Poor legal advice invalidates Binding Financial Agreement

30-July-2012 Family Law By Simone Green

For a Binding Financial Agreement to be valid, or binding, certain conditions must be considered. Section 90G(1)(b) requires that each party be provided with independent legal advice from a qualified practitioner about the effect of the agreement, the rights of that party and the advantages and disadvantages to that party of making the agreement.

The court’s decision in Hoult [2011] FamCA 1023 provides an example of why a financial agreement may be declared not binding.

In Hoult the wife alleged that she was not able to fully comprehend what was being read to her. Further her solicitor did not explain the law relating to the agreement. Nor did he ask her any questions about the history of her marriage, speak to her about her rights, or outline the advantages or disadvantages arising from the agreement.

The evidence of the solicitor was not sufficient to demonstrate that independent legal advice had actually been given to the wife about the advantages and disadvantages of the agreement. The solicitor’s evidence was held to be unsatisfactory. This was particularly because the client’s file contained no diary notes, statements, correspondence or anything else in writing to which reference could be made in respect of the advice given to the wife. In this regard Murphy J commented that it is prudent for solicitors to make “comprehensive diary notes or other memoranda” to assist recall or as evidence. Accordingly it was held that the agreement was not binding on the parties.

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