Binding Financial Agreements - Important High Court Case Pending

In early August 2017, the case of Thorne v Kennedy was heard by the High Court of Australia.  This case has provided the High Court with a rare opportunity to consider and clarify various common law doctrines of undue influence, duress, and unconscionable conduct insofar as they relate to Binding Financial Agreements (or as they are commonly known, pre-nuptial agreements).  The facts of that case were that the late Mr Kennedy was a property developer with assets valued at approximately $18m.  Ms Thorne lived overseas and the parties met through an online dating site.  Ms Thorne had poor English skills, was economically poor and had a fragile immigration status. 

The parties married.  About a week before the wedding, Mr Kennedy insisted on Ms Thorne signing a Pre-Nuptial Agreement.  He had made it clear at the commencement of their relationship that such an agreement would need to be signed as he wanted to protect his assets for his children from a previous marriage.  Ms Thorne received independent legal advice to the effect that she should not sign the Agreement as it was unfair but despite getting that advice agreed to sign it and did so.  An almost identical Agreement was then signed after they married.  Four years later they divorced.  Ms Thorne argued, amongst other things, that she was placed under duress as a result of the ultimatum given to her seven days before she was due to be married.  She also argued that this pressure was exacerbated by the fact that if she did not marry she could not remain living in Australia.  She also argued that purely as a result of the difference in hers and Mr Kennedy’s financial positions that entering into the Agreement constituted an unconscionable dealing. 

The legal arguments are complex and the common law doctrines of duress, undue influence and unconscionable dealings insofar as they relate to Binding Financial Agreements and familial relationships is in need of clarification.  The operation of these doctrines has far reaching practical consequences especially when they arise in situations in the matrimonial context.  The High Court is being asked to grapple with difficult questions that related to autonomy and the protection of the potentially vulnerable people and therefore both legal scholars, lawyers and members of the public alike should welcome the High Court’s guidance with open arms.  Watch this space.

Ben Farmer

28 September 2017