PRE-NUPTIAL or binding financial agreements have been part of Australian law since December 2000. But they have been plagued by problems that have thwarted much of what they were intended to achieve.
There has been longstanding bipartisan support for pre-nups or BFAs, as they are known. The aim is both noble and pragmatic — to empower couples to have control and choice over property division and spouse maintenance if their marriage or de facto relationship breaks down. To reach their own dignified agreement. To stay out of the family law system. To save the finite resources of the courts and reduce the burden on the taxpayer.
Because they oust the jurisdiction of the courts in relation to property division and spouse maintenance, the legislation prescribes standards and conditions to be met: the BFA must be in writing, each party must have independent legal advice, there is protection against fraud, duress and misrepresentation.
BFAs also cannot be used to make binding arrangements about child support or parenting.
So what went wrong? How did it come to pass that many lawyers will no longer act on BFAs? How did a legislative policy designed to alleviate overcrowded family courts by allowing people to make private agreements spawn a cottage industry of legal challenges and end up adding to — not reducing — the workload of the courts?
Much of the blame must ultimately be laid at the feet of successive federal governments.
The legislation that introduced BFAs to Australia carried a fatal drafting problem for many of the agreements.
After that was identified by the Full Court of the Family Court in the Black v Blackdecision, retrospective amendments were made to the Family Law Act to try and cure the problem. And, while partially successful, those amendments and others have given birth to even further technical legal problems with BFAs.
There are a host of ongoing problems with the governing legislation dealing with BFAs, but there are two main examples.
First, the drafting of the prior legal advice requirement is so broad and vague in its framing it has given rise to its own ever-expanding body of case law, replete with differing judicial opinions.
Lawyers are now gun shy about giving advice on BFAs because it is almost impossible to ascertain from the legislation and case law what the advice must cover. And if the advice is wrong or incomplete the risk is that the agreement is not binding.
Second, a leading Supreme Court judge has expressed the view that under the law of equity in Australia there is a presumed relationship of influence between a fiance husband and a fiancee wife, with the practical consequence every BFA made prior to marriage is presumptively void for undue influence.
If that view is correct, then it would remain in each such case for the husband, who might seek to uphold the validity of a BFA made before marriage, to rebut the existence of that presumed relationship of influence.
The Family and Federal Circuit Courts are faced with a substantial lack of resources. Delays for litigants in getting trial dates in some capital city registries now hover around the two year-plus mark. Often these cases involve child disputes and family violence issues, cases that should not have to wait.
And yet judicial time at both trial and appellate level is now often being diverted to deal with lengthy, complex and highly technical legal and factual arguments surrounding the circumstances of the making of BFAs, the nature and content of the legal advice each party received, the technical validity of the agreements, and challenges to the enforcement of such BFAs.
The Law Council of Australia has for years lobbied for amendments to be made to address the legislative problems and to enable BFAs to serve the purpose for which they were intended.
In an age of budgetary austerity, it is difficult to understand why the federal government is not moving swiftly to do just that. The ongoing lack of legislative action hurts families on relationship breakdown, increases legal costs, and adds to the bottom line for the taxpayers who ultimately fund our court system.
