Chetri & Thapa [2024] FedCFamC2F 1611

Introduction

The Federal Circuit and Family Court of Australia (Division 2) in Chetri v Thapa [2024] FedCFamC2F 1611 conducted a detailed examination of the validity of a financial agreement executed under section 90C of the Family Law Act 1975 (Cth). The primary issue in dispute was whether the financial agreement was legally binding, considering the wife’s contention that she had not received the required independent legal advice as mandated by section 90G(1)(b) of the Act. The court also scrutinised serious allegations against the husband, including his admitted forgery of the wife’s and a retired barrister’s signatures on an earlier divorce application, raising significant concerns about his credibility and potential legal repercussions.

Background

The parties, Ms Chetri and Mr Thapa, were married in 1997 after meeting in Country C. The wife later migrated to Australia. The husband contended that they separated on 1 March 2017, while the wife maintained that the separation occurred on 15 June 2022.

During their marriage, the husband ran an enterprise through E Pty Ltd, which acquired commercial properties in Suburb G. The wife, at the husband’s request, established a business in Country C, frequently travelling to manage assets abroad.

In early 2017, the parties executed a financial agreement under section 90C of the Family Law Act 1975 (Cth). The husband claimed that the agreement was valid and binding, as it divided assets between them. The wife, however, argued that she had never received proper legal advice regarding its terms.

Further complicating the matter, the husband had forged both the wife’s and a retired barrister’s signatures on a divorce application, leading to the court questioning whether his actions should be referred to the Director of Public Prosecutions.

Key Legal Issues and Questions for the Court

1. Binding Nature of the Financial Agreement: Whether the financial agreement executed under section 90C of the Family Law Act 1975 (Cth) met the statutory requirements to be considered binding, particularly in relation to compliance with section 90G(1)(b).
2. Independent Legal Advice: Determining whether the wife received independent legal advice before signing the financial agreement, including whether the advice was substantive and met the statutory requirements under section 90G(1)(b) of the Family Law Act 1975 (Cth).
3. Impact of Forged Signatures on Legal Proceedings: Assessing the implications of the husband’s admitted forgery of both the wife’s and a retired barrister’s signatures on the divorce application and whether this conduct affected the credibility of his assertions regarding the financial agreement.
4. Referral to the Director of Public Prosecutions: Considering whether the husband’s fraudulent conduct should be referred to the Director of Public Prosecutions for further investigation and potential prosecution due to the seriousness of the forgery.
5. Unjust and Inequitable Considerations: Determining whether it would be unjust and inequitable under section 90G(1A) of the Family Law Act 1975 (Cth) to declare the financial agreement binding, considering the inadequacy of legal advice received by the wife and the husband’s fraudulent actions.

Case Authorities and Cited Precedents 

The court examined multiple legal precedents to assess compliance with section 90G of the Family Law Act 1975 (Cth) and the enforceability of financial agreements:

1. Abrum & Abrum [2013] FamCA 897 – Confirmed that legal advice under section 90G(1)(b) must be substantive, case-specific, and directed at the rights and obligations of the party receiving advice.

Link: Full Case

• Dragomirov & Dragomirov [2024] FedCFamC1A 187 – Reaffirmed that financial agreements must be scrutinised for compliance with the statutory requirements and that inadequate legal advice can render an agreement non-binding.

Link: Full Case

• Hoult v Hoult [2011] FamCA 1023 – Established that legal advice must extend beyond merely explaining the existence of an agreement; it must detail the impact of the agreement on the party’s legal rights.

Link: Full Case

• Hoult & Hoult [2013] FamCAFC 109; (2013) FLC 93-546 – Clarified that section 90G(1)(b) requires a party to be properly advised of the advantages and disadvantages of entering into a financial agreement.

Link: Full Case

• Logan & Logan [2013] FamCAFC 151 – Addressed the standard required for independent legal advice and reinforced the importance of ensuring parties understand their legal rights before signing an agreement.

Link: Full Case

• Parker & Parker [2012] FamCAFC 33; (2012) FLC 93-499 – Confirmed that while financial agreements do not require court oversight, they must meet statutory requirements for binding effect.

Link: Full Case

• Wallace & Stelzer and Anor [2013] FamCAFC 199 – Emphasised that misleading or insufficient legal advice can justify a court setting aside a financial agreement.

Link: Full Case

• Waterford v Commonwealth [1987] HCA 25 – Considered the evidentiary weight of a party’s sworn testimony when allegations of misconduct, such as forgery, arise in legal proceedings.

Link: Full Case

Court’s Findings

1. Non-binding Financial Agreement: The court found that the financial agreement was not binding under section 90G of the Act. The wife’s legal adviser, Mr S, failed to provide substantive advice regarding her rights and obligations under the agreement. The solicitor did not consider the wife’s financial contributions, non-financial contributions, or the implications of section 75(2) of the Act.
2. Lack of Independent Legal Advice: The court determined that the wife’s solicitor was not truly independent, as his engagement was facilitated by the husband’s solicitor. Further, the evidence suggested that legal fees may have been paid by the husband, creating a conflict of interest.
3. Forgery and Ethical Breach: The husband admitted to forging the wife’s and a retired barrister’s signatures on a divorce application, leading the court to question his credibility. The court sought submissions on whether his actions should be referred to the Director of Public Prosecutions.
4. Unjust and Inequitable Outcome: The court ruled that, even if the agreement had been properly executed, it would be unjust and inequitable to enforce it given the circumstances, particularly the lack of proper legal advice and the husband’s misconduct.

Legal Implications and Precedent Summary

This case underscores the strict requirements under section 90G of the Family Law Act 1975 (Cth) regarding binding financial agreements. It highlights the necessity of genuine independent legal advice, ensuring compliance with statutory requirements and protecting the rights of both parties. The case also serves as a stark warning about the consequences of fraudulent conduct in family law proceedings, as forging signatures on legal documents can lead to criminal prosecution. Additionally, it reinforces the court’s discretion in setting aside financial agreements that, despite proper execution, would result in unjust and inequitable outcomes.

Keywords

• Binding Financial Agreement
• Section 90G Family Law Act 1975 (Cth)
• Independent Legal Advice
• Divorce Application Forgery
• Director of Public Prosecutions Referral
• Property Settlement Dispute

Conclusion and Call to Action

The ruling in Chetri v Thapa [2024] highlights the necessity of obtaining comprehensive, independent legal advice before entering into a financial agreement. It also serves as a stark warning about the repercussions of fraudulent conduct in family law matters.

If you are considering a financial agreement or need legal representation in a family law dispute, consult Pentana Stanton Lawyers. Our experienced team can guide you through the complexities of financial agreements and ensure that your rights are protected.

Contact us today for expert legal advice and representation.