FAMILY COURT OF AUSTRALIA

PHAK & XU	[2015] FamCA 939	

FAMILY LAW – PROPERTY – Financial agreement – application to set aside an otherwise binding agreement pursuant to s 90K Family Law Act 1975 (Cth)	

Family Law Act 1975 (Cth) ss 90K, 90KA	

Kostres and Kostres (2009) FLC 93-420; 42 Fam LR 336
Favia & Carmel-Fevia (2009) FLC 93-411
Taylor & Johnson (1983) 151 CLR 422	
Sanger & Sanger (2011) FLC 93-484; 46 Fam LR 275

N C Seddon & M P Ellinghaus (eds) Cheshire and Fifoot’s Law of Contract (LexisNexis Butterworths, Australia, 10th Australian Edition, 2012)

APPLICANT:	Ms Phak	

RESPONDENT:	Mr Xu 	

FILE NUMBER:	MLC	9662		of	2012	

DATE DELIVERED:	30 October 2015	

PLACE DELIVERED:	Hobart	

PLACE HEARD:	Melbourne	

JUDGMENT OF:	Benjamin J	

HEARING DATE:	24, 25, 26 & 27 August 2015	

REPRESENTATION

COUNSEL FOR THE APPLICANT:	Mr Bartfeld Q.C.	

SOLICITOR FOR THE APPLICANT:	Goldsmith Lawyers	

COUNSEL FOR THE RESPONDENT:	Mr Dixon S.C.	

SOLICiTOR FOR THE RESPONDENT:	U Lawyers	
ORDERS
1.	The financial agreement dated 13 February 2012 entered into between the parties be and is set aside.
2.	The costs of both parties to the application to set aside the financial agreement are:-
(a)	reserved pending determination of the substantive property proceedings between the parties; and 
(b)	any costs application/s pursuant to this reservation is/are to be made within twenty eight (28) days of final property orders and are otherwise to be dealt with in accordance with the Family Law Rules 2004 (Cth).

3.	The trial of the substantive application property proceedings, pursuant to s 79(1) of the Family Law Act 1975 (Cth) for a property settlement, be listed for mention, before the Docket Registrar, at 10.00am on 16 December 2015, at Melbourne, for allocation to a Melbourne Judge for final hearing.
DIRECTIONS
4.	The applicant wife shall pay the hearing fee on or before 30 June 2016. 
5.	The applicant wife shall file and serve a further amended initiating application, a further financial statement and an affidavit of any lay witness upon whom she seeks to rely on or before 1 March 2016. 
6.	The respondent husband shall file and serve a further amended response to the applicant wife’s further amended initiating application, a further financial statement and an affidavit of any lay witness upon whom he seeks to rely, on or before 1 April 2016.
7.	No later than 13 May 2016 each party exchange with each other party:-
(a)	If not already exchanged, a copy of all the documents mentioned in Rule 12.02;
(b)	If not already exchanged, the documents which provide proof of, information or support:-
i.	the information contained in the financial statement; 
ii.	any inheritances, gifts or compensation payments received during cohabitation or post separation;
iii.	any purchase or disposal of property in the twelve (12) months prior to and since separation;
iv.	any increase or reduction of liabilities since separation;
v.	the value of any superannuation interest of a party, including the basis on which the value has been calculated and any documents used to calculate the value; and
vi.	documents relevant to the issues raised in either party’s material. 
8.	Upon the parties appointing a mediator and conducting a private mediation, the requirement for a conciliation conference is dispensed with.
9.	In the event that the value of any item of property owned by either party or a company, trust or other entity in which either party has an interest remains unresolved, the parties agree on the appointment of a single expert to value such property and the single expert’s fees are to be borne equally between the parties and in default of agreement, there be liberty to apply to the Court pursuant to Rule 15.45 (1) of the Family Law Rules 2004 (Cth). 
IT IS CERTIFIED
10.	Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage senior counsel and counsel to attend.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Xu & Phak has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Family Court of Australia at MELBOURNE
MELBOURNE 	

FILE NUMBER: MLC 9662 of 2012

Ms Phak	
Applicant

And

Mr Xu 	
Respondent

REASONS FOR JUDGMENT
INTRODUCTION
1.	This is a dispute between a former married couple about whether their otherwise financial agreement should be set aside as being void or voidable pursuant to equitable principles. 
2.	For the parties, this is an ‘all duck or no dinner’ dispute. 
3.	If the agreement is not set aside, the only jurisdiction and power of this Court is that regarding enforcement.  If the agreement is set aside, then the parties will need to either renegotiate their property differences or have their respective property claims determined through a costly court hearing.
4.	To save the parties trawling though these reasons to ascertain the outcome, I have determined that the agreement should be set aside.  For the benefit of the parties and any other person/s reading this judgment, this particular paragraph was added after the following reasons had been substantially considered and completed.    
5.	Ms Phak (‘the wife’) and Mr Xu (‘the husband’) entered into an agreement dated 13 February 2012 (‘the Agreement’), which document constituted a binding financial agreement pursuant to s 90C of the Family Law Act 1975 (Cth) (as amended) (‘the Act’).  
6.	The Agreement provided for the distribution of property between the parties and the terms of the Agreement have in part been implemented or acted upon.
7.	The wife now seeks an order to set aside the Agreement pursuant to various sub-sections of s 90K of the Act.
8.	No issue was raised by the parties in relation to non-compliance by one or other of them with regard to s 90G of the Act.  The effect of a valid and binding financial agreement is that Part VIII of the Act is not available to base a property claim under the Act.  Section 71A of the Act has the effect that binding financial agreements oust the jurisdiction of the Court.
9.	Section 90K of the Act provides for a court to set aside a financial agreement in certain circumstances.
10.	After a long period of negotiation over 2011, the wife and husband entered into the Agreement on 13 February 2012.  As part of that Agreement the wife was to retain entitlement to two home units at Suburb E, Victoria, (‘Suburb E’).  Each of the parties warranted to the other that these entitlements had a value estimated at $1,000,000.
11.	The Suburb E property deal involved various agreements with developers which the parties believed had created valuable legal rights in respect of two unbuilt home units.  At the hearing the wife asserted, amongst other things, that there was common mistake as to the nature of this property, and that it was in essence a mirage.  
12.	The husband asserted that it was a chose in action, which in effect lead to the wife taking over these assets from late November 2011.  He further claimed she had taken steps which led to the loss of this valuable asset and that the loss was simply a commercial risk that arose subsequent to the execution of the Agreement, and that as a consequence the wife should bear the loss.
13.	This ‘substantial loss’ came to light in late 2013 and early 2014 that in turn led to these proceedings, and to which is the primary issue in this case.  The wife’s case was that when the Suburb E dealings were carefully and objectively examined, and that it is clear that the parties were at all times the victims of a fraud or a ruse, which meant that instead of being entitled to valuable property their substantial deposit was, at all relevant times, worthless. 
THE ISSUES
14.	The wife asserted there was a significant breach of the Agreement by the husband as a consequence of his alleged fraudulent non-disclosure so as to render the Agreement void.  That non-disclosure was asserted to be the value of a house and land package at F Street in Suburb G (‘the Suburb G Property’) as at the date of the Agreement.  The husband said it had a value of $190,000 and the wife said it had a value of $325,000.  Was this alleged non-disclosure by the husband such as would enable the exercise of the court’s discretion to set the Agreement aside? 
15.	The wife further asserted that money from a joint Westpac account had been unilaterally applied, by the husband, to build a house on the Suburb G Property; thus diminishing the funds available to be shared pursuant to paragraph 15(p) of the Agreement.  The wife claimed that as such the Agreement ought to be set aside.  This seems not to be the wife’s strongest argument as the spending of this money reduced the account, but that account was said to contain enough to pay $50,000 to the wife and the balance of about $400,000 to the husband.
16.	The wife asserted that the husband failed to make full and frank disclosure as on the date of the Agreement that he had an undisclosed ANZ Bank account with a credit balance of $30,235.
17.	The wife also asserted that the husband failed to make full and frank disclosure in that the husband represented he had an income of some $15,000 whereas the wife asserts he had a far greater income.  
18.	Senior Counsel for the wife submitted that the essence of the Agreement was that the property would be divided approximately equally and that the division, given all of the factual findings, was very strongly weighted in the husband’s favour given the other factors, including Suburb E.   
19.	The underlying reason for this litigation was the failure of the Suburb E entitlements.  The husband asserted that the wife took a commercial risk, which subsequently failed and as such there was no basis to set the Agreement aside given that post agreement occurrence.  The wife submitted that given the circumstance surrounding the Suburb E entitlements the Agreement was:-
(a)	void by reason of common mistake; or 
(b)	alternatively, a unilateral mistake by the wife with the husband’s knowledge; or
(c)	alternatively, the Agreement is frustrated, as the subject matter of agreement did not come into existence.
20.	As a consequence the wife claims that the Agreement was void ab initio and the Court should set it aside. 
21.	The wife contended that the Agreement was void or voidable because it contained a superannuation splitting order.
BACKGROUND
22.	The wife is aged 40 and the husband is aged 54.  Both parties were born in China and immigrated to Australia in around 1987.  The parties commenced dating in 1991 and commenced cohabitation at the end of that year.  They married in 1992; they separated in 2010 and were divorced in January 2013.
23.	There were two children of their marriage.  Their daughter, C, is now aged eighteen.  Their son, D, was born in 1998 and he died in 2013, having suffered from a long term illness.
24.	The wife claims that she is in poor health having been diagnosed with Hepatitis B.  In addition the wife says she suffers from back pain caused through pregnancy and labour.  She is currently employed.  The husband disputes that the wife is in poor health or was in poor health at the time of entering into the Agreement.
25.	The husband claims he suffers from ‘chronic left shoulder rotator cuff syndrome’ and cannot do heavy lifting of more than 5kg.  The wife asserted that the husband is in good health.  The physical health of the parties has no relevance to this determination, as the only issue for the Court to determine is whether the Agreement between the parties is binding. 
26.	Throughout the marriage, the wife prepared most income tax returns and BAS Statements for the parties and their business interests.  The wife held a Diploma of Accounting qualification.
27.	The husband primarily cared for D in the last year of his life.  There is no issue that the husband cared for D in the year prior to that, although there is an issue as to the extent of the wife’s involvement.
28.	After the parties separated in 2010, they continued to live together under the one roof in the former matrimonial home until August 2014.  At that time the husband was removed from the home by police for allegedly assaulting the wife.  The police made an application for an intervention order on wife’s behalf and on 29 August 2014 interim orders were made in favour of the wife.  In September 2014 the husband filed an application for an intervention order against the wife.  A resumed hearing of the competing applications for an intervention order was heard on 25 February 2015, and the husband’s application was dismissed.  An intervention order was made against the husband in favour of the wife for a period of two years.
29.	In 2010 the parties commenced negotiations in relation to resolving property issues between them.  These continued until the execution of the Agreement in February 2012.  The wife signed and dated the Agreement on 9 February 2012 and the husband signed and dated it on 13 February 2012.  I find the Agreement became binding on that later date.  Each of the parties had independent legal advice and certificates of independent legal advice are attached to the Agreement. 
30.	In April 2008 the parties set up a family trust called the Xu and Phak Family Trust (‘the Family Trust’).  The Trustee of the trust was Xu and Phak Pty Ltd (‘the Trustee Company’).  Shortly after the Trustee Company had been set up the wife became its sole director.  The shareholders of the Trustee Company were the husband and the wife.
31.	On 18 September 2008 the husband sets up an HSBC Bank account in Hong Kong.
32.	Towards the end of 2008, the wife was in contact with the H Group (‘HG’) regarding the Suburb E development.  The HG proposed to the parties that they pay the developers $420,000 in advance, asserting the parties would receive two units worth more than double the amount upon completion. 
33.	The parties discussed this project.  The husband asserted that he initially refused the project because he considered it to be too risky.  Irrespective, the parties jointly agreed to go ahead with this venture.
34.	The proposal was that the parties advance the full price of $420,000 to the developers and secure their interests by way of a loan agreement and caveats over the developers’ properties. 
35.	In late 2008 or early 2009, the parties entered into the undated contracts for the purchase of Unit 1 and Unit 2 in the Suburb E Development.  The vendors were I Pty Ltd and J Pty Ltd.  The purchase price for each unit was $210,000, making a total of $420,000.  This development was said to be in the planning stage and no work had commenced. 
36.	The parties engaged solicitors to advise and act for them in relation to the purchase and securing their interests in Suburb E.  As proposed their advance was secured by way of a loan agreement and caveats over the developers’ properties.  The wife asserted in paragraph 26 of her trial affidavit that she and the husband intended that she would receive two completed units at the time of signing the Agreement and it was the husband and wife’s expectation that this would occur.
37.	Adduced in evidence was the undated loan agreement made between the parties and K Pty Ltd (‘the Developers’ of Suburb E) whereby in late 2008 or early 2009 the parties advanced $420,000 to the Developers with a provision for interest.  This agreement provided some form of security and also provided that the husband and wife could purchase Unit 23 and Unit 24 in the proposed unit development for $210,000 each. 
38.	On 25 February 2009 the parties lodged caveats over two properties, Suburb L and Suburb M, owned by one or other of the Developers of Suburb E.
39.	The caveats were withdrawn on 22 March 2011 and 30 August 2012, with the knowledge of both parties. 
40.	On 9 August 2010 the wife, in her capacity as the sole director of the Trustee Company and for benefit of the Family Trust, entered into two new sale contracts for Suburb E.  This new contract was made with one of the previous Developers.  I accept the evidence of the wife that the husband was present at the time that new arrangement was consummated.  
41.	The new arrangement was said to be to the purchase of lot 21 for $560,000 and $580,000 for lot 26.  In addition the parties (Trust) were/was given ‘Redeemable Certificates’ to limit the cost of each unit of these different units to $210.000.  It was clear that the already paid advance of $420,000 would be the full consideration for the purchase of those home units, when they were built.
42.	In October/November 2010 the Developers defaulted on the parties’ loan agreement, and did not complete (or start) construction of Suburb E in the time frame contained in the initial contract.  The Developers commenced making irregular interest payment into the parties’ joint Westpac Bank account. 
43.	These irregular interest payments ceased in about October 2011.  I find that the wife was aware of the interest rate payments, that she was accessing the parties’ Westpac account electronically, and that she used funds from that account.
44.	In the meantime following their separation, negotiations commenced between the parties with regard to their property settlement.  I am satisfied that the wife wished to retain the entitlement to Suburb E and consequently the proposed Suburb E Units when they were built.  This desire on her part is set out in the draft agreements prepared by the parties.  The hand written documents created by the parties as proposals or heads of agreement are contained in the respondent husband’s bundle of documents.
45.	I am satisfied that each of the parties believed that Suburb E had a value of about $1,000,000 at the time of the negotiations and executing the Agreement.  At one stage the husband proposed a ‘swap’ and that he would end up with Suburb E.
46.	On 19 October to 11 November 2011 the wife emailed Mr N and Mr C OO to chase the interest payments in relation to Suburb E. 
47.	On 23 November 2011 the wife and/or her alter ego entered into further contracts in relation to the Suburb E Unit developments for the purchase of lots 3 and 4.  The purchase price was increased to $595,000 and $610,000 respectively.  Redeemable Certificates were issued to limit the cost of each unit to the original $210,000.  The Redeemable Certificates were expressed to be for $605,000 and $585,000.  The certificates also stated that the Developers would pay interest of 10 per cent per annum on the $210,000 paid on each property until the properties were completely developed ($3,500 per month).  This was not paid. 
48.	The parties believed the Redeemable Certificates could be used to ensure that the wife received the home units she intended to receive without further consideration.
49.	It is not in issue that the wife at that time asked the Developers not to communicate with the husband, and by the end of November 2011 the husband ceased receiving any correspondence from the Developers and ceased any dealings with them until December 2013. 
50.	On 1 October 2013 the wife lodged further caveats over the K Developer’s properties at Suburb M and Suburb L.  
51.	On 25 December 2013 the husband emailed Mr N (from the HG) enquiring about unpaid interest payments from November 2011 to February 2012. 
52.	On 26 December 2013 Mr N emailed the wife stating:-
…	I recall some time, a long time back, you asked that I only send emails to you. …Should I include [the husband’s] email address in my regular updates from here on? …
53.	On 27 December 2013the wife replied to that email stating:-
…	I’ve forwarded your update to him.  Its ok from now on you can send him the update too. …
54.	Mr N replied to the wife’s email explaining the problems the Developers were facing in relation to the Suburb E Units, but reassured her that:-
…	we believe that there is genuinely enough profit in the project to have a new developer receive a good margin …  and all investors get their capital back.  …
55.	The wife replied to Mr N email stating “… wishing you the best luck to get a really good deal for all of us…”.The husband is not copied in this email. 
56.	At or shortly after that time it became clear that the development would not go ahead and eventually the development failed.  The $420,000 was lost.
57.	No endeavour had been made by the Developers to commence building on the properties at Suburb E at that time or at any other relevant time.
58.	The parties had lent a friend, Ms P, the sum of $180,000 and this advance was secured by caveat over Ms P’s property at Suburb Q.  The parties withdrew that caveat on 4 August 2011.  They were owed $210,000, including $30,000 interest, and that sum was lost. 
59.	In early October 2010 the Trustee signed a contract of sale for the parties’ Family Trust to purchase land at Suburb G.  The purchase price for the land was about $193,000.  At the same time a building contract was entered into with R Pty Ltd to build a home on the Suburb G Property for the Trustee Company.  The wife, on behalf of the Trustee Company, signed both of the contracts.  The parties paid an initial deposit of $1,000 then later the balance of $28,511.
60.	Shortly after those contracts were executed the parties were advised that the bank was unwilling to loan funds to the Trustee Company to complete the purchase of the Suburb G Property.  The wife became reluctant to purchase the property.  The husband decided to proceed with the purchase and as a consequence both contracts were amended to provide that the husband would purchase the Suburb G Property and agreed to the building of a home on that land. 
61.	On 24 April 2011 the wife prepared a handwritten draft agreement dividing the assets and liabilities between the parties.  The wife asserted this was done pursuant to the husband’s directions; I do not accept her evidence to that effect. 
62.	On 14 May 2011 the wife prepared another handwritten draft agreement dividing the assets and liabilities between the parties.  The wife asserted this was done pursuant to the husband’s directions; I do not accept her evidence to that effect.
63.	On 17 June 2011 a sum of $150,000 was transferred from joint funds to the husband’s ANZ Bank Account, in preparation for the settlement of the Suburb G Property.  On 8 July 2011 the purchase of the Suburb G Property was settled, and the husband paid $159,672.54 from his ANZ Bank Account (******626).  I am satisfied that the wife had knowledge of this given her access to the Westpac account and her detailed knowledge of the Suburb G transaction.
64.	On 30 July 2011 the wife prepared another hand written agreement to take into account the $159,672.54 paid for the Suburb G Property settlement.  The wife asserted this was done pursuant to the husband’s directions; I do not accept her evidence to that effect.
65.	In early October 2011 the husband asserted that he and the wife met Ms S to discuss refinancing their existing home loan from joint names into the husband’s sole name, to finance the construction of the Suburb G Property.
66.	On 1 November 2011 the wife prepared a typed draft agreement seeking to retain the Suburb E Units, and dividing the assets, liabilities and financial resources (‘November 2011 document’).  The wife asserted this was done pursuant to the husband’s directions; I do not accept her evidence to that effect.
67.	On 3 November 2011 the husband says he signed the Final Specifications document, for the construction of the Suburb G Property, in the wife’s presence.  I accept that evidence.  The building of the house on the Suburb G Property commenced shortly after that time.
68.	On 11 November 2011 the husband’s application to Westpac Bank for refinance was approved and shortly after, on 16 November 2011, $314,956.59 was transferred into the parties’ joint Westpac Classic Account.
69.	On 25 November 2011 the wife unilaterally withdrew $350,000 from the parties joint Westpac Bank Account to a bank account in her sole name and informed the husband by way of emails that she had taken the funds to avoid “wasting my life for excuse after excuse”.
70.	The husband said that he agreed to enter into the Agreement on the basis that the wife repatriated the $350,000 into the parties’ joint Westpac account.  That occurred on 6 December 2011. 
71.	In December 2011 the husband instructed U Lawyers to prepare the Agreement based on the April 2011 Document and the November 2011 draft agreements.  Between that time and early February 2011 the formal Agreement was prepared and submitted to the wife.  The husband provided a copy of the document to the wife. 
72.	A few days later the wife returned the signed agreement to the husband.  The wife showed to the husband a letter from Barnett and Barnett Lawyers dated 9 February 2012 stating inter alia, that the wife agreed to:-
…	sign the Binding Financial Agreement, despite [their] advice that the distribution of assets provides your husband with a slightly higher than 50% share. 
73.	In response, it seems not in issue that the husband suggested they swap their respective entitlements around.  The wife declined his offer. 
74.	On 13 February 2012 the husband signed the Agreement, and it was executed pursuant to s 90C of the Act.  
75.	The wife continued to reside at the former matrimonial home to avoid any disruption to the children, particularly given D’s health.
76.	On 24 February 2012 the wife withdrew $89,161.37 and $1,000 from the parties’ joint bank account, by way of cheques dated 23 and 24 February 2012.
77.	On 18 April 2012, in accordance with the Agreement on 12 February 2012 the wife executed transfers of Land documents for the following properties to the husband:-
•	1 V Street, Suburb W;
•	2 V Street, Suburb W;
•	X Street, Suburb W;
•	Y Street, Suburb W;
•	Z Street, Suburb AA;
•	BB Street, Suburb CC;
•	DD Street, Suburb EE;
•	FF Street, Suburb GG; and
•	B Street, Suburb T (the former matrimonial home). 
78.	The husband was not required to sign any transfer of land documents for the wife because the properties the wife retained pursuant to the Agreement were already in the name of the Trustee Company.
79.	On 7 January 2013 the parties were divorced.
80.	Sadly, on 15 February 2013 D passes away.  
81.	The husband says he made repeated requests for the wife to move out of the former matrimonial home, but she refused.
82.	On 6 February 2014 the wife sent an email to the husband seeking a renegotiation of the Agreement.  The husband did not accommodate that request.
83.	On 7 March 2014 the wife filed an initiating application seeking to set aside the Agreement.  The husband filed a response on 17 April 2014 opposing that application.  A Case Assessment Conference was held on the 5 May 2014. 
84.	In these reasons any statement of fact is to be regarded as a finding of fact unless the contrary is clear from the context. 
THE LAW
JURISDICTION AND POWER
85.	The Agreement is a financial agreement pursuant to s 90C and as such it is binding on the parties.  The jurisdiction of the Court under Part VIII of the Act is excluded, but for enforcement or if the Agreement is set aside pursuant to s 90K of the Act.
86.	The wife’s proceeding were reliant upon s 90K of the Act, and that provision relevantly provides:-
90K(1)  A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that: 
(a)  	the agreement was obtained by fraud (including non-disclosure of a material matter); or 
(aa)  	…  
(ab)  	… 
(b)  	the agreement is void, voidable or unenforceable; or 
(c)  	in the circumstances that have arisen since the agreement was made it is impracticable for the agreement or a part of the agreement to be carried out; or 
(d)  	…. 
(e)  	in respect of the making of a financial agreement--a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable; or 
(f)  	… 
(g)  	the agreement covers at least one superannuation interest that is an unsplittable interest for the purposes of Part VIIIB. 

87.	The other source of power relied upon by the wife was s 90KA of the Act which relevantly provides:- 
90KA The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court: 
(a) 	subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and 
(b) 	has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and 
(c) 	in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court. 
88.	As to the question of whether an agreement is void or voidable pursuant to ss 90K(1)(b) of the Act the Full Court in Kostres and Kostres (2009) FLC ¶93-420 discussed the effect of the legislation and said:-
128. 	We accept that in determining whether the agreement is valid, enforceable or effective, the general law relating to contracts, as well as principles of equity, are to be applied. That must be done to give effect to the parties' intentions at the time of the making of the agreement, and in the context of the statute. The legislature has been careful to include strict requirements if a financial agreement is to be binding, including the requirement of independent legal advice. In those circumstances it is clear the legislature envisaged, because of the nature of these agreements and the removal of the Court's supervisory role, that parties would receive legal advice about the necessity for their intentions to be accurately and clearly reflected in the actual terms of the agreement.

129.	While, for the purpose of construing the agreement a court should, as in the context of a commercial agreement, apply an objective test of a reasonable bystander to the construction of an agreement, it cannot give meaning to an agreement whose terms are so imprecise or ambiguous the parties' intent cannot be discerned. This is particularly so when regard is had to provisions of Part VIIIA in the overall context of the Act.

89.	Murphy J in Fevia and Carmel-Fevia (2009) FLC ¶93-411, considered whether s 90KA of the Act enabled the Court to rectify a failure to comply with s 90G of the Act; saying:-
119.	If the parties to a marriage (or parties to a prospective marriage) enter an agreement which otherwise meets the criteria for the formation of a valid and enforceable contract and which purports to determine how, in the event that their marriage breaks down, their financial affairs should be determined, the principles of contract (and equity) will determine the parties’ rights with respect to that contract.  So much is clear, in my view, from s 90KA.
His Honour went on to state (at para 276-7):

276.	In my view, the Parliament has, in s 90KA,  made it plain that the principles of law and equity shall apply in determining whether, in a particular case, the first of the two prerequisites to the creation of specific statutory agreements is satisfied: namely that there is in fact a valid, effective and enforceable agreement and, thereafter, “financial agreement. Equally, the parliament has made it plain that principles of contract and equity are applicable in deciding if the second of the requirements for the creation of those statutory contracts (the “statute of frauds-type” requirement that it be in writing) are met or can be relieved against.

277.	But, once there is a valid, enforceable and effective form of statutory contract (i.e. a “financial agreement”) according to the statutory requirements - applied in accordance with the principles of contract and equity - the Act provides for a set of requirements whose purpose is not “contractual” but, rather, establishing whether s 71Aof the Act is invoked or not.  If s 90KA was intended by the Parliament to play a role in that (separate) enquiry, s 90KA would have made reference to the question of an agreement being “binding”.

90.	The principles that flow from this seem to be:-
(a)	The determination about setting aside an agreement is a discretionary exercise of the Court.
(b)	Such an exercise of discretion requires the underlying findings or concessions of facts which enliven the relief sought, provided they establish at least one of the subsections of s 90K of the Act.
(c)	As to the determination of whether a contact is void, voidable or unenforceable, the Court has the broad powers of the High Court in its original jurisdiction in interpreting and determining the status of the contract. 
91.	In many ways the determinations can influence the exercise of discretion.  If an agreement is void or unenforceable it would seem in most cases illogical not to set it aside.
92.	The discussions between the senior counsel for both parties and the bench raised whether the Court has the power to reconstruct the Agreement.  It became clear, given the change of circumstances since the Agreement was entered into, that such a course would not be equitable and neither senior counsel supported any such approach, nor will I.
93.	In terms of the alleged material non-disclosures, I have considered them both separately and collectively. 
THE EVIDENCE
94.	The wife relied upon the following documents:-
(a)	her amended initiating application filed 10 October 2014;
(b)	her affidavit filed 1 June 2015 together with seven volumes of annexures (Annexure Books 1 to 7 containing Annexures QP1 to QP40);
(c)	her affidavit in reply filed 20 July 2015;
(d)	her amended financial statement filed 1 June 2015;
(e)	her tender bundle – Exhibit W1;
(f)	the original redeemable certificates and hand-written property settlement draft agreements dated 24 April 2011, 14 May 2011 and 30 July 2011; 
(g)	her Exhibits; and
(h)	an affidavit of Mr HH, valuer.
95.	The wife’s senior counsel also provided a case outline filed 19 August 2005.
96.	The husband relied upon the following documents:-
(a)	his amended response to the initiating application filed 27 October 2014;
(b)	his trial affidavit filed 29 June 2015;
(c)	the annexures to the his trial affidavits (Annexure Books 1 to 3) with Annexures John 1 to John 32; and
(d)	his tender book - Exhibit H1 and other exhibits.
97.	The solicitors for the husband provided an outline of case document filed 19 August 2015.
THE WITNESSES
Mr HH
98.	The wife obtained a retrospective valuation of the Suburb G Property as at 13 February 2012.  The valuer was Mr HH, who deposed an affidavit filed 17 August 2015 and whose amended valuation was admitted into evidence in the wife’s bundle of documents.
99.	In his affidavit the husband said he did not accept the retrospective valuation.  That approach was withdrawn during his evidence.
100.	There was no challenge to Mr HH’s qualifications.  Later in the hearing the husband conceded that the house and land at Suburb G, as at the date of the Agreement, had a value attributed by Mr HH of $325,000.  I accept that evidence.
The wife
101.	Part of the affidavit evidence of the wife was struck out, given that the husband withdrew the final orders he sought numbers 2 and 3 in his amended response filed 27 October 2014.
102.	The wife gave evidence in accordance with the remaining parts of her affidavits filed 1 June 2015 and 20 July 2015.
103.	Each of these affidavits contained voluminous annexures which were removed and are now contained in Exhibit W4 (the seven volumes of exhibits formerly attached to the wife’s trial affidavit) and Exhibit W5 (the Exhibits to her affidavit of 20 July 2015).
104.	In addition, senior counsel for the wife tendered a bundle of documents which were Exhibit W1.
105.	The wife gave evidence that the deductions made by the husband for the building of the house on the Suburb G Property around the time of the advance to the parties of $314,000 in November 2011 were made without her knowledge.
106.	Given the matters to which I have referred elsewhere in these reasons including: the wife’s knowledge of the building and land purchase contract, and the fluctuating state of the parties assets over 2011, I am satisfied that the wife did have knowledge or constructive knowledge of the withdrawal for the need to pay the builder to construct the home at Suburb G.
107.	I find the wife executed the Agreement freely, voluntarily and without pressure.  She was keen to complete the Agreement and used the withdrawal of $350,000 in November 2011 to encourage the husband to instruct his legal practitioners to that end.  The wife was aware that the Agreement did not provide for a precise 50/50 division, although it was a division within that area.
108.	The wife gave evidence in relation to the draft agreements referred to in the husband’s bundle of documents and partly contained in Exhibit W2.
109.	The wife agreed that she was a director of the Trustee Company and that she retained all of the properties of that company.
110.	She denied she controlled the Trustee Company and said the husband was involved in its work.  I accept her evidence that until mid to late 2011 the husband was kept informed of the operations of the Trustee Company and worked with the wife in terms of its acquisitions, sales and the like.
111.	The wife works as a casual interpreter and she has an associate diploma in accounting.  Prior to separation she prepared tax returns for the Trust and Trustee Company and tax returns for the husband and herself.
112.	The wife was cross-examined about her knowledge of the parties’ bank accounts.  The wife asserted that she had little knowledge of the bank accounts, despite having the cheque book and issuing most cheques.
113.	The wife was engaged in the lodgement of BAS statements and other financial records.  I am not satisfied that her evidence in relation to not knowing the amounts in the bank accounts.  Given the factual events over 2011 including her hand-written notes about monies that were or were not in accounts, the removal of the $350,000, the issue of other cheques, and her issue of cheques after the settlement, I am satisfied that she regularly had access to the detail of the bank accounts and regularly accessed them.  Her evidence in relation to ‘not necessarily’ checking accounts was unconvincing and implausible.  
114.	In terms of the bank accounts the wife said she did not notice or was not aware of the difference in the Westpac account of $320,000 and $163,000 as between the earlier draft agreements.  I do not believe her evidence in that regard particularly given her careful observations of the funds in those handwritten notes.
115.	The wife endeavoured to distance herself from the knowledge of the purchase of the Suburb G Property and the building contract.  I was troubled by her evidence in that regard as it is clear that she was involved in the wealth creation of these parties as shown in her preparation of the 2007 loan application, the tax returns and preparation of the BAS statements. 
116.	The wife asserted that the husband withdrew the funds for the building of the house and for the purchase of the land without her knowledge or consent.  I do not believe her.
117.	When asked about the settlement of the Suburb G Property, the wife’s answer was that she was in deep distress with bills and worried about their son’s situation.  I have no doubt both parties were worried about their son’s illness for some time and continued to be concerned.  However, as I said earlier, I do not accept that she was not aware of those significant changes in the monies the parties had in the bank.
118.	The wife was very conscious of funds due to her.  After the signing of the Agreement in February 2002 she deducted significant sums from the joint account.  She took the $50,000, to which she was entitled under the Agreement, $19,488 being the proceeds of the sale of the shares due to her, $10,000 being a reflection of $5,000 from the joint Commonwealth Bank Account, $3,000 for a special bed, and $2,000 for a fridge and other furniture.  She also took a further $1,000.
119.	In October 2010 the wife, as director of the Trustee Company, initially signed the real estate purchase contract for the Suburb G Property.  That contract required the payment of an initial deposit of $1,000, which the wife acknowledged, and the balance of the deposit by 18 October 2010 of some $18,330.
120.	At the same time she initially signed the building contract which provided for a deposit of some $10,180.
121.	Clearly the wife took about $11,000 more than the Agreement provided.  There was no overt objection by the husband in relation to that.
122.	On 25 November 2011 the wife sent an email to the husband following her withdrawal of $350,000 of the parties’ funds.  This was shortly after the husband had borrowed about $314,000 for the purpose of meeting the expenses of building the home.  The wife was aware at the time she was negotiating the Agreement that the husband needed to borrow money for the construction of the home on the Suburb G Property.  The wife, in her email said to the husband:-
	Just wanted to let you know that I have transferred $350,000 out from Classic Plus, and I am keeping the free title as … and Suburb E in the future.
…	im [sic] still open to negotiation with the last agreement.  Otherwise, im [sic] holding on to those, and its half of everything roughly, you can take …
…	im [sic] sorry I have to do this as I am not wasting my life excuse after excuse.
123.	The husband replied on the following day:-
	To avoid loss and make things complicate [sic].  Please transfer $350000 back to the account and bring the gold back.  Don’t do stupid thing [sic].
124.	The wife asserted in her affidavit the following:-
	Throughout the relationship and including the time of negotiating the BFA I relied upon what the husband told me in respect of our finances.  To an extent this reflects traditional Chinese culture where I viewed myself in a subservient role.  In addition, the husband’s behaviour towards me and particularly since 2005 became increasingly abusive, belittling and controlling.
125.	The wife went on to set out the nature of the abuse and the control.
126.	In terms of the finances of the parties, the wife’s assertions as to her subservient role and relying on the husband for the provision of information are inconsistent with the objective evidence.  As such that part of her evidence is unreliable.
127.	The wife had access to the Westpac account and I am satisfied she would have seen the significant funds paid out of the account over the whole of the period but in particular between November 2011 and the signing of the Agreement.
128.	She knew that the parties had borrowed an additional $314,000.  Her explanation that it was just borrowed for the purpose of having it available, and for no particular use, was unconvincing and I did not believe her.
129.	The wife’s evidence in relation to the Suburb E Units was that she and the husband initially signed the documents in 2008 and advanced the sum of $420,000.  The contract was changed in August 2010 and in October/November 2011 the parties jointly agreed to the withdrawal of the caveats.  I will deal with Suburb E in greater detail elsewhere in these reasons.
130.	The Trustee Company received Redeemable Certificates in 2010 which were again offered the following years when the Suburb E agreement changed yet again.  The wife was clearly aware of the detail of the arrangements for Suburb E throughout the transaction. 
131.	The wife’s evidence was that the Developers paid interest for about a year up to October 2011.  This is supported by emails between the Developers and the wife.
132.	During the latter part of the negotiations between the parties, the wife’s evidence was consistent with the husband’s that at one stage he suggested a swap whereby he would take the property the wife wished to retain and she could have the properties he wished to retain.
133.	The wife gave evidence that she had savings accounts in her name with Westpac Bank, one with a balance of $16,334 and the other with a balance of $2,855.28.  These accounts held a total of about $19,000.
134.	Those accounts were addressed to the wife care of her II Street, Suburb JJ address.  The ‘Rocket account’ bank statement apparently went to the parties’ former matrimonial home.
135.	The wife conceded in cross-examination that they had people living with them at the home who paid rent either to the husband or her.  She also conceded that the husband received money from his sister for school fees.  The wife also agreed in cross-examination that in 2012 the husband was primarily responsible for the care of their son D, who was very ill, and was significantly involved in his care in 2011.
136.	The wife seemed to concede that that husband made about $13,000 to $15,000 per year from the products.  Given the wife’s involvement in the day to day commercial activities of the parties, I am satisfied that she was aware of the husband’s income from product sales.
137.	The wife said in terms of the preparation of taxation returns, she was provided with documents from the husband.  I accept that evidence albeit I am satisfied that the wife had access to the bank account records and exercised a significant degree of involvement in the day to day finances of the parties property.
138.	In terms of the wife, I need to treat her evidence carefully as it seemed in many ways fashioned to achieve the result to which she sought.
The husband
139.	The husband provided evidence in accordance with his trial affidavit, to which I have referred earlier.  In chief the husband gave evidence that in the Australia and New Zealand Banking Group Limited (‘ANZ’) account he had savings at the time of the Agreement of about $30,235.83. At times over that period it could have been as high as $34,000.
140.	That account has been bolstered from a balance of $13,700 in November 2011 with deposits of $9,000 on 13 December 2011 which the husband said was for a student living with them and money from his sister, and $5,933.78 from another student in January 2012.  These amounts totalled about $15,000.  I accept the husband’s evidence that this money was not his and was applied for those students’ boarding and school fees.  Thus the money he had was about $15,000 to $20,000.
141.	The husband was cross-examined as to why he did not borrow the money from the ANZ Bank.  He said that that loan approval had expired by the time settlement had come around.  
142.	The husband said the wife knew about the ANZ account.  Given the concerns I have about the evidence of each of the parties, I am not satisfied that the husband notified the wife nor am I satisfied that he did not notify the wife.
143.	The husband was cross-examined in relation to the building of the house at the Suburb G Property and eventually conceded that the retrospective valuation of the incomplete house as at 13 February 2012 was correct.
144.	The husband’s explanation, which I accept, was that at the time he instructed his solicitors, shortly before the 2011/2012 Christmas/New Year period, the building works for the house had not been substantially commenced and there were significantly greater monies in the account, as reflected in the Agreement.
145.	The husband said he never went to the house while it was being built and relied upon the builder and his agent.
146.	The husband was cross-examined in relation to the evidence about his earnings from KK Pty Ltd.  It is clear that the husband was not particularly forthcoming in producing his records and left the wife to her own devices in relation to tracking down information from KK Pty Ltd.
147.	The husband was cross-examined in relation to his 2012 loan applications and his evidence, to say the least, was troubling.  He asserted he knew none of the detail of the loan applications despite seeking to borrow almost $2 million dollars against the parties’ property.
148.	Despite my concerns about the reliability of his evidence, the documents support and I accept that the husband used the whole of the portfolio to raise the $314,000 to pay for the building of the house at the Suburb G Property, and I am satisfied that the wife was aware of that circumstance.  She was aware both of the loan and the purpose for which it was to be used.
149.	In support of the husband’s 2012 loan applications there were letters provided to the Westpac Bank which application falsely asserted that the husband worked for a Chinese company and that he lived in China.  It is clear that the husband did not care what the bank was told, as long as he received the advance. The husband endeavoured to lay the blame wholly at the feet of his mortgage broker.  His evidence in respect of this appeared at times to be fabricated and reconstructed.
150.	What I do accept, however, is that in relation to Suburb E, prior to 2013, the husband thought the money that had been paid and the contracts the parties had signed was valuable.  He did not believe the Developers were dishonest, he said he was cautious and careful.  It is significant that the husband was part of the renegotiations that took place in relation to the 2010 contracts.
151.	The husband was cross-examined about the providence of the original November 2012 Redeemable Certificates and the explanation he provided was wholly unsatisfactory.  In his affidavit the husband said:-
…	As a result of discovery in these proceedings, I have now been provided with two Redeemable Certificates dated 23 November 2011 provided by …
152.	This evidence was clearly intended to say that the husband had no idea that these certificates existed.  However, the original certificates were in his control and when questioned about this he obfuscated and deflected.
153.	The husband said he regarded the roughly equal division of property at the time of the Agreement as fair and acknowledged that the wife no longer has the benefit of the $1 million dollars to which the parties attributed to the Suburb E Development.  He concedes that this gives rise to an unfair circumstance, but says that this arose as a consequence of the wife’s engagement with the Developers and the exclusion of him from it.
154.	I am troubled by the husband’s evidence and I will treat it with great care.
DISCUSSION
The Suburb E Development
155.	Common Mistake is said to be ‘[where] both parties make the same mistake. Each knows the intention of the other and accepts it, but each is mistaken about an underlying and fundamental fact’.
156.	It is trite law that any such mistake must be one at the time of formation of the contract and not later.  At common law the effect of such mistake is generally that the contract is rendered void ab initio.  In equity the rules for setting aside a contract because of mistake have been set out in Taylor v Johnson (1983) 151 CLR 422 where the Mason ACJ, Murphy and Dean JJ said:- 
… 	A convenient statement of them can be found in Williston on Contracts, 3rd ed. (1970), vol. 13, s. 1537. In the United Kingdom, the decisive turning point leading to the near eclipse of the subjective theory was probably the speech of Lord Atkin in Bell v. Lever Brothers Ltd.. In due course, Denning L.J., basing himself on Lord Atkin's speech, formulated a more general proposition than Lord Atkin's comments would, on analysis, warrant (see Lord Atkin's example of a case where "unilateral mistake by the seller of goods will prevent a contract from arising". In Solle v. Butcher, Denning L.J. said: 
"… once a contract has been made, that is to say, once the parties, whatever their inmost states of mind, have to all outward appearances agreed with sufficient certainty in the same terms on the same subject matter, then the contract is good unless and until it is set aside for failure of some condition on which the existence of the contract depends, or for fraud, or on some equitable ground." 
His Lordship then went on to say: 
"Neither party can rely on his own mistake to say it was a nullity from the beginning, no matter that it was a mistake which to his mind was fundamental, and no matter that the other party knew that he was under a mistake." 
While the mistake in Solle v. Butcher was a mistake of fact which affected the operation of a formal written contract, it is plain that the above remarks of Denning L.J. were intended to extend to a mistake as to the existence or content of an actual term of such a contract. [footnotes omitted]
157.	The principle which is now said to be in place in relation to contracts is:-
... a court will set aside or rectify a contract so long as no innocent third party will be thereby affected, when it would be unconscionable for one party to assert his or her strict legal rights arising from the contract, having regard to a mistake which has been made either by both parties or by one party which was known to the other.
158.	On the evidence I find that there has been common mistake by the parties as to the nature and value of an asset which made up a significant part of the parties’ property.  This mistake was made at the time of formation of the Agreement and in the context of the findings of fact elsewhere in these reasons.
159.	There were submissions as to frustration of the contractual obligations arising from the Agreement.  If I am wrong in relation to the common mistake then the Agreement was frustrated as a result of the inability of the wife, as at the date of the Agreement, to receive the asset/assets for which she had bargained. 
160.	I am satisfied it would be unconscionable for the husband to assert his legal rights arising from the Agreement having regard to the mistake which had been made by both parties which would have such a profound impact on the wife given the size of this property and as against the pool of the property.  
161.	As between these parties the Suburb E transaction was not a commercial risk which failed.  It was a common mistake.  As a consequence I am satisfied that the Agreement is void ab initio.  It is not possible to rectify it as the home units were not built and are not going to be built.  If, in the alternative it was frustrated, and as such the contract should be set aside on that equitable basis.
162.	The Redeemable Certificates were not simply a device by which to commercially seduce the wife, they had commercially seduced both parties.
163.	The evidence and findings in respect of Suburb E is as follows.
164.	It is an agreed fact that the parties entered into the Agreement on 13 February 2012.  The wife signed that Agreement on 9 February 2012 and the husband signed the Agreement on 13 February 2012.  There is no issue as to the formal validity of the Agreement, having regard to the provisions of s 90G of the Act.
165.	As to Suburb E, it was described in clause 15 of the Agreement as:- 
clause 15(n) [1 LL Street, Suburb E] … The property is worth E$500,000 in today’s market; and 
clause 15(o) [2 LL Street, , Suburb E] … The property is worth E$500,000 in today’s market.
166.	I find that the parties each believed that Suburb E was valuable property at the time of the Agreement and during the negotiations that led to the Agreement.  
167.	The husband sets out the history of Suburb E, from his perception, in paragraphs 30, 31, 32 and 48 of his trial affidavit.  The wife sets out her version of the events in paragraphs 24 to 39 of her trial affidavit.  In addition she referred to it in her affidavit of reply from paragraphs 26 through to 32.
168.	The parties had sought advice on investment properties and attended a property seminar hosted by HG. They were told about the Suburb E developments and were told that if they advanced $420,000 they would be able to acquire two home units which, upon completion, would have a value much greater than the purchase price.  Completion would take place in about 20 months from the initial agreement, viz. around September 2010.
169.	Section 9AA of the Sale of Land Act 1962 (Vic) provides that any deposits paid, where land is sold prior to a plan, are to be limited to ten per cent and must be held in a specific type of trust account.  It is clear that this section was not complied with in any of the contracts and that the contracts were voidable and could be rescinded by the purchasers (in whatever form that happened to be).
170.	The Suburb E Developers in this case solved this problem in order and acquired the full purchase price. The existence of committed purchasers would have supported the viability of the development.
171.	The evidence from MM Valuers was that the units were valued between $400,000 and $500,000 and it was clear they were being sold to the parties for a very low price. 
172.	The parties entered into the first of the contracts of sale.  The purchasers were the husband and wife in their personal capacity, the vendors were I Pty Ltd and J Pty Ltd and the purchase price of each of the home units was to be $210,000.  The agreement was subject to the units being built and the plans registered.  There was an option to exchange the home units.  The parties were to purchase units 23 and 24.  The contract had a nil deposit.
173.	At the same time the parties entered into a loan agreement with K Pty Ltd, Mr NN, Mr C OO, Ms S OO and Ms W OO and Ms P.  In that agreement the husband and wife agreed to lend K Pty Ltd (‘the K Loan’) the sum of $420,000 which was guaranteed by the individuals and provided for caveats to be lodged over land.
174.	I accept the submissions of senior counsel for the wife that the broad effect of the contemporaneous loan agreement was to provide the vendor of the properties with pre-payment of the purchase price and purported to provide the husband and wife with some form of security.
175.	The husband and wife had legal advice in relation to that transaction.  There are issues between the parties as to who encouraged whom, however both of the parties treated this is a valuable resource including up to the time that they negotiated the Agreement.
176.	In 2009, the units not having been built, the parties entered into further contracts in relation to the Suburb E Units.  In that agreement the vendors were Mr NN and Mr C OO.  The purchase price remained the same.
177.	It appears that the Developers told the parties that the proposals had varied and on 9 August 2010 the parties entered into new contracts in relation to the Suburb E properties.  In those contracts the purchase arrangements changed significantly at that stage: firstly the vendor became K Pty Ltd and the purchaser became the Trustee Company or its nominee.  The lots to be purchased changed as did the ‘headline consideration’ as the proposed home units were now lot 21 with a consideration of $560,000 and residential lot 26 with a consideration of $585,000, but the real consideration was to remain the $420,000 already advanced. 
178.	These units were purported to have a total value of $1,145,000.  The purchasers were not expected to pay out more than the $420,000 and were given Redeemable Certificates by the Developers to the value of the purchase price which could be redeemed against the purchase price as to one of the Redeemable Certificates. 
179.	The Redeemable Certificate provided that if the plan of the subdivision was not registered within the time contemplated in the sale contacts (sixty months) the parties were entitled to the refund of the $420,000 plus interest calculated at 10 per cent per annum.
180.	Each of the parties was aware of these transactions and each of them supported those transactions.  The parties continued to have a caveat over real property.
181.	The Developers made irregular interest payments into the parties’ bank accounts which continued into October 2011.  The husband and wife had placed caveats over two properties in February 2009.  In 2010 the parties withdrew a caveat over a property at Suburb L as the Developer who owned that property ceased their involvement of the development and was in financial stress.
182.	In November 2011 Mr C OO wrote to the parties informing them that he was preparing two contracts for sale and redeemable notes for unit 21 and 26.  He said:-
…	The effect of these contracts is that you are purchasers of the units and the redeemable certificates are evidence of the full payment for the units.
183.	Mr C OO went on to assert that the property had increased in value from $1.8 million dollars to $3.4 million dollars and further that they required the withdrawal of the caveats over the LL Street property and the QQ property.  Further, that subject to the ANZ finance and registration and mortgage they consented to lodging caveats over three different properties. They added that if the need arises the caveats can be reinstated.
184.	The parties signed those withdrawals of caveats.  At that time the parties had agreed, although not formally, that the wife would retain the interest in the Suburb E Units and that the husband would take other property.  The wife instructed the Developers not to write to the husband which request was apparently honoured.
185.	On 23 of November 2011 further contacts were entered into by the wife.  This contract provided for the purchase price of each of the properties in the sum of $590,000 and $610,000, a total perceived consideration of $1,200,000.  In this contract the wife was described as the purchaser and she was given fresh Redeemable Certificates, one for $605,000 and one for $585,000.  The contracts provided for a period of 60 months from November 2012 to complete the home units.
186.	The wife did not at that time lodge caveats over the new properties.  In late December 2013 the Suburb E Units had not been built and the scheme collapsed.  As a consequence the parties lost their $420,000.
187.	On the evidence, including the emails from Mr N, I accept the inference that the parties were subjected to subtle salesmanship to ensure that they did not complain that after four years there was no sign of a building being constructed.  Both of the parties were persuaded to remove their caveats and eventually accept the Redeemable Certificates.
188.	On the evidence, the development was unlikely to be viable.  The purchase price paid was far less than market value.  I accept the submissions by senior counsel for the wife that the whole transaction was a device to take the money from the parties and eventually protect the Developers from personal and asset exposure.  The scheme was set up to appear legitimate. 
189.	What then followed was persuasion and empty promises.
190.	The subsequent contracts were also, it was submitted, inducements to ensure that the husband and wife stayed compliant.  These contracts were, for no apparent reason, drafted and signed with an escalating apparent consideration on the face of the contract, while the Redeemable Certificates ensured that the husband and the wife paid no more for the units.
191.	The evidence of “financial distress” and the way in which the parties were persuaded to remove caveats which they thought protected their interests is a further example of the Developers putting themselves beyond reach of any claim for breach of contract.  The Developers went so far as to pay some interest to maintain in the husband and the wife a belief that the transaction was progressing smoothly.
192.	It was submitted on behalf of the wife that on the date of the Agreement the so called Suburb E units and the Redeemable Certificates were worthless and neither party were alive to that fact at that time.  
193.	As a finding of fact, I am satisfied that both parties believed, on the day the Agreement was concluded, that their rights under the contracts to acquire the units when built were already paid by way of loan, were valuable and that both parties believed that these were of value.
194.	I accept and find the parties shared a common belief that the units would be built and the rights under the contract and the Redeemable Certificates were valuable.
195.	I am satisfied that there is no prospect of any recovery of any part of the purchase price, that the Developers are in liquidation and that the liquidator has reported them to Australian Securities Investment Commission (‘ASIC’) for prosecution.
196.	Given all of the circumstances of this matter, I accept the essence of the submissions by senior counsel for the wife, and I infer that the Suburb E project was simply flim flam, a confidence trick, a fraud scheme; this was used to draw in these parties, to obtain and retain money from them without triggering a rescission of contract or calls on the loans, whilst at the same time the Developers limited and then avoided liability.
197.	I accept the submission of senior counsel for the wife that the Suburb E transaction was a fraud and that at the time the Agreement was entered into both parties believed it had a value of $1,000,000 dollars but was a mirage. 
198.	As such the Agreement was void ab initio and consequently ought to be set aside pursuant to s 90K of the Act or was frustrated by reason of the same circumstances and ought to be set aside both in equity and pursuant to s 90K. 
Understating his income
199.	Much was made by the wife of the nature and extent of the husband’s income. It was submitted by senior counsel for the wife that I could never properly assess what the nature and extent of the husband’s income was.  
200.	Given the cross-examination of the husband in relation to the loan applications I am satisfied that either he and/or his mortgage broker provided false and misleading information to Westpac Bank to secure the loans sought in his 2012 loan application.  The husband provided his licence number and a false address to the bank.  It was asserted to the bank that the husband had an income of between $13,000 per month and $16,000 per month from a company with whom the husband had no association and by whom he had not been employed.  It was upon this false and misleading information that the Westpac Bank advanced significant funds to the husband in relation to his real estate investments.
201.	The husband provided false information to the HSBC Bank in Hong Kong in his 2008 application which he lodged directly where he asserted an income of between $20,000 and $30,000 per month.
202.	The husband expressly dissociated himself from the 2012 loan application, I do not believe him.  However, there is no evidence of income going into accounts from that alleged employment.  It is more likely than not that the false income and employment status asserted in the loan applications were simply devices by either or both the husband or his mortgage broker to persuade the Westpac Bank to make loans available.  I am not satisfied that it is evidence of any real income of the husband, for if there was such income, given her knowledge and involvement with the family finances, the wife was likely to be aware of it.
203.	The parties lost income on their investments.  They lost significant monies as is set out in the 2011 and 2012 tax returns.  These were an investing couple who applied all of their energies (during their relationship) and worked very hard to accumulate property and pay for the property by borrowings and the like.  In addition, during 2011 and 2012, the husband devoted significant amounts of his time to the care of the parties’ son.
204.	I am satisfied on the evidence before me that the husband earned a taxable income of about $15,000 in the 2010/2011 financial year, in terms of his work for KK Pty Ltd.  Given the wife’s past involvement with the husband’s tax affairs and her financial knowledge, I find that the wife was generally aware of what the husband earned from that employment.
205.	I am not satisfied that the husband concealed his real income from the wife. Accordingly, that aspect of the wife’s claim must fail.
The need for the Agreement to be fair and reasonable
206.	The Agreement was not divided on the basis of a percentage division; it was divided on the basis of each party retaining certain properties.  Each warranted to the other the following:-
	The parties acknowledged that each entered into this Agreement after mature consideration and judgments and that they each understand the terms, conditions and provisions thereof and deem such to be fair, just and reasonable.
207.	The Agreement did not have a provision or intention that the division was to be equal.
208.	In Sanger & Sanger (2011) FLC 93-484; 46 Fam LR 275 Coleman, May and Thackray JJ noted at paragraph 86:-
	86.	As is not in doubt, the provisions of s 90K are not designed to, and do not facilitate a party escaping from what proves, or is perceived to be, a “bad bargain”.   …
209.	I accept that to be the law regarding the basis upon which an agreement is not able to be set aside under s 90K of the Act.  However, in this case the parties have each, in effect, acknowledged or warranted to each other that:-
•	They gave mature consideration and judgment to the Agreement.
•	They understand each of the terms, conditions and provisions.
•	Deem such terms to be fair, just and reasonable.
210.	The parties accepted that the Agreement was not an exactly equal distribution of their property.  It was a division of property on an approximate equal division although the husband would receive slightly more than the wife (according to the wife).
211.	This may raise interesting equitable arguments if, at the time the Agreement was signed, it was not fair, just and reasonable.  This may be a cautionary warning to those who draft those agreements to be careful in the acknowledgements that they make in such documents.
212.	I am not satisfied that this part of the claim is made out by the wife. 

The transfers of the husband’s shares in the Trustee Company to the wife
213.	In relation to this issue, it was raised in the material that the husband had not transferred the shares in the Trustee Company to the wife.  The evidence of the wife was that she had not asked the husband to sign the documents.
214.	I accept the submissions of senior counsel for the husband that this basis to set aside the Agreement cannot stand.
Superannuation splitting order 
215.	Senior counsel for the wife submitted that paragraph 34 of the Agreement makes a superannuation splitting order and as such is void as being inconsistent with s 90MJ of the Act.  This is a relatively minor matter and could have been easily rectified and was not seriously argued.  It is not a basis upon which given the relatively small amounts involved and the discretionary nature of any order to set aside a financial agreement, this would not be such as would base the setting aside of the Agreement.
Suburb G Property
216.	It is the wife’s contention that the statement in the Agreement, in paragraph 15(1) the Suburb G Property is described as:-
	This land was purchased in July 2010 for $190,000.  It is registered in the name of the husband.  It is unencumbered.  The property is worth $190,000 in today’s market.
217.	In October 2010 the parties, through the Trustee Company, entered into an agreement to purchase land at Suburb G for $193,300.  This amount was subsequently reduced to $190,000.
218.	On the same day the Trustee Company entered into a contract to build a home on that land for a contract price of $203,630.
219.	Those contracts were signed by the wife on behalf of the Trustee Company.
220.	Shortly after the contracts were executed and after a deposit of $1,000 was paid, and the land contract requiring the balance of the 10 per cent deposit for the land to be paid promptly, it was an agreed fact that the wife became reluctant in terms of purchasing this property and building the house.  As a result both contracts were amended to provide that the husband would purchase the Suburb G Property.  
221.	The purchase of Suburb G Property took place on 8 July 2011.  The purchase of the Suburb G Property was funded out of cheques from the parties’ joint Westpac account totalling some approximately $170,000.  The husband asserted that this was done with the knowledge and consent of the wife.
222.	The wife, in her evidence, asserted she did not know what was happening with this account.  For reasons set out elsewhere, including this part, I do not believe her.  One of the reasons for that was that set out in the various draft agreements entered into between the parties.  
223.	On about 24 April 2011 the wife wrote down the amount contained in the Westpac Bank account as being $320K ($320,000).  In a later draft agreement, after settlement of the land, the wife noted that the Westpac Bank account had $163,762 and there was discussion about the distribution of that.  That is indicative that she was aware of the use of about $160,000.  I infer she was aware this was used to settle the purchase of the Suburb G Property.
224.	Having regard to the settlement and the wife’s clear knowledge of the purchase of the land and the building contract I am satisfied, on balance, that she was aware that the significant reduction in the money held in that Westpac Bank account was as a consequence of the purchase of the land for $190,000 less the 10 per cent deposit.
225.	The husband made various endeavours to borrow money and eventually made a loan application against the parties’ overall borrowings which, as at 24 April 2011, was some $1.65 million dollars.  The husband borrowed a further sum of $314,000 to fund the building of the house on the Suburb G property.  The wife asserted that she was aware of the loan but simply thought it was to raise capital.  Given what I have said elsewhere, I do not believe her.  The wife was aware of the parties’ funds and finances. 
226.	The husband said that he borrowed this money to enable payment for the building of the house on the Suburb G Property and withdrew significant monies from October/November 2011 to fund that building.
227.	The wife had, in late November 2011, withdrawn $350,000 from that account and at the request the husband returned those funds.  I have referred to this earlier.
228.	I do not accept the wife’s evidence that she did not look at or was not aware of that Westpac Bank account.  The wife was not, as she claimed, a cowering partner who relied upon the husband for financial information.  She was a boisterous partner, who for example decided not to proceed with the land purchase and enabled the husband to take over the contract. 
229.	There was a history of the wife preparing loan applications as early as 2007.  The wife’s withdrawal of the $350,000 and the frank exchange between the parties at that time, the wife’s approach in relation to taking over the so called Suburb E Development, her preparation and lodgement of tax returns and her practical and academic qualifications in relation to accounting or book-keeping are such that her assertions are inherently implausible.  
230.	The wife was aware that $314,000 was for the building of the home and I can infer that she was aware that withdrawing those funds at that time would have impacted on the husband’s obligation to meet the building costs.
231.	After the withdrawal of the $350,000 and return of the $350,000 the husband instructed his solicitors to prepare the Agreement.  This was clearly prepared over the December/January period and was ready for execution in early February 2012.
232.	The wife complained that the husband had not made frank disclosure because he described the Suburb G Property as ‘the land’ when in fact a house had been built over November, December 2011, January and February 2012 (a certificate of completion having been issued in early March 2012).
233.	I find that the value of the land and house on the Suburb G property as at the date of the Agreement was $325,000.  I also find that instructions were given at a time when building had not commenced or was in the early stages of construction.
234.	At that time the husband asserted that there was enough money in the Westpac Bank account (including the repayment of the $350,000) and other funds to enable the payment of $50,000 to the wife and for him to retain $400,000.
235.	By the time the Agreement was settled the wife had removed some $61,000 from that account.  A sum of $50,000 was in accordance with the Agreement, $5,000 was apparently a sum in respect of another Commonwealth Bank account (to which the husband seems to have taken no objection), $5,000 towards some furniture, a bed or the like and another $1,000.
236.	In addition the wife was to receive the proceeds of sale of some shares totalling about $19,000 which were paid into the joint account in early February and were taken by the wife after settlement.  The husband was left with a net sum of slightly over $300,000.
237.	Thus, the wife being aware directly or having sufficient knowledge to know that the house was being built and that money ought to be paid or was being paid to the builder observed the value of the house and land increasing from $190,000 to some $335,000 and the husband receiving slightly more than $300,000 rather than $400,000.
238.	Thus the difference was some $40,000.
239.	That was not a failure to disclose.  The wife knew that the house was being built or was to be built, and that building the house and the land was precisely what she had initially agreed to and which the husband had determined to proceed with.
240.	Whilst there was a degree of miss-description it was not, in my view, a non-disclosure of a material matter either by way of a false disclosure or a non-disclosure.  As such the wife must fail in respect of this part of her application to set aside the Agreement.
241.	I am satisfied that the husband did make appropriate disclosure in relation to the Suburb G Property and the house which was built on that land.
242.	The wife signed and was aware of both the building contract and the contract to purchase the land.  
243.	I am satisfied that the wife was aware that the parties’ funds were used to acquire the Suburb G land unencumbered.  Further, I am satisfied that the wife was aware of the borrowings of about $314,000 in October/November 2011.  I am also satisfied the wife was aware that these borrowings were to be used to meet the cost of building the house upon the land.
244.	The wife may not have been aware of when the construction commenced and finished but she was certainly aware of the husband’s obligation in that respect and the purpose of that loan.
245.	The husband was criticised for not taking up an ANZ Bank loan, however I accept his evidence that this loan went stale due to the delay in the registration of the plan and then the settlement of the land.
246.	These parties had commenced effective negotiations in relation to the Agreement in April 2011 and the wife was anxious that these arrangements be brought to a head.  As a consequence the wife removed $350,000 from the joint account in November 2011 to bring about a conclusion to those arrangements.  
247.	I do not accept that the wife can rely upon the misdescription of the land given the matters that I have referred to elsewhere in these reasons.
248.	It was submitted that the use of the parties’ money to purchase the Suburb G Property was material of which the wife was well aware and I refer to the matters discussed elsewhere in these reasons.  I prefer the husband’s evidence to the wife’s with regard to the borrowings in November 2011 of some $314,000.
249.	This part of the wife’s claim should not succeed.
The parties’ bank accounts
250.	The husband had a bank account with the ANZ Bank at the time of the Agreement.  This bank account held in it a sum of about $34,000.  The husband gave evidence, which I accept, that of that sum about $14,000 were monies paid by family to provide for school fees or accommodation for family members who were studying in Australia.  I accept that that money was not his money but was being held in trust for others.  This left a balance in the account of about $20,000.
251.	The husband was not forthcoming in making disclosure in respect of this to the wife and it was only when pressed with a statement that he did so.  It was a non-disclosure by the husband.
252.	At the same time the wife had bank accounts with the Westpac Bank in her name which contained about $18,000.  Neither party seemed to be overly concerned in relation to these bank accounts until the matters regarding the Suburb E Development arose some time later.
253.	I am not satisfied that these failures to disclose by both parties are such as would enable the exercise of the discretionary power to set aside the Agreement.  I have considered this in light of both individual items and cumulatively with the other factors such as the Suburb G Property and the other bank accounts.
254.	It is significant that the wife complained that the husband has not disclosed his Hong Kong bank accounts.  Clearly that was referred to in the draft agreements to which I have earlier referred.
CONCLUSION
255.	The wife adopted something of a ‘scatter gun’ approach and asserted various other failures to disclose and the like in an effort to have the Agreement set aside.  All of those peripheral matters have been dismissed.
256.	However, I am satisfied, for the reasons set out elsewhere, that the husband and the wife were the victim of an elaborate fraud or scam in which they invested $420,000 and by which the so called Developers, over a period of years, isolated themselves from the transaction, changed the transaction, so that it was as at 13 February 2012 just a mirage.
257.	As a consequence it was the assertion by both parties and a genuine belief by both parties that this investment was a valuable property and was a mistake shared by each of them to the contract.
258.	As a consequence of that common mistake the Agreement entered into between the parties is void ab initio at common law and renders the performance of the contract impossible.
259.	Accordingly, pursuant to s 90K(1)(b) of the Act the Agreement is set aside and I will be making directions for hearing of the property proceedings between the parties.

I certify that the preceding two hundred and fifty nine (259) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on	30 October 20156.

Associate:	G Doyle

Date: 30 October 2015