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20/11/2017 9:21 AM AEDT | Updated 20/11/2017 9:27 AM AEDT

Are Some Prenuptial Marriage Contracts Doomed After This High Court Ruling?

The High Court was not impressed by the power imbalance in this relationship.

Australia's High Court was not impressed with this couple's contract.
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Australia's High Court was not impressed with this couple's contract.

A recent court victory may forecast a rocky marriage between divorce lawyers and their clients, after a young Eastern European woman successfully fought to overturn a prenuptial agreement she was forced to sign just four days before her wedding.

A 36-year-old woman moved to Australia seven months after she met 67-year-old Australian property developer online. But four days before their wedding the man presented her with a binding financial agreement to be signed before the wedding and another to be signed 30 days after.

In its decision last week the High Court said because Thorne was willing to sign both agreements despite being advised by her lawyer that they were "terrible" served "to underscore the extent of the special disadvantage under which Thorne laboured".

In the judgement, the pair are given the names Thorne and Kennedy, and no first names are given.

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Love's labor's may be lost after the High Court's decision.

"Kennedy took advantage of Ms Thorne's vulnerability to obtain agreements which... were entirely inappropriate and wholly inadequate," the judgement read.

So Does It Mean Prenups Are Doomed?

Not quite.

The lawyer who represented Ms Thorne, Peter Carmont from Somerville Laundry Lomax, said the decision would set a new precedent for future court cases involving prenuptials.

"It doesn't change the law, but it tells the courts and practitioners how you should interpret this part of the law," he told the ABC.

"What the court said is that the lawyer has to look at the agreement and say 'is it obviously unfair' and you have to look at the surrounding circumstances — such as our case where a wedding arranged with 100 guests that may have been cancelled with four days' notice."

The man in the case owned assets worth more than $18 million before he died in May 2014 in the middle of litigation over the agreement. The couple had no children and separated in 2011.

In 2015 a Federal Circuit Court ruled prenups agreements were not valid.

But in 2016 the Family Court overturned the decision, and the new High Court decision upholds the earlier ruling.

"The decision of the high court isn't miraculous or has any connotations on the rest of the binding financial agreements. It centres purely on contract law," family law solicitor Anita Vayanos from Atkinson Vinden Lawyers told the HuffPost Australia.

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A young man proposing to his girlfriend at sunset. Note the lack of prenuptial.

"Purely on the basis that there was undue influence to get her to sign that agreement.

Vayanos said the decision was made purely based on contract law, and had nothing to do with family law.

"It's always been with contract law that if there's unconscionable behaviour by one of the parties, then it should be set aside.

Others Say The Latest Ruling Could Make Some Prenups Difficult To Enforce

Slater and Gordon Family Lawyer Heather McKinnon described the decision as a huge development for family law in Australia.

"It will make binding financial agreements for relationship, or 'pre-nups' very difficult to enforce," McKinnon said.

"The High Court has recognised that there will almost never be a circumstance where two partners have equal bargaining power in a relationship.

"Essentially, the Court has said that commercial principles of contract law have no place regulating the financial matters of the parties of an intimate relationship."

Up until now, the courts had been treating binding financial agreements, or 'pre-nups', like commercial contracts, McKinnon said.

In this particular case, Thorne was completely reliant on Kennedy, both financially and otherwise, and he she was told that if she didn't sign the wedding would not go ahead.

"The High Court held this to be unconscionable conduct and specifically said independent certificates of advice from lawyers do not cancel out this behaviour," said McKinnon.

She warned anyone with an existing binding financial agreement should be immediately reviewing its effectiveness.

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