Binding Financial Agreements under duress in the High Court

In early August this year the High Court of Australia is to hear an important case about the validity of property settlement agreements in Family Law.

These agreements are referred to by lawyers as ‘Binding Financial Agreements’. They include ‘pre-nups’ which are made at the beginning of a relationship. Made under the Family Law Act 1975 (C’th) they can cover both married and de facto relationships – including same-sex relationships. Parliament introduced these back in the year 2000 to reduce the need for court involvement between separating couples and their property. However this not the first time that these agreements have run into trouble. They have been set aside through non-compliance with strict legal protocol and through non-disclosure of important information.

The validity of agreements in some cases may change when the case of Thorne v. Kennedy is decided by the High Court. This long-running saga involves a deceased Australian multi-millionaire and his much younger foreign national wife who he met via the internet whilst she was living abroad.

The husband and wife made 2 separate agreements: one a prenup before they married; and a second one after the wedding. The deals in each agreement were about the same whereby in the event of a split the wife was to receive $50,000 and that would be that. There is some evidence that the husband told the wife that marriage would not occur unless she agreed to enter into the agreements with him.

In her appeal, the wife alleges that the husband’s insistence upon the agreements was a form of economic duress which forced her to comply because without the marriage she would have lost her right to live in Australia and she would have lost out on the luxurious lifestyle she by then enjoyed. Further questions before the court are complex including considerations of public policy on both sides of the argument.

Whatever the outcome, anyone who is a party to binding financial agreement made when there was a clear financial imbalance between the parties, would do well to keep track of this decision. The case comes before the High Court sitting in Brisbane on 8 August 2017.

For more information on this topic please contact Margaret Miller, Partner and Family Lawyer. This article has been prepared by Bell Legal Group for general information purposes only. It is not legal advice and should not be relied upon as such.