BINDING FINANCIAL AGREEMENTS
CHANGES TO THE LAW REGARDING BINDING FINANCIAL AGREEMENTS
Changes to the Federal Justice System Amendment (Efficiency Measures) Act (No.1) 2009, (effective 4 January, 2010) have relaxed some of the strict requirements imposed by Black, some eighteen months earlier.
Married parties who wished to achieve some certainty and finality in their financial arrangments before, during and after their marriage have had the availability of Binding Financial Agreements ('BFA's') since 27 December, 2000. Strict compliance with the procedural requirements of Section 90G of the Family Law Act 1975 ('FLA') was required for a BFA to be binding as determined by the Full Court in Black & Black (2008) FLC 93-357 but there was no form of judicial scrutiny required for the BFA to be binding. Mr Robert McClelland MP, the amendments “will restore confidence in the binding nature and enforceability of financial and termination agreements under the Family Law Act” (McClelland, R, Second Reading Speech, House of Representatives, 5 February, 2009).
BFA's entered into after 3 January 2010 are subject to the following significant changes:
- a) Advice must be given to a party before he or she signs and that party must be given a signed statement stating that the advice was given. The signed statement can be given to the party at any time after the agreement is signed, and even before.
- b) A copy of the signed statement needs to be given to the other spouse party or to their legal practitioner for the financial agreement to be binding.
- c) It is no longer a necessity for the original of a BFA to be given to one of the parties after it has been signed and a copy to be given to the other party.
- d) A Court now has the power to make an Order declaring that a BFA is binding on the parties pursuant to the new section 90G(1)(b) of the FLA even if one or more of the procedural requirements are not satisfied. Such a declaration can only be made if the agreement is signed by all of the parties and it has not been terminated. Further, the Court must be satisfied that it would be “unjust and inequitable” if the agreement were not binding. The Court is not allowed to take into account any changes in circumstances after the agreement is made.
Of particular note, the changes apply to all financial and termination agreements entered into since BFA’s were introduced (provided that they have not already been set aside by a Court) which means the legislation is retrospective. If a financial agreement was made between 27 December, 2000, and 14 January, 2004, it would be prudent to check if, before signing the Agreement, clients were given advice about the list of matters that are set out in the “Notes” section at the end of the Act as the redeeming Section 90G(1)(b) do not apply to pre-14 January, 2004 BFA’s.