Pre Nuptial Agreements – Landmark High Court Case Decision

On 8 November 2017, the case of Thorne v Kennedy was handed down by the High Court of Australia.  I have previously written about this in an article earlier this year (Binding Financial Agreements - Important High Court Case Pending).

Briefly, the facts were as follows.  A wealthy property developer, Mr Kennedy, met Ms Thorne online on a website for potential brides and they were soon engaged.  Ms Thorne lived overseas and came to Australia leaving behind her life.  The Court found that if the relationship between Mr Kennedy and Ms Thorne ended, she would have nothing, no job, no visa, no home, no place, no community.  A Pre-Nuptial Agreement was signed at the insistence of Mr Kennedy very shortly before the wedding in circumstances where Ms Thorne was given emphatic independent legal advice that the Agreement was entirely inappropriate and that she should not sign it.  Shortly after the parties married, they also signed a second Financial Agreement (known as a Post-Nuptial Agreement) in substantially identical terms.  The High Court found that the primary Judge who conducted the initial trial was correct to consider the unfair and unreasonable terms of the Pre-Nuptial Agreement and the Post-Nuptial Agreement as matters relevant to her consideration of whether the Agreements were vitiated.  In the particular context of these types of Agreements, the High Court said the following factors may have prominence:

  1. Whether the Agreement was offered on a basis that it was not subject to negotiation;
  2. The emotional circumstances in which the Agreement was entered including any explicit or implicit threat to end a marriage or to end an engagement;
  3. Whether there was any time for careful reflection;
  4. The nature of the parties’ relationship;
  5. The relative financial positions of the parties; and
  6. The independent advice that was received and whether there was time to reflect on that advice.

These factors are very significant and need to be considered extremely carefully.  They will have a particular impact on the advice the parties are given prior to considering whether a pre-nuptial or post-nuptial agreement is entered into and on what terms.  The advice is equally important if acting for the person in a superior financial position or an inferior financial position. 

Ben Farmer

18 December 2017