Thorne v Kennedy High Court [2017] HCA 49 8 November 2017

Thorne v Kennedy

Joanna Bloore, ‘Pressure, Influence, and Exploitation in Thorne v Kennedy‘ (24 July 2017)

The High Court has allowed an appeal against a decision of the Full Family Court on the enforceability of binding financial agreements before and after marriage. Pt VIIIA of the Family Law Act 1975 (Cth) allows parties to a marriage to enter into binding financial agreements before or after a marriage to clarify their respective positions on asset redistribution in that the relationship breaks down. The parties met on an online website for potential brides, and the appellant moved to Australia to marry the respondent. The respondent was a wealthy Australian property developer with significant assets; the appellant had no significant assets, basic English skills, no family in Australia and, at the time of the marriage, was in the country on a tourist visa. Shortly before the wedding, the repsondent insisted that the appellant sign a binding financial agreement, which she did, over legal advice that it was ‘entirely inappropriate’ and that she should not sign it (see at [7]–[15]). The parties also entered into a second, post-marriage binding financial agreement, which again the appellant was advised not to sign. The Full Family Court overturned the trial judge’s finding that the agreements were the result of duress and undue influence, holding that the trial judge failed to provide adequate reasons for making those findings, and concluding that the agreement bound both parties.

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The High Court unanimously allowed the appeal. The plurality (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ) held that the Full Family Court erred in disturbing the findings of the trial judge; the agreements were voidable due to both undue influence and unconscionable conduct (at [2]). After reviewing the facts (at [7]ff), and statutory context (at [16]), the plurality reiterated that this appeal focused on whether the agreements should be set aside because the appellant was subject to the vitiating factors applied according to the principles of the common law and equity: duress, undue influence or unconscionable conduct in entering into these agreements (at [22], and noting the issues not raised in the appeal: [23]–[25]).

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  1. Plainly, Mr Kennedy, as the other party to the relationship, not only was aware of, but played a central role in creating, the various factors constituting the special disadvantage[173]. And having regard to the circumstances in which they were entered into and their content, the financial agreements were “neither fair nor just and reasonable”[174]and the entry into them involved an unconscientious taking of advantage by Mr Kennedy.

  2. First, the agreements were “grossly improvident”[175]. Although it is not essential or necessarily decisive that there is “an inadequacy of consideration”[176], it is relevant to observe that the entitlements for which they provided in the event of separation were extraordinarily and disproportionately small in comparison to what Ms Thorne would have been entitled to if she had not entered into the agreements[177].

  3. Second, the circumstances in which the agreements were entered into support the conclusion that Mr Kennedy’s procurement or acceptance of Ms Thorne’s assent to each agreement was unconscientious. True it is that some kind of agreement or “paper” relating to Mr Kennedy’s wealth had long been in the contemplation of the parties, and that Ms Thorne was not under any relevant misapprehension as to the effect of each agreement[178]. However, having brought Ms Thorne to Australia promising to look after her like “a queen”, it was not until two weeks before the wedding that Mr Kennedy arranged for Ms Thorne to receive legal advice; and it was not until ten days before the wedding that she received detailed information about his finances and became aware of the specific contents of the first agreement.

  4. It is not a sufficient response to the conclusion of unconscionable conduct to point to the fact that Ms Thorne received independent legal advice about the two agreements and chose to reject her solicitor’s recommendation on each occasion. The fact that Ms Thorne was willing to sign both agreements despitebeing advised that they were “terrible” serves to underscore the extent of the special disadvantage under which Ms Thorne laboured, and to reinforce the conclusion that in these circumstances, which Mr Kennedy had substantially created, it was unconscientious for Mr Kennedy to procure or accept her assent.

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