On 8 November 2017 the High Court handed down an important decision regarding Binding Financial Agreements (otherwise known as a prenuptial agreement) which could lead to agreements being overturned in the future.

The wife was a 36 year old Eastern European woman of modest means and the husband was a 67 year old Australian man worth approximately $18 million. They met online in 2006. The wife moved to Australia in February 2007 to marry the husband in that September. A few days before the wedding, when her family had already arrived, the husband presented the wife with two Binding Financial Agreements: one to sign immediately and one to sign 30 days after the wedding. The husband made it clear the wedding would be called off if she did not sign them.

The husband arranged for the wife to see a solicitor for independent legal advice. Despite receiving advice not to sign the agreements, the wife signed both Binding Financial Agreements. The High Court held that the agreements were not enforceable because the husband had placed the wife in a “special” form of disadvantage and had undue influence over her.

The factors taken into account by the High Court include:

  1. The agreement was presented days before the wedding and the publicness of the upcoming marriage,
  2. The explicit or implicit threat to end the marriage or engagement if the agreements were not signed,
  3. The agreement was not subject to negotiation,
  4. The wife’s lack of financial equality with the husband,
  5. The wife’s lack of permanent status in Australia and the lack of discussion regarding what would happen to her if she did not sign the agreement, and
  6. The independent advice received and lack of time to reflect on that advice.

If you currently have a Binding Financial Agreement, or are looking to create or sign one, make an appointment with Linna at Hume Taylor & Co today to review its effectiveness.