Alysa Bucknall

Alysa Bucknall

Associate

The validity of Binding Financial Agreements - Corelli & Beroni

The validity of Binding Financial Agreements - Corelli & Beroni
A Binding Financial Agreement (“BFA”) can be entered into between parties at various stages of a relationship, such as before marriage, during the marriage or after separation or divorce. Likewise for de facto couples, a BFA can be entered into before the commencement of the de facto relationship, during the relationship, or following separation. The Family Law Act 1975 sets out what is required for a BFA to be binding and enforceable – these include very specific requirements, which, should they not be complied with, may render a BFA invalid. Here we look at the recent appeal decision of Beroni & Corelli [2021] FamCAFC 9, which provides an example of where a BFA may be set aside. In Corelli & Beroni [2019] FamCA 911, the parties entered into a BFA at the commencement of their de facto relationship. In essence, the BFA provided that should the parties separate, the de facto wife (hereafter referred to as “the wife”) would have no claim to any assets that the de facto husband (hereafter referred to as the “husband”) brought into the relationship (and vice versa), regardless of the duration of the relationship or the contributions made by either party during the relationship. The wife argued that the BFA ought to be set aside on various grounds, including but not limited to duress, unconscionability, undue influence, misrepresentation and mistake. The Court found that the wife came to Australia in 2009 and at that time, could not converse in English, and was still not proficient in English in March 2011 when the parties signed the BFA. The BFA was not translated into the wife’s first language, nor was an interpreter present when advice was provided by her solicitor. It was accepted that the wife had come to Australia on a student guardian visa to allow her son to study here, and she was not in compliance with the conditions of that visa (namely, she was not living with her son as was required, instead living with the husband). The Court was also satisfied that the wife was dependent on the husband not informing immigration authorities of her breach of visa terms, and dependent on him for accommodation and a means of acquiring permanent residency (through a spouse visa). The wife argued that she received no explanation of the BFA from her solicitor, or if any explanation was given, she did not understand it. The Court did not accept this and found that some “very rudimentary” explanation of the BFA was given to the wife in English, some of which she probably understood. However, it was inconceivable that fulsome advice or a proper explanation of the BFA was provided, particularly where the explanation was provided during a 30 minute client attendance, in a language that the wife was not fluent in. Ultimately the Court found that the BFA ought to be set aside for unconscionability and undue influence. The husband unsuccessfully appealed the decision in 2021 (see Beroni & Corelli [2021] FamCAFC 9). This is one example of the importance of the drafting of a BFA being in compliance with the Family Law Act 1975, otherwise parties risk the BFA being set aside at a later date.

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