Financial Agreements

The implications of Thorne & Kennedy on the future of Binding Financial Agreements

by Eliza George

On 8 November 2017 the High Court handed down the much awaited decision of Thorne & Kennedy [2017] HCA 49. The implications of this decision are, as yet, unknown. Family law practitioners are divided in their opinion as to whether the Judgment marks the beginning of the end of Binding Financial Agreements, or if the Court simply reaffirmed the longstanding equitable doctrines of undue influence and unconscionable conduct.

It is undisputed however that this case is a timely reminder of the need for caution in all aspects of the preparation of such Agreements, whether it be with respect to the drafting of each provision, determining the nature of each parties’ entitlements, or overseeing the circumstances in which the Agreement is signed. While these Agreements remain valid and are the only way that parties to a relationship can protect their assets from the risk of a future claim, a considered approach is more important than ever to minimise the risk of your Agreement being set aside at a later stage.

If you have already entered into an Agreement, you should consider whether it is necessary to renegotiate the terms of your Agreement so as to ensure that the Court will not find, as it did in Thorne & Kennedy, that the outcomes are “grossly unreasonable” and indicative of undue influence.

The full text of the decision and a Judgement summary can be obtained from the High Court website http://www.hcourt.gov.au/cases/case_b14-2017.

Pigdon|Norgate exclusively practices in family law and all Binding Financial Agreements are prepared with the experienced advice and input of both partners. If you have been provided with a Financial Agreement from your partner, P|N can assist you through the negotiation process to ensure that your interests are protected. To discuss your options further, please contact Suzanne Pigdon or Rosemary Norgate on 8907 7700.