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What You Need To Know Before Signing a Binding Financial Agreement

Where there is duress, undue influence or unconscionable conduct at the time of entering into a Binding Financial Agreement, the court will set aside the agreement.

In the recent case of Thorne v Kennedy, the High Court of Australia set aside two (2) financial agreements on the grounds of duress, undue influence and unconscionable conduct.

The Facts

The Husband (Mr Kennedy) – 67 years old divorcee with three adult children and assets worth between $18-24 million.

The Wife (Ms Thorne) – moved to Australia in 2007 after meeting Mr Kennedy online 7 months prior.  Ms Thorne, a 36 year old European woman had limited English and no substantial assets.

On 20 September 2007, 10 days prior to the wedding, the parties entered into an agreement despite Ms Thorne receiving independent legal advice advising her not to sign the agreement.  However, Mr Kennedy informed Ms Thorne that if she did not sign the agreement the wedding would not proceed.  At this time, Ms Thorne’s sister and parents had travelled to Australia for the wedding and were staying with the parties in Mr Kennedy’s home.

Only 4 days before the wedding, the Wife signed the first agreement.  On 5 November 2007, 30 days after the wedding, the wife signed a substantially identical post-nuptial agreement (the second agreement).  Again, the Wife received independent legal advice not to sign the agreement.  The agreement was for the Wife to claim $50,000 after three or more years of marriage and if the Husband died while the parties were living together the Wife would receive a penthouse worth up to $1.5M, a Mercedes and a continuing income.

In 2011, the parties divorced, and the Wife commenced proceedings in the Federal Circuit Court seeking a property settlement claim of $1.24M, including spousal maintenance.  In 2014, during the court proceedings, the Husband died, and the Husband’s estate continued to prevent the Wife from making a claim on the estate.

The Decision

In March 2015, the Federal Circuit Court (the primary judge’s decision) set aside both agreements and held that the Wife had “signed the Agreements under duress borne of inequality of bargaining power where there was no outcome to her that was fair and reasonable”.  The court relied upon 6 factors in determining their decision:

  1. the Wife’s lack of financial equality with the Husband;
  2. the Wife’s lack of permanent status in Australia at the time;
  3. the Wife’s reliance on Mr Kennedy for all things;
  4. the Wife’s emotional connectedness to their relationship and prospect of motherhood;
  5. the Wife’s emotional preparation for marriage; and
  6. the publicness of her upcoming marriage.

The Husband’s executors appealed to the Full Court of the Family Court which overturned the Federal Circuit Court decision.  The Full Court found the agreements to be fair and reasonable because the Wife had been told by the Husband at the outset of their relationship, and she accepted it, that his wealth was for his children and provisions were made for the Wife should the Husband predecease her.  The Full Court also held that the Husband’s conduct was not unconscionable because:

  1. there was no misrepresentation made by the Husband about his financial position;
  2. the Husband made it clear at the outset that the Wife would not receive any part of his wealth on separation;
  3. the Wife believed the Husband would never leave her and her lack of concern about her financial position; and
  4. the Husband’s acceptance of handwritten amendments to the agreements that were made by the Wife’s solicitor.

The Wife then appealed the Full Court’s decision and the appeal was heard in the High Court of Australia in August 2017 and the Judgement was delivered in November 2017.

The High Court upheld the Federal Circuit Court’s decision and found the agreements had been entered into by duress, undue influence and unconscionable conduct.

The matter was returned to the Federal Circuit Court awaiting judicial determination regarding the Wife’s application for a property settlement and spousal maintenance.

This Case Provides Some Clarity For The Future

The High Court in Thorne & Kennedy listed 6 factors which will be more strongly considered where there has been duress, undue influence and unconscionable conduct in the context of pre-nuptial and post-nuptial agreements (at [60]):

  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 to end an 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.

Please note that the High Court gave clarity to further issues, and some still remain unresolved.

This article is not legal advice and is intended to provide general information only. 

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family violence

Family Advocacy and Support Services

Family Advocacy and Support Services (FASS) – Legal Aid Qld

A free service for parents affected by family violence is now available in the Federal Circuit Court and Family Court of Australia. The service includes social support and duty lawyer services.

Duty Lawyers and family violence workers will be available at Court on days when there is a Duty List. Services provided will include legal advice, court support, safety planning, legal information and referrals. The Duty Lawyer may also appear in court on behalf of an unrepresented client or assist with negotiations with the other party.

The type of assistance will be determined on a case by case basis depending on the circumstances of the client, Legal Aid guidelines and availability of resources.

This is provided by the Family Advocacy and Support Services (FASS) – Legal Aid Qld.

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Transforming the family law system

The first review of the family law system since 1976 is currently taking place.  This is great news for families who can’t afford the high costs of legal representation in the Family Courts.

There is longstanding recognition that the current family law system is failing many families, with protracted litigation, huge financial costs and delays.  The current family law system as it stands today mostly causes more anguish and grief for families, exacerbating parental conflict rather than providing a safe environment where they can achieve a fair and timely outcome to co-parent.

A new statutory authority has been designed to offer self-represented litigants a process that offers more flexibility and an inquisitorial alternative to the litigious approach.  Families will be helped by a panel of members who are experts in family law, family dispute resolution, family violence, psychology, mental health and child development.  Families won’t be able to have a solicitor attend with him without special leave of the court.  It won’t be necessary to have a solicitor as the panel will be well equipped to assist you from a legal perspective.

It is understood that the during the trial period of this new process, families can take advantage of the panel at no cost.

If you would like to know more about the review of the family law system and how it can help you, please contact our legal drafter, Melita Lloyd.

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3 Reasons To Have Correctly Drafted Court Documents

Correctly drafted court documents can be instrumental to the quick and desirable resolution of your matter. Many of the court forms are self-explanatory, and the court’s websites provide brief instructions on filling out many forms. However, the documents you file are of critical importance. Your affidavit and the orders you are seeking from the court are the judge’s first exposure to your matter.

Reason #1: It will save you money to have The Legal Drafter draft your court documents for you. When you have well prepared court documents your case will run more efficiently and it will keep the judge happy!

 

Reason #2: Well written and accurate documents supporting your matter will give the court the best possible view of your position.

 

Too often, people without experience in legal drafting will include unnecessary or inappropriate information in their court documents instead of focusing on facts relevant to their matter.

We know what facts and information best supports your case and will ensure all the important and relevant information you provide to us is included to support your argument to the best of your ability.

 

Reason #3: A quicker resolution of your matter by having correctly drafted court documents will make any court appearance easier for you and prevent any unnecessary delays during the court process.