Nuptial Agreements are always subject to Judicial Scrutiny

In Throne v Kennedy [2017] HCA 49, decided this month, the High Court of Australia has reminded the decision in Hayman v Hayman [1929] AC 601 when the House of Lords held that an agreement could not exclude the power of the courts, which had existed since 1857, to make financial adjustment between the parties following the breakdown of a marriage. In that judgment at page 609 Lord Hailsham LC, specifically held that “The agreement might be taken into account when the court quantifies the amount of maintenance but it would not be binding”.

The wife, Ms. Throne, challenged the validity of two agreements; one pre-nuptial and the other a post-nuptial agreement, both were signed by Ms. Throne against the legal advice she obtained.

Ms. Throne was a 36 years old single Eastern European woman, living in the Middle East, with no substantial assets and no child.

The husband, Mr. Kennedy, was a wealthy property developer 67-year-old Greek, with assets worth between $18 million and $24 million. He was divorced with three adult children.

The parties met online, in 2006, on a website for potential brides and they were soon engaged. Both shared the Greek Orthodox religion.

Ms. Throne flew to Australia; the wedding was set for 30 September 2007.

On 20 September 2007, Mr. Kennedy took Ms. Thorne and her sister to see an independent solicitor, to sign the agreement. As per terms of the agreement Ms. Throne had to leave or limit her entitlements from the assets of Mr. Kennedy which she would have been entitled in case of separation.

Mr. Kennedy told her that if he liked her then he would marry her but that “you will have to sign the paper; my money is for my children”.

On 20 September 2007, Ms. Thorne first became aware of the contents of the agreement. By this time, Ms. Thorne’s parents and sister had been flown to Australia from Eastern Europe. Guests had been invited to the wedding. Ms. Thorne’s dress had been made. The wedding reception had been booked.

Ms. Throne on 26 September 2007 signed the pre-nuptial agreement and on 5 November 2007, she signed the post-nuptial agreement. The marriage lasted almost 4 years and the parties separated in 2011. In 2012 Ms. Throne challenged the validity of the agreements.

The primary judge set aside both the agreements for duress, [2015] FCCA 484. The judge found that Ms. Thorne came to Australia leaving behind “her life and minimal possessions … If the relationship ended, she would have nothing. No job, no visa, no home, no place, no community”.

The primary judge also found that Ms. Thorne’s circumstances led her to believe that she had no choice, and was powerless, to act in any way other than to sign the pre-nuptial agreement. Her Honour held that the post-nuptial agreement was signed while the same circumstances continued, with the exception of the time pressure.

Mr. Kennedy appealed the primary judge decision and the Full Court reversed the decision of the primary judge, [2016] FamCAFC 189.

The Full Court held that inequality of bargaining power’ or absence of choice cannot establish duress. The court also held that to set aside the agreements there needed to be a finding that the ‘pressure’ was ‘illegitimate’ or ‘unlawful’.

The High Court set aside the findings of the Court of Appeal and held that the agreements were vitiated by undue influence and unconscionable conduct. It was also held that it would be against equity and good conscience for Mr. Kennedy or his successors to be permitted to enforce either agreement.

Disclaimer: This article is general information and not a legal advice. For a legal advice please contact with your specific facts.

Originally published on 25 November 2017 at LinkedIn.

Basharat Ahmad Jatt

Barrister & Solicitor

Principal

Jatt Lawyers

Melbourne, Australia


Disclaimer

This article is general information for the community and not legal advice. For legal advice please contact with particular facts of your case.

The author is an Australian Lawyer of Pakistani origin. Anyone looking for an Urdu, Punjabi, or Hindi speaking lawyer in Australia can confidently contact Jatt Lawyers.

Legal support for Australian Muslims for inheritance and family law issues in Australia is the common practice area of Jatt Lawyers.

Social links

Leave a Comment

Your email address will not be published.