Bills Digest no. 89 2015–16
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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Mary Anne Neilsen
Law and Bills Digest Section
25 February 2016
Contents
Purpose
of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Concluding comments
Date introduced: 25
November 2015
House: Senate
Portfolio: Attorney-General
Commencement: Sections
1-3 commence on Royal Assent. Schedule 1 and Schedule 2 Part 2 commence six
months after Royal Assent unless earlier by Proclamation. Schedule 2 Part 1
commences the day after Royal Assent.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
The Family Law Amendment (Financial
Agreements and Other Measures) Bill 2015 (the Bill) amends the Family Law Act 1975,[1] the
main purpose being to amend the financial agreement regime
to address existing uncertainties around requirements for entering,
interpreting and enforcing binding financial agreements.
The Bill also contains a range of other
family law measures, the more significant relating to: state and territory
interim family violence protection orders and their interaction with parenting
orders under the Family Law Act; new offences to do with international
parental child abduction; and provisions to strengthen the courts’ powers to
dismiss unmeritorious applications.
There are also a number of other minor and
technical amendments, including clarifying definitions and removing redundant
provisions, and amendments clarifying the status of the Family Court.
There are two Schedules to the Bill.
Schedule 1 contains the substantive amendments to
the financial agreement regime in the Family Law Act.
Schedule 2 contains a range of other amendments to
the Family Law Act and is divided into two parts according to
commencement dates.
Part 1 of Schedule 2, which commences the day after
Royal Assent consists of 14 Divisions and proposes amendments that include:
- removal
of a 21 day time limit on the ability of state and territory courts to suspend
or vary a parenting order and other injunctions or arrangements made under the
Act when making an interim family violence order (Division 1)
- clarifying
that the Family Court is a court of law and equity, as well as a superior court
of record (Division 2)
- removing
the prohibition on disclosure to a court that the making of an offer of
settlement in relation to certain proceedings has been made, (although
disclosing the terms of the offer would still be prohibited) (Division 4)
- removal
of the requirement for a court to explain to a child orders or injunctions that
are inconsistent with an existing family violence order where it would not be
in the best interests of the child or where the child is too young to
understand the explanation (Division 7)
- clarifying
that registrars, like judges, have immunity when conducing conferences about
property matters (Division 8)
- strengthening
the powers of courts under the Family Law Act to make summary decrees to
dismiss unmeritorious applications (Division 9)
- preventing,
in most circumstances, cost orders against guardians ad litem[2]
(Division 10)
- new
provisions relating to the arrest powers under the Family Law Act to
provide more guidance on the appropriate boundaries and safeguards (Division
11) and
- other
technical amendments including the removal of redundant and out-of-date provisions
(Divisions 5 and 6)
Part 2 of Schedule 2 which commences up to six
months after Royal Assent consists of three Divisions that include:
- new
offence provisions relating to international parental child abduction (Division
2)[3]
and
- an
extension of the location order provisions in the Act[4]
so that any person, including a person appointed as Central Authority for the
Commonwealth, a state or a territory,[5]
can, for the purpose of the Child Abduction Convention[6],
apply for an order to locate children wrongfully removed from, or retained
outside Australia (Division 3).
The Key issues and provisions section below deals in
greater detail with Schedule 1 and Divisions 1, 7, and 9 in Part
1 of Schedule 2 of the Bill.
Schedule 1—Binding financial agreements
Financial agreements have been a part of the family law
landscape since Part VIIIA of the Family Law Act took effect on 27
December 2000.
The expressed intention of the then Government in
introducing Part VIIIA was to enable parties to contract out of the property
and spousal maintenance provisions of the Family Law Act in a legally
binding fashion, whether before, during or after their marriage. As the then
Attorney-General Daryl Williams described the change:
The aim of introducing binding financial
agreements is to encourage people to agree about how their matrimonial property
should be distributed in the event of, or following, separation. Agreements
will allow people to have greater control and choice over their own affairs in
the event of marital breakdown. Financial agreements will be able to deal with
all or any of the parties' property and financial resources and also
maintenance. An agreement may cover how property would be divided or how
maintenance would be paid. Particular assets, such as rural properties, would
be able to be preserved.[7]
Family Law Act: outline
Part VIIIA of the Family Law Act (sections 90A to 90Q)
sets out the requirements for financial agreements made in relation to
marriage, or in contemplation of marriage; Division 4 of Part VIIIAB of the Act
(sections 90UA to 90UN) which came into effect on 1 March 2009 sets out the
requirements for financial agreements relating to de facto relationships.
For a financial agreement to be binding it must comply
with certain formalities set out in the Act (section 90G for married couples; section
90UJ for de facto couples), and in particular:
- the
agreement must be specified to be made under the appropriate section of the Act
and be signed by both parties (sections 90B, 90C and 90D; sections 90UB, 90UC
and 90UD)
- before
the agreement is signed, each party must be provided with independent legal
advice
- signed
statements of independent advice must be provided to each of the parties and
exchanged.
An agreement may only be terminated by another agreement
complying with all of the same formalities as apply to the initial entry into
the agreement, or by a court setting it aside.
However financial agreements between de facto couples also
terminate automatically if the parties subsequently marry (subsection 90UJ(3)).
Note that these formalities have varied over time. The
history and impact of those changes is briefly described in the next section
and the provisions are discussed in more detail in the Key issues and
provisions section below.
History
The initial hope that financial agreements would provide legal
certainty and an alternative to court orders for separating couples has proved
elusive. The complexity of the provisions governing financial agreements, combined
with the difficulties in their interpretation, have resulted in numerous court
cases challenging the validity of the provisions. Some of the issues around
financial agreements came to a head in Black v Black[8]
which held that a financial agreement entered into under Part VIIIA of the Act
was not binding if it did not strictly comply with the technical requirements
set out in section 90G.[9]
Two previous sets of legislative amendments aimed at
ensuring more certainty have not resolved the difficulties and have arguably
created fresh ground for dispute.[10]
Those amendments were in the Family Law Amendment Act 2003 which took
effect from 14 January 2004 and the Federal Justice System Amendment
(Efficiency Measures) Act (No 1) 2009 which commenced on 4 January 2010.[11]
Commentary from the legal profession has suggested that many
lawyers are reluctant to draft financial agreements because of the risks of
professional negligence claims and because of the time and expense involved in
preparing them.[12]
Family law specialist Jacqueline Campbell, in analysing cases after the 2010
amendments suggests that the safest option for lawyers is to avoid them
altogether. Writing in 2012 Campbell said:
The easiest and safest course for lawyers is to avoid
drafting and advising on financial agreements altogether. Any agreement is at
risk of being found not to be binding even if it appears that the technical
requirements are met. It is difficult to see how a lawyer can minimise the risk
of an agreement being found not to be binding under s90G(1)(b) or s90UJ(1)(b).
It may help to exchange letters of advice, check that they comply with
s90G(1)(b) and are accurate, and ensure that the other party speaks the
language the advice was given in and has full capacity to understand the
advice. However, exchanging letters of advice not only waives privilege and
risks a demand that the whole file be disclosed, but may create further
disagreement between the parties about the terms of the financial agreement. If
there is litigation, the information disclosed in the letter of advice will be
able to be used in that litigation. How does one legal practitioner check that
the other party understands the advice? Is a psychiatric report required, and
confirmation of that party’s ability to understand English? All these matters
may need to be addressed before a lawyer signs a Statement of Independent Legal
Advice.
A lawyer may have done everything necessary to meet the
s90G(1) requirements but be thwarted by the failure of the other lawyer to meet
the standard. There seems no obvious and risk-free way to be assured that the
advice given to the other party meets the s90G(1)(b) requirements.[13]
The Bill is a third attempt at amending the financial
agreement regime in order to resolve the uncertainties around the requirements
for entering into, interpreting and enforcing agreements.
Prior to the Bill’s introduction, the Government released an earlier draft of the Bill, which was entitled Civil Law and Justice
Legislation Amendment Bill 2015: Family Law (‘the Exposure Draft’).
The relevant consultation paper and the Exposure Draft (but not the
submissions) are available on the Attorney-General’s Department website.
Senate Legal and
Constitutional Affairs Legislation Committee
The Bill was
referred to the Senate Legal and Constitutional Affairs
Legislation Committee for inquiry and report by 24 February 2016.
Details of the inquiry (Senate Committee inquiry) are at the inquiry
website. The Committee’s report recommended that on the basis of two
recommendations, the Bill be passed. Those recommendations being:
that the Commonwealth government, in
conjunction with states and territories, consider the practicality of
developing a protocol for sharing information between state, territory and
federal courts where matters involve the protection of children and victims of
family violence.
[...]
that the government consider amending the EM to
include reference to the interaction between the provisions of the Bill, and
Australia's Convention on the Elimination of all forms of Discrimination
Against Women (CEDAW) obligations.[14]
In a dissenting report, Labor Senators recommended that
the Bill in its present form not be passed and in particular that Schedule 1 to
do with financial agreements be excised from the Bill.[15]
One of its further recommendations was that consideration be given to the recommendation
from the Women's Legal Service Queensland that ‘a better balance be obtained in
the legislation between contractual certainties on the one hand and upholding
principles of justice, equity and the protection of the vulnerable on the other,
particularly protecting victims of family violence from ongoing financial abuse
and harm'.[16]
In a further dissenting report, Australian Greens Senators
also have concerns with the Bill noting in particular:
It would be counterproductive and regrettable if the Bill
that purports to contain measures to improve the Family Court’s response to
family violence was to result in an increase in the likelihood of vulnerable
women being financially exploited.[17]
The Greens report recommends that the Bill be amended to
create a framework for binding financial agreements which addresses the
concerns raised by Women’s Legal Service Queensland, Australian Women Against
Violence Alliance and Soroptimist International.[18]
Senate Standing Committee for the
Scrutiny of Bills
The Standing Committee for the Scrutiny of Bills has drawn
attention to a number of provisions in Schedule 1 that have retrospective
application.[19]
As the Committee notes, the Explanatory Memorandum justifies this
retrospectivity on the basis that some parties may have made financial agreements
based on a misunderstanding of the current law and therefore the proposed law
should be consistent with those misunderstandings. The Committee however
believes that:
given that it is possible this retrospective operation of the
law may cause detriment to some parties the committee seeks the
Attorney-General’s detailed advice in relation to the appropriateness of the
retrospective application of these amendments, particularly the extent to which
the retrospective application may cause detriment to a party to an existing
financial agreement.[20]
The retrospective aspects of the provisions are described
in further detail in the Key issues and provision section of the Bills
Digest.
As noted above, the Australian Labor Party and the
Australian Greens raised concerns with the Bill in their dissenting reports to
the Senate Committee inquiry. To date the position of other non-government
parties and independents is not known.
The Family Law Section (FLS) of the Law Council of
Australia was one of the few legal bodies to make substantive comments on Schedule
1 to the Bill. It notes that for over a decade it has made submissions to
Government and called for amendments to address inadequacies in the legislative
provisions dealing with financial agreements.[21]
The FLS of the Law Council therefore supports much of the Bill, with its
submission focusing on the unusual and possibly controversial retrospective
effect of a number of amendments and agreeing that the retrospective operation of
certain parts will ‘help cure the problem for the public, the legal profession
and the courts,’ of many of the possible thousands of existing agreements that
would otherwise be declared non-binding due to relatively minor technical
deficiencies. The submission also highlights additional areas where the FLS of
the Law Council has proposed amendments which are not captured by the Bill
currently before the Senate.[22]
The Law Society of New South Wales has not made a submission
to the current Senate Committee inquiry, although it did welcome the Exposure
Draft, being of the view that reform of the financial agreement regime is long
overdue.[23]
The Women’s Legal Service Queensland in contrast has
expressed concerns that the proposed changes to the financial agreement regime have
not appropriately taken into account the issues for vulnerable people,
particularly women and that the amendments fail to acknowledge the dynamics of
family violence and how binding financial agreements can be used as a tool of
financial abuse against victims of violence.
There is little doubt, in our opinion these proposed changes
will make bfas [binding financial agreements] an even more attractive option
for use by perpetrators of violence and will be a particularly useful tool to
financially exploit vulnerable women. Our practice knowledge tells us that bfas
are particularly used against culturally and linguistically diverse women, who
have limited or no English, little understanding of their legal rights, have
limited support and no understanding of the Australian legal system or laws. [24]
The Women’s Legal
Service does however support the amendments to section 68T of the Family Law
Act which will assist state and territory courts in making interim family
violence protection orders and are aimed at improving the family law system’s
response to violence.[25]
The Australian
Women Against Violence Alliance (AWAVA) supports the intention of the Bill and
particularly the intention of enabling the courts to offer better protection to
victims of family violence. However more generally AWAVA has reservations about
whether many of the proposed amendments will achieve the purpose of offering
better protection to victims of family violence:
Much more extensive change is needed in order to make the
safety of women and children central to the operation of the family law system.[26]
Further details of the various views of submitters to the
Senate Committee inquiry is provided below in the Key issues and provisions
section below.
The Explanatory Memorandum states that there are no
financial implications from implementing the amendments in the Bill.[27]
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[28]
Parliamentary Joint Committee on
Human Rights
The Committee has reported on the Bill and raised issues
about Schedule 1 and the provisions that allow a court to set aside a binding
financial agreement. [29]
As amended by the Bill, the provisions would limit to exceptional circumstances
the court’s powers to set aside certain financial agreement.[30]
The Committee has assessed these provisions against the
Convention on the Rights of the Child and Australia’s obligation under that
Convention to consider the best interests of the child. The Committee questions
whether the amendments that only allow a court to set aside an agreement in
exceptional circumstances may limit the court’s ability to act in the bests
interests of the child to that couple.
The Committee has therefore sought
further advice from the Attorney-General asking if the amendments are justified
and if limiting the court’s power to set aside is a reasonable and
proportionate measure.[31]
Schedule 1—Binding Financial
Agreements
As previously noted, the binding financial agreements regime
in the Family Law Act is in two Parts—Part VIIIA setting out the
requirements for financial agreements made in relation to marriage or
contemplation of marriage and Division 4 of Part VIIIAB dealing with financial
agreements for de facto relationships.
Comments in this section of the Bills Digest relate mainly
to the proposed changes to Part VIIIA of the Family Law Act but will
apply equally to the commensurate changes to Part VIIIAB.
New objects clause
Item 1 inserts proposed section 90AL and
proposed section 90AM which provide a simplified outline of Part VIIIA and explain
the objects and the underlying principles of the Part. Proposed sections
90UAA and 90UAB are similar provisions with respect to Division 4 of Part
VIIIAB dealing with financial agreements for de facto couples. [32]
Proposed subsection 90AM(1) states that the object of
Part VIIIA is:
- to provide for prospective, current or former parties to a marriage
to make a binding agreement that excludes the power of the court to make orders
under Pt VIII about either or both of the following matters:
(a)
how property or financial resources either or
both parties had before divorce are to be dealt with if the marriage breaks
down
(b)
the maintenance of either party during the
marriage or after divorce.
Proposed subsection 90AM(2) states that the principles underlying the object are that:
(a)
prospective, current or former parties to a
marriage should be able to take responsibility for resolving the matters
described in paragraphs 90AM(1)(a) and (b) without involving a court; and
(b)
such parties who make an agreement about those
matters should have certainty that the agreement will bind those parties
unless:
(i)
they make another agreement to terminate the
agreement, or
(ii)
a court sets the agreement aside under this Act.
Comment
There has been much litigation regarding
how the Family Law Act should be interpreted with respect to financial
agreements and the new objects provision is aimed at alleviating these
interpretative uncertainties. The interpretation of provisions of the Act based
on this objects clause, would favour an interpretation that leads to a binding
agreement.[33]
Legal commentary is generally supportive of an objects clause, the Law Society
of New South Wales noting that the need for a statement of object and principles
is perhaps unarguable given the development of jurisprudence on Part VIIIA and
Part VIIIAB agreements.[34]
The FLS of the Law Council recommends that the objects section should also
recognise that financial agreements can deal with property acquired after relationship
breakdown or divorce, and not just property and financial resources received or
acquired prior to that time.[35]
When a financial agreement is
binding
Section 90G sets out the requirements for a financial
agreement to be binding in regard to married couples. As already noted, it has
undergone two sets of amendments since 27 December 2000 and has been at the nub
of the uncertainty around the binding nature of financial agreements.
Section 90G is to be amended again (item 6),
the rationale as stated in the Explanatory Memorandum being:
The wording of existing section 90G is confusing and has led
to differing judicial interpretations, and has been further complicated by two
sets of amendments following its initial introduction.[36]
The objective of repealing existing section 90G
and substituting new sections 90G, 90GA and 90GB is to give clarity
as to when financial agreements are binding. Currently, there are three forms
of section 90G that apply to financial agreements depending on when the
agreement was made. The Bill introduces a fourth version. Each version of
section 90G requires different independent legal advice to be given. Currently,
locating earlier versions of section 90G to check against a financial
agreement necessitates searching through amending Acts and interpreting
transitional provisions. As the Explanatory Memorandum points out, the
different versions make navigating the section 90G requirements ‘undesirable
and unnecessarily complex’.[37]
It has led to difficulty in interpreting section 90G and made it difficult
for legal practitioners to advise their clients. The Bill proposes that
the different versions of section 90G be tabulated, to make it easier to
understand the requirements at different times.[38]
The versions of section 90G prior to the passing of
the Bill are:
1. Financial
agreements made from 27 December 2000 to 13 January 2004: the legal advice must
deal with:
(a)
the effect of the agreement on the rights of
that party, and
(b)
whether or not, at the time when the advice was
provided, it was to the advantage, financially or otherwise, of that party to
make the agreement, and
(c)
whether or not, at that time, it was prudent for
that party to make the agreement, and
(d)
whether or not, at that time and in the light of
such circumstances as were, at that time, reasonably foreseeable, the
provisions of the agreement were fair and reasonable (new section 90GA,
table, item 1).
2. Financial
agreements made from 14 January 2004 to 3 January 2010: the legal advice must deal
with either the matters required for the previous period or those required for
the following period (new section 90GA, table, item 2)
3. Financial
agreements made from 4 January 2010 to the present: the legal advice must
deal with:
(a)
the effect of the agreement on the rights of
that party, and
(b)
the advantages and disadvantages, at the time
the advice was provided, to that party of making the agreement (new section
90GA, table, item 3).
A fourth version will apply from the
commencement date of new section 90G.
Proposed subsection 90G(1) will provide that, for the purposes of the Act, a financial
agreement made after 26 December 2000 is only binding on the parties if
and only if the following conditions are met:
- the
agreement is signed by all parties; and
- either:
- all the conditions in new section 90GA (about legal advice
relating to the agreement) that are relevant to the agreement are met, or
- a court has made an order under section 90GB declaring that the
agreement is binding, and
- the
agreement has not been terminated (before, on or after the commencement of this
section), and
- the
agreement has not been set aside by a court (before, on or after the
commencement of this section).
Under proposed subsection 90GA(2), either
before or after signing the agreement, each spouse party must have been
provided with a signed statement by a legal practitioner confirming that,
before the agreement was signed, that party was provided with independent legal
advice about the matters described in the table for the agreement at the
relevant time.
From the commencement of proposed section 90GA,
the independent legal advice must be regarding ‘the effect of the agreement on
the rights of that party under this Act’. The existing requirement to cover ‘the
advantages and disadvantages, at the time the advice was provided, to that
party of making the agreement’ has been removed. The Explanatory Memorandum
points out that this change substantially simplifies the obligation on legal
practitioners by limiting the requirement for independent legal advice.[39]
Family law specialist Jacqueline Campbell suggests that although not dealt with in the Bill, the issue of
whether financial agreements entered into after the commencement of new section 90GA
but which use the pre-90GA wording of section 90G applicable since
4 January 2010, and refer to ‘advantages and disadvantages’ will
undoubtedly arise. She states:
A similar issue was considered in Collagio & Collins
[2015] FamCA 263 where the breadth of the advice given was greater
than section 90G required but the agreement was still held to be binding.
Of greater concern is whether it is appropriate for the Bill to reduce the
protection of clients by lowering the legal advice requirements for parties
surrendering their rights under Pt VIII.[40]
The Women’s Legal Service Queensland does
not support the ‘watering down of the legal advice requirements’ arguing that
this lessens clarity around the nature of the legal advice that is being sought
and protection for vulnerable parties.[41]
Proposed section 90GA also sets out extra conditions for agreements entered into after
3 January 2010. These are set out in a tabulated form and are
outlined below:
- After 3 January 2010, but before the commencement of new
section 90GA—the statements of independent legal advice must be
exchanged between the spouses or their lawyers
- After the commencement of new section 90GA—not only must
a copy of the statement be given to the other spouse or to their lawyer, but
the spouse must give a written acknowledgement that they were provided with
independent legal advice about the effect of the agreement on their rights
under the Act before signing the agreement and the acknowledgement must be
given to the other spouse or to their lawyer.
The new requirement of an acknowledgement
aims to increase certainty by limiting the potential for parties to dispute the
validity of financial agreements on the basis that they were not provided with
independent legal advice.[42]
In determining whether an agreement is
binding, a court is not to consider whether the advice described in proposed subsection 90GA(2)
was actually provided (proposed subsection 90GA(5)). The
Explanatory Memorandum states that this means ‘that the court should not
go behind the statement provided by a legal practitioner to examine the content
of advice’.[43]
According to Campbell,
this is aimed at removing the uncertainty
raised by such cases as Hoult & Hoult (2013) FLC 93-546;
[2013] FamCAFC 109; Logan & Logan (2013) FLC
93-555; [2013] FamCAFC 151, although in Wallace & Stelzer
(2013) FLC 93-566; [2013] FamCAFC 199 the Full Court said
(at 103):
... that the only enquiry necessary is as to
whether the advice was given and not as to the content of that advice.[44]
Again, the Women’s Legal Service
Queensland is critical of this provision arguing that it is ‘overly restrictive
and against notions of an independent, open and accountable legal system’
stating:
A court should be able to determine all
relevant evidence to assist its decision making and should not be limited in
this role by parliament.[45]
The FLS of the Law Council is supportive
of this provision but suggests it should be drafted to give even more
certainty:
Whilst the provisions of s90GA and 90UJA go a long way to
preventing agreements being the subject of attack in respect of the content of
the legal advice provided, FLS had submitted that matters would be made
clearer, by the legislation containing a deeming provision that once a
signed statement of independent legal advice has been provided, the
requirements are met and the legal advice cannot be further scrutinised as a
basis for declaring an agreement non-binding.[46]
Termination
agreements
Section 90J deals with termination of financial
agreements and is to be repealed and replaced by item
12. The new section 90J obligations are modelled on the
obligations as contained in new section 90G (that is, the agreement
must be signed by all parties, and either the appropriate legal advice has been
given, or there is a court order declaring the agreement is binding and the
agreement has not been set aside by the court).
Financial
agreements and termination agreements binding on de facto relationships
Similar changes as those discussed above are
proposed with respect to existing sections 90UJ and 90UL,
which deal with financial agreements and termination agreements binding on de
facto parties.[47]
Further explanation is provided in the Explanatory Memorandum.
Enforcement of
agreements
Proposed section 90GB deals with enforcement of financial agreements by a court. It is an
amended version of existing subsection 90G(1A) and, as the Explanatory
Memorandum notes, reflects the same policy of existing subsection 90G(1A).[48] If an enforcement
application is made to a court seeking a declaration that the financial
agreement or a termination agreement is binding on the parties to the agreement
and the section 90GA requirements are not all met, then the court must make the
order if it is satisfied that it would be unjust and inequitable if the
agreement were not binding on the spouse parties to the agreement (disregarding
any changes in circumstances from the time the agreement was made).
The transitional and savings provisions for
proposed sections 90G and 90J in item 13 aim to ensure that
the decisions of courts made under previous provisions cannot be re-litigated
because of amendments made by the Bill.
Maintenance
Existing section 90E (and section 90UH
for de facto relationships) sets out the requirements for provisions in
financial agreements relating to the maintenance of a spouse or child. A
maintenance provision in an agreement is void unless the provision specifies:
(a) the party, or the child or children,
for whose maintenance provision is made; and
(b) the amount provided for, or the value of the portion of
the relevant property attributable to, the maintenance of the party or of the
child or each child, as the case may be.
Section 90E is to be amended by item 3 to replace the words ‘the value
of the portion’ of the relevant property with the words ‘the amount or
proportion of the value’ of the relevant property. This will make the section 90E
requirement easier to meet, by not requiring a dollar figure. A percentage can
be used instead.
Section 90E is further amended by item 4 to clarify that a dollar figure
can be a ‘nil’ value. Not only, as the Explanatory Memorandum points out,
can there be practical difficulties associated with ascribing an actual dollar
figure for maintenance to be provided at an unspecified time in the future, but
the wording of the existing section 90E is unclear as to whether parties
can nominate a ‘nil’ value for maintenance. Although some legal
practitioners believed it was possible, many legal practitioners nominate a
nominal $1.00 figure if they do not want to allocate a large lump sum. Campbell
argues:
The amendments do not address whether there
is any better protection offered by a lump sum figure, intended to represent
say 2-3 years of realistic periodic maintenance, or a small amount such as $1
or even nil. Of course, this remains uncertain in relation to property orders
as well.[49]
The amendments to section 90E apply
to all financial agreements made before, on, or after the commencement of the
amendments (item 5(1)). This, for example, retrospectively validates
provisions (if they were invalid) which give a ‘nil’ value for maintenance.[50]
Death of
maintenance payer or payee
Sections 90H and 90UK currently
provide that a financial agreement continues to operate despite the death of a
party to the agreement and is binding on the legal personal representative of
the deceased party. Proposed subsections 90H(2)-(4) and subsections 90UK(2)-(4)
cover maintenance obligations in the event of the death of the payee or the
payer.
The expanded sections 90H
and 90UK will mean that provisions for ongoing spousal maintenance will
terminate on the death of either party except as the agreement otherwise
provides. Death will not prevent the recovery of arrears of maintenance
due before the death. The changes will make these provisions consistent with
existing subsections 82(8) and 90SJ(5) which deal with the recovery
of maintenance payable under a court order.[51]
Maintenance will be able to be recovered
if paid after the death of either party (proposed subsections 90H(5)
and 90UK(5)). This is consistent with subsections 82(7) and 90SJ(4)
which deal with court orders for maintenance.
The new sections 90H and 90UK will
apply to financial agreements made on or after the commencement of the Bill
and are not retrospective (items 9 and 26 respectively).
Maintenance and
re-marriage or re-partnering
Proposed section 90HA[52] (and proposed section 90UKA for de facto relationships)
specifies that ongoing spousal maintenance obligations under an agreement will
terminate in the event of the party receiving the maintenance remarrying or
entering into a de facto relationship with a person other than the spouse
party, unless the agreement expressly provides otherwise.
Campbell states that a major difficulty
with this amendment will be defining when a party has commenced a de facto
relationship.
Costly litigation about whether a
de facto relationship has met the jurisdictional requirements in Part VIIIAB
for a property settlement or maintenance order to be made is frequent. A
possible solution, or at least a partial solution to this problem, which was
suggested by the Law Institute of Victoria in its submission with respect to
the Exposure Draft, was that the payee be in a relationship which met at
least one of the criteria in section 90SB with respect to the new de facto
relationship.[53]
This proposal was not adopted in the Bill.[54]
Setting aside a
financial agreement
Section 90K of the Family Law Act
sets out the circumstances in which a court may set aside a financial agreement
or termination agreement. Item 14 repeals and replaces paragraph 90K(1)(d)
to provide that a court can only set aside an agreement where, if the court did
not set aside the agreement, a child or an applicant with caring responsibility
for a child of the marriage would suffer hardship for reasons described in new
subsection 90K(2A). New subsection 90K(2A) provides that
the test for determining hardship depends upon when the financial agreement was
entered into:
- for agreements entered into before a separation declaration is made—the
test is a ‘material change in circumstances that relate to the care, welfare
and development of the child of a marriage’;
- for agreements entered into at the same time as, or after the making
of a separation declaration (i.e. after separation)—the test is ‘circumstances
of an exceptional nature that relate to the care, welfare and development of
the child of the marriage’.
Proposed subsections 90UM(1)(g)
and 90UM(4A) are similarly worded but apply to de facto relationships.
For agreements entered into after
separation, the test for setting aside a financial agreement for circumstances
relating to children is, therefore, to be ‘exceptional’ rather than ‘material’,
which is in line with section 79A and section 90SN relating to
property settlement orders. The body of case law developed under these
provisions will apply.[55]
The Explanatory Memorandum explains that
the difference in tests reflects the possibility that, for agreements made
prior to separation, a substantial period of time may have elapsed and the
circumstances of the couple may have changed in ways not contemplated by the
original agreement. For example, a couple may have had a child since making the
agreement whose needs may not be appropriately reflected in the agreement. If
the agreement is entered into at the time of or after separation, a higher bar
is considered appropriate, as the couple should be able to anticipate the
future financial needs of the children.[56]
Campbell suggests that perhaps the wording of the Explanatory Memorandum should
read that the parties will be in ‘a better position to anticipate the future
financial needs of the children’, as such foresight is not absolute.[57] Campbell does however
agree that the amendment, at least in relation to separated couples, improves
consistency between section 90K and section 79A, and will make it
more difficult for agreements to be set aside because of changes in
circumstances relating to children.[58]
The Law Society of New South Wales,
commenting on the equivalent provision in the Exposure Draft stated that while
it understood the desirability of the use of consistent language, the lower
threshold of ‘material change in circumstances’ should remain in section
90K(1)(d). The submission stated:
The Committee does not support this change
because of the different circumstances in which a court order and financial
agreement are made. A court order is made under section 79 of the Family Law
Act after the Court has had regard to what is ‘just and equitable’ in a
particular case at the time the court order is made. In these circumstances, it
is appropriate that an application to set aside a court order under section 79A
of the FLA should only be made where circumstances of an exceptional nature
have arisen since the court order was made. However, a financial agreement is a
private contract between parties and is not open to judicial scrutiny at the
time it is made. It is possible that financial agreement is made in
circumstances where there is a power imbalance between spouse parties or where
there is some form of economic abuse. It is for these reasons that the
Committee is of the view that the current threshold of ‘material change in
circumstances’ is appropriate when seeking to set aside a financial agreement.[59]
The FLS of the Law Council in contrast takes
a tougher approach submitting that the threshold should be uniformly lifted
from the current ‘material change’ of circumstances test, to an ‘exceptional
circumstances’ test, arguing this would be consistent with section 79A
of the Family Law Act and section 136(2)(d) of the Child Support
(Assessment) Act 1989, and further lessen the likelihood of agreements
being set aside by courts.[60]
Schedule 2—Other measures
Family violence measures
The Government introduced the Bill on the International Day
for the Elimination of Violence Against Women, stating that the Bill will
enable courts to better protect Australians from family violence. The
Attorney-General in his media release stated:
On the International Day for the Elimination of Violence
against Women, it is important to recognise that every woman has the right to
feel safe and to live without fear. The rates of violence against women in this
country are unacceptable and demand action.
This Bill provides important improvements to the family law
system’s response to family violence and builds on the Coalition Government’s
ongoing commitment to help keep Australian women and children safe.[61]
Division 1 in Part 1 of Schedule 2 of the Bill
proposes amendments aimed at strengthening protections from family violence.
Section 68R is in Part VII Division 11 of the Family
Law Act, which deals with inconsistency between protection orders made
under state and territory family violence legislation and Family Law Act
orders that provide, require or authorise a person to spend time with a child.
The purpose of this Division is:
- to
resolve inconsistencies between orders
- to
ensure that such orders do not expose people to family violence and
- to
achieve the objects and principles in section 60B of the Family Law Act,
which relate to meeting the child’s best interests.[62]
Section 68R addresses the situation where a victim of
family violence seeks a protection order after a parenting order has been made
and is seeking conditions in that protection order that would be inconsistent
with the existing parenting order. As the Australian Law Reform Commission has
explained:
Because conditions in a parenting order made under the Family
Law Act will override any inconsistent conditions in a protection order,[63]
a protection order that is inconsistent with a parenting order may not provide
effective protection for a victim of family violence, as the inconsistent
conditions in the protection order are not binding and cannot be enforced.
Section 68R provides a mechanism for state and territory courts to amend the
parenting order to remove the inconsistency and ensure that the person is
protected from violence.[64]
Section 68R
operates differently depending on whether a parenting order is amended by a
state or territory court during proceedings for an interim protection order or
for a final protection order. When a parenting order is revived, varied or
suspended under section 68R in proceedings to make or vary an interim
protection order, section 68T provides that the variation or suspension of the parenting
order only has effect for the period of the interim protection order or 21 days
from the date of the order, whichever is earlier. In contrast, the Family
Law Act does not place a time limit on parenting orders revived, varied,
discharged or suspended in proceedings to make or vary a final
protection order.
The Explanatory
Memorandum explains that the existing strict 21 day time limit can result in
inconsistent orders about parent‑child contact. For example, if a party
is unable to have their parenting matter heard in the family courts within 21
days, the parenting order that was varied or suspended by the state or
territory court is revived. This can result in two valid, yet inconsistent,
orders— an interim family violence order prohibiting or limiting the other
party’s contact with a child, and a parenting order providing for the party’s
contact with the child. This outcome has the potential to put children and
their carers at risk of further family violence.[65]
To address this
issue, item 2 would amend section 68T in order to remove the 21
day limit and instead provide that the court’s revival, variation or suspension
under section 68R ceases to have effect at the earliest of:
- the
time the interim family violence order stops being in force
- the
time specified in the interim order
- the
time that the order is affected by an order made by a court.
The effect would
be that any revival, variation or suspension of an Order would always cease
upon the expiration of the interim protection order, but judicial officers
would have the flexibility to determine timeframes and relist matters to manage
cases according to their particular circumstance.[66]
This amendment
would implement recommendation 4 of the Family Law Council’s Interim Report
on families with complex needs and in the intersection of the Family Law
and Child Protection Systems[67]
which in turn recommended the Government adopt the relevant part of
Recommendation 16-5 of the Australian and NSW Law Reform Commissions’ 2010
report.[68]
Comment
Submissions to the
Senate Committee inquiry into the Bill have commented on this provision.
The Chief
Magistrate, Adelaide Magistrates Court argues the removal of the 21 day period
in section 68T will create difficulties with a significant risk that parties
may choose to lodge their matters at the Magistrates Court rather than the
Family Court with a substantial shift of the work from the Commonwealth
jurisdiction to the State jurisdiction. This has the potential to create
significant practical difficulties for the Magistrates Court.[69]
However, the
Women’s Legal Service Queensland supports the amendments to section 68T and
thanks the Government for taking quick and decisive action on this measure.[70]
Division 7 in
Part 1 of Schedule 2 of the Bill contains other provisions that may have an
impact in relation to family violence. Existing section 68P sets out the
obligations of a court when making an order or granting an injunction under the
Act, that is inconsistent with an existing family violence order. Item 13
amends subsection 68P(2) removing the requirement for the court to
explain orders or injunctions that are inconsistent with an existing family
violence order to a child where:
- it
would not be in the child’s best interest, or
- the
child is too young to understand the explanation.
The Explanatory
Memorandum justifies this amendment on the basis that although in most cases,
it will be in a child’s best interests to understand the application of court
orders to their family, this may not always be the case.
In particular, it may not be in the child’s interest in all
cases to be exposed to the parental controversy to the extent necessary for
courts to comply with this section. The Bill would provide an appropriate
discretion for courts to dispense with this requirement provided that to do so
would be in the child’s best interest.[71]
Division 9 in Part 1 of Schedule 2 of the Bill
proposes amendments that strengthen the powers of courts under the Family
Law Act to make summary decrees to dismiss unmeritorious applications.
Item 15 would insert new section 45A which
would replace existing section 118.[72]
New subsections 45A(1) and (2) would allow the
court to make a summary decree in favour of one party, in relation to the whole
or part of a proceeding, if satisfied that a party has no reasonable prospect
of successfully prosecuting/defending the proceedings or part of the
proceedings. In determining whether a defence or proceeding has no reasonable
prospect of success, proceedings need not be hopeless or bound to fail (new
subsection 45A(3)).
New
subsection 45A(4) would also empower the court to dismiss all or part
of the proceedings if it is frivolous, vexatious or an abuse of process. This
reflects the existing dismissal power in existing section 118.
New
subsections 45A(5)–(7) would confirm other powers of the court
including the power to makes costs orders as it sees fit.
The Explanatory Memorandum states that new
section 45A would improve outcomes for victims of family violence by
strengthening the court’s powers to dismiss proceedings where people are using
the legal system as a tool of victimisation. It would also improve court
efficiency by providing greater clarity on when applications can be dismissed
by the court.[73]
The Women’s Legal Service Queensland, while supporting
provisions that strengthen the court’s ability to dismiss unmeritorious claims,
argues that because of the number of litigants in person in the family law
system there should be careful consideration about whether this provision will
achieve its policy objective and instead may be misused by the more powerful
party and further injustice.[74]
Their submission states:
Many of our clients who are victims of family violence are
also litigants in person. Often their paperwork is not of a high standard and
they can present badly because of their fear and trauma. They can often be
facing their perpetrator on the other side who is at times legally represented,
as he can afford this. Her claims may seem on their face unmeritorious. In many
instances her case, with assistance, could be substantially improved with the gathering
of evidence and assistance with affidavit materials.
We are concerned however that this provision can be misused
by perpetrators or their lawyers to threaten her that her case is without merit
and they will seek to dismiss it and seek costs against her. We have concerns
that if she withdraws and then seeks legal assistance and files again later
with a stronger case, she may still be perceived as vexatious for making
multiple applications.
We believe there are other ways that victims of family
violence can be protected in the family law system.[75]
It has long been recognised that the legislation covering
financial agreements is complex and far from satisfactory. The number of
amendments since 2000 and the differing interpretations by the courts has
increased the complexity.[76] While commentary from the legal profession has welcomed the
Bill as being long overdue, it has also conceded that it is difficult to
predict whether these proposed amendments will make financial agreements a more
viable option than they are at present.
As Campbell states, the Bill will
hopefully give greater certainty to financial agreements and reduce the amount
of litigation with respect to whether financial agreements are binding. The
past versions of section 90G will be more accessible and when there are
disputes about the interpretation of legislative provisions, the new objective
and principles may help increase certainty and clarity. In Campbell’s view the
Bill addresses some significant problems with financial agreements, and
hopefully unlike previous amendments ‘does not create too many more problems’.[77]
With respect to the amendments aimed at
offering better protection for victims of family violence, the Government’s
promotion of this aspect of the Bill may be slightly overstated. While
advocates against family violence are supportive of the amendments to do with state and territory interim family violence protection orders they have reservations about whether other amendments will achieve
the purpose of offering better protection of victims of family violence and
argue that much more extensive change is needed to make the safety of women and
children central to the family law system.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Family Law
Act 1975, accessed 12 January 2016.
[2]. A
‘guardian ad litem’ is a volunteer appointed by the court to protect the rights
and advocate the best interests of a child involved in a court proceeding.
[3]. The proposed offences in new sections 65YA and 65ZAA are
offences related to retaining a child outside Australia in breach of a court
order or the written consent of all the parties to a parenting order.
[4]. Location orders allow the court to make orders requiring a
person to provide to the Registry Manager of the Court information that the
person has or obtains about the child’s location.
[5]. The
Commonwealth Central Authority is the Commonwealth Attorney-General. State and
Territory Central Authorities are appointed by the Commonwealth
Attorney-General under regulation 8 of the Family Law (Child
Abduction Convention) Regulations 2008, accessed 25 January 2016.
[6]. Child
Abduction Convention is defined as the Convention
on the Civil Aspect of International Child Abduction, done at The Hague
on 25 October 1980, [1987] ATS 2, (entered into force for Australia 1 January
1987) (new subsection 67K(5)).
[7]. D Williams, ‘Second
reading speech: Family Law Amendment Bill 1999’, House of
Representatives, Debates, 22 September 1999, p. 10151, accessed 6
January 2016.
[8]. [2008]
FamCAFC 7; (2008) FLC 93-357.
[9]. The
case is discussed in: Family Law Section (FLS), Law Council of Australia, Submission
to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into
the Family Law Amendment (Financial Agreements and Other Measures) Bill 2015,
pp. 4–6.
[10]. Attorney-General’s
Department (AGD), ‘Proposed
amendments to binding financial agreement provisions of the Family Law Act 1975’,
AGD website, accessed 11 February 2016. The 2010 amendments and subsequent
court cases are summarised in FLS, Law Council of Australia, op. cit.
[11]. M
Bartfeld, ‘Hoult
and Hoult: The full court explains financial agreements – again’, Australian
Family Lawyer, 23(3), Spring 2013. At page one Bartfeld states: ‘in what
can only be described as ineptly drafted amending legislation, the Government
has sought to implement a scheme which purported to rectify the problems
identified by the Full Court in Black and Black. In so doing, the poor
drafting, the retrospective application of the amending legislation and the
incomprehensible transitional provisions have led to three major Full Court
decisions in which the true meaning and intent of the amending legislation was
sought to be explained.’
[12]. R
Nickless, ‘Till
pre-nup do us part’, Australian Financial Review, 28 January 2012.
See also J Wade, ‘The
perils of prenuptial financial agreements: effectiveness and professional
negligence’, Australian
Family Lawyer, 22(3), Winter 2012, p. 24.
[13]. J
Campbell, ‘Binding
financial agreements unbound’, Law Institute Journal, 86(11),
November 2012, p. 34, accessed 18 January 2016.
[14]. Senate
Legal and Constitutional Affairs Legislation Committee,
Family Law Amendment (Financial Agreements and Other Measures) Bill
2015 [Provisions], Report, The Senate,
Canberra, 24 February 2016, p. ix, accessed 25 February 2016.
[15]. Australian
Labor Party (ALP), Dissenting report, Senate Legal and
Constitutional Affairs Legislation Committee, Family Law Amendment (Financial Agreements and Other Measures) Bill
2015 [Provisions] The
Senate, Canberra, p. 35 accessed 25 February 2016.
[16]. Ibid.
[17]. Australian
Greens, Dissenting report, Senate Legal and Constitutional
Affairs Legislation Committee, Family Law Amendment (Financial Agreements and Other Measures) Bill
2015 [Provisions] The
Senate, Canberra, p. 37, accessed 25 February 2016.
[18]. Ibid.,
p. 38.
[19]. Senate Standing Committee for the Scrutiny of Bills
(Scrutiny of Bills Committee), Alert
digest, 14, 2015, The Senate, Canberra, 2 December 2015, pp.
7–12, accessed 10 February 2016.
[20]. Ibid.,
p. 8.
[21]. FLS,
Law Council of Australia, op. cit., p. 1.
[22]. Ibid.,
p. 2. These omissions are referred to at pp. 8, 10 and 13 of the Bills Digest.
[23]. Law
Society of New South Wales, Letter
regarding proposed amendments to binding financial agreement provisions of the
Family Law Act 1975, 22 June 2015, accessed 1 February 2016.
[24]. Women’s
Legal Service Queensland, Submission
to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into
the Family Law Amendment (Financial Agreements and Other Measures) Bill 2015,
p. 2, accessed 1 February 2016.
[25]. Ibid., p. 8.
[26]. Australian
Women Against Violence Alliance, Submission
to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry
into the Family Law Amendment (Financial Agreements and
Other Measures) Bill 2015, accessed 1 February 2016.
[27]. Explanatory
Memorandum, Family Law Amendment (Financial Agreements and Other Measures)
Bill 2015, p. 1, accessed 4 January 2016.
[28]. The
Statement of Compatibility with Human Rights can be found at pages 2-8 of the
Explanatory Memorandum to the Bill.
[29]. Parliamentary
Joint Committee on Human Rights, Thirty-third report of the 44th Parliament,
The Senate, Canberra, 2 February 2016, pp. 4–6, accessed 10 February
2016.
[30]. The
provisions are described at p. 12-13 of the Bills Digest.
[31]. Ibid.,
p. 6.
[32]. Inserted by item 19.
[33]. This is because the resolution of these disputes should be affected
by this new objects clause because section 15AA of the Acts
Interpretation Act 1901 requires that in
interpreting legislative provisions ‘... the interpretation that would best
achieve the purpose or object of the Act ... is to be
preferred to each other interpretation’.
[34]. Law Society of New South Wales, op. cit.
[35]. FLS Law Council, op. cit., p. 6.
[36]. Explanatory
Memorandum, op. cit., p. 12.
[37]. Ibid., p. 13.
[38]. J
Campbell, ‘Financial
agreements: more legislative amendments coming in 2016’, Wolters Kluwer Law
Chat, blog, 22 December 2015, accessed 2 February 2016.
[39]. Explanatory
Memorandum, op. cit., p. 15.
[40]. J
Campbell, Financial agreements: more legislative amendments coming in 2016, op.
cit.
[41]. Women’s
Legal Service Queensland, op. cit., p. 7.
[42]. Explanatory Memorandum, op. cit., p. 15.
[43]. Ibid.
[44]. J
Campbell, Financial agreements: more legislative amendments coming in 2016, op.
cit.
[45]. Women’s
Legal Service Queensland, op. cit., p. 7.
[46]. FLS, Law Council, op. cit., p. 6.
[47]. See items 23 and 29 of Schedule 1.
[48]. Explanatory Memorandum, op. cit., p. 16.
[49]. J
Campbell, ‘Financial
agreements: more legislative amendments coming in 2016, op. cit.
[50]. Ibid.
[51]. Ibid.
[52]. Inserted
by item 10.
[53]. Section
90SB provides a list of factors that are to guide the court when determining
the existence of a de facto relationship.
[54]. J
Campbell, ‘Financial
agreements – more legislative amendments coming in 2016, op. cit.
[55]. Ibid.
[56]. Explanatory
Memorandum, op. cit., p. 20.
[57]. J
Campbell, ‘Financial
agreements: more legislative amendments coming in 2016, op. cit.
[58]. Ibid.
[59]. Law
Society of New South Wales, op. cit., p. 5.
[60]. FLS,
Law Council of New South Wales, op. cit., p. 6.
[61]. G Brandis (Attorney-General), New measures to provide greater protections for Australians affected
by family violence, media release,
25 November 2015, accessed 2 February 2016.
[62]. Section
68N of the Family Law Act.
[63]. Subsection
68Q(1) of the Family Law Act.
[64]. Australian
Law Reform Commission, Family
violence: a national legal response, report, 114, ALRC, Sydney, 2010, paragraph
16.17, accessed 2 February 2016.
[65]. Explanatory Memorandum, op. cit., p. 33.
[66]. Ibid.,
p. 33.
[67]. Family
Law Council, Interim
Report on families with complex needs and in the intersection of the
Family Law and Child Protection Systems, June
2015, p. 104, accessed 2 February 2016.
[68]. Australian
Law Reform Commission, op. cit.
[69]. Chief Magistrate, Adelaide Magistrates Court, Submission
to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into
the Family Law Amendment (Financial Agreements and Other Measures) Bill 2015,
December 2015, accessed 4 January 2016.
[70]. Women’s Legal Service Queensland, op. cit., p. 8.
[71]. Explanatory Memorandum, op. cit., p. 4.
[72]. Section
118 is to be repealed by item 19.
[73]. Explanatory
Memorandum, p. 38.
[74]. Women’s
Legal Service Queensland, op. cit., p. 8.
[75]. Ibid.
[76]. J
Campbell, ‘Financial
agreements: more legislative amendments coming in 2016’, op. cit.
[77]. Ibid.
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