The High Court case of Thorne v Kennedy [2017] HCA 49 further illustrates why family law financial agreements are fraught with risk. In that case, the plurality comprising Kiefel CJ, Bell, Gageler, Keane and Edelman JJ held two substantially identical financial agreements voidable due to undue influence and unconscionable conduct.
The parties met online and the wife, an Eastern European woman, moved from the Middle East to Australia to marry. The husband was a 67-year old property developer who had substantial assets and was divorced with three adult children.
The wife received independent legal advice from an accredited family law specialist that the first agreement was ‘entirely inappropriate’ and she should not sign it. Despite that emphatic advice, she signed the agreement four days before the wedding at the husband’s insistence. He said the wedding would not go ahead if she failed to sign the agreement. By that time, the wife’s family had travelled to Australia for the wedding.
The wife then signed the second agreement in similar terms a month after the wedding, despite again being urged by her lawyer not to sign it.
The plurality upheld the primary judge’s findings that ‘every bargaining chip and every power was in (the husband’s) hands’ and the wife was powerless to act in any way other than to sign the agreements. If the relationship ended she would not be entitled to remain in Australia and she had little to return to overseas.
Notably, the plurality found the primary judge was correct to consider that a party signing a financial agreement where its terms were grossly unreasonable can be an indicium of undue influence.
This case serves as a reminder that financial agreements can be vulnerable to challenge even where both parties received independent legal advice. Further information on the risks of preparing financial agreements can be found in LPLC’s practice risk guide Focusing on family law.
