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Is Australia set to see the end of pre-nups? S&G lawyer speaks out

Is Australia set to see the end of pre-nups? S&G lawyer speaks out

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A Slater and Gordon lawyer has offered insights into the future of pre-nuptial agreements, following a High Court judgment handed down this week that is being labelled as one of the biggest family law decisions in a decade.

Slater and Gordon family lawyer Heather McKinnon has spoken out following a High Court judgment handed down this week surrounding a pre-nuptial agreement.

The matter, Thorne v Kennedy, involved a then 67-year-old Australian property developer and a 36-year-old Eastern European woman who met online back in 2006. The woman moved to Australia seven months after they met to get married, however four days before their wedding the man presented her with one binding financial agreement to be signed before the wedding (or else he would call it off) and another to be signed 30 days after the wedding.

According to court documents, the agreements limited Ms Thornes claim to any property settlement to $50,000 after three or more years of marriage. According to a News Limited publication, Ms Thorne and Mr Kennedy divorced in 2011 after three years of marriage. She then took Mr Kennedy to court in 2012 seeking for the agreements to be overturned, while also seeking a property settlement of $1.24 million, which also included spousal maintenance.

The publication noted that Mr Kennedy died in 2014, however his estate continued to fight against Ms Thorne’s bid for a larger settlement amount.

In its judgment this week, the High Court found both agreements were unenforceable due to Mr Kennedy’s “unconscionable conduct”.

“This is a huge development for family law in Australia and will make binding financial agreements for relationship, or ‘pre-nups’ very difficult to enforce,” Ms McKinnon said.

“The High Court has recognised that there will almost never be a circumstance where two partners have equal bargaining power in a relationship.

“Essentially, the court has said that commercial principles of contract law have no place regulating the financial matters of the parties of an intimate relationship.”

Ms McKinnon noted that up until now, the courts have been treating binding financial agreements, or ‘pre-nups’, like commercial contracts.

“In this case, a solicitor actually advised the woman that it was the worst agreement they had ever seen, because it was drawn solely to protect her husband-to-be’s interests,” Ms McKinnon said.

“But she was completely reliant on him, financially and otherwise, and he told her that if she didn’t sign the wedding would not go ahead.

“The High Court held this to be unconscionable conduct and specifically said independent certificates of advice from lawyers do not cancel out this behaviour.”

In addition, Ms McKinnon described the decision as “essentially the death of pre-nuptial agreements in Australia”, noting that it will be difficult for anyone to have certainty about them from now on.

She added that those with an existing binding financial agreement should be immediately reviewing its effectiveness.

“In light of this judgment, people with existing binding financial agreements should really be looking over the document with a lawyer,” Ms McKinnon said

“This applies to people who have entered into the agreements thinking it has given them protection, as well as those who might be in [the] middle of litigation or starting property proceedings involving these agreements.”

 

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