How Safe Is A Prenuptial Agreement?

The High Court’s decision in Thorne and Kennedy (2017) HCA 49 has put prenuptial agreements back into the spotlight and will have huge implications for both existing and future prenuptial agreements.

Ms Thorne was a penniless young Eastern European woman who fell in love with an Australian property developing multimillionaire after the pair met online. She moved to Australia and the pair soon decided to marry.

Ms Thorne had her entire family fly in for the wedding. By the time they arrived the wedding plans were in full motion and she was eagerly anticipating her upcoming nuptials.

Mr Kennedy, being a shrewd businessman, asked Ms Thorne to sign a Binding Financial Agreement which protected his millions in the event that they ever separated. The agreement was that in the event of separation Ms Thorne would receive nothing if the marriage was shorter than three years and $50,000 if the marriage lasted longer.

Ms Thorne went to see a lawyer (as is mandatory when signing a binding financial agreement). The lawyer described the agreement as being the most unfair agreement she had ever seen and told her not to sign. However Mr Kennedy made it clear that the wedding would be called off unless she signed.

Faced with the above choice, Ms Thorne signed the agreement and allowed the marriage to proceed.

Perhaps unsurprisingly, the marriage ended after a few short years and Ms Thorne sought to challenge the validity of the agreement arguing that it was not fair and she was not in a position to negotiate. Mr Kennedy and later his children relied on the agreement, claiming it was a freely entered into agreement.

The matter eventually progressed to the High Court which ruled in favour of Ms Thorne saying that the agreement was entered into as a result of undue influence and unconscionable conduct by Mr Kennedy.

The High Court stated more broadly with respect of prenup’s that the following matters need to be considered:

  1. Whether the agreement was offered on a basis that it was not subject to negotiation;
  2. The emotional circumstances in which the agreement was entered, including any explicit or implicit threat to end a marriage or engagement;
  3. Whether there was any time for careful reflection;
  4. The nature of the parties’ relationship;
  5. The relative financial positions of the parties; and
  6. The independent advice that was received and whether there was time to reflect on that advice.

There is now a new test in place determining whether a prenup was entered into fairly and existing prenups could be subject to greater challenge.

New prenups will have to be very carefully drafted to ensure that they comply with Thorne and Kennedy.

If you have been forced to sign a prenup that you didn’t want to, are worried that your partner will try and have your prenup thrown out or are contemplating entering into a new prenup call us at Rowan Skinner and Associates Lawyers for legal advice.