The High Court decision in R Lawyers v Mr Daily is a significant Australian case involving a BFA negligence claim and solicitor negligence in relation to Binding Financial Agreements (BFAs).
The case arose from the breakdown of a marriage and the later setting aside of a BFA. However, its real importance lies in what it reveals about the duties owed by family lawyers when advising on financial agreements.
It confirms that family lawyers must do more than prepare documents. In a BFA negligence claim, they are expected to provide clear, careful, and legally sound advice about whether a BFA will actually achieve the client’s intended outcome when tested in practice.
What was the BFA negligence claim about?
The relationship began in the late 1990s. The parties became engaged and planned to marry in 2005.
Before the marriage, the husband instructed R Lawyers to prepare a Binding Financial Agreement.
He wanted an agreement that would:
- Keep each party’s separate property
- Divide jointly acquired assets equally
- Exclude spousal maintenance
Draft agreements were prepared over several years. A final version was signed shortly before the wedding.
After separation in 2018, the wife challenged the BFA. She sought property settlement orders under the Family Law Act 1975 (Cth).
She argued the agreement was no longer binding under section 90K(1)(d) due to a material change in circumstances. This included the birth of children.
The husband then joined R Lawyers to the proceedings. He alleged negligence and breach of contract.
The negligence claim included allegations that the solicitors:
- Failed to properly advise on enforceability
- Failed to warn about drafting uncertainty
- Failed to explain risks relating to future children
- Failed to ensure the agreement achieved the intended protection
What duty does a family lawyer owe when drafting a BFA?
The Court confirmed that solicitors advising on BFAs owe substantial professional duties.
These duties go far beyond meeting basic statutory requirements.
Importantly, the solicitor in this case held herself out as a specialist family lawyer. This increased the standard expected of her.
The Court stated:
“Ms Q held herself out not just as a person able to provide high level advice on matters integral to the efficacy of a BFA but also, that she possessed the skill set to draft an agreement that would at least be certain in its terms, conditions and purported outcome.”
The Court found that the solicitor was required to:
- Ensure compliance with legal formalities
- Advise properly on enforceability risks
- Explain practical consequences of the agreement
- Ensure the document was clear and legally effective
Can a lawyer be negligent for failing to warn about BFA problems?
Yes. One of the central issues was the failure to warn about uncertainty in the drafting.
The trial judge described the advice given as “cursory and nonspecific”.
There was also no evidence that the solicitor warned the client about enforceability risks.
On appeal, Berman J noted:
“There was no note in her file concerning a risk that any term of the agreement had the potential to be uncertain, nor that there was a risk that the entirety of the agreement may be void for uncertainty.”
The Court ultimately found the BFA was not sufficiently certain to be enforceable.
The judgment explained that uncertainty arises where:
- Contract terms have unclear meaning
- Multiple interpretations are possible
- The agreement fails to reflect clear intention
Berman J held:
“The material terms of the BFA cannot be enforced and accordingly, the agreement is void for uncertainty and should be set aside.”
This finding was central to the negligence claim. The husband argued he had paid for a valid agreement, but received one that ultimately failed.
Should lawyers warn clients about having children and BFAs?
Yes. The Court strongly emphasised this issue.
A key criticism was the failure to advise about how future children could affect the agreement.
There was no meaningful discussion about:
- Whether the agreement should address children
- How children could affect enforceability
- Whether future changes could justify setting the agreement aside
The Court accepted that the birth of children may amount to a material change in circumstances under section 90K of the Act.
This became critical because the parties later had two children after signing the BFA.
The Court found the solicitor failed to properly warn that the agreement could later be vulnerable due to changes in parenting responsibilities and family circumstances.
When does loss occur in a negligence claim about a BFA?
The High Court also clarified when loss is actually suffered in negligence cases involving BFAs.
R Lawyers argued that loss occurred at the time the agreement was signed in 2005. If correct, the claim would have been out of time.
The High Court rejected this argument.
Instead, it held that loss only occurred when the relationship broke down and the BFA failed to operate as intended.
The Court stated:
“On the evidence in this case, R Lawyers’ negligence did not cause Mr Daily to incur any loss or damage until the time he separated from Ms Daily.”
This was important for limitation purposes. It confirmed the claim was not statute-barred.
What does this case mean for you?
This decision reinforces that family lawyers must provide detailed and practical advice when drafting BFAs.
They must consider:
- Enforceability
- Certainty of terms
- Future children
- Risk of later challenges
- Whether the agreement achieves the client’s goals
Generic or incomplete advice may expose lawyers to negligence claims years later.
For clients, the case highlights the importance of obtaining specialist advice before signing a BFA.
A Binding Financial Agreement may appear effective at the time. However, if it is not carefully drafted with future circumstances in mind, it may fail when tested in court.
How we can help with a BFA negligence claim
At Rowan Skinner & Associates Lawyers, we provide expert advice on Binding Financial Agreements and family law matters involving a BFA negligence claim.
We help clients understand the risks before signing any agreement and ensure they receive proper legal advice tailored to their circumstances.
If you need advice about a BFA negligence claim or a Binding Financial Agreement, contact our team on (03) 9995 9155 for an obligation-free discussion.
We assist clients throughout Melbourne and the northern suburbs, including Northcote, Alphington, Carlton, Fitzroy, North Fitzroy, Kew and Heidelberg, as well as South Melbourne and South Yarra.
Rowan Skinner is a highly skilled family lawyer with over 35 years of experience across various legal roles and jurisdictions. Rowan specialises in resolving family law disputes such as divorce, financial settlements, child custody and domestic violence cases. Through his diverse and extensive experience, Rowan has a deep understanding of the complexities and nuances involved in family law. Rowan is a skilled negotiator and litigator who follows a compassionate and client-focused approach which prioritises helping you navigate what can be an emotional and challenging time.