Binding Financial Agreements, or BFAs as they are known in Australia, are less common, less certain than the American ‘pre-nups’ you likely know from movies. Since the recent 2017 High Court decision in Thorne v Kennedy questions have arisen as to their certainty if challenged in Court.

In that case the appellant wife travelled to Australia to marry the wealthy respondent in a marriage initiated over the internet. Upon arriving she had no significant assets, limited English and was in the country on a tourist visa only. Several days before the ceremony and with the wife’s family flown over, the respondent asked the appellant to sign a BFA or the wedding would be called off. The agreement provided that if the marriage broke down within 3 years the wife was to receive $50,000 from assets worth at least $18million. Against the advice of her lawyer the appellant signed. She then signed another similarly restrictive agreement after the marriage, again against the advice of her lawyer.

When the parties separated on a final basis within 3 years, the High Court found the agreement to be tainted by the unconscionable behaviour of the respondent husband. The agreement was declared unenforceable. Some members of the court also held the agreement unenforceable on the ground of undue influence. Despite the wife having received independent legal advice, the manner in which the husband acted and exercised control meant that the wife was left with little genuine choice of her own to whether to sign. Her free will was overborne and the agreement was unenforceable.

What does this mean if you are looking at a BFA?

Some have suggested that many current and future BFAs will be unenforceable. This however is likely an overreaction. The Family Law Act clearly allows parties to negotiate a financial agreement either prior to, during or after a relationship, subject of course to specific statutory requirements.

The better view is that an agreement is enforceable so long as it is negotiated, drafted and signed in a manner that the parties are able to freely and knowingly consent to the terms of the agreement. Parties are always better placed to have the protection of a BFA even allowing for these recent judicial pronouncements.

If you have any questions about this article, require assistance or seek more information on a Binding Financial Agreement as it applies to your relationship, please contact us on (02) 9525 8688.