The Truth about Prenups in Australia

The decision handed down by the High Court in the case of Thorne & Kennedy has left many people scratching their heads in relation to Financial Agreements entered into before marriage. Ms Kennedy signed a Pre-Nuptial Financial Agreement 4 days before the wedding. She also signed another one following the wedding. The High Court ruled the Agreements to be invalid. Why? And does this mean that Pre-Nups aren't worth the paper they're written on?

The parties met over the internet in 2006. Ms Thorne was a 36 year old Eastern European woman with no substantial assets. Mr Kennedy was a 67 year old wealthy Australian property developer with assets worth between $18 million and $24 million. About 7 months after meeting Mr Kennedy, Ms Thorne moved to Australia to marry Mr Kennedy. Ms Thorne had basic English skills and no family in Australia.

10 days before the wedding, Mr Kennedy took Ms Thorne to a solicitor to sign the Financial Agreement that he'd had drawn up. The Agreement provided a payment to Ms Thorne of $50,000 plus CPI if the marriage survived 3 years or more. The solicitor strongly advised Ms Thorne not to sign the Agreement as it was "entirely inappropriate."  But by this stage there were 4 days until the wedding. Ms Thorne's family had travelled to Australia for the wedding and all arrangements for the wedding had been made. So she signed the Agreement anyway. Ms Thorne also signed a post-marriage Financial Agreement, which she was advised not to sign.

4 years later, Mr Kennedy unceremoniously kicked Ms Thorne out of the marital home and provided her with a cheque of $50,000 to go away. Ms Thorne took the matter all the way to the High Court. The High Court held that the agreements were invalid on the grounds of unconscionable conduct and undue influence.

The High Court held that Mr Kennedy took advantage of Ms Thorne, whose judgment as to her best interests was negatively affected by the position she was in. It was found that Ms Thorne had a "special disadvantage" which was created by Mr Kennedy bringing her to Australia and keeping her here with the belief that he would marry her, whilst preparing for the wedding and then subjecting her to the pressure of refusing to marry her unless she agreed to the terms of the Agreement.

The High Court decision in Thorne & Kennedy appears to broaden the circumstances in which a Financial Agreement can be set aside. This doesn't mean that Financial Agreements entered into before marriage can't be binding and enforceable. Here at Fox & Staniland we have extensive specialist experience in drafting and providing advice in relation to Pre-Nuptial Agreements. If you are considering entering into a Pre-Nuptial Agreement we suggest that you make an appointment with us to discuss how best to ensure that you won't end up in the same predicament as Mr Kennedy and Ms Thorne.