A decision on binding financial agreements from the High Court of Australia in the case Thorne v Kennedy was handed down on 8 November 2017. Concern has been expressed that this “means the end of Binding Financial Agreements – Binding Financial Agreements will no longer be enforced”. This is far from the case.
Facts of The Case: Thorne v Kennedy
The parties met over the internet in 2006. Ms Thorne was a 36 years old Eastern European woman living in the Middle East with no assets. She had been married before.
Mr Kennedy was a 67-year-old wealthy Australian property developer with assets worth between $18 million and $24 million. He was divorced with 3 adult children.
Mr Kennedy travelled overseas to meet Ms Thorne shortly after meeting her online. He told her that if he liked her he would marry her but “you will have to sign a paper. My money is for my children.”
He travelled overseas twice to meet Ms Thorne. They took an extended holiday around Europe.
In February 2007, she moved to Australia to live in Mr Kennedy’s penthouse with the intention of getting married.
The wedding was set for 30 September 2007.
About 10 days before the wedding, Mr Kennedy took Ms Thorne to his lawyers and told her she had to sign a prenuptial agreement. He told her if she did not, the wedding would not go ahead.
By this time Ms Thorne’s parents and sister had flown to Australia from Eastern Europe. Guests had been invited to the wedding. The wedding dress had been made and the wedding reception had been booked.
On 20 September, Mr Kennedy took Ms Thorne to see an independent lawyer for independent legal advice about the agreement.
The independent lawyer told Ms Thorne that it was the worst agreement she had seen and that she should not sign it. Ms Thorne said she would sign it.
Some amendments were made to the agreement at the request of the independent lawyer.
The agreement was signed by Ms Thorne on 26 September 2007, 4 days before the wedding, and against the advice of the independent lawyer. They married on 30 September 2007.
The agreement required the parties to sign another agreement in almost identical terms after the wedding. Ms Thorne was again advised by the independent lawyer not to sign the second agreement. She ignored that advice and signed it on 5 November 2007.
The parties separated on 16 June 2011 almost 4 years after they married.
Under the terms of the agreement, Ms Thorne received $50,000.
She commenced proceedings in April 2012 to set the agreement aside. A trial commenced in May 2014 but Mr Kennedy died during the trial. The case was continued by his executors.
The trial judge’s decision was that the agreement should be set aside.
The trial judge’s decision was that Ms Thorne’s situation was one where she was subject to undue influence.
The Judge’s Decision On Binding Financial Agreements
To quote the judge directly:
She was in Australia only in furtherance of their relationship. She had left behind her life and minimal possessions…She brought no assets of substance to the relationship. If the relationship ended, she would have nothing. No job, no visa, no home, no place, no community. The consequences of the relationship being at an end would have been significant and serious consequences to Ms Thorne. She would not be entitled to remain in Australia and she had nothing to return to anywhere else in the world. Every bargaining chip and every power was in Mr Kennedy’s hands. Either the document as it was, was signed, or the relationship was at an end. The Husband made that clear.”
As to the second agreement, the judge held that it was simply a continuation of the first – “the marriage would be at an end before it was begun if it was not signed.”
The law has always provided that contracts and agreements can be set aside in cases of undue influence, duress or unconscionable conduct.
When you look at those facts, it is not difficult to see why the trial judge thought that the agreement should be set aside and why the High Court decided unanimously that the trial judge had made the right decision.
Prenuptial agreements can be binding if:
Properly drawn up with provisions that are “fair”;
Parties have time, months not weeks or days, to properly consider the agreements and obtain legal advice. Binding Financial Agreements should not be prepared and signed under pressure of a wedding being just a few weeks or days away.
If you have more questions on binding financial agreements, please contact Leach Legal today.