Tuesday, 28 February 2017

When can duress be used to set aside a binding financial agreement?

A requirement of making a financial agreement a binding one is to have independent legal advice. In a recent case, the wife alleged that she was subject to duress from the husband, when it came to two binding agreements- one signed just a few days before they married, and another signed shortly after they married.

In the case, Kennedy and Thorne, the husband and wife met on a dating site. She lived overseas and was 36. She spoke Greek. The husband was 67 and a property developer worth at least $18 million. The wife migrated to Australia under a spousal or prospective wife visa. Within a few months of living together in Australia, they married. After about four years they split up. It's not clear from the judgment how much the wife would receive under the second agreement, but at trial she sought $1.2 million, which seems clear would have been a lot more than she would have been entitled to under the second agreement.

The wife's difficulty was that before she signed the agreements she was told by her solicitor not to sign because they were terrible agreements- one of them being one of the worst that the solicitor had seen. The Full Court found that because of this legal advice the wife was not under the duress that the trial judge had found:

  1. Here, the evidence relied on by the wife to establish duress is in summary as follows:
    1. From the moment the parties met the husband expressed to the wife that he would provide for her and look after her for life if she came to Australia and married him.
    2. The husband made it clear that the wife would need to sign a document prior to marrying that acknowledged his wealth was his and it would go to his children.
    1. The wife was at all times financially and emotionally dependent on the husband having permanently left and cut her ties with Country B, and being in Australia on a limited visa.
    1. Just prior to the wedding, the husband arranged an appointment for the wife with a solicitor for the purpose of the wife obtaining legal advice about the financial agreement prepared by the husband’s solicitor.
    2. Before seeing the solicitor, the husband told the wife that if she did not sign the agreement the wedding would be off, and he told the wife and the solicitor that the agreement was non-negotiable.
    3. The wife’s parents and her sister had arrived in Australia for the wedding.
    4. The husband drove the wife and her sister to the appointment with the solicitor and waited outside.
    5. At the meeting with the solicitor, the wife became aware for the first time of the contents of the agreement and had information about the husband’s financial position.
    6. The solicitor provided her advice to the wife, and it was to the effect that the agreement was no good and she should not sign it. That verbal advice was followed up with detailed written advice by the solicitor, and at a subsequent appointment the solicitor went through that written advice with the wife.
    7. Despite the legal advice, the wife signed the agreement and the wedding went ahead.
    8. As to the second agreement, the wife’s position had not changed, in that she was still entirely dependent upon the husband, and similar conditions were in place. The wife saw the same solicitor and was given the same advice, but despite that, proceeded to sign this agreement.
  2. It is not apparent to us from that evidence what is the “threatened or actual unlawful conduct” of the husband. Or put another way, what pressure he applied that was “illegitimate” or “unlawful”.
  3. There is no doubt that the wife was reliant on the husband both financially and emotionally, and she looked to him to provide for and to care for her, but the husband met that expectation, and the wife accepted it. Thus, that cannot be seen as an element of illegitimate or unlawful pressure.
  4. Certainly, the husband imposed conditions, but as her Honour found, the wife was “keen to acquiesce”. In other words, the wife was well aware from the outset that the husband’s wealth was his, and that he intended it to go to his children. She was also well aware that a document needed to be signed to protect the husband’s and his children’s position.
  5. In relation to the agreements specifically, the fact that the husband required an agreement before entering the marriage cannot be a basis for finding duress. Nor can the fact that a second agreement was required. Further, and as we have referred to above, the wife’s concern was not as to what would happen to her financially whilst the husband was alive, but as to what would happen if he died. That was her focus, and that was dealt with to her satisfaction in the agreements.
  6. Again, as we have emphasised above, it was not in fact the case that the agreements were non-negotiable. Changes were made by the wife through her solicitor, and they were accepted by the husband.
  7. However, the real difficulty for the wife in establishing duress is that she was provided with independent legal advice about the agreements, she was advised not to sign them, but she went ahead regardless.
  8. We are not persuaded that the wife entered into either agreement under duress, and we are content to find that they are both valid and enforceable. However, once we have found that the second agreement is valid and enforceable, there is no need to bother with the first agreement because, as referred to above, the second agreement terminated the first.
  9. As to whether either agreement is binding, again we only need concern ourselves with the second agreement. To be binding, s 90G of the Act must be satisfied, and in particular there needs to have been independent legal advice provided to both parties about specific matters. We have found that that was the case, and accordingly, we are also content to declare the second agreement binding on the parties.
The wife has sought leave to appeal to the High Court.

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