Binding Financial Agreement Fails for Millionaire Husband (Property Developer)
By Pamela Tieu 04/07/2017
Her Honour Justice Demack of the Family Court of Australia on 4 March 2015 handed down a decision that will affect many Australian Resident intending to marry overseas residents and purports to enter into a Binding Financial Agreement prior to getting marry.
In Thorne & Kennedy  FCCA 484 (4 March 2015), the applicant (Ms Thorne) was a 36 year old woman from overseas with limited proficiency in English. She had been married and divorced once with no children and no assets of substance. The respondent (Mr Kennedy) was a 67 year old wealthy Australian who was a property developer with assets of $18 – $24 million. Mr Kennedy had been divorced from his first wife, with whom he had three children. Ms Thorne decided to leave her home country and move to Australia to further her relationship with Mr Kennedy. She had left behind her life and minimal possessions and brought no assets of substance to the relationship.
Prior to both parties entering into the marriage, Mr Kennedy clearly expressed to Ms Thorne that the wedding will only carry through if they both entered into a financial agreement. The late respondent was clear on his intention to have his children inherit his wealth.
Mr Kennedy had his solicitor prepare the first financial agreement prior to the wedding. Ms Thorne had her own independent legal adviser review the agreement and was advised not to sign it as it was highly unfair. The agreement stated among other things that in the event that the parties separated after 3 years of marriage and there was no children of the marriage then Mr Kennedy will pay her $50,000.00 and there was no obligation for Mr Kennedy to pay her any maintenance.
The applicant had a short time frame to make a decision as the wedding day draws near. Mr Kennedy emphasized that if there was no financial agreement, the wedding will be called off and presumably the relationship will end therefore despite her lawyer’s advice against it, she entered into the contract. The agreement contained a clause that the parties would sign a similar agreement within 30 days to address any concern that the first one was signed in haste. Both parties then proceeded with the wedding as promised after entering into the first financial agreement.
Mr Kennedy then had his solicitor prepare a second financial agreement after the wedding. Similarly, Ms Thorne’s lawyer advised the applicant not to enter into the agreement with the same reason but she did so anyway. The relevant key terms relevant were if the couple separated, Ms Thorne would be in a highly unfavourable position. The applicant took lightly of this clause as she was believed that she will not leave Mr Kennedy. However, her lack of foresight caused her failing to see the possibility of the respondent leaving her. Mr Kennedy then signed a “Separation Declaration” and the couple was officially separated in 2011.
Justice Demack held that the two financial agreements are not binding and is to be set aside.
Her Honour stated at paragraph 93 “Mr Kennedy knew that Ms Thorne wanted to marry him. For her to do that, she needed to sign the document. He knew that she would do that. He didn’t need to open up negotiations. He didn’t need to consider offering something different, or more favourable to Ms Thorne. If she wanted to marry him, which he knew her to want, she must sign. That situation is something much more than inequality of financial position. Ms Thorne’s powerlessness arises not only from her lack of financial equality, but also from her lack of permanent status in Australia at the time, her reliance on Mr Kennedy for all things, her emotional connectedness to their relationship and the prospect of motherhood, her emotional preparation for marriage, and the publicness of her upcoming marriage.” Her Honour further states that in this circumstance, Ms Thorne entered into the first agreement under duress as there was an inequality of bargaining power where there was no outcome available to her that was fair or reasonable.
This article was edtited using Mona Media edition
In light of the above decision, our view is that any persons contemplating a pre-marriage binding financial agreement;
- Should discuss the agreement and finalise the agreement well before your final decision to marry is made. One should never set a date for a wedding, publicized the wedding and then demand their future spouse sign the binding financial agreement otherwise the wedding will be pulled off or sponsorship of a visa will be cancelled.
- If one party is not an English Speaker, it is crucial to ensure that the agreement is properly translated to the non-English speaking spouse in the language they are comfortable with.
- Asset Protection can be done during ones lifetime rather than after death. In the above case, if Mr Kennedy had transferred his assets to his children during his marriage, perhaps his assets could have been better protected
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