Is a “Handshake Deal” Enough? The Perils of Informal Property Settlements Years After Separation

Based on the authentic Australian judicial case Janner & Janner [2025] FedCFamC2F 297, this article disassembles the Court’s judgment process regarding evidence and law. It transforms complex judicial reasoning into clear, understandable key point analyses, helping readers identify the core of the dispute, understand the judgment logic, make more rational litigation choices, and providing case resources for practical research to readers of all backgrounds.

Chapter 1: Case Overview and Core Disputes

Basic Information:

• Court of Hearing: Federal Circuit and Family Court of Australia (DIVISION 2)
• Presiding Judge: Judge O’Shannessy
• Cause of Action: Alteration of Property Interests (Property Settlement)
• Judgment Date: 20 February 2025

Core Keywords:

• Keyword 1: Authentic Judgment Case
• Keyword 2: Family Law Property Settlement
• Keyword 3: Self-Managed Superannuation Fund (SMSF)
• Keyword 4: Informal Agreement
• Keyword 5: Just and Equitable
• Keyword 6: Post-Separation Contributions

Background:

This matter concerns a property dispute between a husband and wife following the breakdown of a long-term marriage that produced three now-adult children. Several years after their physical separation in 2017, the parties successfully divided and sold their non-superannuation assets, including the former matrimonial home. However, a significant asset—a self-managed superannuation fund (SMSF) holding a commercial property—remained untouched, with the parties retaining their original, highly disproportionate interests. The Wife initiated proceedings seeking a formal division of this remaining superannuation, while the Husband argued that their financial relationship had been finalised years earlier by an informal agreement.

Core Disputes and Claims:

The central legal question before the Court was whether a comprehensive and final property settlement agreement had been reached between the parties in 2017.

• The Respondent Husband’s Claim: He asserted that the 2017 division of assets was a full and final settlement of all financial matters, including superannuation. He sought orders that would essentially maintain the existing, disproportionate ownership of the SMSF, arguing it would be unjust and inequitable for the Court to now interfere with an agreement he had relied upon for years.

• The Applicant Wife’s Claim: She contended that while there was a distribution of assets in 2017, there was no final agreement, particularly concerning the SMSF. She argued that she had always understood her interest in the SMSF remained intact. She sought orders from the Court to now effect a just and equitable division of all superannuation entitlements.

Chapter 2: Origin of the Case

The parties married in 1986 and built a life together over nearly three decades, raising three children. The Husband, a finance professional, largely managed the family’s financial affairs, including the establishment of a self-managed superannuation fund in 2010. The parties’ respective interests in this fund were significantly imbalanced from the outset, reflecting the different balances they rolled in from prior employment funds.

The marital relationship began to fracture around 2015 when they started sleeping in separate rooms. The final separation occurred in mid-2017 when the Husband moved out of the matrimonial home. In the period immediately following, the family home was sold. From the proceeds, the Wife received a sum of approximately AUD $700,000, which she used to purchase a new, mortgage-free home for herself. The Husband received the balance of the proceeds, approximately AUD $409,000, which he used, along with a new mortgage, to purchase his own home from which he also operated his business.

For nearly seven years, their financial lives remained separated, yet intertwined. The Husband continued to manage the SMSF, which held a commercial warehouse property that was rented out. Critically, both the Husband and the Wife remained joint trustees of the fund and, more importantly, co-borrowers on the substantial mortgage secured against the warehouse.

The Wife, who described herself as being in a fragile emotional state and financially unsophisticated at the time of separation, asserted she simply accepted the funds to secure her housing, always believing her share of the superannuation fund would be dealt with later. The Husband, however, operated on the assumption that their financial affairs were finalised. This fundamental disagreement over the finality of their 2017 arrangement lay dormant until 2024, when the Wife, having filed for property orders within the statutory time limit following their 2023 divorce, brought the matter before the Court for final resolution.

Chapter 3: Key Evidence and Core Disputes

The Court was presented with conflicting narratives, each supported by the parties’ sworn affidavits and limited documentary evidence.

Applicant’s Main Evidence and Arguments:

• Affidavit Evidence: The Wife deposed that she was emotionally vulnerable at the time of separation, in denial about the end of the marriage, and had no real communication with the Husband. She stated she was simply “delivered the news” about needing to find a new home and had no understanding of the full asset pool or the breakdown of the sale proceeds. She emphasised that she “always believed that the Respondent and I continued to have the [SMSF] property together.”
• Ongoing Liability: The Wife pointed to the incontrovertible fact that she remained a joint trustee of the SMSF and a co-borrower on its significant mortgage debt, arguing this was inconsistent with the idea of a “full and final” settlement.
• Medical Evidence: A letter from her GP was submitted, confirming her history of anxiety and depression, and noting recent panic attacks that were impacting her employment.

Respondent’s Main Evidence and Arguments:

• Affidavit Evidence: The Husband’s affidavit detailed what he asserted was an “informal property settlement” agreed upon in 2017. He presented a calculation suggesting that when all assets (including the SMSF interests at their 2017 values) were considered, the division was approximately 50/50.
• Alleged Agreement: He claimed, “We both agreed that we did not need legal advice as we were both happy with the informal property settlement.” He stated that their adult daughter did not act as an intermediary and that he and the Applicant communicated “extensively” about the division.
• Reliance: The Husband argued that he had relied on this agreement for years, organising his financial affairs, taking on a new mortgage, and building his business on the understanding that his superannuation was secure.

Core Dispute Points:

1. Existence and Scope of the 2017 Agreement: Did the parties’ discussions in 2017 constitute a final agreement that resolved all property matters, including superannuation, or was it merely a partial distribution of non-superannuation assets?
2. Just and Equitable Outcome: Regardless of any past agreement, what would constitute a just and equitable division of the entire asset pool (including the now significantly larger SMSF) at the time of the hearing, pursuant to the Family Law Act 1975?
3. Assessment of Contributions and Future Needs: How should the Court weigh the parties’ contributions throughout the marriage and post-separation, and what adjustments should be made for their future needs, considering their respective ages, health, and earning capacities?

Chapter 4: Statements in Affidavits

The affidavits of the Husband and Wife painted two starkly different pictures of the same events, highlighting the strategic nature of these crucial legal documents.

The Husband’s affidavit was precise and numerical, constructing a narrative of a rational, mutually agreed financial separation. At paragraph 20, he stated, “the Applicant and I agreed on an informal property settlement that was approximately a 50/50% split.” He then presented a detailed breakdown of assets allocated to each party, including their respective SMSF entitlements as they stood in 2017, to support this 50/50 conclusion. This approach was strategically designed to frame the 2017 distribution as a considered, comprehensive, and fair finalisation of their financial relationship.

In stark contrast, the Wife’s affidavit focused on her emotional state and lack of financial comprehension at the time. At paragraph 49, she deposed, “The Respondent and I did not speak much after separation…There was no discussion or explanation of what our asset position was at that time or where money had been applied, I simply just received what I received.” At paragraph 52, she explicitly stated, “I did not regard the monies I received…as a complete financial payout to the end of our marriage.” This narrative was crafted to portray the 2017 events not as a mutual agreement, but as an arrangement she passively accepted out of emotional distress and a lack of understanding, while always maintaining the belief that the SMSF remained a joint asset to be dealt with later.

The Court was thus faced with two conflicting accounts: one of a deliberate, informal contract, and another of a unilateral arrangement accepted under duress and with incomplete information. The decision would ultimately hinge on which narrative was better supported by the objective, contemporaneous evidence.

Chapter 5: Court Orders

Prior to the final determination, the Court stood the matter down to provide the parties with an opportunity to negotiate a resolution. When these discussions were unsuccessful, the matter proceeded to a final hearing. The Court’s task was to hear the evidence, make findings of fact, apply the relevant law, and issue final orders that would bring a conclusive end to the parties’ financial relationship.

Chapter 6: Hearing Scene: Ultimate Showdown of Evidence and Logic

The hearing focused on testing the two competing narratives against the objective evidence. While both parties presented as generally frank and honest witnesses, the Court’s decision ultimately pivoted away from subjective recollections and towards incontrovertible facts.

The cross-examination of the Husband highlighted that despite his assertion of a “final” settlement in 2017, no steps had ever been taken to formalise it. Crucially, no action was taken to remove the Wife as a trustee of the SMSF or, more significantly, as a co-borrower on the substantial mortgage secured against the fund’s primary asset. When questioned, the Husband could not provide a compelling reason why these fundamental financial ties were not severed if the agreement was indeed intended to be final.

The Wife, under cross-examination, remained consistent in her evidence. She reiterated her lack of financial sophistication and her understanding that while she had received funds to buy a home, the superannuation was a separate matter for the future. Her continued legal liability for the SMSF’s mortgage lent significant weight to her version of events.

In making his determination on this central dispute, the Judge found the objective evidence to be determinative. The Court reasoned that the ongoing legal and financial entanglement through the SMSF was fundamentally inconsistent with the existence of a final agreement. The Judge concluded:

I do not accept the Husband’s conclusion from the events, as he recollects them, that there was either an express oral agreement, or one to be implied, that all of the assets, including the self-managed superannuation Fund, were divided between them.

This finding was critical. It meant that the alleged 2017 agreement did not prevent the Court from exercising its jurisdiction. The Judge determined that because a major asset remained financially intertwined and the parties remained legally bound as co-trustees and co-borrowers, there was a “principled reason for interfering with the existing legal and equitable interests.” It was, therefore, just and equitable to make a final property settlement order.

Chapter 7: Final Judgment of the Court

The Court made the following final orders:

1. That the parties each retain all assets and liabilities currently in their sole names, including any superannuation entitlements held outside of the Janner Superannuation Fund.
2. That a superannuation splitting order be made in relation to the Janner Superannuation Fund to effect an overall division of the total property pool (including all superannuation) in the proportions of 53.8 per cent to the Wife and 46.2 per cent to the Husband.
3. The Court provided a detailed formula for the parties’ legal representatives to use in calculating the precise percentage split required to achieve the overall outcome, taking into account the final sale value of the SMSF property and any associated taxes and costs. The parties were ordered to confer and submit a joint minute of proposed orders to give effect to this determination.

Chapter 8: In-depth Analysis of the Judgment: How Law and Evidence Lay the Foundation for Victory

Special Analysis:

The jurisprudential significance of this case lies in its clear application of the principles from Stanford v Stanford in a post-separation context involving an informal, partially executed agreement. It serves as a powerful reminder that even after a long period of separation and a substantial, albeit incomplete, division of assets, the Court’s jurisdiction under section 79 of the Family Law Act is not easily ousted. The judgment reinforces that a “principled reason” to interfere with existing property interests exists where significant financial entanglements—such as being co-trustees and co-borrowers—remain unresolved. It highlights that the Court’s primary duty is to ensure a just and equitable outcome based on the circumstances at the time of the hearing, not to retroactively enforce an incomplete and disputed informal arrangement from the past.

Judgment Points:

A key aspect of the judgment was the Court’s nuanced assessment of witness credibility. The Judge accepted both parties were generally honest in their recollections but resolved the central conflict by deferring to objective evidence. This aligns with the High Court’s guidance in Fox v Percy, which cautions against relying solely on the demeanour of witnesses. The Judge found the Husband’s version of a “final” agreement was logically undermined by his failure to take any steps to formally sever the parties’ most significant remaining financial tie—the SMSF and its associated mortgage.

Legal Basis:

The judgment was structured around the well-established “four-step process” for property settlement applications.
* Step 1 (Identify and value the property): The Court identified the entire pool, including the assets each party retained from 2017 and the current value of the SMSF.
* Step 2 (Assess contributions): The Court found contributions during the marriage to be equal. Post-separation, a modest adjustment of 6% was made in the Husband’s favour to reflect his management of the SMSF and direct financial contributions to it. This resulted in an overall contribution-based assessment of 53% to the Husband and 47% to the Wife.
* Step 3 (Assess future needs under s 75(2)): The Court made a further adjustment of 6.8% in the Wife’s favour, citing her age, significant health issues, the fragility of her employment, and the Husband’s comparatively greater earning capacity.
* Step 4 (Just and equitable check): The final outcome, a division of 53.8% to the Wife and 46.2% to the Husband, was deemed just and equitable in all the circumstances.

Evidence Chain:

The Wife’s victory was built on a simple but powerful chain of evidence:
1. Undisputed Fact: She remained a joint trustee of the SMSF.
2. Undisputed Fact: She remained a joint and several co-borrower on the mortgage secured against the SMSF’s primary asset.
3. Logical Conclusion: These ongoing legal and financial responsibilities are fundamentally inconsistent with the notion of a “full and final” settlement having occurred in 2017.
4. Legal Consequence: Therefore, the Court had a clear, principled reason to intervene and make a final, just and equitable order.

Judicial Original Quotation:

In addressing the Husband’s reliance on the 2017 agreement, the Court was guided by established legal precedent. The judgment referenced the Full Court’s decision in Bevan & Bevan, where it was held that informal agreements and representations are relevant but not determinative. The key principle is that such arrangements cannot oust the Court’s jurisdiction. The Full Court in Bevan stated:

In our view, such representations clearly could be relevant in determining whether it was just and equitable to make an order adjusting existing interests.

In applying this, the Judge in Janner considered the alleged agreement but found that the objective circumstances—particularly the ongoing joint liabilities—weighed far more heavily in the assessment of what was ultimately just and equitable.

Analysis of the Losing Party’s Failure:

The Husband’s case failed for two primary reasons. Firstly, he could not prove the existence of a clear, mutual agreement that covered all assets, including superannuation. His narrative of a “50/50 split” was a post-facto rationalisation rather than a documented consensus. Secondly, and more critically, his actions (or inaction) after 2017 contradicted his claim. By failing to remove the Wife as a co-borrower and trustee, he allowed a significant legal and financial entanglement to persist, leaving the door open for the Court to exercise its jurisdiction under section 79 to finalise their affairs.

Reference to Comparable Authorities:

• Stanford v Stanford [2012] HCA 52: Established that a court must first determine if it is “just and equitable” to make any property order at all before proceeding to alter interests. It is a preliminary and separate question.
• Bevan & Bevan (2013) FLC 93-545: Confirmed that while an informal agreement does not oust the court’s jurisdiction, it is a relevant factor in considering whether it is just and equitable to make an order.
• Hickey & Hickey (2003) FLC 93-143: Set out the “four-step process” for determining property settlement applications, which remains the preferred approach for trial judges.

Implications

1. An informal “handshake deal” is not a final property settlement. Unless an agreement is formalised through consent orders filed with the Court or a Binding Financial Agreement, it remains vulnerable to being overturned.
2. Financial ties are legal ties. Remaining a co-borrower on a mortgage or a co-trustee of a fund is powerful evidence that financial matters are not truly finalised, regardless of what one party may have assumed.
3. Time does not extinguish rights (within limits). A delay in bringing proceedings does not, by itself, prevent the Court from making an order, especially if the application is filed within the statutory time limits.
4. The Court’s focus is on the present. A property settlement is determined based on the assets, liabilities, and circumstances that exist at the time of the hearing, not at the time of separation.
5. Always obtain independent legal advice. This case is a stark reminder of the risks of informal arrangements. Both parties could have saved significant time, cost, and emotional distress by formalising their settlement with legal guidance in 2017.

Q&A Session

Question 1: Why wasn’t the agreement from 2017 legally binding?
For a property settlement to be legally binding and final under the Family Law Act, it must either be made into a formal court order (by consent) or be documented in a Binding Financial Agreement (BFA) that complies with strict legal requirements, including that both parties receive independent legal advice. A verbal or informal “handshake” agreement does not meet these standards and cannot prevent a party from later asking the Court to make a property settlement order.

Question 2: The contributions were assessed at 53/47 in the Husband’s favour. Why did the Wife end up receiving more (53.8%) overall?
This is due to the third step in the property settlement process, which considers the “future needs” of the parties under section 75(2) of the Act. The Court made an adjustment in the Wife’s favour because of her poorer health, the fragility of her employment, her older age, and the Husband’s greater capacity to earn income in the future. This adjustment shifted the balance from the contribution-based assessment to what the Court determined was a just and equitable final outcome.

Question 3: What happens now that the Judge has made these orders?
The Judge has set out the final percentage division but has directed the parties’ lawyers to confer on the precise wording of the superannuation splitting orders. This is because splitting a self-managed super fund can have complex tax and administrative consequences. The lawyers, likely with advice from an accountant, must draft orders that achieve the Judge’s intended outcome in the most effective and tax-efficient way. If they cannot agree on the wording, they will have to return to Court for the Judge to finalise the exact terms of the orders.

---

[Appendix: Reference for Comparable Case Judgments and Practical Guidelines]

1. Practical Positioning of This Case

• Case Subtype: Matrimonial Property Settlement
• Judgment Nature Definition: Final Judgment

2. Self-examination of Core Statutory Elements

① De Facto Relationships & Matrimonial Property & Parenting Matters (Family Law)

• Core Test (Existence of De Facto Relationship – Section 4AA):
  • Duration of the relationship: This case involved a long-term marriage, so this test was not in dispute. For de facto cases, a relationship of at least 2 years is generally required, unless specific exceptions apply.
  • Nature and extent of common residence: The parties shared a matrimonial home for the vast majority of their relationship.
  • Whether a sexual relationship exists: This was an element of their long-term marriage.
  • Degree of financial dependence or interdependence: The parties were fully financially intertwined, sharing assets, liabilities, and operating a business and SMSF together.
  • Ownership, use and acquisition of property: Property was acquired jointly throughout the marriage, even if legal title was sometimes held in one name (e.g., the SMSF property).
  • Degree of mutual commitment to a shared life: The parties had a long-term marriage and raised three children together, demonstrating a clear mutual commitment.
  • The care and support of children: The parties jointly cared for and supported their three children into adulthood.
  • Reputation and public aspects of the relationship: The parties were publicly recognised as a married couple.
• Property Settlement – The Four-Step Process:
  • Identification and Valuation: The Court’s first step was to identify and value all existing property and superannuation of the parties at the time of the hearing, forming a single asset pool. This included the Wife’s house, the Husband’s house, and the net value of the SMSF.
  • Assessment of Contributions: The Court assessed the financial contributions (income, inheritances), non-financial contributions (homemaking, renovations), and welfare contributions (parenting) made by each party throughout the entire relationship, both before and after separation. The Court found these to be largely equal during the marriage but made a small adjustment in the Husband’s favour for his post-separation management of the SMSF.
  • Adjustment for Future Needs (s 75(2) Factors): This was a critical step in this case. The Court considered factors such as the parties’ respective ages (Wife 63, Husband 59), health (Wife’s anxiety and depression), income-earning capacity (Husband’s was greater), and care of others (Husband’s care for grandchildren). This assessment led to a significant adjustment in the Wife’s favour.
  • Just and Equitable: The Court reviewed the overall percentage outcome (53.8% to the Wife, 46.2% to the Husband) to ensure it was fair and equitable in all the circumstances of the case, concluding that it was.
• Parenting Matters (Section 60CC of the Family Law Act 1975):
  • Primary Considerations: While not a central issue in this case as the children were adults, in parenting disputes the court’s paramount consideration is the child’s best interests. This involves balancing the benefit of the child having a meaningful relationship with both parents against the need to protect the child from physical or psychological harm, with protection from harm being given greater weight.
  • Additional Considerations: These include the child’s views, the parents’ capacity to provide for the child’s needs (including emotional and intellectual needs), and the practical difficulties and expenses associated with a child spending time with each parent.

3. Equitable Remedies and Alternative Claims

• Promissory / Proprietary Estoppel: The Husband’s case had elements of an estoppel argument. He was essentially arguing that because the parties had an agreement (the promise) and he acted on it to his detriment (by taking on a mortgage and organising his finances), the Wife should be “estopped” from resiling from that agreement. This argument failed because the Court found there was no clear and unequivocal promise covering superannuation. Furthermore, it would not be unconscionable to allow the Wife’s claim, given her own ongoing financial detriment as a co-borrower on the SMSF loan.

• Unjust Enrichment / Constructive Trust: While not explicitly argued, a party in a similar position to the Husband could potentially argue that the other party would be unjustly enriched if an agreement were overturned. However, this is a difficult argument to run against the Court’s broad statutory discretion under section 79, which is designed to achieve a just and equitable outcome by considering all contributions, not just those that fit within a narrow claim of enrichment.

4. Access Thresholds and Exceptional Circumstances

• Regular Thresholds:
  • For married couples, an application for property settlement must be brought within 12 months of a divorce order taking effect. In this case, the parties divorced in mid-2023 and the proceedings were initiated in early 2024, placing the Wife well within the statutory time limit.

• Exceptional Channels (Crucial):

  • If a party is outside the 12-month time limit, they must seek leave from the Court to proceed. To be granted leave, they must demonstrate that hardship would be caused to them or a child if leave were not granted. Given the significant value of the SMSF in this case, a party in the Wife’s position would likely have been successful in obtaining leave even if she had been out of time.
• Suggestion: Do not abandon a potential claim simply because you do not meet the standard time or conditions. The law provides exceptions for situations involving hardship, which are assessed on a case-by-case basis.

5. Guidelines for Judicial and Legal Citation

• Citation Angle:

  • This case is a useful authority in matters where there has been a long post-separation delay and a dispute over whether an informal, partially-performed agreement should prevent the Court from making a final property order. It reinforces the principle that ongoing financial entanglement is a strong indicator that a final agreement was not reached.
• Citation Method:
  • As Positive Support: For a party seeking to overturn an informal agreement, cite this case to argue that where significant joint liabilities (like a mortgage) or joint trusteeships remain, it is just and equitable for the Court to intervene and make a final order under section 79.
  • As a Distinguishing Reference: If an opposing party cites a case like Bevan & Bevan to argue an informal agreement should be upheld, you can distinguish your facts by pointing to this case, emphasizing that unlike in some other matters, the continued existence of joint legal and financial responsibilities provides a clear “principled reason” for the Court to make an order.
• Anonymisation Rule: When citing this case, use the procedural titles: “In Janner, the Court found that despite a significant delay since separation, it was just and equitable to make an order because the Applicant Wife remained a co-borrower on the SMSF mortgage.”

Conclusion

The core implication of this case is a powerful “Golden Sentence”: Financial ties are not severed until they are legally severed. This judgment demonstrates that assumptions, informal deals, and the passage of time are no substitute for the finality of a formal court order.

Everyone needs to understand the law and see the world through the lens of law. The in-depth analysis of this authentic judgment is intended to help everyone gradually establish a new legal mindset: True self-protection stems from the early understanding and mastery of legal rules.

---

Disclaimer
This article is based on the study and analysis of the public judgment of the Federal Circuit and Family Court of Australia (Janner & Janner), aimed at promoting legal research and public understanding. The citation of relevant judgment content is limited to the scope of fair dealing for the purposes of legal research, comment, and information sharing.
The analysis, structural arrangement, and expression of views contained in this article are the original content of the author, and the copyright belongs to the author and this platform. This article does not constitute legal advice, nor should it be regarded as legal advice for any specific situation.

---

Original Case File:

👉 Can’t see the full document?
Click here to download the original judgment document.