If drafted carefully, by family lawyers familiar with the provisions of the Family Law Act 1975 (Cth), Financial Agreements can be a very effective tool for:

  1. Asset protection;
  1. Agreeing to how, in the event of separation two parties to a de facto relationship or marriage, wish to deal with the division of their property and the payment of maintenance;
  1. Finalising property settlements between two parties to a de facto relationship or marriage, if for whatever reason obtaining Orders is not appropriate or practical; and
  1. Extinguishing maintenance claims as part of an overall property settlement.

However, if poorly drafted, or drafted without sufficient knowledge of the Family Law Act 1975 (Cth) and relevant case law (key decisions of the Court made from 2008 to date) such agreements may be defective and be set aside by a Court.

When financial agreements are defective and are set aside, it means that a party that would otherwise have been bound by the terms of the agreement in relation to various financial matters, is able to re-litigate their claim, incurring further legal fees to resolve matters.

When this occurs it often results in negligence claims being filed against solicitors for those defective agreements. A difficulty for parties instituting negligence proceedings is the limitation period that applies to those claims, which is 6 years, and when time starts to run, being:

  1. From the date the financial agreement is executed; or
  1. From the date the financial agreement is set aside by a Court or found defective.

The Victorian Court of Appeal decision in Orwin v Rickards [2020] VSCA 225, delivered 4 September 2020, considered this issue. The appellant argued that the loss she suffered arose after the date she executed the agreement, and the trial judge was incorrect in determining that her loss arose on that date (and therefore she had not brought her claim in time). However, the Court questioned the inconsistent decisions in relation to this issue.

The point is if you have a financial agreement that is defective, or that you think might be defective, you should seek legal advice immediately and file any negligence claim without delay or run the risk that you will not be able to advance that claim due to the 6 year limitation period.

At TLFC our Family Law Section is able to assist you, please contact us on 03 8600 9333 or email us at [email protected] or directly to Justine Clark at [email protected] and Tina Deburiet at [email protected].