The High Court of Australia to determine the issue of duress and Financial Agreements

Thorne v Kennedy [2017] HCATrans 148 (8 August 2017)

In the case of Thorne v Kennedy [2017] HCATrans 148  the High Court of Australia is considering the issue of what constitutes “duress” when it comes to challenging the binding nature of Financial Agreements entered into pursuant to the Family Law Act 1975.

In this particular case, the wife was of Eastern European background and had flown to Australia to be with the husband.  Ten days prior to the wedding, the husband told her to sign a pre-nuptial agreement (known as a Financial Agreement) and delivered the ultimatum that unless she signed it, there would be “no wedding”.  Counsel for the wife, Mr Foley (former Attorney General of Queensland) submitted to the Full Court as follows:

“If the relationship ended, she would have nothing. No job, no visa, no home, no place, no community. The consequences of the relationship being at an end would have significant and serious consequences to Ms [Thorne]. She would not be entitled to remain in Australia and she had nothing to return to anywhere else in the world.”

“But in this case that threat took place against a background where the appellant “ (the wife) “had come to Australia, had taken up residence, had fallen in love, had wanted to have a child with the respondent, so it was found.  Her parents had been flown out from the home country in eastern Europe, accommodated by the husband.  Her sister had been flown out, accommodated by the husband.  The invitations had been sent out.  The wedding dress had been purchased.  And it was at that point, and that point only, that the terms of the agreement were presented to her, on 20 September, 10 days before the wedding.” 

The wife subsequently signed the Financial Agreement, stating that she had no other choice but to sign.  The parties separated 4 years later.  The husband later died during the proceedings and his children from his first marriage have continued the litigation.  The wife seeks to set aside the Financial Agreement on the ground of unconscionable conduct (which includes duress).

S90k of the Family Law Act 1975 provides the circumstances which a Court may set aside a Financial Agreement.

s1(e) ”in respect of the making of a financial agreement – a party to the agreement engaged in conduct that was in all the circumstances unconscionable.”

The wife’s case relies on the following:

  • That the pressure was illegitimate given the timing;
  • There was no reasonable alternative to the wife but to sign the Financial Agreement.

Mr Foley submitted in Court as follows:

“Well, so far as duress is concerned, it is submitted that the will of the appellant was overborne.  The nature of the threat of not proceeding with the wedding so late in the piece may be said to be a lawful act at one level but it constitutes a legitimate pressure because it was unconscionable in the circumstances given the background of events, the emotional dependency – emotional and financial dependency of the appellant upon the respondent given that there is a finding of fact. “

“So when he said there would be no wedding that meant the relationship would be at an end.  The applicant wanted a wedding, she loved Mr – we will call him Kennedy – and wanted a child with him.  She had changed her life to be with Mr Kennedy.  That is to say there was a reliance upon his love and affection which resulted in a change in her life.”

Judgment in this matter is yet to be delivered by the High Court.   It is noted that the High Court is likely to be tied up with various pressing matters such as the challenge to the postal vote in relation to the Marriage Equality plebiscite and the challenges to the standing of MPs including the Deputy Prime Minister and Member for New England Barnaby Joyce.

The matter of Thorne v Kennedy was heard before the Full Court of the High Court on 8 August 2017, the full transcript can be read here.  The decision is expected to be delivered in the coming weeks.

By Caroline Counsel and Sarah Damon

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