Financial Agreements: the pitfall of uncertainty

Financial Agreements are written agreements which are signed by all parties and retained but not filed in court and not reviewed by judicial officers at the time they come into existence.  This means they are not turned into court orders by a judicial officer but in fact take the place of court orders.  Great care must be taken in the preparation of the documentation to ensure there is no ambiguity or uncertainty and whether or not this has happened will not be known unless one or both of the parties to the agreement brings an application to court for such determination.

In the 2016 case of Garvey v Jess the husband and wife married in 2006.  Prior to the marriage they had entered into a binding financial agreement.  The parties subsequently separated and the husband sought to enforce the terms of the agreement.  The wife asserted that the agreement was void for uncertainty and the agreement should be set aside.

What was the problem?

The agreement provided for the parties to each retain their respective property with any “joint property” to be divided equally.  There were no machinery provisions within the agreement as to how the joint property was to be divided.

The wife argued that for an agreement to be binding there was a requirement that there should be a meeting of the minds about how to give effect to an equal division of joint property.  She submitted to the court that there had never been a concluded agreement because the essential terms were uncertain.

The wife’s arguments were ultimately rejected by the judge.

In summary the judge came to the view that the parties could not have known at the time of making the agreement what assets they would have at the time of the breakdown of their relationship and therefore what machinery provisions would have been appropriate.

The fact that an essential term may produce more than one result does not mean it is uncertain.

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