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"Special Disadvantage" results in Financial Agreement being set aside

Tuesday 6th April 2021

By: Georgina Gregory

The case of Beroni & Corelli [2021] FamCAFC 9 (10 February 2021) involved a Financial Agreement that quarantined all the parties’ current and future property from each other, regardless of the length of the relationship or the contributions of either party.

The Wife was not proficient in English at the time the Financial Agreement was drafted, despite this the Financial Agreement was written in English. The Wife only discussed the agreement with her solicitor for 30 minutes. The agreement was signed in 2011. The Financial Agreement was signed only a few months before the wife was granted a spouse visa in July 2011.

The Wife argued that she was at a special disadvantage as:

(a) She could not speak, read or understand English well, and was dependent upon the Husband to assist her to do so.

(b) She had no understanding of the law of property division upon the breakdown of a de facto relationship, whereas the Husband did.

(c) She could not read the agreement, whereas the Husband could.

(d) She was dependent upon the Husband not informing immigration authorities of her breach of her guardian visa terms.

(e) She was dependent upon the Husband for her financial security in Australia, in that as at the date she signed the agreement, she was unable to work in the country, and her only form of income was an allowance in the sum of $2,000 per month which the Husband was paying her.

(f) She was dependent upon the Husband for her accommodation, and she had no residence of her own in Australia, or the means to acquire one, albeit perhaps she could have rented.

(g) She likely did not know that the agreement was manifestly unfair until she was told that by her solicitor on the date she signed the agreement, by which time she had already determined to sign it.

(h) The only way that the Wife could acquire permanent residence in Australia was by remaining in a relationship with the Husband and obtaining a permanent visa, however the Wife knew that if she did not sign the agreement, the relationship would not continue, at least past three years.

(i) The Wife was fearful of returning to her home country because of her ex-Husband, which the Husband was aware of.

 All the above claims were accepted by the primary judge and the Wife was found to be at a special disadvantage. The Husband having the Wife sign such an unequal Financial Agreement and his exploitative insistence, were held to be unconscionable based on his knowledge of her special disadvantage.

The primary judge also found there was undue influence as a result of: 

(a) The general position of dominance which the Husband had in relation to the Wife;

(b) His insistence, over a considerable period of time, that the BFA be signed, and his later insistence it be signed without amendment;

(c) The Wife’s fear that he may inform immigration authorities that she was in breach of her visa conditions;

(d) The Husband and Wife’s knowledge that, in order to obtain an [sic] permanent visa, the relationship needed to continue, but it could only continue if the BFA was signed; and

(e) The Wife’s dependence upon the Husband for accommodation and income in Australia.

 

The Husband would appeal this decision to the Full Court. The Husband contended the Wife had the Financial Agreement explained to her, and was advised by her solicitor to not sign the agreement, but the Wife rejected the advice and signed of her own free will.

 

The Wife’s solicitor who advised her on the Financial Agreement was subpoenaed to give evidence but refused to cooperate. The entirety of Wife’s solicitor’s file was tendered upon subpoena. The Husband sought an inference to be drawn that the solicitor’s evidence would not assist the Wife’s case. This was not accepted by the Court as the solicitor was uncooperative.

The Full Court upheld the primary judge’s decision on the basis that undue influence was present and the Wife was at a special disadvantage, based on the factors outlined by the primary judge.  Further in dismissing the Husband’s argument the Court noted that the Wife likely had no real understanding of the Financial Agreement or the value of the claim she would be giving up. Although the Wife was advised the Financial Agreement was unfair, there was no evidence of an explanation of the advantages and disadvantages of entering into the Financial Agreement.  The advice provided to the Wife was consequently insufficient to remedy the undue influence or unconscionability found.

Outcome

No merit was found in any of the grounds for appeal, the appeal dismissed and the Husband was ordered to pay costs.

 

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