The High Court of Australia recently set aside a binding financial agreement in the case of Thorne v Kennedy  HCA 49. The case involved a financial agreement between a 67-year-old property developer husband and his 36-year -old wife. The husband was a man of considerable means, with a net worth of $18,000,000 to $24,000,000. The wife was of limited means. The couple met in the middle east but eventually decided to marry and settle in Australia, which required the wife to move to Australia. The Husband told the wife prior to the marriage that she would have to sign a financial agreement if the marriage was to take place. The wife was not shown the financial agreement until 20 September 2007 just 10 days prior to the couples’ wedding on 30 September 2007. The wife sought independent legal advice in relation to the agreement and was told not to sign it but did so anyway.
The High Court upheld the decision of the trial judge to set aside the financial agreement due to unconscionable conduct and noted that the agreement could have been set aside for duress. In reaching her decision the trial judge noted the unfair and unreasonable terms of the agreement as well as the fact that the wife had felt she had “no choice” and was “powerless” to resist the agreement if she was to marry the husband. The trial judge also noted:
- The wife’s lack of financial inequality with Mr Kennedy
- The wife’s lack of permanent status in Australia at the time of the marriage
- The wife’s reliance on the husband for all things
- The wife’s emotional connectedness to the relationship and the prospect of motherhood
- The wife’s emotional preparation for marriage
- The publicness of her upcoming marriage
In reaching its decision, the High Court noted a list of factors which may have prominence in determining whether or not to have a financial agreement set aside:
- Whether the agreement was offered on a basis that it was not subject to negotiation
- The emotional circumstances in which the agreement was entered, including any explicit or implicit threat to end a marriage or engagement
- Whether there was any time for careful reflection
- The nature of the parties’ relationship
- The relative financial positions of the parties
- The independent advice that was received and whether there was time to reflect on that advice
It would appear that binding financial agreements are not all too binding after all.