Can a Binding Financial Agreement Be Overturned?

Grounds for Setting Aside a BFA

A court can set aside a binding financial agreement (BFA) on the grounds in section 90K or section 90UM. Disappointment with the agreed result does not, by itself, establish one of those grounds.

The main grounds correspond across the two Commonwealth regimes.

Creditor protection supplies further grounds. These cover agreements intended to defraud or defeat creditors, and agreements made with reckless disregard for creditors’ interests. The Act also protects specified property interests of a party’s other spouse or de facto partner against fraud, defeat or reckless disregard.

Section 90UM adds a ground for certain agreements recognised under section 90UE from non-referring States. It concerns missing prescribed advice or an advice statement where leaving the agreement standing would be unjust and inequitable. These de facto rules concern agreements within Part VIIIAB. Establish the applicable jurisdiction before using them.

For the child-related ground, the material change must arise after the agreement. It must cause hardship to the child or to a party with the required caring responsibility if the agreement remains. Having a child does not automatically satisfy that test.

Was the Agreement Binding in the First Place?

Section 90G compliance is a separate question from whether a binding agreement must be set aside. Start with the requirements for a binding financial agreement and the solicitor’s file from signing.

Identify the pleaded defect, such as missing independent advice or an advice statement, and compare it with the signing file. The question is whether that defect prevents the agreement from binding the parties.

The agreement must also remain unterminated and not have been set aside. Section 90UJ contains the corresponding Commonwealth de facto requirements. Both provisions allow a court to cure specified advice or statement defects in defined circumstances, so a missing certificate alone does not settle enforceability.

An agreement made before marriage, commonly called a prenup, faces the same section 90K grounds as an agreement made during marriage or after divorce. Its age does not immunise it from challenge.

Undue Influence and Unconscionable Conduct

Undue influence and unconscionable conduct concern how the parties came to sign the agreement. Pressure and financial inequality must be assessed in their full context.

In Thorne v Kennedy [2017] HCA 49, the High Court restored orders setting aside pre-marriage and post-marriage agreements. Ms Thorne signed despite strong independent advice against doing so. Her dependence on Mr Kennedy and the pressure surrounding the wedding formed part of the factual assessment.

The majority identified six factors that can have prominence in these agreements, at paragraph 60.

• Whether the agreement was presented as non-negotiable.
• The emotional circumstances, including an express or implied threat to end the relationship or engagement.
• Whether there was time for careful reflection.
• The nature of the parties’ relationship.
• Their relative financial positions.
• The independent advice received and the time available to reflect on it.

Undue influence examines whether a party’s ability to exercise free choice was impaired. Unconscionable conduct requires a special disadvantage and the other party’s exploitation of it. At paragraph 38, the Court explains that the disadvantage must seriously affect the person’s ability to judge their own interests.

Financial inequality alone does not decide either claim. Nor does independent advice automatically answer a claim about the circumstances of signing. Preserve drafts and negotiation emails alongside the advice file. Travel arrangements, housing dependence and threats tied to the wedding can help explain the choices available at the time.

Non-Disclosure at Signing

Failing to disclose a material matter can amount to fraud under section 90K(1)(a), with the equivalent ground in section 90UM(1)(a). The question concerns obtaining the agreement, so evidence must connect the omission to the circumstances of signing.

In Jeeves & Jeeves [2011] FamCAFC 94, the Full Court dismissed an appeal concerning alleged business non-disclosure. Materiality to the wife’s consent was not established. The decision shows why identifying an omitted fact and explaining its effect on consent are separate tasks.

Compare the agreement’s asset schedule with the disclosure exchanged before signing. If a business was omitted, collect the business records and ownership evidence from that period. A recent valuation alone does not establish its value or ownership when the agreement was made.

Bank statements from the months around signing can show transactions that contradict the disclosed financial position. Look for recurring business receipts, transfers to account numbers absent from the schedule and payments of business liabilities from personal accounts. Those entries guide requests for the underlying records.

For example, suppose an asset schedule records only employment income and one personal account. In this hypothetical matter, statements show regular deposits carrying a company name and transfers to a second account before signing. Obtain the receiving account statements and company records to establish the income source and the party’s business interest.

A deposit can be a loan, refund or transfer between the party’s own accounts. Establish its source before calling it income. A transfer reference can identify a lead without proving who owns the receiving account.

If the agreement is several years old, obtaining historical bank statements helps reconstruct the signing period. Keep a chronology that pairs each alleged omission with its supporting record and the disclosure it contradicts. Record what the client already knew, because that evidence can affect materiality.

For a large statement bundle, FinTrace saves hours of conversion and review by producing a searchable Excel ledger and a clear findings report. Suspicious transactions and possible undisclosed income are flagged, with each finding citing its source PDF filename and page. That gives you the supporting transaction evidence for the signing-period chronology without repeating the statement review.

What Follows When a BFA Falls Away

When a BFA is set aside, the ordinary property framework can apply to matters the agreement previously covered. The court does not automatically award the challenger an equal share or recreate the agreement on different terms.

For married parties, the property claim proceeds under section 79. Commonwealth de facto property claims use section 90SM, subject to the applicable jurisdictional requirements. Sections 90K(3) and 90UM(6) also permit orders preserving or adjusting rights after an agreement is set aside.

The time limit for the later property claim needs its own analysis under section 44. Ordinary married-party property applications generally have a 12-month limit after divorce takes effect. Where an agreement is set aside under section 90K or invalid under section 90KA, section 44(3B) supplies a different calculation.

For those divorced parties, proceedings can be commenced within 12 months after the later of the divorce taking effect and the agreement being set aside or found invalid. Beyond that period, leave is required.

For Commonwealth de facto claims, section 44(5) permits an application within two years after the relationship ends or 12 months after the agreement is set aside or found invalid. It also permits an application with both parties’ consent. Leave for a late application has its own statutory conditions.

These periods concern the consequential property or maintenance proceedings. Treat the challenge and the later property claim as distinct procedural questions. Diarise the relevant events and relief sought before commencing the challenge.

Varying or Ending an Agreement by Consent

Parties who both want to change a financial agreement can replace it with a new agreement that meets the applicable formal requirements. Editing the old document and initialling the changes does not provide that replacement process.

Under section 90J, married parties can terminate an agreement through an express provision in another financial agreement. Alternatively, they can make a written termination agreement. Section 90UL provides those two routes for Commonwealth de facto agreements.

A standalone termination agreement requires all parties’ signatures. Each spouse party must receive independent legal advice before signing about the termination agreement’s effect on their rights and its advantages and disadvantages. Each must receive a signed statement confirming that advice, with a copy supplied to the other party or their practitioner.

The termination agreement must not have been set aside. Both regimes allow a court to cure specified advice or statement defects on the statutory terms. A new financial agreement has its own section 90G or section 90UJ requirements, including fresh advice about that agreement.

Termination ends the agreement’s operation, but does not itself divide the property or reverse every transfer already made. Sections 90J(3) and 90UL(3) allow orders preserving or adjusting rights following termination. Any remaining ordinary property claim depends on the applicable jurisdiction and time limits.

Voluntary termination does not itself trigger section 44’s extra period for an agreement set aside or found invalid by a court. Before terminating, identify the remaining property claims and record how the parties intend to resolve them. If they want different financial terms, use a compliant replacement agreement that expressly deals with the old one.