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Thorne v Kennedy [2017] HCA 49 (8 November 2017) HIGH COURT OF AUSTRALIA
KIEFEL CJ,
BELL, GAGELER, KEANE, NETTLE, GORDON AND EDELMAN JJ
THORNE APPELLANT AND
KENNEDY RESPONDENT
Thorne v Kennedy
[2017] HCA 49
8 November 2017
B14/2017
ORDER
1. Appeal allowed.
2. Set aside the orders of the Full Court of the Family Court of Australia made on 26 September 2016 and, in their place, order that the appeal to that Court be dismissed with costs.
3. The respondent pay the appellant's costs of the appeal to this Court.
On appeal from the Family Court of Australia
Representation
M J Foley with P J Woods for the appellant (instructed by Somerville Laundry Lomax)
R G Leth
idge SC with G C Eldershaw and D Birch for the respondent (instructed by Jones Mitchell Lawyers)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Thorne v Kennedy
Family law – Financial agreements – Family Law Act 1975 (Cth), Pt VIIIA – Pre- nuptial agreement – Post-nuptial agreement – Where fiancé wealthy – Where fiancée had no substantial assets – Where fiancée moved to Australia for purposes of ma
iage – Where fiancée had no community or connections in Australia – Where fiancée relied on fiancé for all things – Where pre-nuptial agreement provided to fiancée shortly before wedding – Where fiancé told fiancée that if she did not sign agreement wedding would not go ahead – Where independent solicitor advised fiancée against signing – Where pre-nuptial agreement signed – Where substantially identical post-nuptial agreement signed – Whether agreements voidable for duress, undue influence, or unconscionable conduct – Whether primary judge's reasons adequate.
Words and phrases – "adequate reasons", "duress", "financial agreement", "illegitimate pressure", "independent legal advice", "maintenance order", "post- nuptial agreement", "pre-nuptial agreement", "property adjustment", "special disadvantage", "unconscionable conduct", "undue influence", "vitiating factor".
Family Law Act 1975 (Cth), ss 90F, 90G, 90K, 90KA.
1. KIEFEL CJ, BELL, GAGELER, KEANE AND EDELMAN JJ. This appeal concerns two substantially identical financial agreements, a pre-nuptial agreement and a post-nuptial agreement which replaced it, made under Pt VIIIA of the Family Law Act 1975 (Cth). The agreements were made between a wealthy property developer, Mr Kennedy, and his fiancée, Ms Thorne. The parties met online on a website for potential
ides and they were soon engaged. In the words of the primary judge, Ms Thorne came to Australia leaving behind "her life and minimal possessions ... If the relationship ended, she would have nothing. No job, no visa, no home, no place, no community"[1]. The pre-nuptial agreement was signed, at the insistence of Mr Kennedy, very shortly before the wedding in circumstances in which Ms Thorne was given emphatic independent legal advice that the agreement was "entirely inappropriate" and that Ms Thorne should not sign it.
2. One of the issues before the primary judge, Judge Demack, was whether the agreements were voidable for duress, undue influence, or unconscionable conduct. The primary judge found that Ms Thorne's circumstances led her to believe that she had no choice, and was powerless, to act in any way other than to sign the pre-nuptial agreement. Her Honour held that the post-nuptial agreement was signed while the same circumstances continued, with the exception of the time pressure. The agreements were both set aside for duress, although the primary judge used that label interchangeably with undue influence, which is a better characterisation of her findings. The Full Court of the Family Court of Australia (Strickland, Aldridge and Cronin JJ) allowed an appeal and dismissed a notice of contention by Ms Thorne, concluding that the agreements had not been vitiated by duress, undue influence, or unconscionable conduct. For the reasons which follow, the findings and conclusion of the primary judge should not have been distu
ed. The agreements were voidable due to both undue influence and unconscionable conduct.
3. The names, and some details, of the parties were suppressed during the course of this litigation. That approach was generally followed on this appeal, including the use of pseudonyms to describe the parties.
Background
4. The parties met over the internet in 2006. At the time, Ms Thorne, who was an Eastern European woman, was living in the Middle East. She was 36 years old. She had no substantial assets. She previously had been ma
ied and divorced and was subsequently in a four year de facto relationship which ended when her partner moved to Kuwait for work. Mr Kennedy was a 67 year old Greek Australian property developer. He had assets worth between $18 million and $24 million. He was divorced with three adult children.
5. Ms Thorne's profile on the website on which they met described her as a single woman with no children, of the Greek Orthodox religion, who spoke a little English and Greek. She shared the same religion with Mr Kennedy and generally conversed with him in Greek. Mr Kennedy travelled overseas to meet Ms Thorne very shortly after meeting her online. He told her that if he liked her then he would ma
y her but that "you will have to sign paper. My money is for my children"[2].
6. During their courtship phase, Mr Kennedy travelled overseas twice to meet Ms Thorne. He took her on an extended holiday around Europe, during which he met her family. He bought her expensive jewellery. In Fe
uary 2007, about seven months after Mr Kennedy and Ms Thorne met, they moved to Australia to live in Mr Kennedy's expensive penthouse with the intention of getting ma
ied.
7. The wedding between Ms Thorne and Mr Kennedy was set for 30 September 2007. On 8 August 2007, Mr Kennedy had instructed a solicitor to prepare a pre-nuptial agreement. It is unclear whether Ms Thorne was, at this time, aware of the agreement but she was certainly not aware of its contents.
Around 19 September 2007, Mr Kennedy told Ms Thorne that they were going to see solicitors about the signing of an agreement. Ms Thorne asked Mr Kennedy whether he required her to sign the agreement. He replied that if she did not sign it then the wedding would not go ahead. On 20 September 2007, Mr Kennedy took Ms Thorne and her sister to see an independent solicitor, Ms Ha
ison, who was an accredited family law specialist. Mr Kennedy waited in the car outside. It was during this appointment that Ms Thorne first became aware of the contents of the agreement. By this time, Ms Thorne's parents and sister had been flown to Australia from Eastern Europe and accommodated for the wedding by Mr Kennedy. Guests had been invited to the wedding. Ms Thorne's dress had been made. The wedding reception had been booked.
8. The day after the meeting, Ms Ha
ison produced a written advice to Ms Thorne which she subsequently explained to Ms Thorne. There was no dispute that Ms Ha
ison's advice was accurate. Some of the key features of Ms Ha
ison's advice were as follows:
(1) The agreement provided for Ms Thorne to receive maintenance during the ma
iage of the greater of (i) $4,000 per month or (ii) 25% of the net income from the management rights of a proposed development. Ms Ha
ison observed that the
$4,000 per month contained no provision for increase and was a very poor provision from someone in Mr Kennedy's circumstances.
(2) Ms Thorne would be permitted to live rent free in a penthouse located in the proposed development and her family would be permitted to live rent free in a unit located in that development. Ms Ha
ison noted, however, that Ms Thorne had informed her that the local council had refused planning permission for the proposed development.
(3) If Ms Thorne and Mr Kennedy separated within the first three years of ma
iage, with or without children, then Ms Thorne would get nothing. The rights described above would also cease.
(4) If Ms Thorne and Mr Kennedy separated after three years, without children, Mr Kennedy would only have an obligation to pay a single lump sum of $50,000 to Ms Thorne. This payment was indexed to the Consumer Price Index if the separation occu
ed after 1 July 2011. Ms Ha
ison described this amount as "piteously small".
(5) If Mr Kennedy died while they were living together and while they had not separated then the agreement provided that Ms Thorne would be entitled to (i) a penthouse in the proposed development or, if that were not possible, a unit she chose in the same city not exceeding a market value of $1.5 million; (ii) 40% of the net income of the management rights of the proposed development or $5,000 per month, indexed annually, whichever was the greater; and (iii) the Mercedes Benz car that was presently in her possession or a replacement vehicle of the same or higher value.
9. Ms Ha
ison's advice concluded as follows:
"I believe that you are under significant stress in the lead up to your wedding and that you have been put in a position where you must sign this Agreement regardless
of its fairness so that your wedding can go ahead. I also understand from what you have told me that you are longing to have a child and you see your relationship with [Mr Kennedy] as the opportunity to fulfil what may well be a long held desire. I hold significant concerns that you are only signing this Agreement so that your wedding will not be called off. I urge you to reconsider your position as this Agreement is drawn to protect [Mr Kennedy's] interests solely and in no way considers your interests."
10. On 21 September 2007, the same day that Ms Ha
ison had produced her written advice, the solicitors for Mr Kennedy wrote to Ms Ha
ison. The solicitors refe
ed to amendments to the agreement that Ms Ha
ison had sought which had been incorporated. The solicitors then said that since the wedding was scheduled for 30 September it was Mr Kennedy's preference that the agreement be signed that day, ie on 21 September 2007.
11. The amendments made to the agreement at Ms Ha
ison's suggestion