By Jen McMillan -
Snapshot
- Drafting and advising on binding financial agreements is complex, and lawyers can face negligence claims years later if agreements are set aside.
- In R Lawyers, the High Court confirmed that time limits for such claims may not commence until separation and in this case, the solicitors’ advice was too general and failed to address specific risks, including the risk of the agreement being void for uncertainty.
- Practitioners should provide tailored and detailed advice, ensure clarity in terms, document advice thoroughly, and retain files well beyond the usual period to mitigate future liability.
Drafting and advising on a pre-nuptial binding financial agreement (‘BFA’) can be a complex and challenging process. What is more, when the parties separate and one is seeking to set the BFA aside, the solicitors who prepared or advised on the BFA can find themselves caught in the crossfire.
The facts of R Lawyers v Mr Daily & Anor [2025] HCA 41 (‘R Lawyers’) are that, in 2002, Mr Daily instructed R Lawyers to advise on and prepare a BFA before his marriage. As part of their advice to Mr Daily, R Lawyers wrote to him as follows:
‘Under the Family Law Act 1975 (Cth), agreement can be set aside if:
- the agreement was obtained by fraud, including non-disclosure;
- the agreement is void, voidable or unenforceable;
- it is impracticable for all or part of the agreement to be carried out;
- there has been a material change in the care of a child leading to hardship if the agreement remains; or
- the party engaged in unconscionable conduct.
Unconscionable conduct relates to excessive or unreasonable behaviour by one party, especially the party who is in the superior financial position.
As you can see from the above, it is indeed difficult to ensure the document that we prepare for you is effective in the event that you subsequently separate.’
