Australia: Thorne v Kennedy: The Death Knell For Prenups In Australia?

Last Updated: 28 November 2017
Article by Philippa Hewitt and Rita Ku

Perhaps not shock waves but certainly ripples have passed over the Family law legal community in Australia with the judgment handed down by the High Court in Thorne v Kennedy on November 8. In that case, the court held that a prenuptial agreement, and a subsequently settled post nuptial agreement in substantially the same terms, would not be enforceable on the basis of undue influence and unconscionable conduct by the husband. This comes at a time when prenuptial agreements as well as post nuptial agreements are on the rise and generally more acceptable not only in Australia, but in many countries globally, not least Hong Kong.

Here, the husband was a successful property developer, owning assets worth between A$18 million and A$24 million, a divorcee with three adult children who was aged 67 at the time of the marriage. The wife was an Eastern European woman living in the Middle East, also divorced but with no children and aged 36. The couple met over the Internet on a dating website in 2006. They met in person soon after and he took her on an extended trip around Europe, meeting her family. They moved to Australia in March 2007 and set their wedding day for September 30, 2007. In August Mr. Kennedy instructed his solicitor to prepare a prenuptial agreement but it was not until 11 days before the wedding that he informed Ms. Thorpe that they needed to make an appointment to see the solicitors to sign it. He had made it clear from the outset that there would be no wedding without an agreement in place as he wanted to leave his assets to his children.

The following day, Ms. Thorpe sought independent legal advice. She was given strong advice by the family law solicitor not to sign the agreement as the A$4,000 provision for maintenance was very poor from someone in Mr. Kennedy's circumstance. He had further provided housing for her but there was no certainty that the housing would be built. Lump provision of A$50,000 was described by her lawyer as "piteously small". There was also provision in the event that Mr. Kennedy were to die while they were still living together, which was Ms. Thorpe's main concern at the time. Her lawyer went on to advise that she believed Ms. Thorpe was under significant stress in the lead up to the wedding and that she was only prepared to sign so that the wedding would not be called off.

Despite her legal advice to the contrary, Ms. Thorpe signed the agreement on September 26, four days prior to the wedding. Her relatives had flown out from Eastern Europe and were staying, courtesy of Mr. Kennedy, in his home. After the wedding, again contrary to the strong advice from her lawyer, Ms. Thorpe also signed a postnuptial agreement in substantially the same terms as the prenuptial agreement.

In less than 4 years after the marriage, the parties separated and signed a separation declaration and Ms. Thorpe applied to set aside the agreements, seeking property worth A$1.1 million and a lump sum of A$104,000. Unfortunately Mr. Kennedy died in 2014 during the trial and the case was continued by the executors of his estate, who were two of his adult children. The primary court found that the agreements should be set aside, the Full Court disagreed on appeal and the matter came before the High Court for determination.

The court looked at the legal concepts of duress, undue influence and unconscionable conduct. The primary court had focused on the wife's lack of free choice rather than whether the husband had exerted pressure on her. Lack of free choice, particularly between fiancées, was a presumption within the legal doctrine of undue influence. In finding that the wife had no choice or was powerless, the primary judge noted her lack of financial equality with Mr. Kennedy, her lack of permanent status in Australia at the time, her reliance on Mr. Kennedy for all things, her emotional connectedness to their relationship and hopes for motherhood, her emotional preparation for marriage and the "public-ness" of her upcoming marriage. She had "no job, no visa, no home, no place, no community". In respect of the postnuptial agreement, the effect was the same – if she did not sign, the marriage would be at an end before it had begun.

The Full Court on appeal essentially held that financial inequality in itself could not provide a reasoned basis for duress. The court further held that Ms. Thorpe could not have been subject to undue influence because she has acquiesced in Mr. Kennedy's desire to protect his assets for his children and because she had no concern about what she would receive on separation. Rather, her concerns were whether he would predecease her. They also found that there was no unconscionable behaviour because there had never been any misrepresentation on his part: he had always been clear that, should they separate, this would happen.

The High Court agreed with the primary judge that the agreements should be set aside because of undue influence and Mr. Kennedy's unconscionable conduct: he had clearly taken advantage of Ms. Thorpe's weak position, and that she was at a special disadvantage which he, or any reasonable person, would see was a real possibility. The circumstances in which she found herself were such that her state of mind was affected to the extent that rendered her incapable of making a judgment in her own best interests.

Is this new? In fact, not really. There are many cases all over the world in which guidelines have been given to safeguard the rights of the financially weaker party and, in particular, there are guidelines in respect of how many days before the wedding should the agreement be signed.

In England the recommended number of days is 28, in which time the parties should have been able to consider the implications of their agreement and allegations as to duress and undue influence fall away, or are at least diminished. The agreement must also be fair. One clear point which came out in trial on the evidence of Ms. Thorpe's lawyer was that the agreement was "entirely inappropriate" and inadequate.

So will this mark the death knell for prenuptial and postnuptial agreements? No, but it is a useful reminder that agreements may well not be enforceable if certain factors are absent: the parties must have time to reflect on their agreement, there must be intention to make the agreement which is unaffected by pressure from either side and the agreement must be a fair one, providing adequate provision for both parties in the event of relationship breakdown.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Coleman Greig Lawyers
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Coleman Greig Lawyers
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions