Well, Barnaby Joyce has sure gotten our attention recently. It’s as old as the hills: Two people get together, one is older and already has kids, and the younger one is female.
And a similar story should get our attention this week. In this case, one man was older, and very rich, while she hardly spoke English, and he influenced her to sign not just one, but two, binding financial agreements under family law legislation. And then he died as well.
Read on for a useful tale from Peter McNamara about unequal bargains and what you can do to make bad deals stick.
The younger vulnerable wife signed two family law documents that were meant to be binding. The first agreement was signed 4 days before her wedding, the second was signed a month after the wedding. Both agreements were explained and certified for the wife by her own independent lawyer. What did the lawyer say, both times? “Don’t sign it.”
But she did. And then they separated.
Both agreements were bad deals. The husband at 67 years had amassed over $18 million and had three adult children. The wife was 36 and didn’t have much money. When they separated 4 years later, the wife challenged the deal because she got a piteously small $50,000, and if he died, an apartment worth up to $1.5M, a Mercedes and an income.
The case was fought through the Federal Circuit Court. The husband died half-way through the case. It was appealed to the full Family Court and to the High Court of Australia. The High Court said the wife was under undue influence and the deal was so unconscionable that it should be struck down. The test of “a bad deal” will depend on:
- Was it negotiable?
- What were the emotional circumstances and were there any threats?
- Was there time to reflect?
- The relationship and in particular, was one party at a special disadvantage?
- The relative financial positions; and
- The independent advice and the time to reflect on it.
The lesson is, if you have a financial agreement that is heavily weighted towards one party, then think about offering a better deal, don’t leave it to the last moment to propose it and don’t say: “take it or leave it” and require both legal advice and other independent advice, possibly from a competent financial planner.
Finally, if you want the deal to stick, speak to Peter McNamara about your planned deal with your fiancé, partner or married or defacto spouse.
For the full judgment and orders of Throne v Kennedy  HCA 49 click here.