Financial Agreements: Duress and Misrepresentation

Take these facts: a second marriage for the husband who was 67 years of age and a younger wife of 36 who he initially met on a dating site.  The husband had 3 children from an earlier marriage and was at pains to ensure that their interests be protected in the future. The wife was not born in Australia and lived overseas when the parties met.

 In the case of Thorne & Kennedy the husband insisted on a financial agreement or there would be no marriage. He chose about 2 weeks before the wedding when all the arrangements had been made and the wife’s family had travelled to Australia for the forthcoming wedding to inform her that she had to sign a paper or the wedding would be cancelled. He left her with a solicitor and waited for her in the car.

In short, prior to the marriage the wife had sought independent legal advice from an accredited family law specialist and was informed that the effect of the agreement was such that it was “no good and should not be signed”. The wife was urged by the solicitor to reconsider her position.

She signed the document. Subsequent to the marriage another financial agreement was prepared and the wife received further legal advice to the effect that “the agreement was terrible”. In fact the wife understood that the document was the worst agreement that the solicitor had ever seen.

The first agreement was signed 4 days before the wedding. The document made provision that a second agreement in similar terms to the first would be prepared and had to be signed after the wedding.

The wife had now actually signed both agreements. The parties separated some years later.  The wife sought to say in her application to the Court that the two agreements should be set aside.

The husband died during the course of the litigation proceedings and the case was thereafter conducted by the 2 children who had been appointed as executors under the father’s will.

Do these circumstances signal any form of duress or undue influence?

The first judge concluded that the wife had changed her life to be with her husband. She had wanted a child with him. There was a lack of financial equality between them as the husband was an Australian property developer with assets at the time of meeting his future wife approximating between $18m and $24m.The wife had in effect no substantial assets at the time they met.

Conclusion by the primary judge

Taking into account the individual circumstances the agreement had been signed under duress.

Factors considered by the primary judge

What were these 6 factors of persuasive importance:

  1. Lack of financial equality between the parties
  2. Lack of permanent status in Australia at the time of signing the agreements
  3. Reliance on Mr Kennedy for all things
  4. Her emotional connectedness to the relationship and the prospect of motherhood
  5. Her emotional preparation for the marriage
  6. The “publicness” of her upcoming marriage

Judge’s decision

She was in Australia only in furtherance of their relationship. She had left behind her life and minimal possessions… She brought no assets of substance to the relationship. If the relationship ended, she would have nothing. No job, no visa, no home, no place, no community. The consequences of the relationship being at an end would have significant and serious consequences to Ms Thorne. She would not be entitled to remain in Australia and she had nothing to return to anywhere else in the world.

Appeal to the Full Court of the Family Court

The husband appealed the decision and the Full Court of the Family Court determined that the correct test to apply to consider if there had been duress was in fact if there is a threatened or actual unlawful conduct.  It was insufficient to say that the pressure was overwhelming.

Appeal to the High Court

An appeal was lodged by the wife with the High Court and a decision was handed down on the 8 November 2017.  The Court determined that the agreements were voidable due to undue influence and unconscionable conduct.  The findings and conclusion of the primary judge should not have been disturbed.

If you wish to read this case at length you can do so by googling the name of the case Thorn & Kennedy and the issues discussed and the relevant sections of the Family Law Act will be available to you.

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