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BFA, pre-nup

Paula Phelan is a Family Lawyer with Specialist Accreditation in this area from the Queensland Law Society. She has been a lawyer for 21 years and is the director of Phelan Family Law, a Rockhampton legal firm specialising in Family Law only.

What is a pre-nuptial agreement?

Often known as “pre-nups”, they are contracts entered into by a couple prior to marriage dealing with how the parties propose to divide the assets and property of the marriage in the event of a separation.

There are very strict guidelines dealing with the making of these contracts. If they are not followed, the pre-nups can be challenged and overturned at a later date.

Today we will look at the application of these guidelines in the case of Thorne v Kennedy.

Here, the High Court struck down both pre and post nuptial agreements on the basis of undue influence and unconscionable conduct.

The agreements were entered into between a financially challenged 36 year old woman from overseas and a 67 year old wealthy Australian property developer.

Before the marriage, an agreement was signed to the effect that the wife would have very little claim on his assets in the event of a separation.

Ms Thorne’s English was poor, she had no assets and she had been persuaded to come to Australia by the property developer. Her Australian Visa was about to expire.

She had been asked to sign the “pre-nup” 4 days before the wedding,

All of her family were already in Australia, having flown from their country of origin.

She was told that if she didn’t sign the agreement, the marriage wouldn’t go ahead.

The independent solicitor who advised her in relation to both agreements strongly recommended that she didn’t sign.

The couple were divorced just under 4 years later.

At what point does the concept of undue influence come into play with these agreements?

The Court held that it arose where a person has no free will. Ms Thorn had been unduly influenced by her future husband to the extent that she could not make clear, calm or rational decisions.

The grossly unreasonable nature of the agreement on its own also indicated undue influence.

The second basis on which the agreement was struck down was unconscionable conduct. This occurs where one party takes advantage of another’s special disadvantage to induce them into entering an agreement which is unfair and harsh. The other party must be aware of the special disadvantage and unconscientiously take advantage of it.

Both agreements were overturned and the wife was free to bring a property settlement claim.

If one party to a marriage wishes to enter into a “prenup”, they should not introduce it just before the wedding, when all the guests have arrived, nor should they make it extremely disadvantageous to the other party.

Secondly, the mere presence of independent legal advice may not be enough on its own to negative either undue influence or unconscionable conduct. This is particularly so where the independent legal adviser has advised the person not to enter into the agreement.

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