In this video, CGW family law partner Justine Woods talks to us about the importance of accuracy in binding financial agreements.
Hello, hello, everyone. I’m Justine Woods, I’m the family law partner here at Cooper Grace Ward. And this morning, we’re going to discuss the importance of accuracy in binding financial agreements.
Accuracy in a binding financial agreement
Now, if you come to see us and we prepare you a beautiful, binding financial agreement, whether that’s in contemplation of a relationship, whether you’re in one, in an intact relationship, which isn’t a very romantic description, but what we might refer to in family law world or you’re negotiating a property settlement and it’s going to be documented by a financial agreement. I cannot emphasise enough the importance of accuracy. It will be very dull and it’s certainly a tedious process. But in preparing a binding financial agreement, you will be interrogated about all the dates of birth, the dates when you began living together, when the relationship broke down. Do you have other children, your precise circumstances at the beginning of the relationship, the major transactions during the relationship, how you have and will care for any children of the relationship or marriage.
And my strong preference and recommendation to people is to have what I call a self-contained document. So, that is, on the face of it, without any other material before an objective third party reader. Can you see what this document was about? What were the circumstances and the relevant history of the people who signed it? What was what was it intended to achieve? And sometimes that’s just a paragraph about intention and then very clear, plain operative terms about what is going to happen to your assets, and that’s all that a binding financial agreement can deal with, is going to occur.
Spaller and spaller number two
A very salutary reminder about why that accuracy is so important is a very recent case of spaller and spaller number two. Now, as soon as you’ve got a number in your case name, you know that this is a litigious couple and there’s been misery all round. But recently, that case was decided and it reminded everyone of the very old doctrine of deed estoppel. Now, what that is is very fancy legal jargon for if you sign an important legal document, such as a deed, particularly if you’ve had legal advice and you have warranted by your signature, that the information contained in it is correct, you will be estopped, (fancy for stopped) stopped from saying to the contrary later. So, in that case, the parties separated, couldn’t agree on their property settlement. The husband alleged that the parties had separated in 2019, the wife said, they’d separated in 2012. Now, that, of course, made a difference to the length of the relationship, made a difference to the contributions post separation and how they would be treated. How the acquisitions post separation, which are rarely excluded but are given different weight by the court, would be taken into account in their overall adjustment. So, it was quite a vital argument to be undertaken. So, what happened is that in 2014 the husband had been in a very serious car accident when he was at fault and he was ordered to pay quite a significant judgment sum. And he had signed a deed of settlement with the insurance company and with the other parties in the accident that said the husband and wife, as at the date of the deed, 2014 are separated. But the wife has agreed to contribute the sum of $500,000 to the judgment debt due to the other parties in the accident. And the court after a long discussion found, if you sign up a legal document and you’ve had legal advice, then you are going to be stuck with what you have included in it. Now, that was only about what we call the recitals, the descriptive parts, and of course, in the Family Law Act there are also, in the absence of grounds to set aside a binding financial agreement, the whole principle is you’ll be held to the operative terms, what you have agreed to do about your assets. But that whole approach and being astopped from then saying, well, I signed it but I didn’t really mean it or it wasn’t really true or inaccurate. In the absence of absolutely exceptional circumstances, you going to be stuck with that information. And it’s a very powerful thing if you’ve got recitals in there that truly and accurately describe your position, your agreement is even stronger.
So, I think what I’m saying to you is really be prepared to tolerate some boredom, some tedium, to be answering the questions and then reviewing your own document to make sure it’s absolutely correct, telling your solicitor what is missing, what is the context? Because it can be incredibly powerful information to include. And on the whole, you’re going to be held to what you’ve signed. If you’d like to talk about these issues, please feel free to contact us here at Cooper Grace Ward.