High Court Orders that Pre-nuptial Agreement be Set Aside

In what has been described as a ‘landmark’ judgment, the High Court has ruled that a pre-nuptial agreement and similarly worded post-nuptial agreement should both be set aside.

The case involved a couple who married in 2007 after meeting initially online. They have been given the names Mr Kennedy and Ms Thorne to protect their real identity.

Mr Thorne was aged 67 at the time and had previously been married and had three grown up children. He was a successful property developer in Australia with assets amounting to around $18 million. She was 36-years-old and from Eastern Europe, and was described as having no substantial assets.

A few days before the wedding Mr Kennedy arranged for Ms Thorne to see a solicitor about signing a pre-nuptial agreement and warned her that if she didn’t sign it, the wedding wouldn’t take place. The solicitor Ms Thorne saw advised her against signing the agreement as it was drafted solely in Mr Kennedy’s interests. However, four days before the wedding they both signed the agreement. They signed another agreement, drafted along similar lines, shortly after the wedding.

The couple separated after almost four years of marriage and Ms Thorne applied to the Federal Circuit Court to have both agreements set aside and also sought an adjustment of property order and a lump sum spousal maintenance order.

The judge found in Ms Thorne’s favour, ruling that the agreements should be set aside on the grounds of “duress”.

This decision was successfully appealed, but Ms Thorne was given leave to appeal to the High Court, which has now ruled in her favour, finding unanimously that the agreements should be set aside for unconscionable conduct.

The case will now go back to the Federal Circuit Court to determine the original maintenance application.

It has been suggested that this decision may lead to other divorcing couples applying to have their own pre-nuptial agreements set aside, reports the Australian. This is particularly likely if there are grounds for claiming some degree of unfairness or inequality around the signing of the agreement.

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Sources:

http://www.hcourt.gov.au/assets/publications/judgment-summaries/2017/hca-49-2017-11-08.pdf

http://www.afr.com/news/high-court-rules-worst-prenups-invalid-20171108-gzh33y

http://www.theaustralian.com.au/news/nation/landmark-high-court-ruling-set-to-test-prenup-reliability/news-story/bb9f1c351125ee2c2422f717c2a07fc7