Can a Financial Agreement be challenged?
Yes. A Financial Agreement can be challenged and set aside by the Court under specific circumstances outlined in the Family Law Act 1975.
While they are intended to provide finality, they are not bulletproof and must strictly comply with legal requirements to remain enforceable.
A party to a Financial Agreement cannot simply decide that they are unhappy with the Financial Agreement after signing it, there are specific grounds that a party must use to challenge a Financial Agreement in Court.
The most common grounds to challenge a Financial Agreement are as follows:
Non-disclosure of assets: One party failed to disclose the full extent or value of their assets, liabilities, or financial resources at the time of signing.
Fraud or misrepresentation: The agreement was obtained through dishonest conduct, such as hiding significant business interests or providing false information.
Duress, coercion, or undue influence: A party was pressured or manipulated into signing, often seen in cases where an agreement is presented shortly before a wedding with a threat to cancel the ceremony.
Lack of Independent Legal Advice: Both parties must receive independent legal advice from separate lawyers who must provide a signed certificate confirming this advice was given.
Material change in circumstances: A significant change has occurred—most commonly relating to the care and welfare of a child—that would cause hardship if the agreement were enforced.
Unconscionable conduct: One party took unfair advantage of the other's vulnerability, such as a language barrier, illness, or extreme financial dependency.
Impracticability: It is no longer possible or practical to carry out the agreement due to unforeseen circumstances.
Technical Defects: The agreement was not drafted or executed correctly according to strict statutory formalities.
In Frederick v Frederick, the Court confirmed that a Financial Agreement remains binding even when it appears one-sided. The judgment referenced Hoult v Hoult , which emphasized that: “The point of the legislation is to allow the parties to decide what bargain they will strike... they can literally make the worst bargain possible, but still be bound to it.”
The landmark High Court case of Thorne v Kennedy serves as a key example where a Financial Agreement was overturned due to undue influence and unconscionable conduct, emphasising that fairness and the circumstances of signing are critical to validity.
If you wish to challenge a Financial Agreement, then you must lodge an application with the Court seeking an order to set aside the Financial Agreement. The Court makes decisions based on evidence, so you should consider what evidence you will put forward to prove the grounds for the challenge. Like any case in Court, this can be a long and costly process.
