When can the Court set aside a Financial Agreement?
The Court can set aside a Financial Agreement if specific grounds to do so are met. If the Court does this, then the provisions of the Family Law Act will apply to determine a just and equitable property dispute.
The grounds for the Court to set aside a Financial Agreement are as follows:
1. Fraud, Misrepresentation, or Non-Disclosure
Fraud can include deliberate dishonesty, partial disclosure, or concealment of assets.
If one party hides financial information, undervalues assets, or misrepresents income when the agreement was made, then the Court may find the Financial Agremeent was entered into under false pretences. Fraud does not require malicious intent; even an omission or failure to update information before signing can be sufficient.
2. Duress, Undue Influence and Unconscionable Conduct
A Financial Agreement must be entered into voluntarily and freely. If one party was coerced, pressured, or emotionally manipulated into signing, the Court may deem the agreement invalid.
For example, threats to cancel a wedding unless the agreement is signed, presenting the Financial Agreement shortly before marriage to deprive the other party of sufficient time to review it, or exploiting a partner’s emotional dependence or limited understanding.
Duress or undue influence both invalidate consent. Unconscionable conduct occurs when one party exploits another’s vulnerability, such as illness, distress, or lack of legal understanding to gain an unfair advantage.
3. Absence or Inadequacy of Independent Legal Advice
The Family Law Act mandates that both parties receive independent legal advice before signing a Financial Agreement. Each lawyer must confirm in writing that advice was given regarding the effect of the agreement and the advantages and disadvantages of entering into it.
Failure to meet this requirement may make the Financial Agreement unenforceable. A Court will scrutinise whether the legal advice was genuine and adequately explained the agreement’s implications.
4. Non-Compliance with Statutory Formalities
A Financial Agreement must comply with the Family Law Act: it must be in writing, signed by both parties, and accompanied by certificates confirming independent legal advice.
Even minor errors, such as missing signatures or absent certificates, can be grounds for the Court to set aside the Financial Agreement. The Court has consistently ruled that strict compliance is essential.
5. A Significant Change in Circumstances
The Court can set aside a Financial Agreement if there has been a significant change in circumstances relating to the care, welfare, or development of a child, and if enforcing the agreement would cause hardship. For example, a child’s unexpected medical condition, disability, or financial dependency.
6. Impracticability or Frustration
A Financial Agreement may become impossible or impracticable to carry out. For example, if assets mentioned no longer exist, a business collapses, or external events make compliance unreasonable.
7. Void, Voidable or Inequitable Agreements
The Court can rely on equitable doctrines to set aside a Financial Agreement. For example, on the basis of a mistake, misrepresentation, or lack of true consent.
If one party misunderstood a key term or was misled about its effect, there may be no “meeting of minds,” making the contract voidable. A Court will also also consider fairness, and if enforcing the Financial Agreement would cause injustice, the Financial Agreement can be set aside.
