High Court of Australia and Binding Financial Agreements

Important Decision from the High Court of Australia regarding Binding Financial Agreements Pursuant to the Family Law Act 1975 (Cth).

The decision in Thorne v Kennedy [2017] HCA 49, concerns a young woman successfully taking action to void a prenuptial agreement she signed just prior her marriage to a wealthy property developer.

The husband who is much older and an experienced businessman was far more sophisticated than the young wife.

The prenuptial agreement was heavily in the favour of the husband and objectively not balanced in its distribution of matrimonial assets in the event of a separation and dissolution of marriage.

The High Court has extinguished an agreement that would have paid the wife only about $50,000. As a result of the Court's decision the wife is now able to commence an application for a larger division and payment because of the size of the matrimonial asset pool which was in the millions.

This is a landmark case, which has been closely watched by this firm as currently we instructed in an action with similar circumstances whereby we are seeking to set aside a prenuptial agreement on behalf a client.

In Thorne v Kennedy some of the facts are -

  • The wife signed the prenuptial agreement although she received independent legal advice that the agreement was unfair and inappropriate.
  • There had been two executed agreements and the agreements limited her claim to any property settlement to $50,000 after three or more years of marriage.
  • The wife after 4 years of marriage, in initial proceedings sought for the agreements to be overturned and sought a property settlement of $1.2 million - this figure was inclusive of spousal maintenance in the sum of $104,000.
  • The husband had passed but his estate continued to resist the wife's claim.
  • The Federal Court at first instance ruled in favour of the wife.
  • The Court determined that the wife's, consent to the agreements had resulted from duress, undue influence and unfairness. Therefore, the consent was invalid.
  • The husband's estate appealed and had been successful on appeal.
  • The wife appealed that decision, and was granted special leave to the High Court. The High Court decision was in favour of the wife.
  • The Justices of the High Court unanimously found the agreements should be set aside for “unconscionable conduct”.
  • A majority of the Justices of the High Court also found that the agreements should be set aside for “undue influence”.
  • This case now returns to the Federal Court for a determination on the property settlement amount to be paid to the wife.

Therefore, anyone with existing signed prenuptial agreements should be reviewing the document with a lawyer in light of this decision.

If you wish to make any enquiries please send an email to naz@papamihail.com.au