Prenuptial agreements, known as "binding financial agreements," first became enforceable in Australia in 2000 with the enactment of the Family Law Amendment Act 2000. Part VIIIA of the Family Law Act sets forth particular provisions concerning the oversight to be given to such agreements by family law solicitors. For a binding financial agreement to be binding it must be in writing signed by both parties; be given (the original) to one party with a copy given to the other; specify the extent of any spousal maintenance provided; state that both parties have received specified independent legal advice about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and annex a certificate of an independent lawyer certifying that such advice was provided.
An agreement will not be binding if it was obtained by fraud, was made under duress, by mistake, by virtue of undue influence, if it is impracticable for all or part of the agreement to be carried out, if there has been a material change in the care of a child leading to hardship, if a party engaged in unconscionable conduct when making the agreement, such as where one spouse is at a disadvantage and the agreement runs contrary to good conscience.
In the landmark case of Thorne v Kennedy, [2017] HCA 49, two financial agreements were set aside on the grounds of unconscionable conduct and undue influence. That case was applied in two cases in 2019. In Chaffin v Chaffin [2019] FamCA 260, the court set aside the prenuptial agreement while in Delrio v Jindra [2019] FCCA 1186 the court enforced it. In both cases the weaker parties were represented by independent counsel, each of whom recommended that their client should not sign the agreement. In Chaffin, the court determined that the weaker party was subject to a special disadvantage which seriously affected her ability to make a judgment as to her own best interests of which the other party took advantage. In Delrio, there was no such special disadvantage.
In recent cases, it has been held that, in order to give advice about the effect of an agreement on the rights of a party, that is their rights under the Family Law Act in relation to property, a legal practitioner must first establish what those rights are at the time the advice is provided.
Accordingly, the advice must be real and meaningful. It must be directed to the parties' circumstances and their present rights. Proper identification of a parties' rights can only be done by identifying the property of the parties then held and a consideration of the parties' contributions (financial and non-financial) to the acquisition of that property and to the welfare of the children. Other relevant factors would then need to be considered. Only by doing so can advice be given that complies with the terms of the statute. Similarly, advice about the advantages and disadvantages for a party making the agreement must involve a consideration and comparison of what would be their rights but for entering the agreement and those advantages and disadvantages after having entered the agreement. No doubt each would have its advantages and disadvantages, and they need to be compared. Chetri & Thapa [2024] FedCFamC2F 1611 (14 November 2024).
Serious issues arise as to whether a marital agreement entered into outside Australia that does not conform in every respect to the provisions of the Australian Family Law Act will be enforceable in Australia. This can create momentously important issues when spouses who are parties to a non-Australian prenuptial or post-nuptial agreement relocate to Australia or if one spouse is of Australian nationality or there exists another basis for the Family Court of Australia to have jurisdiction over a potential divorce case.
It should be assumed that an Australian court will not recognize and enforce a non-Australian prenuptial or post-nuptial agreement that does not satisfy the specific requirements of the Australian Family Law Act, even though it complies with the laws of the country in which it was signed. There is a possibility that a foreign choice of law or choice of court provision in a foreign agreement might influence an Australian court's decision to stay its case in favor of the foreign court.
Our office has worked on many U.S. – Australia prenuptial agreements, always collaborating with local counsel in all jurisdictions as appropriate.
Disclaimer: We are admitted to practice only in New York but work as appropriate with lawyers throughout all U.S. states and throughout the world.
