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Insights

BFAs can be entered into at any time including before, during or after marriage and separation. They are not just for married couples. People considering entering into or are already in a defacto relationship can also enter into a BFA. For the document to be binding and enforceable, each party must receive their own independent legal advice.

Not Always Binding

Section 90K of the Family Law Act does provide for the setting aside of BFAs. BFAs can be set aside by the Court if the Court is satisfied that:

  • the agreement was obtained by fraud; or
  • a party entered into the agreement to defraud or defeat a creditor or with reckless disregard for a creditor’s interests; or
  • a party entered into the agreement to defraud another person who is in a defacto relationship with the spouse or with reckless disregard for the interests of that other person; or
  • the agreement is void, voidable or unenforceable; or
  • in the circumstances, it is impracticable for the agreement or part of the agreement to be carried out; or
  • since making the agreement a material change in circumstances has occurred which will result in hardship if the agreement is not set aside; or
  • in making the BFA, a party to the agreement engaged in conduct that was, in all circumstances unconscionable; or
  • a payment flag is operating on a superannuation interest; or
  • the agreement covers an unsplittable superannuation

The Parkes Case

In the recent case of Parkes and Parkes [2014] FCCA 102 heard by the Federal Circuit Court of Australia, the wife applied to set aside a BFA made two days prior to their wedding. The grounds that the wife relied upon in her application were that the husband exercised duress or undue influence or engaged in unconscionable conduct and that there had been a material change in circumstances relating to the care, welfare and development of a child of the marriage and that she would suffer hardship if the court did not set the agreement aside. The husband first raised the issue of entering into a BFA three days before the wedding. All of the preparation for the wedding had taken place. It was alleged that the husband refused to follow through with the wedding unless the BFA was signed by the wife prior to the wedding.

The wife successfully showed that she was at a position of special disadvantage known to the husband. If she did not sign the agreement, the wedding and possibly her relationship with her future husband would be over. She argued that she felt she had no choice but to sign the BFA. The Court inferred from him providing her with the agreement so close to the wedding that the husband did so intentionally. The wife’s consent was found to have been overborne as she was subject to duress and undue influence by the husband. Further, the birth of their two children since the signing of the BFA meant that there had been a material change in circumstances. The Court also found that the wife would suffer hardship if the agreement was not set aside as she had major responsibility of care of the children. The BFA was set aside.