Appeal Exposes Unconscionability in BFA: Beroni & Corelli Case

Setting aside a Binding Financial Agreement (“BFA”) by reason of undue influence and unconscionability. This was thoroughly canvassed in the Appeal, Beroni & Corelli [2021] FamCAFC 9 (10 February 2021)

Communication Between the Parties, BFA: The parties had difficulty with communication; the husband was not able to speak the wife’s language, and the wife had limited English this allowed the parties to have some communication. This hindered effective communication between the parties, BFA.

The husband told the wife that he wanted her to sign a BFA (Binding Financial Agreement),  a BFA was drawn up and each party retained a solicitor in relation to it. the BFA was in English, it was not translated in either the wife’s language or the husband’s language to the wife, and any explanation of its terms to her was in English.

In essence, the BFA provided that if the relationship between the husband and the wife came to an end, the wife would not be entitled to make any claim on the assets which the husband brought into the relationship (or vice versa), no matter for how long the relationship between them continued, or what contributions either of them made during it – but assets built up during the relationship would remain capable of division in accordance with their respective contributions. The parties agreed to marry. When the relationship finally ended. the wife commenced these proceedings seeking orders setting aside the BFA, and for property settlement.

The wife claimed a variety of relief to impugn the BFA, including non est factum, duress, unconscionability, undue influence, misrepresentation, unilateral mistake, estoppel, repudiation/renunciation and statutory claims under s 90UM and s 90UJ of the Family Law Act 1975 (Cth) (“the Act”).

The Trial Judge was  satisfied that there was actual undue influence, by virtue of the following matters:

THE APPEAL 

Ground 1 – The primary judge erred in accepting the claim by the [wife] for undue influence in circumstances where the wife was advised as to the essential nature of the financial agreement, understood it, and chose to reject her solicitor’s advice not to sign it. 

The key findings as to undue influence made by the primary are reproduced as follows:

“I am satisfied that there was actual undue influence, by virtue of the following matters

(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 a 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 Appellant Judge was not persuaded that the execution of the agreement by the wife was the product of her free will. Particularly, the stark improvidence of the transaction is unlikely to be the product of her free will, in the face of advice not to enter it.

The Judge specifically dealt with the husband’s assertion that signing the BFA was just a part of the wife’s scheme to get permanent residency in Australia, and in signing it, she knowingly took a chance that things would go well for her. The husband claimed that, in reality, it was he who was the victim of the wife’s plot.

The Judge rejected that claim. He stated.” It is fanciful to claim that the husband was emotionally vulnerable to the wife’s manipulation. If that were so, why insist on the BFA at all? Why become angry at the suggested changes? Why reject them and insist on it being signed unaltered? The answer to all those questions, I am well satisfied, is that the husband uses his money to manipulate and control others, and if it were at any risk, he would have terminated the relationship prior to three years.”

 The Judge referred to the plurality in the High Court decision of Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85 (“Thorne v Kennedy”) at [31], the basis for a claim of undue influence is the absence of a person’s free will. In considering the test, their Honours said this:

“The question whether a person’s act is “free” requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Pressure can deprive a person of free choice in this sense where it causes the person substantially to subordinate his or her will to that of the other party. It is not necessary for a conclusion that a person’s free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person became a “mere channel through which the will of the defendant operated”. Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be “markedly sub-standard” as a result of the effect upon the person’s mind of the will of another.”

The Judge dealt with the husband’s contention that, having had explained to her the essential nature of the BFA, in circumstances where the wife’s solicitor advised her against signing the BFA but she rejected that advice, the wife acted on her own free will. “The husband asserts that where independent advice has been given, and understood, as to the advantages and disadvantages of a transaction, a claim for actual undue influence should fail. Further, the husband contends that in rejecting the wife’s affidavit evidence in relation to the attendance upon Mr E the primary judge could not have been satisfied that the wife’s case for undue influence was made out.”

The Judge went on to say, “Finally as to this ground, it was contended by the husband that whatever the wife’s level of proficiency in English was, the primary judge found that it was sufficient for her to understand the essence of the BFA and to exercise her free will in respect of entering the agreement.

In addressing this ground it is necessary to also refer to what the primary judge said in relation to the wife’s claim for unconscionability as those findings relate to the claim for undue influence. They are as follows:

The wife says that she was in a position of special disadvantage in dealing with the husband because:

(a) She could not speak, read or understand English well, and was dependent upon her 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 BFA, whereas the husband could;

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

(e) She was dependent upon the husband for her financial security in Australia, in that as of 31 March 2011, she was unable to work in the country, and her only form of income was an allowance in the sum of $2,000.00 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 BFA was manifestly unfair until she was told that by Mr E on 31 March, 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 BFA, the relationship would not continue, at least past three years; and

(i) The wife was fearful of returning to Country G because of her ex-husband, which the husband was aware of.”

The Judge was satisfied that all of those matters were established on the evidence. In addition he was further further satisfied that the husband was generally controlling of the wife, and that she was somewhat fearful of him.

“All of these, to my mind, combine to establish that the wife was indeed in a position of special disadvantage, vis-à-vis the husband, at the time she signed the BFA.”

The Judge was not satisfied that the advice which Mr E gave, or at least tried to impart to the wife on 21 March 2011, was sufficient to remedy that special disadvantage. He went on to say,” Leaving aside the inevitable language difficulties, which necessitated an interpreter, there is the further fact that I am well satisfied the wife was never given a copy of the BFA – as it would have been pointless, because she could not read it, much less understand it – and I am not persuaded that the wife had any real understanding as a result of her discussion of 30 minutes with Mr E on 31 March, as to the sort of value of claim which she would be giving up. The advice must have been, necessarily, given the language barrier and the 30 minute duration of the conference, wholly inadequate to remedy the position of special disadvantage.”

The Judge then dealt with the question as to whether the husband unconscientiously victimised, exploited, or otherwise conducted himself towards the wife by, firstly, insisting that she sign the BFA, and secondly insisting via her solicitors that it be in the proffered form, without variation. It was the Judge’s view he did. “The husband must have known, even without Mr E’s letter, that the terms of the BFA were simply outrageous. In my view the husband’s insistence that it be signed, and signed in an unamended form, given his knowledge of the wife’s circumstances of special disadvantage, means that his conduct in having the agreement signed, and insisting upon it being complied with, are unconscionable. It is a form of exploitation of the wife. It is, both legally and morally, inequitable.”

The Judge then dealt with the wife’s contention that these findings overcome the husband’s argument that the wife understood the essential nature and the advantages and disadvantages of entering into the BFA. “The wife did not “have any real understanding … as to the sort of value of a claim which she would be giving up”. Indeed, nowhere in the evidence, whether in the wife’s solicitors’ file note or otherwise, was there evidence of an explanation of the advantages and disadvantages of entering into the BFA provided to the wife by her solicitor. Given the 30-minute duration of the meeting along with the wife’s lack of proficiency in English, any explanation given to the wife would have been wholly inadequate for her to understand the advantages and disadvantages of signing the BFA.”

He went on to say, “As the wife submits, and as was found by the primary judge the fact that the wife was advised against signing the BFA, but did so anyway, maybe an “indicium of undue influence” as was held to be the case by the plurality in Thorne v Kennedy at [56]. We agree with this submission.”

The Judge dealt with the wife’s argument that the onus in relation to undue influence shifted to the husband as the dominant party to show that the transaction was the product of the wife’s free will and was unaffected by undue influence. The Judge reached the conclusion that the husband was unable to do that. 

Ground 2 – The primary judge erred in finding that there was actual undue influence by virtue of the matters identified at [214] of the reasons (whether separately or collectively). 

The husband submitted that the matters relied upon cannot overcome the effect of the wife’s solicitor’s advice being given, understood, and acted upon by the wife. The Judge contended that whilst the factors might suggest a disparity in bargaining power between the parties, much more is required to establish a finding of actual undue influence. 

As to the husband’s submission that the factors cannot overcome the effect of the wife’s solicitor’s advice being given, understood, and acted upon, the wife contends that this is misconceived in at least three aspects, namely:

1. The finding was that “some very rudimentary explanation of the BFA was given to her in English”, not that proper and sufficient advice was either given or understood;
2. The advice given by the solicitor for the wife was not acted upon, but was acted against; and
3. Reliance by the husband on the “advice” overlooks the proposition in Thorne v Kennedy that the wife’s insistence to sign the BFA against the advice can be an indicium of undue influence.

The Judge agreed with that contention.

The husband sought to distinguish the circumstances of the wife in the case in question from the circumstances experienced by the wife in Thorne v Kennedy. It was submitted that the wife in that case had “far more acute pressure” on her by receiving the BFA to sign only 10 days prior to her wedding and that if the agreement was not signed, the relationship was at an end. The husband said that no such ultimatum was made in the case in question, and the wife knew of the agreement for some time prior to signing it. This argument was rejected, given the primary judge’s finding that the wife likely did not know the BFA was manifestly unfair until she was told by her solicitor, thereby having less than 30 minutes to absorb the advice.

The husband also contended that the factors identified “overstate the precariousness of the wife’s position” namely:

•  the primary judge rejected the wife’s evidence that the husband had threatened to report her to immigration authorities and the husband was not aware of the wife’s visa condition.;

• The correct position was that the husband would not allow the relationship to continue past three years if the wife refused to sign the BFA. It was not the case that the wife’s refusal to sign it threatened to bring the relationship to an immediate or near end; and

• While it is correct that the wife was dependent on the husband for accommodation and income, if the relationship ended, the wife could have sought alternative rental accommodation.

In response, the wife submitted that:

• These factors are clearly not challenged and they thrust the onus of proving that the BFA was not affected by undue influence onto the husband;

• With the finding related to the wife’s fear of being reported to authorities and not what the husband had in fact done. Secondly, the wife says that there was ample evidence to find that the husband was aware of the terms of the wife’s visa and that the divorce, BFA and visa went together. 
• As to the criticism as found by the primary judge, the parties were under the misapprehension that the wife’s student guardian visa was to expire in November 2011, and the only way it could continue was to apply for a spouse visa, but that could only occur if the BFA was signed; and

• The primary judge’s finding that the wife could have rented does not detract from the fact that the wife had nil assets and was reliant upon the husband for her income and accommodation which was of a very high standard.

Ground 3 – By accepting the wife’s claim for undue influence on the basis that the primary judge was not satisfied that the execution of the [BFA] was the product of the wife’s free will, the primary judge failed to correctly apply the burden of proof to the wife’s claim for undue influence.

The primary contention here is that the conclusion reached by the primary judge was insufficient to set aside the BFA on the basis of undue influence (or unconscionability) because it was for the wife to prove the existence of undue influence, not for the husband to demonstrate that the transaction was the product of her free will.

As the plurality held in Thorne v Kennedy, there are different methods of establishing undue influence, as follows:

“There are different ways to prove the existence of undue influence. One method of proof is by direct evidence of the circumstances of the particular transaction. That was the approach relied upon by the primary judge in this case. Another way in which undue influence can be proved is by presumption. This presumption was relied upon by Ms Thorne in this Court as an alternative. A presumption, in the sense used here, arises where common experience is that the existence of one fact means that another fact also exists.

Common experience gives rise to a presumption that a transaction was not the exercise of a person’s free will if

(i) the person is proved to be in a particular relationship, and

(ii) the transaction is one, commonly involving a “substantial benefit” to another, which cannot be explained by “ordinary motives”, or “is not readily explicable by the relationship of the parties”.

Although the classes are not closed, in Johnson v Buttress Latham CJ described the relationships that could give rise to the presumption as including parent and child, guardian and ward, trustee and beneficiary, solicitor and client, physician and patient, and cases of religious influence.

Outside recognised categories, the presumption can also be raised by proof that the history of the particular relationship involved one party occupying a similar position of ascendency or influence, and the other a corresponding position of dependency or trust.

In either case, the presumption is rebuttable by the other party proving that the particular transaction or transfer, in its particular circumstances, was nevertheless the result of the weaker party’s free will.

The husband contends that, given the primary judge rejected that this was a case of presumed undue influence, it fell into the first category described of Thorne v Kennedy, and thus the onus of proving undue influence rested with the wife.

However, the wife submits that the husband has misconceived the issue of onus, both in respect of undue influence and unconscionable conduct. She contends that there is no challenge to the primary judge’s findings that the relationship between the husband and wife was one of ascendency and dependence and that the BFA transaction was highly improvident for the wife, and thus the particular relationship fell into the recognised category of presumed undue influence as discussed in Thorne v Kennedy.

When that was put to counsel for the husband at the hearing of the appeal, it was suggested that the primary judge’s use of the words “actual undue influence” in making the finding excluded it from falling within the presumption categories.

We do not accept that submission. The findings of his Honour and established the presence of a particular relationship between the husband and wife where the husband had a position of ascendancy and the wife was in a position of dependency. We fail to see why those findings would not fall into the third category recognised by the plurality in Thorne v Kennedy, and which then requires the dominant party to demonstrate that the transaction was the product of the weaker party’s free will.

This is also the case for unconscionable conduct. In the High Court decision of Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 (“Amadio”) at 474, Deane J held that “an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable”.

There is no merit in this ground.

Ground 4 – The primary judge erred in finding that the wife was at a special disadvantage, and that [the husband] had unconscientiously taken advantage of this special [dis]advantage.

The principles relevant to a finding of unconscionability were summarised by the plurality in Thorne v Kennedy at [38]–[40] and quoted by the primary judge (at [204]) as follows:

A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage “which seriously affects the ability of the innocent party to make a judgment as to [the innocent party’s] own best interests”. The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring “victimisation”, “unconscientious conduct”, or “exploitation”. Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage.

In Commercial Bank of Australia Ltd v Amadio, Deane J said that the equitable principles concerning relief against unconscionable conduct are closely related to those concerned with undue influence. The same circumstances can result in the conclusion that the person seeking relief (i) has been subject to undue influence, and (ii) is in a position of special disadvantage for the purposes of the doctrine concerned with unconscionable conduct. For instance, in Diprose v Louth (No 1), the trial judge, King CJ, observed that both doctrines were satisfied where the defendant “was in a position of emotional dominance which gave her an influence over the [plaintiff] which she exercised unconscientiously to procure the gift of the house”. Before the High Court in that case, Mr Diprose relied only upon the ground of unconscionable conduct.

Although undue influence and unconscionable conduct will overlap, they have distinct spheres of operation. One difference is that although one way in which the element of special disadvantage for a finding of unconscionable conduct can be established is by a finding of undue influence, there are many other circumstances that can amount to a special disadvantage which would not establish undue influence. A further difference between the doctrines is that although undue influence cases will often arise from the assertion of pressure by the other party which might amount to victimisation or exploitation, this is not always required.

In Commercial Bank of Australia Ltd v Amadio, Mason J emphasised the difference between unconscionable conduct and undue influence as follows:

“In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position.”

First, the husband submits that his Honour’s findings stop short of the finding required for unconscionability, such that the special disadvantage needs to “seriously [affect] the ability of the innocent party to make a judgment as to [the innocent party’s] own best interests”. The husband contends that his Honour did not make that latter finding.

Secondly, the husband submits that not even the factors supported the finding that the wife was at a special disadvantage, let alone one which seriously affected her ability to make a judgment as to her own best interests. He contends that the factors go to the wife’s asserted difficulties in understanding the precise terms of the BFA, but these did not prevent her from understanding the essential nature of what she was signing as found by the primary judge in rejecting the wife’s claim for non est factum. The remaining factors are said to go to the wife’s dependence on the husband.

Thirdly, the husband submits that because the primary judge rejected the wife’s more serious allegations, there was no basis for a finding of special disadvantage by reason of the findings.

Fourthly, the husband also challenges the factual correctness of the finding that the wife did not know that the BFA was manifestly unfair until she was told by her solicitor on 31 March 2011. The husband says that this finding is inconsistent with paragraph 39 of the wife’s affidavit filed 16 May 2016, where the wife deposes that she “was aware that [the BFA] was heavily weighted in favor of the de facto husband in respect of financial matters”. It is also said that the finding is inconsistent with the wife’ solicitor’s letter sent on 17 March 2011 complaining about the BFA’s one-sided nature. Although the primary judge found that the wife’s solicitor sent that letter without the wife’s instructions, the husband contends that an inference to the contrary should have been made in light of the wife failing to call her solicitor (which is the subject of Ground 7).

Finally, the husband submits that even if the wife was subject to a special disadvantage, there was no basis for the finding that the husband had unconscientiously taken advantage of that disadvantage. The husband says that what his Honour finds cannot constitute victimisation and exploitation of the wife. Again, the husband seeks to distinguish these circumstances from the circumstances in Thorne v Kennedy and submits that the husband in this case did not give an ultimatum to the wife, as the husband did in that case.

As to the husband’s first submission, the wife says that it is purely “semantic” and that the findings “implicitly and necessarily included a finding that the wife’s ability to make a judgement as to her own best interests was seriously impaired”. The husband’s submission overlooks the primary judge’s findings where his Honour was “not persuaded that the wife had any real understanding … as to the sort of value of claim which she would be giving up” and that the advice was “wholly inadequate to remedy the position of special disadvantage”, together with the findings of “exploitative insistence” that the wife sign the agreement unamended.

As the plurality noted in Thorne v Kennedy, the same circumstances can result in the conclusion that the wife has been subject to undue influence as well as being in a position of special disadvantage for the purposes of the doctrine concerned with unconscionable conduct. Thus, the findings of undue influence (which self-evidently arise from the findings bolster the conclusion that “the special disadvantage of the wife entailed that it seriously affected her ability to make a judgement about her own interests. We agree with that submission.As to the criticism of the factors, counsel for the wife correctly asserts that it is one thing for the wife to have had an understanding of the effect of the BFA not radically different from its actual effect (for the purposes of rejecting the claim for non est factum), but it is a very different thing for a person to have sufficient knowledge and understanding adequately to protect their own interests (Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362 at 415; Amadio at 462).

In relation to the argument that the primary judge rejected the wife’s serious allegations and thus the remaining findings were no basis for establishing special disadvantage, the wife submits, and we are persuaded, that this represents an unjustified “elision” from evidence not accepted to claims found, and that the unchallenged findings do justifiably inform the conclusion of special disadvantage.

The husband’s challenge to the factual correctness should also be rejected because it is based upon a misrepresentation of the evidence. The fact that the husband attended with the wife upon her solicitor on 17 March 2011 corroborates the fact that the BFA would not have been discussed in any detail on that occasion, and thus the finding that the wife was unaware of its unfair nature before 31 March 2011 is made out.

As to the husband’s submission about the “ultimatum” that was relevant in Thorne v Kennedy, it is said that that was a matter of fact and evidence, and not a prerequisite to a finding of special disadvantage as the husband is endeavouring to make out. In any event, the wife here was under a practical ultimatum, in circumstances where the husband was insistent upon her signing the BFA, and the parties were proceeding on the basis that the wife’s current visa expired in November 2011, and the divorce, the BFA and the spouse visa all went together. This, coupled with the primary and intermediate findings of fact, demonstrates that the husband took unconscientious advantage of the wife’s special disadvantage. Again, this ground has no merit.

Ground 5 – By setting aside the [BFA] on a basis that gave decisive weight to its asserted one-sided nature, the primary judge misconceived of [sic] the Court’s jurisdiction to set aside a financial agreement:

The husband’s first contention here relates to the scope of the legislative policy behind allowing financial agreements between parties to have binding force under the Act, namely s 90G and s 90UJ. That is, a financial agreement will be binding under the Act where the requirements in s 90G or s 90UJ are met, and that allows for personal autonomy between the parties about their financial affairs (Hoult v Hoult [2013] FamCAFC 109; (2013) FLC 93-546 at [310]). However, that does not mean that their choice is insulated from vitiating conduct (for example, see s 90UM and s 90UN of the Act).

Secondly, it is contended that the primary judge’s expressed conclusions as to undue influence and unconscionability, such as “manifestly unfair”, “simply outrageous” and “stark improvidence”, demonstrate that his view of the terms of the BFA was the decisive factor in his Honour’s decision to set aside the BFA. It is submitted that this reasoning misconceives the nature of the Court’s jurisdiction to set aside a BFA.

Curiously though, the husband concedes that the terms of an impugned BFA will be relevant where the BFA is sought to be impugned by vitiating factors such as duress, undue influence and unconscionability and so much was held in Thorne v Kennedy at [56] where the plurality said that unfair and unreasonable terms of a BFA will be a relevant consideration in a primary judge’s decision as to whether the agreement is vitiated and can be an “indicium” of undue influence.

Nevertheless, the husband submits that the terms of the BFA could not amount to an indicium of undue influence or unconscionability, given the clear warning provided by the solicitor to the wife about its terms.

We consider that the primary judge did not misconceive the nature of the court’s jurisdiction to set aside the BFA, given his recitation of the relevant principles and his discussion.

The findings and characterisations of the primary judge were entirely appropriate, and by no means were they the entire basis for his Honour’s decision to set aside the BFA. As put by the wife, an unfair, disadvantageous or improvident transaction can be a necessary, albeit not sufficient, element of a transaction liable to be set aside due to vitiating factors.

The primary judge’s comments were a summary of the relevant findings, and the degree of the perceived unfairness of the BFA’s terms was only one factor amongst the many factors taken into account.

This ground of appeal is without merit.

Ground 6 – In light of the wife’s failure to call her solicitor

it was not open to the primary judge to find:
(a) That the wife had suffered undue influence;
(b) That the wife was under a special disadvantage;
(c) That the solicitor’s explanation of the [BFA] was very rudimentary, and that the wife probably understood only some of it;
(d) The solicitor’s explanation was limited, perhaps with an expectation on the part of the solicitor that the document would be found unenforceable.

Grounds 6 and 7 relate to the wife failing to call her former solicitor, Mr E. As can be seen, here the husband asserts that the findings made by his Honour were not open on the evidence without calling Mr E.

As to undue influence, it is submitted that absent evidence from the wife’s solicitor which disavowed what was in his certificate and file note, the evidence did not support that the wife’s will was overborne in signing the agreement. Further, the husband contends that absent the solicitor’s evidence, there was no basis for the primary judge’s findings about the solicitor’s “rudimentary” explanation, and that the wife probably only understood some of it. The husband similarly makes the same argument in respect to unconscionability, namely, that the wife’s solicitor could not have completed the certificate and file note in good conscience if this had presented to him as a case where the wife was in a position of special disadvantage.

As a result, the husband contends that in the absence of a finding that the wife’s solicitor failed in his duties, and that the certificate he signed as to the advice he gave was false, it was not open for the primary judge to make the findings he did.

However, the wife contends that despite the wife’s solicitor not giving evidence as to the circumstances of the execution of the BFA, there was ample evidence to support the findings his Honour made, namely:

• The BFA was a significant legal document of some length and written in legal language;
• At the time of signing, the wife could not read English;
• The wife could only converse on simple matters and in broken English; and
• The wife’s solicitor assessed that the wife required an interpreter, however no interpreter attended at the time the wife signed the BFA.

It was plainly open to his Honour to accept, as he did, the evidence of the wife given in cross-examination as to the circumstances in which she executed the BFA, and the absence of evidence from the solicitor could not prevent that outcome.

Further, the wife says that if this ground of appeal is suggesting that the primary judge should not have made those findings without hearing from the wife’s solicitor, it is the case that a party is not obliged to call a particular witness (Kuhl v Zurich Financial Services [2011] HCA 11; (2011) 243 CLR 361 at [63]), and further, the wife’s solicitor could have been called by the husband. The wife expressly waived privilege in her communications with the solicitor, and invited the husband to call him instead.

However, if this ground is about making the findings adverse to the wife’s solicitor without him being called upon to answer, the point is plainly wrong. There is no authority which says that a court cannot make adverse findings about the conduct of a solicitor, when that solicitor fails to give evidence. In any event, it cannot be overlooked that the solicitor here refused to cooperate with the wife. The wife issued a subpoena to the solicitor to give evidence, but he refused to cooperate. He must clearly have been on notice of the nature of the issue to which his evidence was relevant, yet he declined the opportunity to be heard before adverse findings were made.

Finally, it cannot be held against the wife that she failed to call a witness in circumstances where she could not proof them, or know their evidence (Payne v Parker [1976] 1 NSWLR 191 at 197 (“Payne v Parker”)). A party is not obliged to call a witness who will not cooperate.

This ground has no merit.

Ground 7 – The primary judge erred in finding that the rule in Jones v Dunkel did not apply to the wife’s failure to call her solicitor. Applying that rule, the primary judge should have inferred that:

(a) The solicitor’s evidence would not have assisted her case;
(b) The wife was aware of the one-sided nature of the agreement prior to her meeting with her solicitor on 31 March 2011;
(c) Prior to the wife signing the [BFA] on 31 March 2011, the solicitor had advised the wife about the effects of the agreement on her rights, and about the advantages and disadvantages of the agreement;
(d) The wife understood the solicitor’s advice;
(e) The wife understood that it was the opinion of her solicitor, whose job it was to consider her interests, rather than her husband’s, was that the financial agreement was not “fair” as between husband and wife;
(f) Despite receiving and understanding the solicitor’s advice, the wife wished to sign the agreement.

The primary judge introduced this issue in the reasons as follows:

“Mr E was the only other person present when the wife signed the BFA. He was, on other occasions, the only person present for periods during earlier conferences, and one of three people present for others. For these reasons, he must have been able to give evidence relevant to the events which transpired on those occasions, the wife’s proficiency in English, and her apparent understanding of the substance of the BFA.

No affidavit of Mr E was filed by the wife, nor was the subpoena she served on him called upon. However, she expressly waived privilege in her communications with him, and invited the husband to call Mr E instead.

The husband says an inference should be drawn that Mr E’s evidence would not have assisted her case; the wife denies such an inference should be drawn.”

His Honour then set out the relevant legal principles which applied citing Glass JA in Payne v Parker at 200–202. His Honour continued:

“Turning firstly to the conditions for the potential operation of the rule, the first is whether or not the absent witness would have been expected to be called by one party rather than the other. Mr E was the wife’s solicitor, and ordinarily subject to the restraints of legal professional privilege, which could only be waived by his client, one would expect her to call him. However here the wife has waived legal professional privilege, and indeed expressly invited the husband to call him instead.

Mr E’s professional competence is plainly raised by these proceedings. Moreover, there may be an interesting argument as to whether in advising the wife, he owed a duty of care not only to her, but also to the husband. Therefore, not only do his interests not necessarily align with those of the wife in the circumstances, but indeed, might not align with those of the husband.

He has refused to cooperate with the wife in these proceedings. That confirms my suspicion that he is, or perceives that he is, at litigious risk in relation to his conduct. It would not be appropriate in those circumstances for the wife simply to call Mr E blind, even with the prospect of being able to have him declared hostile, and hence cross-examine him.

In these unique circumstances, I am not persuaded that he would be expected to be called by the wife, rather than the husband.

Turning then to the second matter, it is inconceivable that Mr E’s evidence would not elucidate a critical matter, namely the wife’s proficiency in English as at 31 March 2011, and also the extent to which he gave her advice as he later certified. His evidence must necessarily have been highly illuminative of both of those matters, and probably others as well.

The final matter is whether his absence is unexplained. In large part, it is explained. He has not been prepared to cooperate with the wife. That in itself is an explanation, and I am of the view it is, at least, satisfactory.

I decline to draw an adverse inference against the wife from her failure to call Mr E.

However that is not the end of the matter. That is because, in a sense, Mr E nonetheless did give evidence. The entirety of his file was tendered. It contains not merely his file notes, but also file copy and original correspondence, and other primary documents. There is no reason to think that his file notes are not substantially accurate, or that his file is otherwise incomplete. Much of his evidence in that form is unhelpful to the wife, for instance, his certificate of advice on the BFA, and his file notes which record him having given her certain advice. Therefore even if I had been prepared to draw an adverse inference against the wife, I am far from persuaded that it would have been of a kind significantly more adverse to her than his evidence in the form of his file.”

This ground of appeal challenges the primary judge’s findings above, namely that the conditions required for an adverse inference established in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 (“Jones v Dunkel”) were not made out, and in particular the first and third conditions referred to by his Honour.

The husband asserts that clearly the first condition was satisfied, and it was beside the point whether the wife’s solicitor was cooperative with the subpoena or not. He says it was open to the wife to call on the subpoena she issued to her solicitor to attend to give evidence.

Similarly, the husband asserts that the third condition was also met, namely that the wife’s solicitor’s absence was not explained. As is evident, his Honour found that the wife’s solicitor’s absence from Court was explained, and that was due to him being uncooperative with the wife in relation to the subpoena issued to him, and that was sufficient for the primary judge in not drawing a Jones v Dunkel inference. However, the husband argues that this was an error of law on the part of the primary judge in finding that the inference was not available, and the evidence should have led his Honour to draw a number of specific inferences as outlined in the sub-paragraphs of this ground.

The husband further submits that an adverse inference should have been drawn against the wife notwithstanding the rule in Jones v Dunkel. The primary judge held when evaluating the credibility of the wife that her evidence was prone to exaggeration and that “where there are issues of credibility… [his Honour] will be vigilant to see if the wife’s claims are supported by either a credible witness, or alternatively, by contemporaneous documentation”. The husband says that if this approach was followed by his Honour in evaluating the wife’s claims, he would have rejected them on the basis that they were not corroborated by a credible witness and were directly contrary to the BFA advice certificate and the wife’s solicitor’s file note.

The wife asserts that the husband’s submissions misapply the rule in Jones v Dunkel. She submits that the ultimate question on appeal is not whether the rule is able to be applied, but whether the relevant findings were open to the Court. The rule merely allows, but does not compel, the drawing of inferences when a witness is not called (Manly Council v Byrne [2004] NSWCA 123 at [51]). Further, the rule does not allow an inference to be created; it must be available independently of the application of the rule.

The wife emphasises the finding of the primary judge that the wife’s failure to call her solicitor was explained by his lack of cooperation with her. Moreover, the wife contends that because the wife’s solicitor was equally available to both parties, no Jones v Dunkel inference is available (Claremont Petroleum NL v Cummings [1992] FCA 446; (1992) 110 ALR 239 at 259), or alternatively, an inference is available against both parties but the particular strength of the inference against either depends on the circumstances (AMP Services Ltd v Manning [2006] FCA 256 at [49]). Bearing in mind that legal professional privilege had been waived, the husband had the wife’s solicitor’s file, the husband had the onus of displacing the claims of undue influence and unconscionability, and that the husband was asserting that sufficient advice had been given by the solicitor to allow the wife to exercise her free will, the wife contends that the Court could have drawn an inference that the husband’s unexplained failure to call Mr E would not have assisted his case.

As to the claimed inferences the husband suggests should have been drawn, the wife submits that these are merely speculation or conjecture (Jones v Dunkel at 304).

Ultimately, the wife asserts that this ground does not go anywhere. Even if it were established that the wife’s solicitor’s advice was to not sign the agreement, yet she still did so, that could only confirm, and not deny, the existence of undue influence (as held in Thorne v Kennedy at [56]).

It is readily apparent that his Honour had regard to the objective and found facts in arriving at his findings as to the circumstances in which the wife executed the BFA, and, as the wife submits, his Honour “appropriately tested the evidence against his assessment of the wife’s reliability and satisfied himself of the conclusion he came to”.

There is no merit in this ground of appeal.

CONCLUSION

Having found no merit in any of the grounds of appeal, the appeal must be dismissed.

Need Legal Help?

If you need help, please contact the Brisbane Family Lawyers team at James Noble Law today for a FREE, no-obligation 20-minute consultation. To schedule an appointment with one of our Qualified and experienced Family lawyers in Brisbane.

Find Brisbane family lawyer on Google Maps near you.

You may also like to learn more about:

• How To Create Airtight Binding Financial Agreements? How Tight Is An Airtight BFA?
• PRENUPTIAL AGREEMENT AUSTRALIA (BFA).
• Consent Orders in Family Law Matters.
• Binding Financial Agreements in De facto Relationships – 100% Watertight or Not?