When is "Nil" as good as $10?

The Federal Government has proposed some further changes to the Family Law Act. Some of these deal with family violence and the press release is timed to coincide with International Day for the Elimination of Violence Against Women. Some, in a very welcome development, have to do with prenuptial or financial agreements. We shall report in future articles the effect of those proposed changes but need to note that they are only proposed changes at the moment because the Government's bill has to pass both houses of parliament.

There is however one aspect of the new proposals that is a very welcome step in relation to financial agreements. These financial agreements are not merely prenuptial agreements but can be done between partners to a de facto relationship, and can also be done during the relationship or after its breakdown or even after divorce.

The result of the proposed change in this respect will be to end an utterly sterile and pointless debate, and end a useless practice. Section 90E of the Family Law Act provided that if a financial agreement related to the maintenance of a spouse or a child, it was of no effect unless the provision specified the amount of provision of maintenance or the value of the portion of the property attributable to that party's or that child's maintenance. So you had to say how much each party was getting for spouse maintenance or, if for example the party was getting $1million settlement, $900,000 might be for property settlement and $100,000 for spouse maintenance, and each party would surrender his and her claim. The problem was with the phrase "the amount provided for...". In most agreements each party simply gives up the right to maintenance and so each party would normally get nothing by way of maintenance. However some lawyers argued that "the amount" implied there had to be some amount, and it could not be "nil". Others quite happily used nil.

For those worried about this, what developed was a practice of valuing the maintenance right given up at $10. You then had the practice where after the agreement was signed, on party gave the other $10 and the other party immediately gave it back. I imagine there would be many many people who simply forgot to do it. They thought, and justifiably, that this was trivial and silly.

I am not aware of any case that has arisen, but it would be conceivable that failure to exchange the $10 amounted to a breach of the financial agreement and potentially a risk of the agreement being set aside by the court.

The new proposed change specifically says that "nil" will be just as good as $10. The argument is over (if the Bill passes into law).

Disclaimer: The articles on this page are correct at the time of writing but changes in the law or procedure  may affect the accuracy of the information. Should you require any specific legal advice please contact Pearson Emerson Family Law.