A recent judgement delivered by the High Court on 8 November 2017 has re-emphasised the non-binding nature of “Prenups” or Binding Financial Agreements. This article explains how despite there being an agreement before the marriage as well as after the marriage, both Agreements were found to be voidable due to undue influence and unconscionable conduct.
The case involved wealthy property developer Mr Kennedy aged 67 (whose executors/family took over Court proceedings when he died) with assets in excess of $18 million dollar separating from his Middle Eastern 36 year old wife Ms Thorne who had no assets. The two met on an internet website for potential brides and soon began a relationship.
Seven months later Ms Thorne moved to Australia to live with Mr Kennedy. After he proposed and around 10 days before the wedding Ms Thorne was told they were going to see a solicitor about signing an agreement. When Ms Thorne asked why she had to sign an agreement Mr Kennedy replied that if she did not sign it then the wedding would not go ahead.
In accordance with the correct legal process Ms Thorne sought independent legal advice. A basic summary of the important sections of the Agreement was that Ms Thorne receive $4,000 a month during the marriage (with no provision for an increase in the future). If the parties separated within 3 years Ms Thorne would get nothing. If they separated after 3 years Ms Thorne would receive $50,000. If Mr Kennedy died she would receive a penthouse rent free.
Her Family Lawyer advised her not to sign the agreement as it in no way considered her interests and was one of the worse agreements she has ever seen. Ms Thorne’s family was already in the country and the wedding was all planned. The Court noted that at this stage if the relationship ended Ms Thorne would have nothing, No job, no home, no place, no community. She signed the Agreement before the wedding and later another after the wedding.
After the case was heard twice it reached the High Court. The Court unanimously overturned the Full Court’s decision for different reasons but the majority of 5 concluded that that Ms Thorne had no choice or was powerless other than to enter the agreements and was unable to make clear, calm or rational decisions. The majority of the Court ruled Mr Kennedy had exerted undue influence over the decision making of Ms Thorne.
The majority also found that Mr Kennedy had engaged in unconscionable conduct by taking advantage of Ms Thorne’s special disadvantage. Mr Kennedy created the urgency with which the prenup was required to be signed, and the further haste surrounding the post marriage agreement. There was no avenue for Ms Thorne to return her family home and this added further pressure for her to sign the agreement which were characterised by the Court as “gross inequality”. The appeal was allowed in favour of the wife.
Prenups and Binding Financial Agreement are a dangerous area of Family Law and you are required by law to seek legal advice before signing such agreements. Call us on 1800 087 934 to speak with our Accredited Family Law Specialist Kate Walker if you are considering such agreements.