Prenuptial Agreements

Can Prenuptial Agreements be Set Aside?

Prenuptial agreements (also known as Binding Financial Agreements) can be set aside if they meet the grounds to set aside the agreement under the Family Law Act 1975.

There are many pros and cons of entering into a Binding Financial Agreement prior to a marriage (often colloquially referred to as a “pre-nup agreement”). It is important to obtain legal advice to determine if a pre-nup agreement is appropriate for you. It is also important to ensure that both parties enter into the agreement of their own volition without undue pressure or incentive, which could result in the agreement later being overturned on the basis of duress.

For example, in the case of Kennedy & Thorne [2016] FamCAFC 189 (26 September 2016), the Full Court heard an application in relation to a husband and wife who were married for 3 years and then separated.

The wife filed proceedings to have the Binding Financial Agreement (pre-nup) that she signed set aside on the basis of duress. The wife claimed that the independent legal advice she received (legal advice that solicitors are required to provide you when entering into the Agreement) was not sufficient. Proceedings revealed that the solicitor had advised that the first binding financial agreement draft was “no good and should not be signed.” The second draft of the binding financial agreement was that it was “terrible and… should not sign it.” The wife signed 2 binding financial agreements (one per s90B, which is in contemplation of marriage) and the other after the marriage (under section s90C).

The husband passed away during the proceedings and his estate continued the case on his behalf and the initial Judge, Justice Denmark, found that both agreements were signed under duress.

However, the matter was appealed and the Full Court considered the evidence relied upon the wife to determine if it met the test for duress (namely, whether there was “threatened or actual unlawful conduct” that occurred).

The wife submitted the following:

1. That the husband said he would always look after her if she came to Australia and married him;
2. That the husband made it clear that she had to sign a financial agreement to acknowledge his wealth was his and would go to his children;
3. That the wife was financially and emotionally dependent on the husband having permanently left and cut her ties with her country of origin and was in Australia on a limited visa;
4. That the husband arranged the wife’s appointment with a lawyer to get advice about the financial agreement;
5. That before seeing the lawyer, the husband told the wife if she did not sign the agreement, the wedding would be off and the agreement was non-negotiable;
6. That the husband drove the wife to the appointment and waited outside;
7. That the wife became aware for the first time of the contents of the agreement and the financials of the husband at the meeting of the solicitor;
8. That the solicitor provided her advice and advised her not to sign it both verbally and in writing
9. That despite the verbal and written legal advice not to sign the agreement, the wife signed it and the wedding went ahead.

The Full Court was NOT persuaded that the wife entered the agreement under duress. The Agreements were found to be valid and enforceable and the s90C Financial Agreement was declared to be binding.

It is important to ensure that you obtain legal advice prior to entering any financial agreement. Whilst agreements can and have been set aside if there are concerns for matters such as duress, undue influence and/or unconscionability, the above case is an example of a case where claiming that you were forced to sign, particularly in circumstances where you are advised not to sign, may not be sufficient to claim duress.

If you would are seeking advice in relation to binding financial agreements or prenuptial agreements, contact Claire Naidu & Co, Lawyers and Mediators for family law advice.   Click here for our contact details.

Note: This blog does not constitute legal advice and Claire Naidu & Co is not responsible for any reliance upon its contents in the absence of legal advice being provided to you in conference or in writing concerning your specific circumstances.