By Briana Kotzapavlidis

24 November 2017

Pre-nups or any agreement entered into before, during or after a marriage or defacto relationship, when properly prepared and executed, can give parties some comfort about how their assets are likely to be divided (if at all) in the event of a separation.

Once signed, after both parties have had the benefit of independent legal advice, a Financial Agreement (including a pre-nup) is and remains binding and enforceable unless the parties agree in writing to terminate it, or the agreement is set aside by the Court.

There can be no guarantee that one of the separated parties might not make a future application to the Court to seek to set the agreement aside, with a view to obtaining a larger property settlement or spousal maintenance package. Whilst there is no way of making a financial agreement “watertight” (that is, absolutely excluding a set aside application), as experienced and qualified family law practitioners we will guide and advise you about the best way to protect your interests in the future.

The recent High Court decision in Thorne and Kennedy (8 November 2017) has not changed or expanded the grounds upon which a party can seek to set an agreement aside. However, the decision highlights that the overarching fairness or otherwise of the terms of the agreement may be one factor (amongst a number and range of factors) that may be taken into account if one party makes an application to set the agreement aside.

The Court, in deciding whether or not a Financial Agreement should be set aside, may also look at factors such as whether the agreement was offered on the basis that the terms were not open for negotiation (that is, on a “take it or leave it” basis), the nature of the parties’ relationship and their respective financial positions, the emotional circumstances in which the agreement was entered including any threat to end a relationship, engagement or marriage if the agreement is not signed and whether there has been time for the parties to carefully reflect and consider both the agreement and the independent legal advice they had received before signing the agreement.

In Thorne and Kennedy the High Court was satisfied that the agreement should be set aside as it had been procured by undue influence and unconscionable conduct; that is the Wife did not enter into the agreement of her own free will and she was under a special disadvantage (including by reason of circumstances created and exacerbated by the husband) and it was wrong of the husband to knowingly have her sign the agreement.

Like all aspects of Family Law, each and every Financial Agreement is unique to the parties who seek to enter into it and should be carefully and cautiously drafted and tailored to best meet those parties’ needs.

If you would like to discuss this further, please do not hesitate to contact our Family Law Team.

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