Prior to the commencement of the Family Law Act 1975 (Cth), parties to a marriage were able to document a financial settlement in a “Deed of Settlement” which had to be approved by a judge exercising jurisdiction under that Matrimonial Causes Act 1971 (Cth) (repealed) before the agreement had any force or effect.

The Family Law Act 1975 (Cth) had similar provisions to the Matrimonial Causes Act and had a procedure for the registration of agreements, pursuant to s 86 of the Act, or for “approval” of an agreement pursuant to s 87. Section 86 provided that the terms of a registered agreement had the same effect as if they were orders made by the court, but successive judgments of the Family Court watered down these provisions. Section 87 agreements, however, provided a good degree of finality, as they could only be set aside under certain limited circumstances, set out in s 87A of the Act.

Part VIII A — Financial Agreements was inserted into the Family Law Act in 2000 and sets out the provisions that govern the making of private agreements, called “financial agreements” or “binding financial agreements”, between parties.

Practice Tip: Due to the increasing number of cases in which financial agreements are being set aside and to the subsequent uncertainty that prevents practitioners from being able to guarantee to their clients that a financial agreement will be “binding”, it is prudent not to describe a financial agreement as a binding financial agreement. To describe it as binding may lead the client to believing it is. In Victoria this approach has been supported by the Legal Practitioners Liability Committee.

When those provisions were enacted, they related to couples who were married or who were contemplating marriage. Agreements for couples who were contemplating marriage are colloquially known as “pre-nuptial agreements” although that term does not appear in the Family Law Act 1975 (Cth). Part VIII A replaced ss 86 and 87, which were repealed at the same time.

Part VIII A provided for three different types of financial agreements being:

• an agreement for couples contemplating marriage: s 90B;

• an agreement entered into during the marriage but before divorce: s 90C;

• an agreement entered into after divorce: s 90D.

Part VIIIA was substantially expanded in 2009 by the insertion of Pt VIIIAB. Div 4 of that Part relates specifically to financial agreements. The division extends coverage of the Family Law Act 1975 (Cth) in relation to financial agreements to include financial agreements between de facto partners in all states except Western Australia. It applies to couples who are in a relationship, or whose relationship ended, after 1 March 2009 (or 1 July 2010 in the case of South Australia). The provisions allow for the making of a financial agreement between de facto couples who:

• are contemplating a de facto relationship: s 90UB ;

• are in an existing de facto relationship: s 90UC ;

• have separated on or after 1 March 2009: s 90UD.

In Western Australia, de facto partners may enter into financial agreements pursuant to Pt 5A Div 3 of the Family Court Act 1997 (WA), which allows for agreements between couples who:

• are contemplating a de facto relationship: s 205ZN ;

• are in an existing de facto relationship: s 205ZO ;

• have separated on or after 1 December 2002: s 205ZP .

The definition of “de facto relationship” includes same sex couples: s 4AA(1)) )) and s 13A Interpretation Act 1984 (WA). See De facto law under the Family Law Act. See also De facto law — state based.

Practice Tip: The Family Court of Western Australia will only have jurisdiction to determine the property settlement and maintenance rights of couples in a de facto relationship if:

• one or both of the parties were resident in Western Australia on the day the application was made;

• either both parties have resided in Western Australia for at least one third of the duration of the relationship or substantial contributions (of the kind mentioned in s 205ZG(4)(a) ) have been made in the state by the person making the application; and

• one of the following applies:

The statutory requirements for a financial agreement to be binding on the parties in marital relationships are identical and are found in s 90G of the Family Law Act 1975 (Cth). The statutory requirements for a financial agreement to be binding on the parties in de facto relationships (in all states except Western Australia) are identical and are found in s 90UJ of the Family Law Act 1975 (Cth). The statutory requirements for financial agreements to be binding on the parties in de facto relationships in Western Australia largely mirror the provisions in the Family Law Act 1975 (Cth) and are found in s 205ZS of the Family Court Act 1997 (WA).

An advantage to a financial agreement is that no court proceedings are required; however, to ensure that parties are not coerced into entering into an agreement that is not favourable to them and is less than they would obtain should the matter proceed through the court, the Family Law Act 1975 (Cth) and Family Court Act 1997 (WA) require strict compliance with a number of procedural matters including (generally) the requirements that:

• the agreement must be in writing;

• independent legal advice be provided to both parties;

• the solicitor for each party sign a statement that legal advice has been provided to their client.

Although a legal practitioner must give the appropriate advice on the effect of the agreement on their client, they no longer need to be satisfied that they believe the agreement is fair and equitable.

A financial agreement that is held to be binding will oust the jurisdiction of the court in so far as the provisions of the financial agreement allow. The relevant statutory provisions are s 90K (s 90UM in relation to de facto relationships and s 205ZV of the Family Court Act 1997 (WA) in relation to de facto relationships in Western Australia). A financial agreement that is not held to be binding can be set aside by the court see ss 90G and s 90K in relation to marital relationships; ss 90UJ and 90UM in relation to de facto relationships; ss 205ZS and 205ZV in relation to de facto relationships in Western Australia.

Financial agreements that are binding only oust the court's jurisdiction with respect to financial matters or resources expressly dealt with in the agreement unless the relevant statutory provisions apply. Those provision are:

• s 90F (in relation to marital relationships);

• s 90UI (in relation to de facto relationships); or

• s 205ZR (of the Family Court Act 1997 (WA) in relation to de facto relationships in Western Australia).

For example, some financial agreements only deal with spousal maintenance, not property, or if they do deal with property it may only deal with some of the parties’ property (eg it is common for a financial agreement to seek to exclude a particular asset from a property settlement with the balance of the parties’ asset pool to be determined by the court). A financial agreement that is set aside has the effect of not affecting the jurisdiction of the Family Court to make whatever orders for maintenance or property settlement is has the power to do. Sometimes the financial agreement may be relevant to proceedings, eg the recitals may be evidence of the parties’ income, contributions or property pool was at a certain time or the terms of the agreement may be relevant when the Court is considering whether it is just and equitable to make orders pursuant to s 79 of the Family Law Act.

There have been many cases heard in the Full Court of the Family Court in relation to what “strict compliance” is. Almost all cases heard deal with agreements not complying with s 90G of the Family Law 1975 (Cth) or complying with an outdated s 90G .

In the matter of Black v Black , the Full Court overruled a previous decision of single judge not to set aside a financial agreement where there had not been strict compliance with s 90G . The basis of this decision was that the effect of the agreement was to oust the jurisdiction of a Family Court to make financial orders and therefore strict compliance with the formal requirements of s 90G of the Family Law Act 1975 (Cth) was required.

After the decision of Black v Black, amendments to s 90G came into effect on 4 January 2010. The amendments provided that even if there is not strict compliance with the requirements of s 90G(1) , as long as the agreement is signed by all parties and it would be unjust and inequitable if the agreement was not binding, then the court may make an order under subs (1B) declaring that the agreement is binding on the parties to the agreement.

The Family Law Act 1975 (Cth) was amended on 1 March 2009 to include jurisdiction over de facto property issues if the parties separated after this date.

Below is a comparative table of the main provisions relating to financial agreements in relation to:

• married couples in all states and territories;

• de facto couples in all states and territories except Western Australia; and

• de facto couples in Western Australia.

Married couples De facto couples in all states except Western Australia De facto couples in Western AustraliaGenerallyPt VIIIA , Family Law Act 1975 (Cth)Pt VIIIAB Div 4 , Family Law Act 1975 (Cth)Pt 5A Div 3 , Family Court Act 1997 (WA)Financial agreements before marriage/de facto relationships 90B s 90UB s 205ZN Financial agreements during marriage/de facto relationships 90C s 90UC s 205ZO Financial agreements after divorce/breakdown of de facto relationships 90D s 90UD s 205ZP Certain provisions in financial agreementss 90F s 90UI s 205ZR When financial agreements are bindings 90G s 90UJ s 205ZS Effect of death of a partys 90H s 90UK s 205ZT Setting aside financial agreements or termination agreementss 90K s 90UM s 205ZV

See Compulsory advice and Definitions and recitals.