Landmark Decision Today in the High Court of Australia

A new wave breaks over the Love Boat on its voyage through the troubled waters of Binding Financial Agreements in the Land Down Under

Earlier today the High Court of Australia delivered its judgment in the eagerly awaited decision in the case of Thorne & Kennedy. The High Court considered for the first time the validity of Binding Financial Agreements entered into pursuant to the provisions of the Family Law Act 1975. Binding Financial Agreements were recognised in Australia in 2000 when amendments were made to the Act. The effect of the amendments was that if an Agreement was found to be binding, the jurisdiction of the Family Court of Australia for Orders for property settlement and/or spouse maintenance, upon a marriage breakdown, was excluded.

The High Court has today allowed the Wife’s appeal from the Orders of the Full Court of the Family Court (that had found the Agreement binding) and set aside those Orders. The High Court found:

• The primary Judge was correct to consider the unfair and unreasonable terms of the pre-nuptial agreement and the post-nuptial agreement as matters relevant to her consideration of whether the agreements were vitiated;

• Contrary to the reasoning of the Full Court, the primary Judge had carefully set out the six factors which, together with the lack of a fair or reasonable outcome, led her to the conclusion that the Wife had no choice but to enter the agreements. The primary Judge’s conclusions were open to her on the evidence;

• The reasons given by the primary Judge for her conclusion of undue influence were not inadequate;

• The Full Court also erred in its conclusion that the Wife’s entry into the agreements was not procured by unconscionable conduct.

This case will have significant implications for future decisions on Binding Financial Agreements entered into in Australia.

Our Special Counsel, Maurice Edwards, has previously presented papers on Binding Financial Agreements including “Binding Financial Agreements – A Voyage through the Troubled Waters of BFAs in the Land Down Under”. The citation for the High Court decision is “Thorne v Kennedy [2017] HCA 49″.

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