KANYE CALLED IT
‘If you aint no punk holla ‘we want prenup’ yeahhhh!’
Kanye West, the poet of his generation, knew what was up. PRENUP.
In 2017 the High Court of Australia rattled the cage the nation’s family lawyers are kept in with the Kennedy & Thorne decision. This decision to set aside two financial agreements for reasons never applicable or considered before caused family lawyers to be out on the streets, crying and shredding files. No…they were not, I’m totally exaggerating – the reaction was limited to radio interviews and commentary that only other family lawyers listened to.
PRENUP = PRENUPTIAL
PRENUPTIAL = MADE BEFORE LEGAL MARRIAGE
Prenuptial Agreements (‘prenup’) known in Australia as a Binding Financial Agreement (because we are way less Hollywood and LA and so much more Canberra) generally come about because one party in a relationship wants to protect their wealth in the case of a separation because as YEEZY SPITS IT: ‘it’s somethin’ that you need to have, ‘cause when she leave yo’ ass, she gon’ leave with half’.
How does it work in WA?
Binding Financial Agreements (“BFA”) are used where parties to a marriage or a de facto relationship agree on how they will divide their property and finances if they should separate.
Parties can enter into a BFA before they get married, during the relationship, and after the relationship.
In Kennedy & Thorne, the 67 year old groom was wealthy, to the point where if you looked up ‘wealth’ in the dictionary it would read:
1. an abundance of valuable possession and money;
2. Mr Kennedy.
On the contrary, the bride was 36, she spoke very little English, she had no assets and she met the groom in 2006 via a bride website. We’re all thinking it, opposites really do attract! The bride moved to Australia on the groom’s promise that she would be treated like a ‘queen’. Yes, we too hear Kanye in the background and gettin’ down:
‘Now, I ain’t saying she a gold digger’.
Ten days before the wedding, the groom presents to the bride a draft Binding Financial Agreement. The bride obtains oral and written legal advice from her family lawyer who, in summary advised ‘DO NOT SIGN THIS AGREEMENT’ because:
1. the agreement weighed too heavily in the groom’s favour; and
2. it was the worst prenup the solicitor had ever seen.
Despite the caps lock, the bride signed the agreement a mere 4 days before the wedding. We were all blown away when the wedding planner let out a sigh of relief.
The parties married.
The parties then signed a second Binding Financial Agreement because the first agreement said they needed to execute a new agreement within 30 days of being married. Again, the bride’s family lawyer advised words to the effect of ‘DO NOT SIGN THIS AGREEMENT’.
A few years later, the bride and groom separated.
The bride commenced legal proceedings with an application for both Binding Financial Agreements to be declared not binding and/or to be set aside. The bride also sought property settlement and spousal maintenance, causing the parties to fall deep into the belly of the beast that is the Family Court.
The matter progressed to the High Court, and the parties found themselves in the hands of Chief Justice Kiefel and fellow benchers, Justices Bell, Gageler, Keane and Edelman, who all put their family law hats on.
The High Court held that both Binding Financial Agreements were void (invalid) due to:
1. unconscionable conduct; and
2. undue influence.
The jaws of many family lawyers dropped upon reading the High Court’s determination because the general vibe of a prenup is that it isn’t fair – the love and support of the wealthy person that you want to marry is conditional upon you signing an agreement which pretty much finalises any separation before it has even happened, and the separation is normally pretty measly on your end.
The High Court said that all Binding Financial Agreements needed to be treated like a legal contract, because fundamentally, that is what they are. A legal contract is an ‘arms-length agreement’ meaning all parties to the transactions are acting in their own self-interest and are not subject to any pressures from any other parties. Doesn’t really sound like a prenup to me.
The High Court’s assessment of the facts revealed that when the parties were negotiating, they were not at arms-length:
1. the groom created urgency by giving the BFA to the bride only ten days before the wedding;
2. the groom told the bride that if she did not sign the BFA the wedding was off;
3. the bride’s entire family had been flown to Australia for the wedding, and the groom’s ‘ultimatum’ did not involve getting her family home;
4. the groom telephoned the bride whilst she was in an appointment with her family lawyer, who was telling her ‘DO NOT SIGN THIS AGREEMENT’ and the groom knew that his bride was with her lawyer;
5. the bride knew that she needed to sign a document, but she never anticipated the agreement to be as unreasonable as it was.
For these reasons, the court found an imbalance in the bargaining power of the parties, leading to unconscionable conduct and undue influence being made out on the facts resulting in the High Court set those agreements aside.
The High Court most helpfully went on to list potential factors that can now act as guidelines for family lawyers preparing these agreements and family court judicial officers when determining the validity of these agreements.
Given Kanye doesn’t go into the High Court’s factors, we won’t either. Though, we will leave you with this: if you want a prenup, a Binding Financial Agreement or a property settlement, see a family lawyer. If you want a prenup, a financial agreement or a property settlement that is bullet-proof, see our family lawyers.
This Article was written by our Rebecca Walker.
Book an appointment with Rebecca by contacting us here.
The material contained in this blog is intended as general information only and should not be relied upon as legal advice. Unless stated otherwise, references to any law in is a reference to laws in Western Australia. If you would like more information about any of the contents of this website, please call us on (08) 9322 6644 or email us at email@example.com