Setting aside a pre-nuptial agreement – duress and unequal bargaining power

By Margaret Miller • In Family LawComments Off on Setting aside a pre-nuptial agreement – duress and unequal bargaining power

In the recent case of Thorne & Kennedy, the 36 year old wife claimed she had been forced to sign a pre-nuptial agreement, and a later agreement confirming the terms of the first agreement, by her very wealthy 67 year old husband. He threatened to call off the wedding if she did not sign and to abandon her after the marriage if she did not sign the later agreement. Ms Thorne applied successfully to the family court to have the agreements set aside when he husband ended the marriage suddenly four years later.

The husband opposed the application on the basis that the wife had received “proper legal advice” before she signed. When the husband died during the proceedings, the case continued against his estate.

The family court has power to set aside financial agreements if:

  • the agreement was obtained by fraud e.g. non-disclosure of a material matter; or
  • the agreement is void, voidable or unenforceable e.g. the binding requirements were not fulfilled; or
  • circumstances have arisen since the agreement was made that make it impracticable for the agreement or part of the agreement to be carried out; or
  • since the agreement was made, a material change in circumstances that relate to the care, welfare and development of a child of the relationship has occurred. As a result of the change, the child, one who has caring responsibility for the child, a parent, person with residence order or specific issues order in relation to care, welfare and development, or a party to the agreement will suffer hardship if the court does not set the agreement aside; or
  • a party to the agreement engaged in unconscionable conduct in the process of developing the financial agreement e.g. insisting upon the agreement being signed on the parties’ wedding day.

In this case, the Court decided that the wife was a vulnerable party with no bargaining power because she had come from overseas, had limited English skills and was threatened with “No job, no visa, no home, no place, no community. The consequences of the relationship being at an end would have 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  ….. The wife had no bargaining power, nothing to persuade a different outcome, no capacity to affect any change”.

The solicitor who gave the wife her legal advice before she signed the agreements told her plainly that it was a bad agreement and that she should not sign it.  She expressed concern at the haste in signing and that the short time before the wedding was placing the wife under duress.  She repeated the advice when the second agreement was signed.

The Court agreed and set aside both agreements. When entering into a family law financial agreement, care should be taken to make sure it will be valid and not subject to being set aside.

For more information, or for any other family law related queries, please contact Margaret Miller, Partner in our Litigation and Dispute Resolution department.

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