Would you sign a prenup if your fiance threatened to cancel the wedding?

Binding Financial Agreements (BFA’s) or prenups as they are commonly known are meant to be voluntary, and each party must enter into the agreement of their own free will, and not because they have been pressured into it by the other party.  The High Court will consider the issue of “duress” in the matter of Kennedy & Thorne [2016] FamCAFC 189 where Ms Thorne claims she was forced to sign the binding financial agreement — because her husband-to-be, “Mr Kennedy”, said he would cancel the wedding if she refused.  Her legal team argues that this meant she was “under duress”, and that the agreement should therefore be declared void by the court.

Mr Kennedy was a divorced, 67-year-old property developer worth between $18 million and $24 million, while Ms Thorne was half his age with no assets.   They met on a dating site and he organised to fly to her home country in the Middle East to meet in person, promising to marry her if they hit it off.  After a four-year marriage, she is contesting a BFA she signed on the eve of the wedding, which left her with just $50,000 of his fortune and she is now seeking a bigger slice of his wealth.

The High Court will examine the question of whether threatening to “cancel the caterers” amounted to “unlawful duress”.  Mr Kennedy has passed away while the trial was part heard and the case will be carried on by the husband’s estate.  The estate, it seems will counter that Ms Thorne willingly signed the agreement after obtaining independent legal advice, and was not concerned at the time about the amount of money she would be left with if the marriage ended. 

The High Court is due to hear the appeal on 8 August and will need to clarify issues around duress, undue influence and unconscionable conduct.

If your married, intending to marry, in a de-facto relationship, have assets or have been gifted an inheritance then it could be time to think about a BFA.  However please ensure that if you are considering if you want to have a BFA, don’t leave it until the day or two before the wedding, and don’t threaten to call the whole thing off if your beloved doesn’t sign. 

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Be careful what you pay for – creating a pattern of dependence

People will often consult a family lawyer after a separation and be struggling as a result of now having to pay for two separate households, having become used to having to support one household for many years. Parties’ expenditure may have expanded during a relationship given the savings they were making in only running one household, meaning that post-separation the weekly budget becomes very strained.

It is important then to carefully consider what you do and don’t pay for post-separation, as this will likely become the position you have to keep up until there is a final settlement. If you start paying for the mortgage as well as for your rent in new premises, then you will have to convince a Court carefully and with proper detail of a very significant change in your financial circumstances. You will need to explain why you no longer have capacity to pay this amount in order to avoid having to continue with this arrangement for what is effectively “spousal maintenance” whilst proceedings continue. The recent case of Hogan & Orwell (http://www.austlii.edu.au/au/cases/cth/FamCA/2016/505.html) reviewed the party’s finances from the perspective of a spousal maintenance application and the Husband in that situation was required to continue with mortgage payments. The Husband had increased his credit card liability by about $35,000 but had produced no explanation for why this had increased by such a large amount.

This cost can become overwhelming for people, and if decisions are not made very carefully, you can be locked in to paying for two properties for a considerable period of time, particularly if litigation takes a long time to sort out. This is one of the many factors your sensible family lawyer should advise you about in considering how to run your case. Call us for more information or send us an email if you would like to discuss your situation in a confidential free initial assessment.

http://nffamilylawyers.blogspot.com/2017/05/be-careful-what-you-pay-for-creating.html

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A whole lotto luck for Mr Elford as Judges decide not to divide winnings to wife

Cases about lottery winnings often draw attention perhaps in part due to the large sums of money that can be involved but also because they require some very particular and detailed attention to be paid to how parties in a dispute have organised their lives during their relationship, before and after the win.


In a recent case, known as Elford and Elford (http://www.austlii.edu.au/au/cases/cth/FamCAFC/2016/45.html), a Wife appealed orders that provided for her to, by and large, not receive the benefit of a lotto win that happened very early in the relationship.


Ordinarily, you might think that if a lotto ticket is bought by one person in a relationship and the winnings are received during the relationship then those funds should be put into the parties’ joint assets and simply divided.


This is not necessarily the case though.

In a case known as Zyk  and Zyk (1995) FLC 92-644, the Court said that it was preferable to approach the issue as one of “contribution” rather than as a “windfall”.

That is, the Court should look at how the ticket was purchased, how were the funds used to buy the ticket were sourced and were generally or otherwise used, and what happened with the winnings afterwards.

It should also look at how the parties’ relationship was structured at the time to determine their intentions.

Applying these principles, the Court in this case noted that the parties had kept their finances very  separate throughout their ten year marriage; they had separate accounts and kept no joint accounts; the Husband purchased the ticket from his money that was not mingled together with the Wife’s; that the parties did not ‘hand each other’ their pay at the end of each fortnight; and when the Husband received an inheritance during the relationship, he deposited that inheritance into his own account with the lotto winnings and kept the monies separate.

In total, the parties’ conduct seemed to demonstrate that they very much kept their finances their own and separate both at the time of the win, and afterwards.

The way the parties organised their affairs was so clearly separated that it does appear to be notably different to the majority of cases that family lawyers would see.

This justified the Husband receiving a very large recognition for his contribution of both his lotto winnings and the inheritance.

The Wife was provided with an Order that meant she received 10% of the total assets.

Missed in much of the online commentary about this case is that the Husband had also suffered a stroke some 12 months before the separation that left him blind, unable to drive or read and required kidney dialysis three times a week.

The case means that lawyers and parties should very carefully and realistically assess what actually happened in a relationship and not look to simply say that all of each other’s property is shared.

Our experienced family lawyers know the questions to ask you to keep you informed and up to date with these issues.

You can contact us on 03 9614 7111 or Melbourne@nevettford.com.au to discuss your situation.

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