Prenuptial agreements have been widely held to be the perfect instrument for protecting one’s assets in a marriage, particularly where there is a vast inequality in the wealth brought to the relationship.
However, the recent High Court ruling found in Thorne v Kennedy [2017] HCA 49 could have a substantial impact in the effectiveness of prenuptial agreements in the future.
Case Summary
Mr. Kennedy was a wealthy property developer that met his wife, Ms. Thorne, online and who resided overseas at the time. Mr. Kennedy made it clear to Ms. Thorne that his wealth was for the benefit of his adult children, but would nonetheless ‘take care’ of his future spouse. Once Ms. Thorne had moved to Australia and was set to marry Mr. Kennedy, the latter had Ms. Thorne enter into a prenuptial agreement that was grossly in the favor of Mr. Kennedy. Contrary to legal advice, Ms. Thorne signed the prenuptial agreement under the threat that the wedding would not proceed if she did not.
Mr. Kennedy and Ms. Thorne then separated, and the latter sought to have the prenuptial and financial agreements (of which there were two in succession) set aside on the grounds of duress. The trial judge set aside the agreements, which the Full Court of the Family Court of Australia then overturned. On appeal, the High Court enforced the decision of the trial judge and reinstated the decision to set aside the agreements.
Impact on Australian Family Law
One of the arguments that the respondent (Mr. Kennedy) put forward was that the Appellant (Ms. Thorne) had sought independent legal advice, and had then signed the prenuptial agreements voluntarily, and of her own free will. The High Court rejected this argument that obtaining legal advice absolutely overcomes any undue influence by the stronger party. Rather, the important material facts were that the appellant had wholly and completely relied on the financial support of the respondent, and faced the threat of her wedding being canceled, which she had a substantial stake given that a large number of her family had arrived in Australia in attendance. In addition, the respondent had also made statements to the effect that he was wealthy, financially capable and would support the appellant and provide her with a high quality of life.
The fact that the appellant had relied on the respondent to such a degree, and had no substantial assets of her own contributed to her successful appeal, as the High Court felt that this materially contributed to her claim of undue influence and duress, which would be reasonable for an ordinary person in similar circumstances.
The outcome of the case is that a strong precedent has been set that could potentially overturn many future prenuptial dispute cases on the basis of undue influence and duress, particularly where there is extrinsic evidence that shows a superiority of one party over another financially, and perhaps socially.
