All that hype – Binding Financial Agreements (BFA’s)

Posted on Mar 13, 2018 by Samantha Miller   |   Categories: Family Law

A recent High Court case (Thorne v Kennedy) was much anticipated but the outcome, in my opinion did not live up to the hype. It was tipped to give significant guidance on the much vexed topic of how binding are ‘Binding Financial Agreements’ (colloquially referred to as ‘pre-nups’). In the end it simply restates basic principles of contract law.

The facts of the case are interesting and it’s not hard to see why lawyers were keen to follow it. Mr Kennedy was a wealthy property developer aged 67 when he met Ms Thorne on the internet. Ms Thorne was a 36 year old eastern European women with little assets. Mr Kennedy had assets in the region of $20million and made it abundantly clear to Ms Thorne that he intended to preserve the assets of his marriage for the benefit of his three children.

In February 2007, about 7 months after the parties met Ms Thorne moved into Mr Kennedy’s ultra luxurious life in Australia. It was the parties’ intention that they would marry in the near future and a date in September of that year was set. Plans were put in place and Ms Thorne’s family flew to Australia for the occaision. Ms Thorne’s dress had been made and all other preparations finalised before Mr Kennedy presented her with the Binding Financial Agreement.

Whilst Ms Thorne had been informed in the past that a pre-nup would be required however she was not provided with the details until 10 days prior to the wedding. At this time she was provided with competent independent legal advice and told that she should not sign the document in summary the lawyer stated

“I believe that you are under significant stress in the lead up to your wedding and that you have been put in a position where you must sign this Agreement regardless of its fairness so that your wedding can go ahead. I also understand from what you have told me that you are longing to have a child and you see your relationship with [Mr Kennedy] as the opportunity to fulfil what may well be a long held desire. I hold significant concerns that you are only signing this Agreement so that your wedding will not be called off. I urge you to reconsider your position as this Agreement is drawn to protect [Mr Kennedy’s] interests solely and in no way considers your interests.”

Despite the advice Ms Thorne signed the document and another similar document a few weeks after the wedding took place. It could therefore not be said that Ms Thorne did not know the implications of signing the document. The present case rested on whether the extreme disparity in bargaining power essentially rendered Mr Kennedy unable to enforce the agreement due to the interplay of the following factors :

a) Duress;
b) illegitimate pressure;
c) special disadvantage;
d) unconscionable conduct; and
e) undue influence.

Ultimately the High Court has found this to be the case. That is Mr Kennedy, or his estate as it ultimately was, could not enforce an agreement given the circumstances under which it was signed.

Family lawyers have been advising their clients prior to this judgement to allow sufficient time to both parties to consider the implications of the agreement before signing and avoid any suggestion of duress, undue influence, time pressure etc. Therefore in my opinion this decision simply reinforces how important that advice is and does not have any ground breaking implications for Binding Financial Agreements.