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Case Round Up

Thorne v Kennedy [2017] HCA 49

By Helena Mumford on the 23rd Apr 2018

High Court grants special leave granted to the Wife to appeal the Full Court’s decision on whether pre-nuptial agreement could be set aside for duress, undue influence or unconscionable conduct.

Facts:
1. The parties met online in 2006 when the Wife was living overseas. She moved to Australia 7 months later to live with the Husband.
2. The Husband had significant assets valued between $18m – $24m, while the Wife had no assets.
3. The Wife was told to sign a pre-nuptial agreement 11 days before the parties wedding. The agreement provided that the Wife would receive nothing if the parties separated within three years of $50,000 if the parties separated after three years.
4. The Wife received independent legal advice and was strongly advised not to sign the agreement however she proceeded to sign the agreement 4 days before the wedding. The Wife had been aware since she met the Husband that she would have to sign an agreement of some kind however she was not advised of the contents of the agreement until 11 days before the wedding when she saw it for the first time.
5. The parties married in September 2007. The agreement provided that within 30 days of signing, another agreement would be signed in similar terms. In November 2007 the second agreement was signed.
6. The parties separated in August 2011 and the several months later, in 2012, the Wife commenced proceedings to set aside both agreements, seeking a property settlement and spousal maintenance order. The Trial Judge set aside both agreements after finding they were signed under duress or undue influence. The Husband appealed and the agreements were upheld.
7. The Wife’s Appeal to the High Court was allowed.

Decision
The High Court rejected the argument that because the Wife had independent legal advice, she was free of undue influence by the stronger party. The important facts were that the Wife relied on the Husband for her financial support and she faced the prospect of her wedding being cancelled if she did not sign the agreement. This was particularly concerning for the Wife who had several family members arrive in Australia for the wedding.
The appeal was successful, and the High Court was unanimous in finding that the agreement should be set aside due to unconscionable conduct.
This case is significant as there is now a more substantial risk to parties with a superior financial position as Agreements can be open to challenge on the basis of undue influence, unconscionable conduct and duress and there needs to be important consideration given to these issues when drafting Financial Agreements.