In the wake of the recent High Court decision of Thorne and Kennedy  HCA 49 much attention has been focused in Family Law circles about the continued use of Financial Agreements to resolve property matters.
Financial Agreements (sometimes referred to as ‘Binding Financial Agreements’, BFAs or ‘pre-nups’) are a form of contract drawn up with reference to the Family Law Act 1975 (C’th), the legislation that deals with how property may be adjusted in the event of the separation of a couple, married or de facto including same sex couples. They are private agreements that, unlike consent orders, do not need court approval to confirm that the terms are ‘just and equitable’ and as such come under no independent scrutiny. They do however require the parties to receive independent legal advice prior to signing.
The circumstances described in the Thorne and Kennedy case reflected great imbalance in the financial positions of the parties and the exertion of substantial pressure upon one party to sign. The wealthy husband made clear that there would be no wedding to the less well-off wife if she refused to sign. There was significant time pressure put upon her. Having left her home country and invested herself heavily in the relationship she signed despite receiving some unflinching advice that the agreement was unfair and should not be entered into. The agreement was eventually overturned by the High Court.
The decision provided an overview of some of the issues that can affect the validity of financial agreements including duress, undue influence and unconscionable conduct. Whilst the case has not changed the law what it has done is to highlight the importance of proper professional preparation of Financial Agreements particularly having regard to:
• The nature of the relationship of the parties;
• The financial positions and life stages of the parties;
• Whether the terms of the agreement are fair and reasonable;
• Whether any negotiation has been (or could be) entered into;
• Emotional circumstances;
• Existence of any threats or coercive behaviour;
• Time constraints or pressures;
• The independent advice provided and the extent to which time to consider that advice has been allowed.
At Bell Legal we are very aware of the issues surrounding Financial Agreements. We are careful to ensure that our clients have a proper understanding of the issues when such an arrangement is sought.
Financial Agreements still have a place in Family Law dispute resolution. They remain a flexible option for people who wish to plan for or agree the terms of their own property settlement. When entered into thoughtfully and on fair and reasonable terms, these agreements still represent a viable way for people to avoid the expense, stress and uncertainty of the court system.
Please note, this article is general in nature and is not legal advice. To discuss whether a Financial Agreement may be suitable for your circumstances or if you have any other Family Law query please contact Alex Wynn, Senior Associate – Family Law, on 07 5597 3366 or send him an email to email@example.com