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High Court Decision on Binding Financial Agreements: Key Takeaways for Couples

High Court Clarifies Financial Agreements: Key Lessons from R Lawyers v Mr Daily [2025]

It is uncommon for the High Court of Australia to hear family law matters. Most disputes under the Family Law Act are finalised in the Federal Circuit and Family Court, and only a very small number—those involving significant questions of law, unresolved legal uncertainty, or issues of national importance—proceed to the High Court. The High Court will generally only intervene when a case raises a point of principle that has broad implications beyond the individual parties.

R Lawyers v Mr Daily [2025] HCA 41 is one of those rare cases. It clarifies the legal operation of Financial Agreements, the distinction between an agreement being binding and being of force and effect, and how these agreements interact with the Court’s power to make property orders under the Family Law Act. The case also highlights the serious consequences that can flow when a Financial Agreement is poorly drafted or when the parties do not receive clear, competent advice.

What happened in the case, and the outcome for Mr & Mrs Daily

In this case, the Financial Agreement was found to be void for uncertainty and also liable to be set aside on hardship grounds, because it did not properly anticipate the impact of children on the parties’ financial arrangements. Once the agreement was set aside, the Court proceeded with a full property settlement under s 79 of the Family Law Act, meaning the Financial Agreement ultimately provided no protection for Mr Daily. He then sued the lawyers who drafted and advised on the agreement, arguing their advice had been inadequate. He succeeded only in part: the Court awarded him $38,000 for wasted litigation costs relating to the uncertainty issue but rejected his larger claim that, but for the poor advice, he would have achieved a better financial outcome. In practical terms, despite having gone to the effort and expense of preparing a Financial Agreement, he ended up litigating property settlement from scratch and recovered only a fraction of what he claimed in damages from R Lawyers.

What is a Financial Agreement and when can you enter one?

For married couples

Married couples can enter into a Financial Agreement:

  • before marriage – s 90B

  • during marriage – s 90C

  • after divorce – s 90D

For de facto couples

De facto couples have equivalent options. They may enter into:

  • a Financial Agreement before the de facto relationship begins – s 90UB

  • a Financial Agreement during the de facto relationship – s 90UC

  • a Financial Agreement after a breakdown of a de facto relationship – s 90UD

What these agreements can cover

Whether married or de facto, a Financial Agreement can address:

  • how the parties’ property and financial resources are to be divided if the relationship breaks down, and

  • the maintenance of either party during or after the relationship.

The spouse or de facto partners must be parties to the agreement, but other people may also be added—for example, where trusts, companies or family contributions form part of the financial structure.

When can a court set aside a Financial Agreement?

The Court may set aside a Financial Agreement only if one of the statutory grounds is met, such as:

  • the agreement is void, voidable or unenforceable, or

  • the hardship grounds under s 90K(1)(d), where a material change in circumstances relating to a child would cause hardship if the agreement remained in place.

In this case, the lower court found the agreement was both void for uncertainty and liable to be set aside on hardship grounds.

Thinking about a Financial Agreement? Choose your lawyers carefully.

This case is a strong cautionary tale for anyone contemplating a Financial Agreement. These agreements are only effective when both parties receive thorough, tailored, and competent legal advice from experienced family lawyers. If the agreement is poorly drafted or the advice is superficial, the agreement may collapse years later—exactly as occurred for Mr Daily—leading to expensive litigation and outcomes neither party intended. If you are considering a Financial Agreement, it is essential that both you and your future spouse engage reputable family law solicitors to ensure the agreement is drafted properly, compliant, and genuinely protective of your interests.

Why this decision matters

This rare High Court judgment reinforces that:

  • Financial Agreements are highly technical documents requiring meticulous compliance.

  • Independent legal advice must be meaningful—not a tick-and-flick exercise.

  • A separation declaration is essential before a Financial Agreement can operate.

  • If the agreement is not binding or is set aside, the Court returns to full property settlement powers under Part VIII.

For practitioners, the case emphasises the importance of careful drafting and clear advice. For clients, it is a reminder that a Financial Agreement is only as strong as the legal work behind it.

If you are considering a Financial Agreement or reviewing an existing one we can help. At Powell Family Law, we provide clear, practical advice to ensure your agreement is properly drafted and tailored to your circumstances.

Contact us to arrange a confidential consultation and get the right advice before you sign anything that affects your financial future.

Natalie Powell