When beginning a marriage or de facto relationship, it’s common to assume it will last forever. However, sometimes relationships don’t work out as planned and end in separation or divorce. In such circumstances, property settlements and financial arrangements can become a significant source of conflict between the parties involved. A Binding Financial Agreement (BFA) is one way to address these issues before they arise. In this article, we’ll explore a BFA, prenuptial and postnuptial agreements. Furthermore, we also discuss why a BFA can be difficult to set aside and provide guidance on how to set up an enforceable BFA.
Background – What is a Binding Financial Agreement?
When couples enter into a marriage or a de facto relationship, they may consider making a binding financial agreement to regulate their financial affairs if the relationship breaks down. A binding financial agreement, or prenuptial agreement, is a legally binding document that sets out how the couple’s assets and liabilities will be divided in case of separation or divorce. Similarly, a postnuptial binding financial agreement can be created when couples separate, they can consider entering into a binding financial agreement to formalise the division of their assets, liabilities, and financial resources. A binding financial agreement after separation can be useful in situations where the separating couple has already agreed on how to divide their property and finances. Still, they want to ensure that the agreement is legally binding and enforceable. By making a BFA after separation, the separating couple can avoid going to court and have a judge decide on how their property and finances will be divided. Binding financial agreements can be difficult to set aside. This article will discuss how to set aside a binding financial agreement.
Grounds for Setting Aside a Binding Financial Agreement
Binding financial agreements can be set aside in certain circumstances. The Family Law Act 1975 (Cth) sets out the grounds for setting aside a binding financial agreement. These grounds are as follows:
Non-compliance with the Formal Requirements
A binding financial agreement must comply with the formal requirements set out in the Family Law Act. These requirements include that the agreement must be in writing, signed by both parties and that each party must have received independent legal advice before signing the agreement. The agreement may be set aside if these formal requirements still need to be met.
Case law: Ruane & Bachmanne-Ruane  FamCA 1101, the court found that the BFA was not valid because the husband did not receive independent legal advice before signing the agreement. The court held that the husband did not have a full understanding of the effect of the agreement, and therefore, the agreement was not binding and enforceable.
Fraud or Undue Influence
A binding financial agreement may be set aside if one of the parties was induced to agree by fraud, duress, or undue influence. The party seeking to set aside the agreement must show that the other party’s conduct was so improper that it deprived the first party of the ability to exercise his or her own free will.
Case law: In Thorne v Kennedy (2017) FLC 93-807, the court set aside a binding financial agreement because the wife was subjected to undue influence and unconscionable conduct by the husband, who threatened to call off the wedding if she did not sign the agreement.
Material Change in Circumstances
A binding financial agreement may be set aside if there has been a material change in circumstances since the agreement was made. For example, if the agreement was made when the parties had no children but now have children, the agreement may no longer be appropriate.
A binding financial agreement may be set aside if it would cause hardship to one of the parties. The party seeking to set aside the agreement must show that the agreement would cause him or her to suffer financial hardship and that the other party would not suffer similar hardship if the agreement were set aside.
A binding financial agreement may be set aside if one party engages in unconscionable conduct. Unconscionable conduct is so unfair that it goes against good conscience.
Procedure for Setting Aside a Binding Financial Agreement
If a party wishes to set aside a binding financial agreement, they must apply with the Federal Circuit and Family Court of Australia. The application must set out the grounds on which the party seeks to set aside the agreement.
Once the application is filed, the court will consider it and may make orders as it sees fit. The court may order that the agreement be set aside in whole or in part or that the agreement be varied. The court may also make any other orders that it considers appropriate, such as orders for paying costs. A costs order is an order made by the court that requires one party to pay the legal costs incurred by the other party. A costs order may be made in favour of the successful party in the proceedings or against the unsuccessful party. A costs order aims to compensate the successful party for the legal costs incurred in the proceedings. In addition, a costs order may also act as a deterrent against parties bringing frivolous or vexatious claims or engaging in unreasonable conduct during the proceedings
It is important to note that the court will only set aside a binding financial agreement if it is satisfied that one of the grounds set out in the Family Law Act 1975 (Cth) exists. As noted above, these grounds include non-compliance with the formal requirements of the Act, fraud, duress, undue influence, a material change in circumstances, hardship, and unconscionable conduct.
Ramsden Family Law – How We Can Assist With A Binding Financial Agreement
Setting aside a binding financial agreement can be a complex and challenging process. It is essential to seek the guidance of a lawyer who specialises in family law to ensure that you understand the legal process and your rights. Our team of experienced family lawyers at Ramsden Family Law can provide you with the guidance and support you need to navigate this process successfully. We can assess your situation and advise whether you have grounds to set aside your binding financial agreement. If you do, we can help you prepare the necessary documents and submissions to present to the court. Contact us today to schedule a consultation with one of our family lawyers.