Five Financial Agreements Signed: Why Were None Legally Binding in This Australian Family Law Case?

Based on the authentic Australian judicial case Shala & Shala [2025] FedCFamC1F 639, 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 1)
• Presiding Judge: Austin J
• Cause of Action: Family Law – Property Settlement & Validity of Financial Agreements
• Judgment Date: 15 September 2025
• Core Keywords:
  • Keyword 1: Authentic Judgment Case
  • Keyword 2: Binding Financial Agreement (BFA)
  • Keyword 3: Family Law Act 1975
  • Keyword 4: Independent Legal Advice
  • Keyword 5: Unconscionable Conduct
  • Keyword 6: Property Settlement

Background:

This case involves a husband and wife who, over a six-year period, executed five separate agreements intended to govern the division of their property. The relationship between the parties was complex, with conflicting accounts of their separation date and allegations of family violence. When the wife ultimately sought substantive financial relief from the Court, the husband sought to rely on these agreements, arguing they were legally binding and precluded her from making any further claims. The Court was therefore required to conduct a preliminary hearing to determine the legal status of these five agreements before the main property dispute could proceed.

Core Disputes and Claims:

The central issue was whether any of the five agreements qualified as a “binding financial agreement” under Part VIIIA of the Family Law Act 1975 (Cth).

• The Applicant’s (Wife’s) Claims: The wife contended that none of the agreements were valid or binding. She argued they failed to meet the strict technical requirements of the Act. Further, she claimed she was subjected to duress and unconscionable conduct, and that the legal advice she received was deficient, particularly concerning the second agreement. She sought declarations to this effect, which would allow her to proceed with an application for a traditional property settlement under Part VIII of the Act.

• The Respondent’s (Husband’s) Claims: The husband argued that the agreements, particularly the second and fifth, were valid and binding. He sought the dismissal of the wife’s application and the enforcement of the agreements, which would finalise the property division according to their previously agreed terms.

Chapter 2: Origin of the Case

The parties married in 2014. On the very day of their wedding, they executed their first document, titled simply “Agreement,” which purported to dictate how their property would be divided in the event of a future separation. This set the stage for a series of agreements that would later become the focus of intense legal scrutiny.

By February 2018, the relationship had evidently deteriorated, though the timeline remains contentious. The parties signed a second, more formal “Financial Agreement.” This document was accompanied by certificates of independent legal advice and, crucially, separation declarations in which both parties stated they had separated two years earlier, in February 2016. However, the wife now alleges this declaration was knowingly false, claiming she was coerced into signing it out of fear of physical harm from the husband. She contends the true and final separation did not occur until December 2022. The husband’s position on the separation date has been inconsistent; he has at various times claimed it occurred in 2016, 2017, and later, February 2018, around the time the second agreement was signed.

The complexity deepened in March 2018 when, within weeks of signing the second agreement, the parties executed two more agreements. Then, in February 2020, a fifth document was signed, titled “Amendment to the Binding Financial Agreement,” which sought to dramatically alter the terms of the second agreement by transferring properties back to the husband that were originally allocated to the wife.

The wife commenced these proceedings in February 2023, initially seeking to set aside the second agreement and pursue a conventional property settlement and spousal maintenance. The husband responded by seeking to enforce the agreements. The matter was complicated by a subsisting family violence order against the husband for the wife’s protection and parallel proceedings in the Supreme Court of New South Wales, where a mortgagee took action against one of the properties due to the husband’s alleged failure to maintain loan repayments.

Chapter 3: Key Evidence and Core Disputes

The determination of the case hinged on a forensic examination of the five agreements and the circumstances surrounding their creation.

Applicant’s Main Evidence and Arguments:

• The Five Agreements: The wife tendered all five agreements to argue they were technically deficient under the Family Law Act 1975. For example, she pointed out that some failed to specify the correct section of the Act under which they were made.
• Affidavit Evidence: The wife’s affidavits contained detailed allegations of a history of family violence, coercive control, and bullying. She specifically claimed she was “forced” to sign the second agreement and the false separation declaration out of fear.
• Contradictory Evidence from the Husband: The wife highlighted the husband’s inconsistent statements across various documents (including a divorce application and affidavits) regarding the date of separation to undermine his credibility and support her claim that the separation declarations were false.
• Evidence of Deficient Legal Advice: The wife argued the solicitor who advised her on the second agreement, Mr B, was not truly independent, had been selected by the husband, and gave her advice based on false premises (such as the incorrect separation date).

Respondent’s Main Evidence and Arguments:

• The Executed Agreements: The husband’s primary evidence was the signed agreements themselves, particularly the second agreement, which included certificates of independent legal advice signed by both parties’ solicitors.
• Separation Declarations: He relied on the signed separation declarations as proof that the parties had separated in 2016, providing the legal basis for the second agreement.
• Affidavit Evidence: The husband denied the wife’s allegations of coercion and unconscionable conduct, asserting that she entered into the agreements willingly and with the benefit of independent legal advice.

Core Dispute Points:

1. Statutory Compliance: Did each of the five agreements meet the strict formal requirements of Part VIIIA of the Family Law Act 1975 to be classified as a “financial agreement”?
2. Sufficiency of Legal Advice: Did the legal advice provided to the wife, particularly for the second agreement, meet the statutory standard, or was it deficient to the point of invalidating the agreement’s binding nature?
3. Vitiating Conduct: Was the wife’s consent to the agreements procured by duress, undue influence, or unconscionable conduct on the part of the husband?

Chapter 4: Statements in Affidavits

The affidavits of both parties presented starkly contrasting narratives. The wife’s statements aimed to construct a picture of a relationship dominated by the husband’s coercive control. She detailed specific incidents of alleged violence and asserted that her signing of the agreements, particularly the second agreement and its false separation declaration, was not a free and voluntary act but a capitulation to fear. Her initial, legally drafted affidavit provided a coherent narrative, whereas a later affidavit she prepared herself was described by the Court as “virtually incomprehensible,” highlighting the critical role of legal assistance in articulating a case effectively.

The husband’s affidavits, in contrast, painted a picture of a series of voluntary and legally sound agreements. He denied the wife’s allegations of coercion and maintained that both parties had the benefit of independent legal advice. However, his credibility was undermined by the significant inconsistencies across his own documents regarding the date of separation, a fact central to the validity of the second agreement. This inconsistency provided objective support for the wife’s claim that the separation declarations were indeed false.

Chapter 5: Court Orders

Prior to the final hearing, the case was marked by the husband’s procedural non-compliance. In May 2025, the Court issued clear procedural directions requiring the parties to file and serve documents in readiness for the trial. The husband failed to comply with these orders and also failed to appear at multiple procedural hearings. Consequently, a specific judicial notation was made on the Court file warning the husband that if he failed to appear at the trial, it would proceed on an undefended basis. This set the stage for the contentious applications that would occur at the commencement of the hearing.

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

The trial commenced with significant procedural drama. The husband appeared without legal representation and immediately made two applications. First, he sought an adjournment to secure lawyers. This was refused. The Court noted his prolonged history of non-compliance and his failure to act on previous opportunities to obtain representation.

His Honour held that the husband’s unreadiness was a situation of his own making and would not justify further prejudice to the wife, who was ready to proceed.

Second, the husband applied to restrain the wife’s solicitor from acting, alleging a conflict of interest because the solicitor had previously acted for both parties in minor disputes with tradesmen in 2017. This application was also swiftly dismissed. The Court reasoned that there was no risk of confidential information being misused, as the previous matters were unrelated to the current family law proceedings.

The Court held: “The husband was not Ms Sutherland’s client in respect of those disputes, he could not possibly have divulged information to her which attracted legal professional privilege… Even if the husband had been Ms Sutherland’s client, he was unable to articulate how any conflict of interest presently arose. He did not depose that he conveyed confidential information to Ms Sutherland in 2017 (or at any other time), let alone that he reasonably believes such information may now be used to his disadvantage in these quite different matrimonial proceedings.”

This finding was determinative. The Court concluded that the husband’s claim of conflict was “fanciful” and refused to deprive the wife of her chosen legal representation. The trial then proceeded to the substantive issue: the validity of the five agreements. The husband, despite initially declining, eventually sought and was granted leave to rely on his previously filed affidavits, leading to his cross-examination. He ultimately chose not to have any questions put to the wife.

Chapter 7: Final Judgment of the Court

The Court made the following declarations and orders:

1. The agreements executed by the parties on 17 July 2014, 28 February 2018, 9 March 2018, 16 March 2018, and 20 February 2020 are not financial agreements within the meaning of Part VIIIA of the Family Law Act 1975 (Cth).
2. Alternatively, the second agreement is not a binding financial agreement.
3. The wife’s application for substantive financial relief under Part VIII of the Act was adjourned to a future date for procedural directions.

This outcome represented a comprehensive victory for the wife on the preliminary issue, clearing the path for her to pursue a property settlement through the Court’s discretionary jurisdiction.

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

Special Analysis:

This case serves as a powerful reminder of the unforgivingly technical nature of Binding Financial Agreements in Australia. The judgment demonstrates that courts will not hesitate to invalidate an agreement that fails to strictly comply with the letter of the law, regardless of the parties’ original intentions. It underscores that a “deal is not a deal” in family law unless it meticulously adheres to the statutory framework designed to protect both parties. The jurisprudential value lies in its methodical, step-by-step invalidation of five separate agreements, providing a clear roadmap of common and fatal errors in drafting and execution.

Judgment Points:

The Court’s reasoning for invalidating each agreement was precise and rooted in the explicit requirements of the Family Law Act 1975. The key deficiencies identified were fatal, leaving no room for the agreements to be salvaged.

Legal Basis:

The Court’s analysis was anchored in Part VIIIA of the Family Law Act 1975 (Cth), specifically:
* Section 90B: Governs financial agreements made before marriage.
* Section 90C: Governs financial agreements made during marriage.
* Section 90D: Governs financial agreements made after divorce.
* Section 90G: Sets out the strict requirements for a financial agreement to be binding, including the crucial element of independent legal advice.
* Section 90K: Provides grounds for setting aside a binding financial agreement, including duress and unconscionable conduct.

Disassembly of Judgment Basis:

The Court meticulously dismantled each agreement:

• First Agreement (17 July 2014): This agreement failed at the first hurdle. It was executed on the day of the marriage, but it did not state whether it was made before the marriage (under s 90B) or during it (under s 90C). This omission was fatal, preventing it from being classified as a “financial agreement.”

• Second Agreement (28 February 2018): This agreement failed on multiple grounds.

  • Incorrect Statutory Basis: It was made during the marriage but incorrectly stated it was made under s 90D (for post-divorce agreements) instead of the correct s 90C.
  • Deficient Legal Advice: Even if the error could be rectified, the Court found the legal advice given to the wife was fundamentally flawed. It was based on the false premise that the parties had separated two years prior, meaning any advice given would not have properly accounted for contributions made between 2016 and 2018. The Court noted, “The mistaken assumption about the separation occurring long before in February 2016 is significant because Mr B would not likely have given the wife any advice about how her financial and non-financial contributions made between February 2016 and February 2018…would have influenced her likely rights in an alternate cause of action.”
  • Lack of Independence: Evidence suggested the wife’s lawyer, Mr B, was acting more in the husband’s interest, having been instructed by him and later releasing the wife’s file to him without her consent. This destroyed any notion of “independent” advice.
• Third and Fourth Agreements (March 2018): These were also made during the marriage but failed to state they were made pursuant to s 90C. Like the first agreement, this was a fatal defect.

• Fifth Agreement (February 2020): This “amendment” failed for two key reasons. First, it also did not specify it was made under s 90C. Second, and decisively, there was no evidence that either party received independent legal advice before signing it, a core requirement of s 90G. The statutory declarations attached were insufficient to cure this defect.

Judicial Original Quotation:

In assessing the quality of legal advice for the second agreement, the Court was not satisfied that the mere presence of a certificate was enough. The evidence pointed to a process that was fundamentally compromised. On the issue of whether it was practicable to carry out the agreement, the Court’s logic was direct:

“The second agreement was predicated upon the parties’ mutual acknowledgment they finally separated in February 2016…The second agreement was executory in character and was intended to take immediate effect upon its execution in February 2018. The terms of the second agreement were not dependent upon some hypothetical future separation. That the parties might not have truly separated until after February 2018…is not to the point. The second agreement was operable and the parties acted upon it.”

This indicates that because the parties had already acted on the agreement (transferring properties), an argument of “impracticability” was untenable. The agreement’s downfall lay in its formation, not its implementation.

Analysis of the Losing Party’s Failure:

The husband’s case failed because he placed his faith in documents that were legally defective from their inception. His primary strategic errors were:
1. Reliance on Flawed Agreements: He failed to recognise or seek advice on the fundamental statutory non-compliance of the agreements he was seeking to enforce.
2. Inconsistent Evidence: His contradictory statements about the separation date fatally undermined the credibility of the “separation declarations” that were crucial to the second agreement’s structure.
3. Procedural Disengagement: His failure to comply with court orders and his last-minute, unmeritorious applications for adjournment demonstrated a disregard for the court process, which weakened his position and ensured he entered the trial unprepared and on the back foot.

Reference to Comparable Authorities:

• Thorne v Kennedy (2017) 263 CLR 85: The High Court’s leading authority on setting aside financial agreements for duress, undue influence, and unconscionable conduct. It establishes the key factors to consider, such as the inequality of bargaining power and the emotional circumstances surrounding the agreement.
• Hoult & Hoult (2013) FLC 93-546: A key Full Court decision confirming that while the court will not generally inquire into the quality of legal advice, it must be satisfied that advice of the prescribed nature was actually given for an agreement to be binding.
• Logan & Logan (2013) FLC 93-555: Reinforces the principles in Hoult and places the evidentiary burden on the party seeking to challenge a seemingly compliant agreement to prove the deficiency in the legal advice.
• Osferatu & Osferatu (2015) FLC 93-666: Establishes that litigants should not be deprived of their lawyer of choice without due cause and that an assertion of a conflict of interest must not be “fanciful.”

Implications

1. Technical Precision is Non-Negotiable: This case is a stark warning that financial agreements are not simple contracts. They are statutory instruments that demand absolute and strict compliance with the Family Law Act 1975. Even minor errors, such as citing the wrong section, can render an entire agreement void.
2. Independent Legal Advice is More Than a Signature: A certificate of advice is not merely a box-ticking exercise. The advice must be genuinely independent, based on accurate facts, and fully explain the rights a party is giving up. Courts will look behind the certificate to examine the true nature of the advice process.
3. Consistency is Key to Credibility: Your statements across all legal documents, from initial applications to final affidavits, must be consistent. Contradictions, especially on crucial facts like the date of separation, can destroy your credibility in court.
4. Do Not Ignore Court Directions: The judicial system operates on rules and deadlines. Disregarding procedural orders, as the husband did, can lead to severe consequences, including having the case proceed without you or being denied adjournments at critical moments.
5. A “Deal” Made Under Pressure is No Deal at All: While the Court in this instance invalidated the agreements on technical grounds, it also examined the context of family violence and control. Any agreement signed under duress or unconscionable pressure is vulnerable to being set aside.

Q&A Session

1. Why couldn’t the Court just fix the errors in the agreements, like the wrong section number?
While courts can sometimes rectify simple clerical errors in contracts, financial agreements under the Family Law Act 1975 are a special category. The legislation sets out strict, mandatory requirements that must be met for an agreement to be valid. The failure to specify the correct statutory basis (e.g., citing s 90D for an agreement made during marriage instead of s 90C) is considered a fundamental failure to comply with the legislative scheme, not a mere typo. The Court in this case determined this failure deprived the agreements of the very character of a “financial agreement.”

2. What happens to the parties’ property now that the agreements have been declared not binding?
The Court’s decision means the “gate” that was blocking the wife’s claim has now been opened. The matter will proceed as a standard property settlement case under Part VIII of the Family Law Act 1975. The Court will follow the four-step process: identify and value the asset pool, assess the parties’ financial and non-financial contributions, consider their future needs, and finally, make orders that are “just and equitable.” The previously signed agreements may still be considered as evidence of the parties’ intentions at various times, but they will not dictate the outcome.

3. Why was the husband’s adjournment application denied if he didn’t have a lawyer? Isn’t that unfair?
While courts prefer parties to be legally represented, a right to an adjournment is not automatic. In this case, the husband had a long history of non-compliance with court orders and had missed multiple prior opportunities to engage lawyers. He was explicitly warned that the trial would proceed in his absence. Granting a last-minute adjournment would have caused further delay and expense for the wife, who was ready to proceed. The Court balanced the husband’s self-inflicted predicament against the need for the timely resolution of disputes and found in favour of proceeding.

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

1. Practical Positioning of This Case

• Case Subtype: Family Law – Validity of Binding Financial Agreements & Property Settlement
• Judgment Nature Definition: Final Judgment on a preliminary, bifurcated issue.

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: (General rule: 2 years, unless exceptions apply).
• Nature and extent of common residence: (Did they live together? Was it continuous?).
• Whether a sexual relationship exists: (Or existed).
• Degree of financial dependence or interdependence: (Any financial support arrangements?).
• Ownership, use and acquisition of property: (Joint names or separate?).
• Degree of mutual commitment to a shared life: (Was it casual or committed?).
• The care and support of children.
• Reputation and public aspects of the relationship: (Did family/friends view them as a couple?).

Property Settlement – The Four-Step Process:

1. Identification and Valuation: Determine the net asset pool (assets minus liabilities).
2. Assessment of Contributions: Financial contributions (initial, during relationship), Non-financial contributions (renovations), and Contributions to the welfare of the family (homemaker/parenting duties).
3. Adjustment for Future Needs (s 75(2) Factors): Consideration of age, health, income earning capacity, care of children, and standard of living.
4. Just and Equitable: The final sanity check—is the proposed division fair in all the circumstances?

Parenting Matters (Section 60CC of the Family Law Act 1975):

• Primary Considerations: The benefit to the child of having a meaningful relationship with both parents VS The need to protect the child from physical or psychological harm (Harm is given greater weight).
• Additional Considerations: The views of the child (depending on maturity), the capacity of parents to provide for needs, practicalities/expense of spending time.

3. Equitable Remedies and Alternative Claims

In cases where a financial agreement is found to be non-binding, parties are not left without recourse. The failure of the agreement simply means the matter reverts to the Court’s general jurisdiction under Part VIII of the Family Law Act 1975. However, principles of Equity can still be relevant.

• Constructive Trust: If one party has made significant contributions to a property legally owned by the other, and it would be unconscionable for the legal owner to retain the full benefit, a constructive trust could be argued. In this case, had the agreements been set aside for other reasons, the contributions of each party to the various properties would have been a key factor in the property settlement assessment, which is an exercise analogous to equitable principles.
• Promissory / Proprietary Estoppel: While not the primary argument here, if one party had made a clear promise (e.g., “you will be taken care of financially if you sign this”) upon which the other party detrimentally relied, an estoppel argument could theoretically be raised to prevent the first party from unconscionably resiling from that promise.

4. Access Thresholds and Exceptional Circumstances

• Regular Thresholds: For a financial agreement to be binding under s 90G, it must meet all technical requirements, including being signed by all parties, and each party having received independent legal advice from a legal practitioner, with signed statements from those practitioners annexed to the agreement.
• Exceptional Channels (Crucial): Section 90G(1A) of the Act provides a critical “escape hatch.” A court may declare an agreement binding even if it does not comply with all technical requirements (like the exchange of lawyers’ certificates) if it would be “unjust and inequitable” not to do so. The husband in this case did not argue this point, and given the multiple, fundamental flaws in the agreements (including deficient advice and incorrect statutory references), it is highly unlikely such an argument would have succeeded.

Suggestion: Do not assume an agreement is automatically invalid or binding. The Court’s power under s 90G(1A) provides a degree of flexibility, but as this case shows, it will not be used to salvage agreements that are fundamentally defective in their substance and formation.

5. Guidelines for Judicial and Legal Citation

Citation Angle:

It is recommended to cite this case in legal submissions or debates involving:
* The strict interpretation of the formal requirements for financial agreements under ss 90B, 90C, and 90D of the Family Law Act 1975.
* Challenges to the binding nature of an agreement based on deficient or non-independent legal advice, even where a certificate exists.
* The consequences of factual inaccuracies within a financial agreement (e.g., incorrect property ownership, false separation dates).
* The dismissal of unmeritorious applications for adjournments or to restrain legal representatives in family law proceedings.

Citation Method:

• As Positive Support: When arguing that an agreement is non-binding due to a failure to correctly identify the statutory provision under which it is made, citing this authority can strengthen the argument that such a defect is fatal.
• As a Distinguishing Reference: If the opposing party attempts to rely on an agreement with minor flaws, you should emphasize that the flaws in Shala & Shala were multiple and fundamental, distinguishing the current matter.

Anonymisation Rule: Do not use the real names of the parties; strictly use professional procedural titles such as Applicant / Respondent.

Conclusion

This case powerfully illustrates that in the realm of family law financial agreements, technical precision is paramount. The Court’s methodical dismantling of five separate agreements serves as a crucial lesson: shortcuts, ambiguities, and compromised legal advice will render even the most detailed agreement worthless. The husband’s belief that he had secured his financial future was undone by a failure to adhere to the strict letter of the law.

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 (Shala & Shala), 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.

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