Binding Financial Agreement ➲ During De Facto [Australia excl. WA]

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This document creates a Binding Financial Agreement (BFA) for parties who are currently in a de facto relationship within the meaning of section 4AA of the Family Law Act 1975 (FLA).

When is a de facto relationship deemed to be formed?

If you are unsure whether you are already in a de facto relationship or may be about to be deemed by Australian law to have entered into one please read:

FAQ: We are not married. When will Australian law impose a "de facto" relationship?

Note: This document assumes that both parties are ordinarily resident outside of WA

The agreement will be created under the provisions of the Family Law Act 1975.  

Section 90UA specifies that two de facto parties can make a Part VIIIAB financial agreement under section 90UC of the Family Law Act 1975 only if the parties are ordinarily resident in a participating jurisdiction (which does not include WA) when they make the agreement.

A Part VIIIAB financial agreement pursuant to section 90UC of the Family Law Act 1975 is a Binding Financial Agreement made between two parties:

1️⃣ During their de facto relationship; and

2️⃣ Providing how, in the event of the breakdown of the de facto relationship, all or any of the property or financial resources of either or both parties at the time when the agreement is made, or at a later time is to be dealt with.

This agreement cannot be entered into if, at the time of making of the agreement, either party is a party to any other financial agreement under the provisions of the Family Law Act 1975 (Cth).

This agreement deals with the parties':

⚖️ Property and liabilities;

⚖️ Superannuation; and

⚖️ De facto partner maintenance.

❌ This agreement does not cover child support.

Important: Independent Legal Advice for both parties from their own lawyer [before they sign] is required for the BFA to be valid!

It's a critical element for the validity of a Binding Financial Agreement that both parties are provided with independent legal advice from their own respective Australian legal practitioners.

This must happen before the parties sign the Binding Financial Agreement.

Test your knowledge and get a discount for this document: take the Family Law [Australia] ➲ Property Settlement Quiz.

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General Answer

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Feedback obtained directly from businesses who have used certain [non-law firm] online services

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This FAQ was created by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

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Credits:

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Credits:

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Why does Blue Ocean Law Group℠ use a *.law website domain?

What is a *.law web domain?

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All about *.law domain names

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If I create a legal document for my client on your law firm’s website am I giving legal advice or am I a "mere scribe"?

Is your role that of a mere scribe?

If your role is merely that of a "scribe or scrivener" as outlined below it is unlikely you would be deemed to be providing legal advice or engaging in the practice of law.

Caution: Some Online Legal Documents have evolved!

Unfortunately this is not as easy as it once was … when online legal document templates were all static "fill in the blanks" one-size-fits-all templates.

Increasingly, the capabilities + complexities of legal document automation have evolved to cater to an ever widening range of facts and conditions.

Using the complex design + incorporation of what we call Embedded-Lawyer Logic it is no longer possible to avoid the automated tailoring of the online legal document to suit the client's circumstances + legal needs.

They are designed to produce a quality bespoke legal document just like a lawyer does.

The use of Embedded-Lawyer-Logic™ in the online process:

✅ Is now very similar to a client being interviewed by a lawyer;

✅ It drills down to ask the same questions and provide the same options a highly experienced + competent lawyer is required to do.

As a result the draft legal document created now has the potential to vary significantly based on the responses provided by the client.

We have now progressed to the point that the new normal online process is designed to cause your role to fall outside of the role of a "scribe or scrivener" alluded to below.

In the leading case on this issue Legal Practice Board v Computer Accounting and Tax Pty Ltd [2007] WASC 184; 35 WAR 59 (Simmonds J) noted at para. [152] that Brinsden J in Barristers Board v Palm Management Pty Ltd [1984] WAR 101 referred to Re Matthews (1938) 79 P 2d 535, apparently with approval, as follows at para. [108]*:

The court went on to say that where an instrument is to be shaped from a mass of facts and conditions, the legal effect of which must be carefully determined by a mind trained in the existing law in order to ensure a specific result and to guard against others, more than the knowledge of the layman is required and a charge for such services brings it definitely within the term 'practice of the law' [emphasis added].

How to limit your role to that of a "scribe or scrivener"?

Therefore, we strongly recommend that you advise your client to either:

✅ Create the draft legal document themselves + ensure independent legal advice is sought from our legal team prior to negotiation and execution; or

✅ Instruct you to create the legal documents using our Lawyer-Assisted option.

Doing this ensures your role is clearly limited to that of a "scribe or scrivener".

Our legal team will then take the responsibility for reviewing your client's individual circumstances together with the draft legal document in order to provide your client with the relevant legal advice, ensure your client understands their legal position and options, and to propose and make any required amendments to the legal document based on your client's instructions.

What is a "mere scribe or scrivener"?

In Legal Practice Board v Computer Accounting and Tax Pty Ltd [supra]*:

… the court held that work of the mere clerical kind, such as filling out of skeletal blanks or drawing instruments of generally recognised and stereotype forms effectuating the conveyance or encumbrance of property, such as a simple deed or mortgage not involving the determination of the legal effect of special facts and conditions, should be generally regarded as the legitimate right of any layman because it involves nothing more or less than the clerical operations of the now almost obsolete scrivener (emphasis added).
(The scrivener was eliminated in England by the 1804 Act.).

The view of the Institute of Chartered Accountants in Australia ... ^

Timely reminder

The 2007 case of the Legal Practice Board v. Computer Accounting and Tax Pty Ltd* serves as a timely reminder to members that there are legislative provisions in each state and territory which prohibit a person who is not a legal practitioner from engaging in legal practice.
This prohibition is mirrored in the Institute’s regulations relating to public practice (regulation 1207).
However, there are differences between the jurisdictions as to how the prohibition is framed.  

Even so, members who use the services of document providers are urged, as a minimum, to:
✅ Use only reputable document providers whose services are backed by competent legal practitioners;
✅ Ensure that they abide by the terms and conditions of the document providers as to the use of the documents and their supply to clients; and
✅ Avoid redrafting of documents to suit the circumstances of individual clients, unless appropriate legal advice is obtained by the relevant parties.

Seek legal advice

The Institute believes that the recent WA case does not require any change to a member's legitimate use of this type of service in accordance with their terms and conditions.
However, if you have any concerns or queries about the use of document providers, you should seek legal advice.

Sources:

* Legal Practice Board v Computer Accounting and Tax Pty Ltd [2007] WASC 184;

^ Extracted from the article: Court case raises issues about preparation of legal documents.

Credits:

This FAQ was created by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

We are not married. When will Australian law impose a "de facto” relationship.

When can an application for a financial Property Settlement be made to the Family Court?

The circumstances governing whether a "de facto” relationship will be imposed by Australian law for the purposes of making an application to the Family Court for a financial property settlement generally can only arise when one of the following legally prescribed circumstances is present [1]:

1️⃣ Two adult persons who are not married or related by family live together as a couple in a "genuine and permanent domestic relationship” for at least two years (this can include more than one period providing it totals at least 2 years);

2️⃣ There is a child of the relationship;

3️⃣ There have been significant contributions made and a serious injustice would result if the court did not make an order or declaration; or

4️⃣ The de facto relationship has been registered in a State or Territory under laws for the registration of relationships.

When does a “de facto” relationship exist?

In the recent case of Radecki & Fairbairn [2020] FamCAFC 307 the Full Court of the Family Court of Australia at Sydney in their judgment dated 11 December 2020, confirmed the relevant law to determine the existence of a de facto relationship from para. 26 as follows:

A de facto relationship exists where a Court finds that the parties were “a couple living together on a genuine domestic basis” (s 4AA(1)(c) of the Act), which is to be decided by reference to the matters set out in s 4AA(2) of the Act, which are as follows:
(a) the duration of the relationship;
(b) the nature and extent of their common residence;
(c) whether a sexual relationship exists;
(d) the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
(e) the ownership, use and acquisition of their property;
(f) the degree of mutual commitment to a shared life;
(g) whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
(h) the care and support of children;
(i) the reputation and public aspects of the relationship.
In addition, the Court “is entitled to have regard to such matters… as may seem appropriate to the court in the circumstances of case” (s 4AA(4) of the Act).
In a passage which has been frequently quoted and applied when determining the existence of a de facto relationship (see, for example, Sinclair & Whittaker (2013) FLC 93-551 (“Sinclair & Whittaker”) at [55] and Cadman & Hallett (2014) FLC 93-603 (“Cadman”) at [48]), albeit in a different legislative context, Fitzgerald J said in Lynam v Director-General of Social Security(1984) FLC 91‑577 at 79,663:
Financial arrangements cannot be taken in isolation and considered of particular importance in determining the nature of relationship.
Their materiality, like each of the other elements of the relationship, stems from the impact which they have as part of an overall situation.
Each element of a relationship draws its colour and its significance from the other elements, some of which may point in one direction and some in the other.
What must be looked at is the composite picture.
Any attempt to isolate individual factors and to attribute to them relative degrees of materiality or importance involves a denial of common experience and will almost inevitably be productive of error.
The endless scope for differences in human attitudes and activities means that there will be an almost infinite variety of combinations of circumstances which may fall for consideration.
In any particular case, it will be a question of fact and degree, a jury question, whether a relationship between two unrelated persons of the opposite sex meets the statutory test.
Although not expressly mentioned in s 4AA(2) of the Act, an intention to enter into a de facto relationship or to end one is powerful evidence to be taken into account under s 4AA(4) of Act, in determining whether such a relationship exists or has ended.
Whilst evidence of such intention is not required and, in many cases, is not present, where such an intention can be identified, it can be telling.

Q: Is the definition of de facto relationship different in Western Australia?

A: Technically Yes, as the definitions are not identical. However they are largely similar.

The definition of a de facto relationship in Western Australia is set out in section 13A of the Interpretation Act 1984 (WA).

Footnotes:

[1] s. 90SB of the Family Law Act 1975 (Cth.).

[2] Joint judgment of May, Strickland & Ainslie-Wallace JJ reported at 86,682.

[3] Paragraph 94 of the joint judgment of Bryant CJ, Thackray & Aldridge JJ reported at 87,398.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

What is the effect of a Binding Financial Agreement (BFA)?

A legally valid* Binding Financial Agreement (BFA) will operate to prevent the Court from being able to make property adjustment orders under the Family Law Act 1975.

A Binding Financial Agreement (BFA) can also deal with spousal maintenance and prevent your former partner from filing an application for spousal maintenance.

Important Note:

* In order to be legally valid and actually in fact “legally binding”, a Binding Financial Agreement (BFA) must not be susceptible to being set aside by the Court for any reason.

For a detailed discussion of when a Binding Financial Agreement (BFA) can be set aside, please refer to the separate FAQ on this topic.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

When can a Binding Financial Agreement (BFA) be set aside?

Can the BFA be set aside if it represents a “Bad Deal” for one of the parties?

In the case of Hoult & Hoult [2013] FamCAFC 109 Strickland and Ainslie-Wallace JJ opined at para. [310]:

“ … The point of the legislation is to allow the parties to decide what bargain they will strike, and provided the agreement complies with the requirements of section 90G(1) they are bound by what they agree upon.  

Significantly, in reaching agreement, there is no requirement that they meet any of the considerations contained in section 79 of the Act, and they can literally make the worst bargain possible, but still be bound to it."  

Setting aside a Binding Financial Agreement (BFA)

If any of the following apply the Binding Financial Agreement (BFA) can be set aside by the courts:

1️⃣ A party did not receive independent legal advice prior to signing the BFA

2️⃣ A party has received inadequate or wrong legal advice from their lawyer prior to signing the BFA

3️⃣ A party was advised by a lawyer but they were not an Australian Lawyer

4️⃣ The BFA was signed under duress

Make sure there is plenty of time.

Watch out for the looming wedding date which could provide a basis for a claim of undue influence or duress.

5️⃣ The BFA was signed under undue influence

If a party does not have a good command of English, DO NOT allow the intended partner or a relative to act as an interpreter.

This may lead to allegations of undue influence or duress or that the party did not understand the BFA.

6️⃣ Fraud/Unconscionable conduct was involved

Failure to make full and complete disclosure of all material matters constitutes “Fraud”

If a party to a Binding Financial Agreement (BFA) is aware of relevant information and does not disclose it to the other party, whether intentionally or non-intentionally, the Court may set the agreement aside at a later date, under section 90K of the Family Law Act:

"A court may make an order setting aside a financial agreement if and only if, the court is satisfied that: the agreement was obtained by fraud (including non-disclosure of a material matter)…"

What might constitute “Fraud” in the context of a BFA?

❌ If a party fails to disclose the true extent or value of his or her assets.

This might occur, by way of example, if a party:

➲ Hides assets;

➲ Mistakenly assumes the assets don't need to be disclosed, such as property held in the name of a Trust which they directly control, or property held overseas which the other party knows nothing about, or cryptocurrency they have forgotten they own but could become worth a material sum;

❌ Not disclosing the true value of assets, or material information which could assist to determine the true value of assets;

❌ Failure to disclose other material information which would impact on a person's decision to enter into the Binding Financial Agreement; or

❌ Deceiving the other party in some way, in order to induce them to sign the Binding Financial Agreement.

In such a case, he or she would create an inherent weakness in the Binding Financial Agreement, leaving the possibility open for it to be challenged at a later date by the disgruntled ex-partner.

7️⃣ There has been a material change in circumstances relating to the care. welfare and development of a child …

Family Law Act 1975 (Cth.)
90K         Circumstances in which court may set aside a financial agreement or termination agreement
(1)          A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:
(d)          since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (2)), a party to the agreement will suffer hardship if the court does not set the agreement aside; or

8️⃣ Lawyers' Laundry List of Avoidable Mistakes

These avoidable mistakes made by one or both of the parties lawyers were incapable of rectification by the Court.

This meant that the Court had no choice but to invalidate and set aside the BFA in the following situations:

➲ The wrong type of Binding Financial Agreement was entered;

➲ There were mistakes in one or both of the Lawyer's Certificates;

➲ The BFA was executed by a party before receipt of legal advice;

➲ Out-dated Lawyer Certificates were used;

➲ The lawyer failed to record the advice provided and have the party sign an acknowledgement of having received the advice;

➲ There were other legally technical matters wrong regarding the BFA such as it being signed in counterparts or a translator was delegated to provide the legal advice.

9️⃣ The BFA was entered to defraud or defeat the interests of third parties

❌ If a party enters a BFA for the purpose of defrauding or defeating the interests of creditor/s or another person who might claim rights due to the existence of an additional de facto relationship.

What is the effect of setting aside the BFA?

If a Binding Financial Agreement (BFA) is set aside, it means that it is “as if” the original agreement never existed.

Either party is then free to commence proceedings seeking a property settlement and/or spousal maintenance.

By Mutual Agreement: Update BFA or file Consent Orders with the Court

If at anytime, for any reason both parties agree, the parties could decide to replace the BFA with an alternative or updated BFA.

Important: All of the above notes regarding setting aside a BFA, apply to any alternative or updated BFA.

The same rigor must be applied. New certificates of independent legal advice must be obtained, etc.

If the parties have separated, it is also possible for the terms of a BFA to be overridden by consent orders filed with the Court (subject to amendment by the Court if they are deemed not to be fair and equitable).

Note:  

The legal term “set aside” means to declare a legal agreement, decision or process to be invalid.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

‍Is a Binding Financial Agreement (BFA) the same as a Prenup?

The legal term Binding Financial Agreement (BFA) is the correct wording to use in Australia for this kind of agreement.

Q: It's the same thing as a prenup right?
A: Yes, sort of …

In order to provide some context, a Binding Financial Agreement (BFA) has in the wider community (including overseas and in the media) commonly and historically been referred to as a Prenuptial agreement or Prenup.

A Binding Financial Agreement (BFA) can be entered at any time

1️⃣ As a Prenup, Postnup, after the parties have separated, or in the case of de facto relationships, at any time in the absence of nuptials altogether; and could alternatively be

2️⃣ Called a Separation Agreement, Cohabitation Agreement or Divorce Agreement.

Just because the name uses the word “Binding” does not make it so!

Whilst the parties may include the word binding in the name or within the body of the agreement, simply using the word binding does not of itself make the agreement legally binding.

Whether a Binding Financial Agreement (BFA) is in fact legally binding* is a determination which can only be made by the Court.

Important Note:

* In order to be legally valid and actually in fact “legally binding”, a Binding Financial Agreement (BFA) must not be susceptible to being set aside by the Court for any reason.

For a detailed discussion of when a Binding Financial Agreement (BFA) can be set aside, please refer to the separate FAQ on this topic.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

What happens if a party breaches their duty of timely full and frank disclosure in negotiating Binding Financial Agreements / Family Law Court Proceedings?

The parties to any Binding Financial Agreement or Family Law Court Proceedings must make full and frank disclosure of their financial circumstances.

Binding Financial Agreements

Consequences of Non-Disclosure

If a party can show that the other party to the Binding Financial Agreement has not provided full and frank disclosure of their true financial position, the Binding Financial Agreement may not be enforceable.

At the very minimum the Binding Financial Agreement would be subject to a valid legal challenge in Court where the non-disclosing party would bear the onus of proof of showing the the non-disclosure was not material.

This is especially the case where the Binding Financial Agreement (in light of the true financial position of the parties) is not "fair + equitable".

Family Law Court Proceedings

Consequences of Non-Disclosure

If the non-disclosure is clear to the Court, or disclosure is made in a confusing manner with little or no effort made to respond to requests for clarification: the most likely result will be the Court making Property Orders unfavourable to the non-disclosing / non-cooperating par­ty.

If the non-disclosure is discovered after Court pro­ceed­ings have completed there may be valid grounds for the Court to set aside the original Prop­er­ty Orders and make new orders to replace them based on the true finan­cial position.

The Court may use its discretion to order that all or part of the legal costs incurred by the innocent party in both the original and subsequent Court proceedings are payable by the non-disclosing party, and in some cases the Court may order the non-disclosing party in contempt of Court.

Delay caused by Late Disclosure

In the marriage of Briese, Smithers J. at para. [2] described the ongoing duty of full and frank disclosure^ [emphasis added] in Family Law Court Proceedings as:

"… A positive obligation to set out at an early stage their financial position in a clear and comprehensive manner. The Regulations, and now the Rules, are not intended as a vehicle to mask the true position, or as an aid to confusion, complexity or uncertainty. They are not intended as the outer limits of the obligation of financial disclosure, but as providing avenues towards disclosure.
The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance.
Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding."

Consequences of Late Disclosure / Evasive Conduct

In the marriage of Briese, Smithers J. at para. [6] provided an example of the cost consequences in Family Law Court Proceedings where a party eventually provides full and frank disclosure, but only after unduly prolonging the proceedings + being evasive as to their financial circumstances [emphasis added]:

In the unreported decision of Nygh J. in Marinko (29 October 1982) the learned Judge made an order for costs against the husband, in part because of his conduct of the proceedings.
He found that the husband had unduly prolonged the proceedings and further that he had been evasive as to his financial circumstances.
At p. 3 of his reasons for decision his Honour said:
"It is quite clear that under reg. 97, there is an obligation on the parties to make a full and fair disclosure of all their financial assets; it is also expected of the parties that they shall co-operate with the conduct of the proceedings in order to bring them to an early and prompt conclusion with a minimum of expense.
This obligation is incumbent upon the Court under sec. 97(3) of the Act, and by inference, it lies upon the parties and their legal advisers to co-operate in that goal.
It is, therefore, not an answer to say that the wife did not succeed fully, or that the evidence which she finally obtained out of the husband was not all helpful, or essential to her case.''

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.