Divorce agreement. Wife and husband can not make settlement

Spouse Maintenance Order made by Wife Challenging Financial Agreement

Jacob Smith ||

Time and time again, we see the value in ensuring that Financial Agreements (commonly referred to as ‘prenups’) are entered into between parties with care, fairness, and in a timely manner without pressure, to avoid any challenges further down the track.

In a recent case before the Family Court (Salvage & Fosse), a de facto wife (wife) applied to set aside a Financial Agreement that had been in place for many years on her assertion that:

  1. the Agreement was presented to her as being ‘not negotiable’;
  2. she was pressured and rushed to sign it;
  3. her lawyer’s advice was brief, with no opportunity to reflect;
  4. her de facto husband’s (husband) financial position was far superior; and,
  5. her English was poor

The wife also sought interim orders for spouse maintenance and what was described as a “litigation funding” order to enable her to pursue her case.

The parties were together for over 14 years with no children. The property pool was approximately $1.3 million, mainly been brought in by the husband. The wife had made significant contributions as a homemaker and cared for the husband. At separation, the wife was on an income tested pension, and the husband continued to provide financial support to her.

The Family Law Act provides that even with a Financial Agreement, the Court is not prevented from making a spouse maintenance order if the Court is satisfied that when the agreement came into effect, the party making the claim was unable to support themselves without an income tested pension, allowance or benefit.

It was on this basis that the trial judge made an interim order for spouse maintenance. The judge also made an order for litigation funding. The husband appealed.

The Full Court found that the Agreement came into effect when the parties separated, not when it was signed and, as such, the spouse maintenance order was correct as the wife was unable to support herself at that time. However, the order for litigation funding was set aside because the Full Court found that the judge ought to have evaluated the strength of the wife’s claim, the likely division of property if the Financial Agreement was set aside, and the costs.

If you are considering entering into a Financial Agreement, please do not hesitate to contact a member of Coleman Greig’s Family Law team today, who would be more than happy to assist you.

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