NEWS

Binding Financial Agreements – Requirements Changed Again

Further changes to the requirements for a financial agreement to be binding became operative on 4 January 2010 designed to address issues raised in previous cases such as Black & Black (2008) FLC 93-357 in which agreements had been set aside because certain technical requirements had not been strictly complied with.

The requirements in relation to Certificates of Independent Legal Advice have changed. Statements are still required but are no longer required to be included in financial agreements. However it may be necessary to prove later that the statement was signed by the lawyer and exchanged between the lawyers (a further requirement of the new amendments).

The new amendments also make it mandatory that each party actually receives independent legal advice. It may no longer be sufficient to simply rely on signed statements of legal advice.

An overriding discretion seems to have been provided to the Court to declare financial agreements binding, despite certain issues of non-compliance and technical issues, where the Court is satisfied that it would be unjust and inequitable if the agreement was not binding.

Of course as with any amendments to legislation, these new amendments have yet to be tested by case law. However what is clear is that lawyers and clients need to negotiate a new set of rules regarding binding financial agreements and their technical requirements. Agreements of this nature were, when initially implemented by Parliament, intended to provide certainty for separating spouses. The consensus amongst the commentators appears to be that the new amendments may simply increase the uncertainty and confusion rather than address those issues in a way that gives clarity and certainty.