Financial Agreements are often used as an effective way of protecting you from a spousal maintenance claim by your ex partner.
A Binding Financial Agreement, when prepared properly, is capable of ousting the court’s jurisdiction to hear a spousal maintenance claim, so you do not have to worry about your ex asking for you to pay them maintenance in the future e.g. if they are sick, caring for the children or unable to work for some other reason.
In the case of Guild & Stasuik  FamCA 348, the court was required to determine whether a prenuptial Binding Financial Agreement was effective in ousting the court’s jurisdiction to hear an application for spousal maintenance by the wife after separation of the parties.
Prior to the parties marrying, they signed a prenuptial agreement in anticipation of their marriage.
The Binding Financial Agreement included provisions to the effect that it was a financial agreement pursuant to section 90B which allows parties who are engaged to one another to reach an agreement as to how to divide their assets in the event that they separate and also whether spousal maintenance will be paid.
The husband owned and operated a business. He received income from trusts that owned properties.
The wife worked part time and was the primary carer for the two children.
The wife alleged the husband had financially supported the family until 2018 and that they had enjoyed a comfortable lifestyle.
The wife sought an order that the husband pay spousal maintenance to her of $1,000 per week and other expenses associated with the matrimonial home where she continued to live with the children.
The Financial Agreement included a provision entitled ’No Claim for Maintenance’, which provided:
(The wife) agrees that in the event of separation occurring, that she will make no claim for maintenance for herself and will accept the provisions of this Agreement in full and final settlement of any claim for maintenance that she might otherwise have had.
The question for the Court was did this clause oust the court’s jurisdiction to consider a spousal maintenance claim?
The husband’s position was that the prenuptial agreement was effective in ousting the Court’s jurisdiction to make spousal maintenance orders in favour of the Wife.
The wife argued the absence of a specific amount in the agreement made that provision void.
The Law in relation to Spousal Maintenance and Binding Financial Agreements
S90E (s90UH for de facto couples) applies to spousal maintenance clauses in Financial Agreements. Section 90E and s90H state that a provision for spousal maintenance in a financial agreement is void if it fails to specify who is to receive the maintenance and how much the maintenance is.
In other words there is a requirement that the spousal maintenance provision provide for:
- The actual amount provided for the maintenance of the named party; OR
- The value of the portion of the relevant property attributable to maintenance.
An example of a clause that might satisfy the second definition under s90E is where a financial agreement provides that $50,000 of the funds received by the Wife, in the event that separation occurs, is attributable to spousal maintenance to the Wife.
The Court considered that it was not reasonable to hold that the spousal maintenance clause affected the wife’s right to make a spousal maintenance claim as it was not certain and secondly, a reasonable person would have known that legal advice was given, noting the certificate of advice signed by both solicitors. By virtue of both parties having received legal advice, they each should have been made aware of section 90E of the Family Law Act.
In terms of the certainty of the spousal maintenance provision in the financial agreement, the court held that although the provision as to spousal maintenance contained the wife’s promise not to make an application for maintenance, it did not indicate she was barred from doing so. The intention of the parties when agreeing that the wife would make no claim was uncertain. The Court interpreted section 90E narrowly such that the provision was void & the Court heard the wife’s spousal maintenance claim.
Beware defective spousal maintenance clauses in Financial Agreements
The lesson to be learnt from this case is that it is very important that you have a lawyer who specialises in family law draft your financial agreement, so as to protect your income and assets in the future.
If you are contemplating entering into a financial agreement to protect yourself from a claim of spousal maintenance by your former partner, contact us on 3465 9332 to book a reduced rate consultation to have a confidential discussion about your individual circumstances.