Introduction
Q1: I made a bad deal in my BFA. Can I get it overturned for that alone?
A: No. A bad bargain by itself is not unconscionable conduct under section 90K(1)(e). The court will not redo the deal just because the numbers turned out badly for one side. Reference: Sanger [2011] FamCAFC 210
Q2: My ex acted dishonestly when we signed. Can I have the agreement set aside?
A: Sometimes, but only if you also acted properly. Section 90KA imports equity into BFA disputes, and equity demands clean hands. If you knew about the misconduct and signed anyway, the court will not rescue you. Reference: Pagani [2023] FedCFamC2F 805
Q3: I signed under family violence and pressure. Is that enough to overturn the agreement?
A: Family violence at the time of signing can amount to unconscionable conduct, but you must plead it specifically and prove it with evidence. Courts treat this as a threshold issue heard before the property dispute. Reference: Malone [2022] FedCFamC1F 784
What is unconscionable conduct under the law?
A binding financial agreement (BFA) is a private contract under Part VIIIA of the Family Law Act 1975 (Cth). Once it is signed and properly witnessed, courts treat it as binding. The only way to escape a binding BFA is to fit one of the narrow set-aside grounds in section 90K. Unconscionable conduct is one of those grounds, and it is much narrower than what most people assume.
Section 90K(1)(e) reads:
"in respect of the making of a financial agreement—a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable."
In plain language, this provision has three working parts:
- The conduct must relate to the making of the agreement. Things that happened years after signing, like a fall in asset value or a change in the parties' financial circumstances, are not within s 90K(1)(e).
- The word unconscionable here carries its equitable meaning, not the everyday sense of unfair. Courts use the long-developed equitable doctrine: exploitation of a special disadvantage known to the stronger party.
- The court considers all the circumstances together. A single act in isolation rarely qualifies; the question is whether the whole picture at signing is unconscionable.
Section 90KA backs this up by directing courts to apply contract-law and equity principles when deciding whether a BFA is valid, enforceable or effective. So pleading s 90K(1)(e) is in effect pleading the equitable doctrine of unconscionable dealing, with the BFA-specific timing rule attached.
The Full Court in Sanger [2011] FamCAFC 210 drew the negative boundary cleanly:
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". ... The evidence ... failed to establish that declining to set aside the agreement in whole or part would be unconscionable in any way.
Core Point: Section 90K(1)(e) is not a refund button for a deal that turned out badly. It targets equitable misconduct in the formation of the agreement, not the financial outcome that followed.
Why does it matter to understand this correctly?
Most people who want to challenge a BFA reach for the word unconscionable because it sounds like a catch-all argument. It is not, and treating it that way has real costs.
If you misread s 90K(1)(e), you face three concrete problems:
- You spend money on litigation that has no real chance. Courts dismiss bad-bargain challenges quickly, often at an early stage. Your filing fees, legal advice and lost time will not come back.
- You give up the bargaining position you already had. Once the other side sees you have no real ground, they have no reason to negotiate. The settlement window narrows, not widens.
- You hand legal costs to the other side. Failed BFA challenges often attract adverse cost orders. You started the case to keep more of the asset pool and end up paying out of it.
The Sanger case shows how this plays out.
The parties signed a BFA in October 2007 that required the husband to pay the wife $350,000. Both parties signed off on the agreed asset valuations: a company R Pty Ltd at $400,000, the matrimonial home at $750,000. On those numbers the husband expected to keep about 40 percent of the asset pool.
Sixteen months later R Pty Ltd was placed in voluntary liquidation and became worthless. The matrimonial home then sold for $101,000 less than its agreed value. The husband applied to set aside the BFA, arguing it had become impracticable under s 90K(1)(c) and that enforcing it would be unconscionable.
Outcome: The Full Court of the Family Court dismissed the appeal. The husband had personally covenanted to pay any shortfall to the wife. The recitals of the BFA showed both parties had understood and accepted the risk of asset value changes. Section 90K is not a tool to escape a bad bargain, and the husband had failed to show that enforcing the agreement was unconscionable in any way.
Key Point: The court will not redistribute risk after the fact. If you signed up to take a risk at the time of the BFA, you keep that risk. Unconscionability is judged by the conduct at signing, not the financial outcome that came later.
How does s 90K(1)(e) actually apply across different situations?
Section 90K(1)(e) sounds open-ended on the page, but the case law has drawn clear lines. The four scenarios below cover most situations a person might face when wondering whether to challenge a BFA. Each scenario shows where the line falls and which legal gateway actually applies.
Scenario 1: Bad bargain or asset value changes
Common Misconception: I lost money on this deal, so the agreement must be unconscionable.
Legal Truth: Section 90K(1)(e) targets conduct at the formation of the agreement, not the financial outcome. A change in asset values, a windfall to one side, or a bad commercial result is not unconscionable on its own. Both parties accepted market risk when they signed.
Holding the parties to the terms of the BFA is not unconscionable in this case ... this case remained at all times a case of common intention, expressed in the BFA.
The parties separated in April 2002 and divorced in April 2006. They signed a BFA in 2006 providing that the matrimonial home would be sold and the wife would receive the net proceeds. At signing, the home was worth $700,000 with a $270,000 mortgage, so the wife expected about $430,000.
The parties then agreed to delay the sale to wait for the market to improve. The husband kept servicing the mortgage and used the property as security for additional business borrowings, while the wife continued to live in the home and paid for renovations. Eight years later, in November 2014, the home finally sold for $1,350,000. The wife stood to receive an extra $650,000 windfall on top of her expected share.
The husband sued, arguing it would be unconscionable for the wife to keep the entire windfall. He framed it as a failed joint enterprise and pointed to his mortgage payments and continued business risk.
Outcome: The court dismissed his claim. The BFA had been signed under s 90D, after separation. Its purpose was to end the parties' financial relationship, not launch a joint enterprise. Holding the parties to the BFA was not unconscionable. The wife kept the full sale proceeds.
The same lesson, from opposite directions, is visible across the two cases:
| Comparison | Sanger [2011] | Laconi & Cosgrove [2017] |
|---|---|---|
| Direction of asset movement | Loss of value (company collapse, home below agreed price) | Gain in value ($650,000 windfall to the other side) |
| Who challenged | Husband (paying party) | Husband (mortgage-servicing party) |
| Argument | Enforcing the $350k payment is unconscionable | Letting the wife keep the entire gain is unconscionable |
| Outcome | Challenge dismissed | Challenge dismissed |
| What the court emphasised | Parties had accepted the risk in the BFA | Parties had agreed common intention in the BFA |
Key: Whether the asset moved up or down, the court will not adjust risk that the parties allocated to themselves at signing. Section 90K(1)(e) does not exist to rescue either party from their own deal.
What works in this scenario
- Confirm the BFA explicitly addressed the relevant risk (market movement, business outcome, valuation method)
- Look for separate misconduct at signing, not just the post-signing financial outcome
- If your only complaint is the numbers, accept the agreement and turn focus elsewhere
Scenario 2: My spouse acted dishonestly, but I knew about issues too
Common Misconception: If they did wrong, I can rely on s 90K(1)(e) regardless of what I did.
Legal Truth: Section 90KA imports equitable principles into BFA disputes, including the rule that a person seeking equity must come with clean hands. If you knew about the other side's misconduct, signed anyway and stayed silent, the court will not set the agreement aside on your application even where the misconduct is real and serious.
The circumstances of the execution of the Agreement by the parties and their solicitors acting as witnesses is nothing short of diabolical. The Wife comes to the proceedings seeking equity with well less than clean hands.
The parties signed a section 90B BFA during their relationship. At the time, the wife held significant assets, while the husband had recently purchased a property at D Street (a pseudonymous address in the judgment) for $530,000. The BFA's Schedule 1 (assets) and Schedule 3 (liabilities) were both left entirely blank, so the husband's $530,000 property went undisclosed.
The execution went further. The lawyers for both parties signed witness statements certifying they had seen their clients sign the document, when in fact they had not seen them sign at all.
After separation, the husband applied to declare the BFA not binding due to non-disclosure and uncertainty. The wife counter-applied under s 90G(1A) to declare it binding despite the technical defects, arguing it would be unjust and inequitable not to.
Outcome: The wife's application was dismissed. The court found she had known the husband held undisclosed property, she had signed with the schedules blank, and she had taken no step to correct the position at the time. She did not come to the court with clean hands and could not invoke an equitable remedy. The agreement remained not binding, and the property dispute proceeded under s 79.
What works in this scenario
- Document what you knew at the time of signing, especially around the other party's disclosure
- If you spotted gaps at signing, raise them then and put it in writing
- Do not stay silent for years and then claim equity will rescue you
- If your hands are not clean, focus on a different gateway (such as fraud under s 90K(1)(a)) rather than s 90K(1)(e)
Scenario 3: Family violence, duress, or undue influence at signing
Common Misconception: I was pressured into signing but proving it is impossible, so why bother?
Legal Truth: Family violence patterns, duress and undue influence at the time of signing can vitiate a BFA. They map onto unconscionable conduct under s 90K(1)(e), or onto the void/voidable ground under s 90K(1)(b), or both. Courts treat these allegations as a serious threshold question heard before the substantive property dispute.
The wife sought spousal maintenance and property adjustment orders. The husband relied on a BFA he said was binding and barred those claims.
The wife pleaded instances and patterns of family violence allegedly perpetrated by the husband, asserting these were sufficient to vitiate the BFA. The husband applied to bifurcate the proceedings: he wanted the question of whether the BFA was binding decided as a discrete threshold issue first, before the substantive property claim went ahead.
Outcome: The court agreed to bifurcate. The bindingness of the BFA would be heard as a separate threshold issue, with the family violence allegations central to that hearing. The substantive property claim was held back until the threshold issue was resolved.
What works in this scenario
- Plead specifically: dates, incidents, patterns of controlling behavior, financial control
- Collect evidence: medical records, AVOs, witness statements, contemporaneous communications, bank records
- Expect a separate threshold hearing and prepare for it as the case, not a side issue
- Use the High Court's Thorne v Kennedy framework for arguing undue influence in BFAs
Scenario 4: Signature defects or inadequate legal advice
Common Misconception: Bad legal advice equals unconscionable conduct equals set aside.
Legal Truth: Inadequate legal advice and signature defects normally go through a different gateway. They sit under s 90G(1A), which lets a court declare an agreement binding despite technical defects if it would be unjust and inequitable not to. This is a separate question from s 90K(1)(e) unconscionable conduct.
As "remedial" or "beneficial" legislation, the sections should be construed "generously" to ensure that the "mischief" which the legislation seeks to address is remedied.
The parties signed a BFA in November 2004. After the wife and her solicitor had already signed, the agreement was amended. The wife's solicitor had advised her the agreement was unfair and she should not sign. The wife did not challenge the agreement for over three years.
The husband sought to enforce the agreement under s 90G(1A), arguing it would be unjust and inequitable if the agreement were not binding. The trial judge accepted that the wife had received advice about the advantages and disadvantages of the amended agreement, but concluded it would not be unjust and inequitable for the agreement not to bind. The trial judge took a narrow reading of s 90G(1A).
Outcome: The Full Court of the Family Court allowed the appeal. The trial judge's narrow interpretation did not promote the remedial purpose of s 90G(1A). The case was remitted for re-hearing on the proper, generous test.
What works in this scenario
- Identify which gateway your facts fit before drafting any application: s 90K(1)(e) for unconscionable conduct, or s 90G(1A) for technical and advice defects
- Preserve the original signed document and any amended versions side by side
- Get the legal advice statements from both sides and confirm what was actually signed and when
For a fall in asset value alone, see Can Asset Depreciation Overturn a BFA in Australia?. For a wider survey of every set-aside ground under s 90K (procedural defects, vitiating factors, child hardship, uncertainty), see When Can a Financial Agreement Be Set Aside in Australia?.
What should you do if you want to challenge a financial agreement?
Four lessons sit underneath the cases above.
- Bad bargain alone will not work. Sanger and Laconi & Cosgrove both show that courts will not adjust risk the parties allocated to themselves at signing. Movement in asset values, in either direction, is not unconscionable conduct.
- Equity demands clean hands. Pagani shows that even where the other party clearly misbehaved, your own knowledge and silence at signing will sink an equitable claim. Document what you knew and when.
- Family violence is a real ground but you must plead and prove it. Malone shows courts treat this as a serious threshold issue. The court wants specifics, dates and evidence, not a generic narrative of an unhappy relationship.
- Know which gateway you are using. Parker shows that signature defects and advice issues sit under s 90G(1A), not s 90K(1)(e). The wrong gateway means the wrong test and likely a dismissed application.
Practical do/don't list:
| Do | Don't |
|---|---|
| Identify the specific subsection of s 90K (or s 90G(1A)) that fits your facts | Lump every grievance under unconscionable conduct and hope the court picks one |
| Pinpoint conduct at the time of signing | Argue the agreement is unconscionable because of the financial outcome years later |
| Document what you knew at the time of signing | Stay silent for years, then ask equity to rescue you |
| Get separate legal advice before any challenge | Self-represent on a complex set-aside application |
| Collect evidence of family violence, controlling behavior, or duress | Rely on a generic narrative without dates, incidents, or witnesses |
