Lady Justitia
       Family Law

Spousal Support / Alimony
Divvying up the Assets
Prenups

Spousal Support / Alimony

“Both empirical and ideological factors tend to indicate that there will be a continuing decline in spousal support… As regards ideology, the growing trend towards individualism works against situations where one adult is required to support another…”1
“This study provides empirical support for the proposition that spousal support issues are fundamentally gender issues. Those who receive spousal support are almost always women, and those who pay it almost always men.”2

Sect 72 (1) of the Cmlth Family Law Act 1975

A party to a marriage is liable to maintain the other party, to the extent that the firstmentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

              (a)  by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

              (b)  by reason of age or physical or mental incapacity for appropriate gainful employment; or

              (c)  for any other adequate reason;

having regard to any relevant matter referred to in subsection 75(2).

Up until the 1970s marriage in Australia was regarded as the traditional ‘till death us do part’ institution where divorce, although tolerated, was more the anomaly than an acceptable possibility. It was a lifelong contract between two people and, like all contracts, violation of such was taken seriously by the courts. The ‘innocent’ aggrieved husband or wife would take the ‘guilty’ party to court and ask for a divorce claiming; desertion, cruelty, denial of conjugal rights, adultery or some similarly bad behaviour. If proven, the court would grant the divorce and then financially punish the transgressor who broke the contract by forcing the breadwinner to pay continuing spousal support to the other party, or alternatively, denying the dependent party spousal support. As in most cases, where the breadwinner was the male, the reason the punishment was financial support until the ex-wife might marry another supporter was that, she, being ‘only’ a woman, was incapable of being productive enough in employment to financially take care of herself.

The broad notion acceptable to the community is, I think, that if a husband of means irretrievable destroys the reality of a marriage, and it appears that he contemplates marriage with another woman who he prefers to his wife, the court should ensure that he pays to his spouse he is repudiating, having regard to his conduct towards her... whatever is fair and reasonable, recognizing that he is pursuing his own gratification in disregard of obligations he undertook. Justice Barry, Davis v Davis, Victorian Supreme Court, 1964.

Divorce laws changed significantly with the Commonwealth Family Law Act of 1975 when the whole concept of fault was done away with, and either party could much more simply gain a divorce having to prove little more than technically separating from their spouse.

Despite those who believe fault divorce should be brought back fully or in part, there are reasons to believe that this reform was justified.  If a couple married at average age 25 and lived till the first died at a not unexpected age of 80, then that would mean the contract they were signing would be expected to very possibly have a life of 55 years. This is an extraordinary long time for the law courts to expect parties to honour contracts. Who would sign an employment contract for such a period; or a contract to supply some agricultural produce; or to insure a driver against having accidents; or a house against fire and burglary? Do not physical and societal environmental factors change over years which would require the parties to re-consider their position? Do not people themselves change over time due to life experiences, maturity, and their ongoing education?

The simple fact is that whereas a person can be expected to honour a three-year employment contract that, in the main, occupies eight hours Monday to Friday every week of the year, can he or she really be expected to honour almost every day of a 55 year contract, even if each day’s hours are less? A person slowly coming to realise they no longer wish to be in a very close relationship with someone they originally felt deeply for, is not fundamentally a bad person deserving punishment, especially when one considers that approximately 45% of all marriages end in divorce.

However with the enlightening late 20th century attitude that men and women should no longer made to felt guilty for evolving into people with different beliefs, values and attitudes, one would then have to address the issue of whether the breadwinner should ever “be punished” again by giving post-divorce support to the other party.

As a 2002 family law study by a Professor Carol Rogerson for the Canadian Department of Justice stated3,

With the disappearance of fault, an explanation of spousal support as an innocent wife's expectation damages for her husband's breach of his marital obligations was no longer sustainable. To the extent that spousal support was understood as simply giving a spouse what he or she would have gotten had the marriage continued, the imposition of the obligation was rendered illegitimate. Absent a finding of wrongful breach of promise, why was one spouse required to use his or her "means" to meet the "needs" of the other post-divorce? Logically, either a new explanation had to be found to justify the obligation, or the obligation had to be eliminated.

Unfortunately, while many explanations have been put forward as why a party after divorce might truly suffer a drop in living standards and would need compensation to get them through the transitionary period, if not further, they are rarely accompanied by reasons explaining why it is the ex-partner who must be responsible for this compensation. 

Other explanations however, although few and far between, have endeavoured to make this link.

Compensation for economic loss: forgone careers and loss of opportunity

If we, for example, take the wife as the support claimant (which in practically all cases it is), then the essence of this economic loss theory is that for the length of the marriage, the woman was taken out the workforce to be a mother and/or wife and that by the time of the divorce when she would re-enter the job market, she would be at a great disadvantage in earning ability to others of her age, because of her lack of experience and acquired skills.

There are a number of responses to this:

What career?

What if, at the time of marriage, the wife was employed at the very low end of the job market, and of all her aspirations none was to rise in her career but simply to maintain her less than challenging job so as to give her attention to other pursuits such as sporting? A supermarket checkout operator who leaves her job for 15 years should not have that much trouble regaining it.

What job?

In the increasing affluent lifestyle that many Australian now enjoy, it is not that rare for a young woman to spend a number of years of overseas travel after high school and then returning home to marry without ever having maintained any full-time job.

Childless marriage

In the situation where the marriage bore no children, the obvious question to ask is how the wife was “deprived” of a career when there did not appear to be any reason why she could not undertake one all along. If the reason given was that she was obligated to help in her husband’s business, then that help would have contributed to its financial assets, assets which she would have claim to half of at the breakup of the marriage.

Invalid by omission

The most serious problem with compensation for economic loss argument is that no matter how many examples one may give of women in promising careers who were stopped mid-stream at the behest of the husband to give birth and care for children, even the defenders of the law would grudgingly admit that there have been divorced women who did not, by any stretch of the imagination, fit that career profile.

Yet as expressed on the Spousal Maintenance page of the Family Court of Australia in its introduction4,

Under the Family Law Act 1975, a person has a responsibility to financially assist their [former husband or wife] or former de facto partner, if that person cannot meet their own reasonable expenses from their personal income or assets.

No mention of limiting it to those who had their careers affected5 but to all divorced partners who are in financial need. So as the economic loss argument only works for some, and yet spousal support can apply to any party in need, it follows that we are still waiting for justification for this law.

One of the most egregious examples of this ‘enlightened, new age, fault-free’ divorce settlements is a Queensland case from 2010. According to a newspaper report6, the family assets, as accrued only from the valuations of the husband’s business as a builder, amounted to approximately $4,500,000. After orders to pay $600 per week for support of the twins from the marriage, the husband was also ordered, by Judge Gary Watts, to surrender 75% of the $4.5 million estate to the wife. Granted that 50% would have been more than generous  as a division of assets, one wonders why over one million dollars was also needed for spouse support considering not only that the assets payment, one would think, would have been sufficient to keep the wolf from the door, but also the fact that during the court hearing, the wife’s mother had declared her wealth to be estimated at approximately $17,000,000 and that she had taken it upon herself to support her daughter and the twins.

 

So can spousal support / alimony be justified in the modern era?Carol Rogerson

Getting back then to the very reasonable comment made by Professor Rogerson, “why [is] one spouse required to use his or her "means" to meet the "needs" of the other post-divorce?” Does not divorce mean, to quote the Australian Oxford Dictionary, detached and separate? Why is one non-committed, autonomous individual somehow obligated to give financial aid to another after the court has finalised the financial settlements from their marriage and declared them free to go their separate ways?

There is a certain irony in the fact that the modern age that grants women equality to follow all vocations and pursuits, still embraces the patriarchal  19th century concept, in practice if not in theory, that there still must be a man somewhere in their dependent lives to guarantee them financial support.

 

 

1.Spousal Support in Australia: A study of incidence and attitudes, Working Paper No 16, Feb 1999, Australian Institute of Family Studies.
2. op cit.
3.http://www.justice.gc.ca/eng/rp-pr/fl-lf/spousal-epoux/ss-pae/3.html
4.http://www.familycourt.gov.au/wps/wcm/connect/fcoaweb/family-law-matters/property-and-finance/maintenance/
5.
Although there is an ambiguous term relating to earning ability and marriage, which may influence how much the recipient receives, but not whether or not they receive.
6. Overington, Caroline, ‘Gold digger’ gibe angers judge, The Australian, p.3, 15th May 2010

Divvying up the assets

Below is an outline of the main legislation for the division of combined assets (legally termed ‘alteration of property interests’) after a divorce (or separation for de-facto marriages).

Family Law Act 1975
Section 79.2
     The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

Section 79.4
“In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:”

  • the direct financial contributions by each party to the marriage such as wage and salary earnings
  • the indirect financial contributions by each party such as work done on home improvement
  • the non-financial contributions to the marriage such as caring for children and homemaking, and
  • effect of …
  • matters relating to spousal support (S. 75.2)
  • effect of …
  • matters relating to child support.

“There is no formulae used to divide your property…Your settlement will probably be different from others you may have heard about.”                                                                                    Family Court of Australia website1

“The present Act is so vague in expressing its basic principles, and generates such a divergence of approaches to its application as to cause excessive uncertainty and confusion.”      Commonwealth Law Reform Commission2

“There is no other family property legislation in the Western world which is both so expansive in its scope and yet so vague about its purpose.”                                                                 erstwhile President of the International Society of Family Law3

 

If one is wondering the cause for the cynicism of the above statements then perusing sections 2 and 4 of Section 79 of Australia’s Family Law Act above may help. The directions from Parliament for how the court is to divide the combined assets is to “take into account” the contributions, debts and obligations, and that’s it. Where parties beforehand don’t come to an agreement, as long as the trial judge believes he/she is acting according to justice and equity, the discretion to be exercised is extremely wide.

To make matters even more complex, the Family Court also places ‘on the table’ for distribution, all assets owned by the spouses separating, whether individually received by inheritance, owned prior to the marriage or, surprisingly, even after.

Where one might innocently believe that the matrimonial wealth for division is that earned up to the point of separation, the first step in a divorce, in fact not only is it beyond that, but also not even at the declaration of decree nisi by the court, but still beyond that to the time the court authorises division of assets, a hearing held separately from the divorce hearing. In a 2017 case, Calvin v McTier  FLC 93-791, the husband, to his later regret, did not immediately bother with the property settlement after his divorce came through. Four years later he received a substantial inheritance and at that time decided to finalise his property arrangements with his erstwhile wife. Much to his dismay, he was informed that, despite no child maintenance being involved, the ex-partner was to receive 35% of that inheritance4.
 

The Murky Art of Evaluating the Homemaker Contribution

As non-specific as it is, one would at least surmise that when the legislation asks that each spouse’s contribution be valued, the intent would be that the asset split should somewhat be in accordance with the comparison of that evaluation, after modifications to accommodate the contingencies of sections (d) to (g) such as child support.

Beginning from the legislation becoming law in 1976, in ascertaining the contributions made by each party to the marriage, two alternative approaches were utilised:

Balancing approach

 When the financial contribution of the breadwinner (middle income or below salary plus home improvement work, if any) was very roughly equal to that of the homemaker (house work, child care, plus house and garden maintenance, if any) especially over a marriage/ cohabitation of substantial years,  then rather than engaging in tedious accounting of the details of who brought into the marriage, what, and when, the court takes what is known as the ‘global’/ ‘balancing’ approach, and summarily declares the contributions equal.

"after a long marriage, where both parties have worked together and built up such an asset as the matrimonial home by their joint efforts, even if the efforts of one were that of homemaker alone, equality should be considered the normal starting point5"

 Assets approach

Alternatively, when it is of a shorter duration, or when substantial wealth has been accrued during the marriage and it is obvious it is due more to one party than the other, then the ‘assets’/ ‘nexus’ approach is adopted to the division of asserts, whereby specific accounting is engaged in. 

The ‘all contributions are actually equal’ argument

Perhaps because of the influence from being aware of the concept in other western countries, albeit with different asset division laws, of equal dispersion of assets to both parties, from as early as 1977 opinions in Family Law Court cases were being made declaring that equality between the spouses should be the starting point in evaluating contributions, irrespective of how much wealth the breadwinner had actually created. How this notion could ever be interpreted from the words of the legislation “any contribution made in the capacity of homemaker or parent”, is truly logic defying. Suppose a young wife, married to and also the mother of a child of, an extremely successful entrepreneur making $50 million per year, is recognised in divorce and property settlement hearings, as “contributing” $25 million per year to the marriage because of her home making and parenting skills (to be deducted from the husband’s income). If she should subsequently marry and have a child with someone who only earned only $200,000 per year, why is it that, in case of a divorce, the estimation of her homemaker and child carer contributions would suddenly drop to $100,000 per year?  

Nevertheless, in 1977 Chief Justice Elizabeth Evatt of the Family Court of Australia held in Rolfe v Rolfe  that,
While the parties reside together, the one earning and the other fulfilling responsibilities in the home, there is no reason to attach greater value to the contribution of one than to that of the other. This is the way they arrange their affairs and the contribution of each should be given equal value.”6 

However, this was soon knocked on its head in 1984 in the High Court of Australia case of Mallet v Mallet where Chief Justice Harry Gibbs declared.

“Parliament has not provided, expressly or by implication, that the contribution of one party as a homemaker or parent and the financial contribution made by the other party are deemed to be equal, or that there should, on divorce, either generally, or in certain circumstances, be an equal division of property.”7

As Family Law Professor Patrick Parkinson stated, “Cases which suggest that the homemaker contributions can  be  assessed  in  the  abstract  without  any methodology of quantification have to be reconsidered, for they are inconsistent with the responsibility to act judicially.”8

Stare Decisis, not

Despite that declaration in Mallet and later confirmed in Norbis9, back in the lower Family Courts, what might be called the disobedient children wearing the judicial robes, resentful at being told they were wrong, still endeavoured to disregard their superiors. By a concept of law known as stare decisis, the reason given by the majority in one case sets legal precedent and thus compels the same rulings in future cases with similar circumstances.James (HCA infected by bias) Brewster

“A judge who is dissatisfied with a precedent established by a higher court in the same court hierarchy can do little about it. If the precedence is from a higher court, it is binding.”10

But apparently not so if it is a family law matter where the decision maker can even be as low as a magistrate. 

In an astonishing judgement handed down in 2012, Magistrate James Brewster held, in Hoffman v Hoffman11, that “…my duty is to apply the law laid down by appellate courts in Australia. [but] … I believe that I am free to decline to follow the line of authority…[for the following reasons]”.

If it were not bad enough that he was, by his own admission, renouncing his duty, that he should defend his actions by maligning members of the highest court of the land in calling them biased would, one would think, well exceed judicial propriety. One of the two reasons the magistrate used was that the HCA decision in Mallet was “infected by gender bias.”12

He was quick to add, “This is not a criticism of the justices in the case.” But how could it not be? Who did he think handed down the decision but the justices? He went on to explain that “the zeitgeist in 1984 when Mallet was decided, was vastly different to the zeitgeist today.” Not that this would be justification for a lower court anyway, (especially considering that appellate judges who do have authority to affect change can only do so on common law, not statute law) but the time period in which the zeitgeist had “vastly” changed was only 28 years. Was the honourable magistrate aware that probably the most well-known case law precedent today, Donoghue v Stephenson is 86 years old? In fact, law schools in Australia teach relevant ratios decidendi of at least ten cases of age over a century, with one, Darcy v Allein, ‘The Case of Monopolies’, going back to 1603.

Using a hypothetical, the second reason he gave was that a wife in a wealthy family who had servants and nannies to do everything for her would have that negatively affect her in property settlement. Well, yes. If the legislation says “…in property settlement proceedings the court shall take into account the  …contribution[s]” of each party,  then as that is obviously the case, what can the problem be? The irony of Magistrate Brewster’s argument is that when declaring there is, per se, a wrong where a woman might receive less property, yet offering no reason as to why, he himself appears to be the gender biased judicial officer.

Special Contributions

It’s not how much he makes, but how he makes it.

It is hard to find the genesis for this rather surprising theory that no matter how much income the breadwinner may contribute to the marriage, the contribution of the homemaker / child carer is still equivalent. Perhaps it could be laid at the foot of the otherwise highly reputable HCA judge Darryl Dawson from his comments in Mallet. Even though he was part of the majority, ruling that “it does not follow in every case…the contribution of each…should be regarded as equal”, his description of the exceptions seemed quite at variance with what the legislation required. Dawson declared,

“if the [breadwinner] is engaged in conducting a business, the nature of the business, the skills which the husband applies in it, the way in which he applies those skills and the manner in which the business has been built up, are all factors [that would reflect a higher contribution].”

So it’s not the money made but how those skills were applied. What an exceedingly strange thing to say. Who cares how he made his money? How does this character assessment relate to section 79.4, which, with regards to the breadwinner, asks the court to simply consider his financial contributions, or the financial estimate of his labour used to improve matrimonial property?

 In evaluating contributions why should we be interested in the quality of the breadwinner’s skills as compared to the quantity of his contributions? Is the acclaimed, internationally recognised artist allowed to keep a greater share of his contributions because of who is, but the schlep who got lucky on the ponies, or the breadwinner fashion model who doesn’t get out of bed for less than $10,000 per day to just stand around and get photographed, not allowed to keep any more of theirs?

Straw Man Argument

From this rather strange logic unfortunately introduced by a notable judge, came the argument presented by the breadwinner in Fields v Smith13, the publicised most recent Australian case on property settlement.  Here it was argued that the wealth created, “none of which arises from inheritance or windfall” (as though that were merely unskilled earnings), but by the stewardship of the husband due to his acumen, “special skill”, or “special talents” and, “according to the Australian Bureau of Statistics”, that $33 to $39 million dollars (of income) elevated the family into the top 0.3% of Australian households.

Family Court Chief Justice Bryant rightly dismissed this ridiculous argument that the husband deserved to keep more because he apparently improved the social class of the family. However, after easily knocking back this straw man of an argument, rather than paying adherence to the precedent set in Mallet that equality was not a starting point, she reverted to the notion that “s. 79 does not suggest that one kind of contribution should be treated as less important or valuable than another.” and ordered the assets should be divided equally.14

Reasons given for presumption of equality

In Smith v Fields it was not uncommon to notice (as probably with many court decisions handed down) the phrase ‘…but that argument was dismissed because the appellant did not offer any evidence or authority to support it.’15 Fair enough, but it is interesting how little argument is offered to support this ‘equal contributions’ notion.

Freed from Obligation

One attempted justification for “equating” the homemaker’s contribution with that of the breadwinner was first enunciated by a Sir Jocelyn Simon, President of the Probate, Divorce and Admiralty Division of the High Court in England in 1964.

He declared that the cock can feather its nest because it does not have to spend most of its time sitting on it.16 This rationale was applied thirteen years later by Family Court Chief Justice Elizabeth Evatt in declaring in a judgement,

“the purpose of s79(4)([c]), is to ensure just and equitable treatment of a wife who has not earned income during the marriage, but who has contributed as a homemaker and parent to the property. A husband and father is free to earn income, purchase property and pay off the mortgage so long as his wife assumes the responsibility for the home and the children.”17

“…so long as…” ?

Suppose the situation where a wife was suddenly called away to attend to her dying mother in another city, the husband would have to immediately come home from his high paying job to care for his children. But after spending a day or two feeding, bathing, shopping and otherwise caring, would it not occur to the wealthy man that he could hire a qualified nanny and possibly a general housekeeper/driver, to do the job for him? And surely the wages for both would still come in at much less in price than his $500,000 annual salary.

Sydney University Family Law Professor, Patrick Parkinson, reflects the comments of many when he rhetorically asks, “Would the highly successful entrepreneur have made such a large fortune without the loving support of a partner during their happier times?”18

There are a number of responses to this:

  • As the Professor himself later declares, “…single people make fortunes too.”
  • Love and support is not a one-way street. The spouse is not a prostitute. In a marriage the contribution of any love and support from the homemaker is obviously balanced by the reciprocated love and support.
  • The irony of the claim is that whatever the money-making benefit that may have been utilised by the breadwinner due to the spouse’s love and support, would it not, to some degree, also work in the reverse direction from the first signs of a breakdown in the relationship up until the final property alteration hearing, where he may have lost his house, if not also his children?
  • Apart from general strength of character to keep one’s nose to the grindstone, one doesn’t always have to be exceptionally talented to make a relative fortune over a period of time. A person can obtain a high paying job, not because of exceptional skills but because of a tolerance for severe adverse conditions. The fly-in-fly-out mining worker who spends years in desolate areas with an unpleasant climate, or the plumber always prepared to be called out any time of day, any day of the week, public holiday or not, can accrue in time significant savings, far superior to the average worker. Would they, or the roustabout working on the oil rig in choppy seas, or the military serviceman on danger pay allowance in a combat theatre of war, really not be able to exercise their skills if not married nor in a relationship?

The Devaluation of a Marriage Partner

As mentioned by Bryant CJ above in Fields, the argument to defend this contribution equalisation seems to be that granting the high earner a bigger share of the pie “significantly devalues the role of the homemaker and parent”19, and thus, must not be tolerated.

To begin with, rather than being a problem, this seems to be nothing more than a tautology.   Obviously if you get less of a share in the distribution of any created asset then it logically follows that your contribution was judged to be less. This is not a problem per se, unless there is evidence your contribution was in fact greater, in which case the problem that must be addressed is that negligence or malfeasance has occurred in the evaluation of your input. To say that there should be default equal distribution of assets so as not to make one party look bad, or to prevent the appearance of devaluing a whole demographic, is far from a just and equitable manner to maintain the law. As Family Court Judge Guest has said,

“It is understandable that the requirement to assess contributions in cases of this nature [recognising significant breadwinner income] may arguably be seen to sit incompatibly with a societal commitment to gender equality. But is that the test?”20

In Summation

So if we are stuck for a rationale for why we treat the contributions as equal no matter how much the breadwinner earned, at least we have the fall-back position of following precedence set by the highest court in the land, the High Court of Australia

As was held by the majority in Fields,

“the notion, if there ever was one, that for some reason the wealth of parties itself, particularly in relation to business interests, should axiomatically mean that the party involved in the business is entitled to more, has been put to rest. It should also be said that it significantly devalues the role of homemaker and parent that the High Court said in Mallet v Mallet (1984) 156 CLR 605 at 623 per Mason J [where she] should be given ‘substantial and not merely token weight’”. (emphasis added)

Well there you have it, the notion of disparity has been put to rest and we have equality to prevent one party from being “devalued”. What more could you ask for?

Well, for a start, how about the full Justice Anthony Mason quote.

“The Family Court has stated - and in my view correctly stated - that the purpose of s.79(4)(b) is to give recognition to the position of the housewife who, by her attention to the home and the children, frees her husband to earn income and acquire assets.
And it has been held, again correctly in my view, that the Act intends that the wife's contribution as homemaker should be recognized in a substantial and not merely in a token way. However, the judges of the Family Court have gone a step further by saying that the contribution of the wife as homemaker is to be equated to the contribution of the husband as income earner. This exposition of the proposition that equality is a convenient starting point proceeds upon a misconception of s.79.
No doubt a conclusion in favour of equality of contribution will be more readily reached where the property in issue is the matrimonial home or superannuation benefits or pension entitlements and the marriage is of long standing. It will be otherwise when the property in issue consists of assets acquired by one party whose ability and energy has enabled the establishment or conduct of an extensive business enterprise to which the other party has made no financial contribution and where that other party's role does not extend beyond that of homemaker and parent.”   (emphasis added)

It is hard to understand why his honour makes a point of the differentiation between token and substantial. Surely anyone reading section 79.4 (c) would understand the full value of the contribution of not only housekeeping but also the important duty of caring for the welfare of children.  One possible answer is that the non-breadwinner has traditionally been known as the ‘homemaker’ whose presumed duties, derived from her appellation, is to simply undertake household duties such as cleaning and placing food on the table, and thus possibly deserving only token evaluation. Another could be that where a high earning breadwinner is involved, the probability would be that an aspect of a high income is a corresponding high devotion of time and attention to one’s employment and thus leaving less time for child care, the gap then having to be filled by the homemaker, her valuation of contribution thus rising to substantial.

Whatever the reason, Justice Mason made it abundantly clear that ‘substantial’ still does not mean ‘equal’, and thus to “take into account: the contribution by a party to the marriage” means exactly what it says.

 

 

 

1 ‘How does a court decide how to divide assets and debts?’, Family Court of Australia website at www.familycourt.gov.au/
 2 ‘Matrimonial Property’ Report No 39, The Law Reform Commission, Cmlth of Australia, 1987.
 3 University of Sydney Law Professor Patrick Parkinson, ‘Quantifying the Homemaker Contribution in Family Property Law’, Federal Law Review 1, [2003], p. 6.
 4
https://farrellfamilylawyers.com.au/family-law-property-settlement-assets-acquired-post-separation/
5 Zdravkovic v Zdravkovic (1982) FLC 91-220
6 Rolfe v. Rolfe (1977) FLC 90-629, at p 78,272.
 7 Mallet v Mallet, (1984) 156 CLR 605
 8 University of Sydney Law Professor Patrick Parkinson, ‘Quantifying the Homemaker Contribution in Family Property Law’, Federal Law Review 1, [2003], p.54.
 9 Norbis v Norbis HCA (1986)
10  Newson L & Aldous, J, The Legal Maze, MacMillan Education Australia P/L, South Yarra, 2002, p.33.
11  Hoffman & Hoffman    (2012) FMCAfam  1061
 12 Paragraph 46.
13 Fields v Smith [2015] FamCAFC 57
 14 The wife in this case was far from just a homemaker and was involved in the family business, however it was unchallenged that her business contribution was still significantly less than the husband.
 15 Paragraph 130.
 16
Sir Jocelyn Simon, 'With All My Worldly Goods' (Presidential Address, Holdsworth Club, University of Birmingham, 1964) 15.
17  Rolfe v Rolfe (1977) 34 FLR 518,519.
 18 Professor Patrick Parkinson, ‘Quantifying the Homemaker Contribution in Family Property Law’, Federal Law Review 1, [2003], p. 26
 19 Paragraph 134.
20  Justice Paul Guest, ‘The End of Equality?’, Anglo-Australian Colloquium, Oxford Centre for Family Law and Policy, July 2004.

Prenups

A prenuptial agreement, known in Australia as a financial agreement, is a contract entered into prior to marriage to declare arrangements, mostly financial, that happen should the marriage end in divorce. Up until the turn of the twentieth century the best advice was to save the legal expenses of having one done as presenting one in court in a divorce hearing merely caused a chuckle by the judge while he threw it into the waste paper bin and proceeded to dictate financial arrangements according to his or her own personal predilections.

However, probably due to public pressure he was no longer able to ignore, on the 27 December 2000 Prime Minister John Howard managed the passing of an amendment to the  Family Law Act, introducing Pt VIIIA, which finally forced the court to recognise prenups, well, at least to the degree they recognise normal contracts, “according to the principles of law and equity”.

In practice this means that ‘financial agreement’ contracts are enforceable unless the court is able to invalidate them on traditional legal grounds, such as a party was drunk when signing, or grounds of equity law where there may be evidence of duress, undue influence or unconscionable conduct as defined.

So far so good. No one deserves to have their contract enforced where there is proof of the above improper attributes. What has unfortunately happened however, is the, shall we say, broadening, of the meaning of those last three concepts of equity law.

The Problems with Equity Law

Equity law is different to all other aspects of law in that it is far from exhibiting the confidence and stability of what may be called black and white law. With common and statute law one generally knows where one stands on the right / wrong divide, and expensive lawyers are mostly retained only to minimise sentences or search for loopholes.

With equity, no specific physical action or communication defines a wrong, but whether or not, in the eyes of appointed judges, what you did, or failed to do, was unconscionable.

As declared by the majority in a 1953 HCA case,

“…application of these equitable principles… calls for a precise examination of the particular facts, a scrutiny of the exact relations established between the parties, and a consideration of the mental capacities, processes and idiosyncrasies of the [other party]. Such cases do not depend upon legal categories susceptible of clear definition and giving rise to definite issues of fact readily formulated.”1

The Australian Competition and Consumer Act 2010 (Clth) uses the terms “bargaining power” or “bargaining positions” repeatedly to describe situations where commercial contracts may be invalidated due to unconscionability. In Chapter 1, section 2, the ACC act goes to the trouble of defining over 120 terms used in the legislation, yet fails to offer definitions for either of the two.

And when you have legal wrongs which are hard to define, identification also becomes difficult:

  • “the boundaries, particularly between undue influence and duress, are blurred”2
  • “the primary judge used that label interchangeably with undue influence,”3
  • “I agree with the orders proposed by the plurality. However, the path I take is different: each financial agreement made under Pt VIIIA of the Family Law Act 1975 (Cth) was procured by unconscionable conduct, but not undue influence.”4
  • "no Court has ever attempted to define undue influence"5. Lindley LJ in Allcard v Skinner 1887.

 

Thorne v Kennedy
 

The “go to” court case to best understand current Australian law on prenups is the headline grabbing 2017 case titled Thorne v Kennedy6 where the ‘financial agreement’ was, through the court hierarchy, invalidated by a single judge of the Federal Court, validated by three judges of the Family Court of Appeal, and finally thrown out by the full complement of seven judges of the  High Court of Australia.

Issues from the Case

  • Is not gaining a hoped for benefit the same as suffering a loss?
  • Should mental competency and independent legal advice be enough to counter undue influence?
  • Is love a legally justifiable motive for marriage?
  • If a ‘bad’ act has no parallel good act, is it still bad?

Basic Facts

In 2006 Kennedy7, a 67 year old wealthy Australian businessman communicated on line with Thorne, a 36 year old East European woman of humble background and modest means, who declared she wished to marry and have children. They met, holidayed for a few months in Europe, then Kennedy sponsored Thorne and her family to come back to Australia with the intention of not only marriage but also gaining Australian residence. From the beginning Kennedy informed Thorne that he wanted the bulk of his estate to go to his three children. The prenup offered to Thorne guaranteed a comfortable lifestyle for her and accommodation for her family while the marriage existed, a financial package in excess of a million dollars for her if she was widowed, but an extremely modest package if either party left the marriage. Kennedy paid for independent legal advice to Thorne, which in fact vehemently opposed signing. After insisting upon, and getting, some minor changes, she signed nonetheless.  After four years Kennedy left the marriage and as per the prenup, Thorne received nothing more than $50,000, which she successfully challenged in court.

The thing that quickly comes apparent for the HCA judges in first reading, or hearing about, this case is that; to not get kicked out of Australia and returned to a second-world country, some poor immigrant woman had to sign a prenup giving her, if divorced, only one quarter of one percent (0.25%) of the wealth of some multi-millionaire rich guy. One wonders how successful they were in putting that scenario to one side while considering with an open mind what our laws of contract actually are, as well as the manifestations of varying from them.

At first glance, there was nothing wrong with the financial arrangement drafted by Kennedy’s lawyers, and if it was to be invalidated it would probably have be on the equitable grounds of duress, undue influence or unconscionable conduct.

Duress

Many law students first learn of the legal concept of duress by being given the fictional Luca Brasiexample from the film The Godfather where Johnny Fontaine’s manager is helped along to sign the contract of Johnny’s release by hitman Luca Brasi’s gun resting against his temple.  Whether or not the manager would later have dared challenge the contract in court, it would have been invalidated due to two factors: the signer was under duress and not of free will, although still of sound mind, and the person causing the duress was the other party to the contract, or someone acting on his behalf.

Originally the common law held that the threat of criminal harm had to be to the person, but over time this was modified to the property and interests of the party as well. However, when further claims were made that duress can be the result of actions that can only be described in fluid, subjective terms, the NSW Court of Appeal put its foot down stating, ‘The vagueness inherent in the terms “economic duress” and “illegitimate pressure” can be avoided by treating the concept of “duress” as limited to threatened or actual unlawful conduct’8.

As no criminal or otherwise unlawful conduct could be identified in Mr Kennedy’s actions that put pressure on Ms Thorne, the claim of duress had to be put to rest (despite the attempt by the original primary judge).

As a relief as it is that Kennedy was not found complicit in causing duress when not doing anything illegal, it was disconcerting that the High Court still left the possibility open,

“In these circumstances, it is not necessary to address the arguments in favour of or against the conclusion of the … Court of Appeal that duress … requires proof of threatened … unlawful conduct”9

Undue Influence

What was next to consider was undue influence, an action defined as the “improper …use of an ascendancy acquired by one person over another for the benefit of himself…”10.

A leading court case of precedent on this is Johnson v Buttress11, where the aggrieved party, Johnson, was a 67 year old “illiterate… man peculiarly dependent upon others” and especially a close relative, a niece of his departed wife, who cared for him and in return received the gift of Buttress’s cottage and land signed over in a transfer without legal advice.  Quoting Dixon J from that case, identifiers of evidence of undue influence would be:

  1. The claimant being impressionable, illiterate or less intelligent
  2. “trust and confidence reposed in the” other party.
  3. “deliberate contrivance” of one over another
  4. Acting against one’s own interests.
  5. No legal advice given.

So where are the similarities to this case?

  • There was no evidence Thorne was of limited intelligence or illiterate. Despite it not being her first language, the primary judge held her English was sufficient to communicate with her English speaking acquaintances, and her original lawyer testified that she fully understood the meaning of the prenup, even to the degree of insisting on the minor changes.
  • With regards to her being under the influence of Kennedy,
    • While being careful not to fall into the fallacy of the false dichotomy, why would there be specific trust from her to him? She had only known him 6 months, and even though speaking the same language, coming from countries and cultures on either side of the world and of differing standards of living, they were hardly of the same background.
    • That there may have been a default blind faith because they were engaged, has been negated in law by Chief Justice Brennan in Louth v Diprose12,
      • “Common experience today of the wide variety of circumstances in which two people can become engaged to marry negates any conclusion that a relationship of fiancé and fiancée should give rise to a presumption that either person substantially subordinates his or her free will to the other”
    • And besides, how could any prenup ever be recognised if there was a legal presumption that the older, or the richer, or the more educated, party had undue influence over the other?
  • There was no evidence presented that Kennedy contrived to influence Thorne by deceptions, spurious arguments, or haranguing.
  • As mentioned below, it is highly questionable that Thorne was, in fact, acting against her own interests. 
  • What more was Kennedy expected to do?
    • In practically all successful claims utilising undue influence, there was no independent legal representation for the claimant in the original contract. In cases where undue influence was not an issue, contracts have been upheld even when the challenger did not have representation when signing and it is not a prerequisite in most contracts. Thus, after the trouble and expense of arranging it, legal representation would seem a fair counter to the undue influence claim, especially when there was no supporting evidence of limited intelligence or existing trust and confidence towards Kennedy.
    • Not that they had evidence to suppose Thorne was intellectually challenged, but the approach taken by the HCA appears to be that if she was stupid enough to ignore the advice from an experienced professional, she still should be protected from her decision. One wonders how far that precedent should go with regards to people who refuse to take responsibility for their commitments.
    • According to the UK Chancery Division (Superior and Appellate Courts of England and Wales), not that far.
      • “All that is necessary is that some independent [and disinterested] person … should put clearly before the person …removed entirely from the suspected atmosphere… what are the nature and the consequences of the act. It is for adult persons of competent mind to decide whether they will do an act, and I do not think that independent and competent advice means independent and competent approval.”13
  • And as has been hinted at by Australia’s highest court in 2013, no one has a right to be protected from the manifestations of their own stupidity.
    • "[i]n the absence of a relevant legislative provision, there is no general duty upon a casino to protect gamblers from themselves”14

That expert advice of her lawyer

Consultants giving advice operate in all different fields.   The financial consultant will tell you which hedge funds to invest in, or stay away from, the insurance broker which are the best and worst policies for the client’s specific needs, and even friends will suggest which is the best car to buy followed by the second and third best. If the advice happens to be good, then satisfaction in what one is after in the above circumstances will definitely be attained.

Bearing that in mind, one wonders how Thorne could have benefited from taking and acting upon Ms Harrison’s advice.  As the HCA confirmed, it was apparent that Kennedy was not bluffing but adamant that this was the only prenup he would accept.  “It was open to the primary judge to conclude that Mr Kennedy, as Ms Thorne knew, was not prepared to amend the agreement other than in minor respects.”15

So might there have been another suiter offering more money for Ms Thorne’s hand that Harrison had on hold?
As that was not the case, what are we left with? If Thorne had done what was suggested to her, there would have been no marriage and no life in Australia, and within a short time she, her friend, and her family would have all been back on the ship, travelling, possibly steerage class, towards eastern Europe to return to their impecunious lifestyles in their second-world home country. How could anyone, apart from Ms Harrison, see this as a better outcome? 

Influence from whom?

It is interesting that when the HCA came to the conclusion that Thorne acted under undue influence, they appeared to assume the ‘culprit’ they wanted to blame, rather than keeping an open mind as to who else it might be. So who else might have had an ascendancy over Thorne, and a self-interest that she should sign? Perhaps not one, but a number of older people she had known all her life, who were very close to her, and who did not want to be giving up their wealthy patron’s high life for the first boat back to their village in Eastern Europe with their child or sibling Ms Thorne.

Being a bilingual woman of 36 years, who had travelled far from her home country, and experienced two marriages (one legal and one de facto) it is probable that she knew her own mind, but if she was under the influence of another, the obvious higher likelihood is that it would have been her blood family rather than a man of a foreign culture she had only know half a year. 

 

Not to be deterred, their honours still came up with a reason why it was, in fact, undue influence.

“it can be an indicium of undue influence if a pre-nuptial or post-nuptial agreement is signed despite being known to be grossly unreasonable even for agreements of this nature. In other words, what the Full Court rightly recognised as the significant gap between Ms Thorne's understanding of Ms Harrison's strong advice not to sign the "entirely inappropriate" agreement and Ms Thorne's actions in signing the agreement was capable of being a circumstance relevant to whether an inference should be drawn of undue influence.”16

Translation: From the advice of her lawyer, Thorne just knew it was a bad offer, so if she accepted anyway, that could only mean she was under an adverse influence.

And to help, let’s create another definition of Undue Influence

What is most surprising about the Thorne / Kennedy17 saga is the alternative indices for identifying undue influence, first offered by Judge Demack in the primary hearing, and subsequently confirmed and categorised by the High Court18.

  1. “whether the agreement was offered on a basis that it was not subject to negotiation;
  2. the emotional circumstances in which the agreement was entered including any explicit or implicit threat to end a marriage or to end an engagement;
  3. whether there was any time for careful reflection;
  4. the nature of the parties' relationship;
  5. the relative financial positions of the parties; and
  6. the independent advice that was received and whether there was time to reflect on that advice.”

There are two problems with this addition: its provenance seems to be extremely sketchy, and the rationale for some of the indicators are positively logic defying.

In the official court report of Thorne v Kennedy [2017] HCA 49, 8 November 2017, there are 178 footnotes accompanying the reasons offered by the judges. Practically all of them cite legislation or case law. Considering many of them cite up to four different cases, it would be safe to say that there is a total of at least 200 references to case law or statute in the judgement. What thus becomes interesting is that when the court goes beyond their earlier defined indicators of undue influence where they extensively quote Johnson v Buttress, to introduce another set of indices, the only citation we get is not even from case law or legislation, but from an article in an academic journal19 by an unidentified author. 

With regards to the new indices offered, items 3, 4 and 6 were also from Johnson v Buttress and have been addressed above. The remaining three however do present a challenge.

  • Take it or leave it
    • As per index #1, the most fundamental concept in a contract is what is often termed ‘the meeting of the minds’. If party A wants to buy at n dollars and party B accepts that price then that is all that is necessary, irrespective of how the parties got there. It is positively ridiculous to claim that each party must also engage in some manner of negotiation beforehand (purposely starting off with an unrealistic figure and then ‘being prepared’ to come down?) as though it were a game. Are the honourable members of the HCA aware that contracts are an integral part of every day life, such as whenever one enters a shop and automaticalthe mad hatterly engages in verbal contracts to buy products? When they take a six pack off the shelf at Aldi’s and present it at the checkout for the bar code to be read, do they insist on some negotiations on price to be undertaken? What do they do if Aldi declares their price is not negotiable?
  • If you don’t accept, then I’ll go to extremes by withdrawing my offer.
    • It is hard to work out which is inaner, index #1 or #2. With regards to the latter, the court has said that when negotiating a contract of marriage, one cannot threaten to cancel the marriage, i.e., declare they are ultimately not prepared to accept the other’s terms. Well, if one may dare ask, just what does one do if you are not prepared to accept the other’s terms?
      • You can’t drink plenty of coffee and keep haranguing and arguing with them until 2 am, when they finally give up and sign, because that in itself could be judged as consent through harassment. 
      • Agree to marry, but then on the wedding day do a runner?
  • Richer and more Bargaining Power
    • The relevance of ‘relative financial positions’ of index #5 does not immediately come to mind.
      • Presumable it means the “inequality of bargaining power”20 between the two parties, often mentioned existing between Thorne and Kennedy, although there is no definition offered by the judges in any of the three hearings. It is revealing how no matter how much judges and other authorities use the term in common law and legislation, as mentioned above, they are never prepared to define it.
      • Perhaps because they are not prepared to attempt a semantic service they know they cannot fulfil, the following legal dictionaries do not even have an entry for the concept, The Australian Legal Dictionary, Edward Arnold Australia; Legal Terms, Butterworth Guides; West’s Encyclopedia of American Law, 2nd Edition; the Victoria Law Foundation’s Everyday-Law legal glossary.
      • To its credit Butterworths Concise Australian Legal Dictionary does make an attempt, the essence of which comes down to having the advantage with respect to financial resources; negotiation skills, or another not related to superior wealth.
    • Being a better negotiator, or being able to afford one, does seem to be rather picky, especially considering not only that both parties had legal representation anyway, but also that the court accepted Kennedy was adamant in his final price.
    • With regards to financial resources, no explanation is given as to why it should be an advantage in negotiations. This writer sometimes purchases books online from Amazon.Com, a company owned by Jeff Bezos, reputed to be the richest private citizen in the world. As the reason the writer buys them is that they are cheaper than elsewhere, Mr Bezos’s vast wealth obviously hasn't given him an advantage in coming to a price agreed to by both parties.
       

Every dame a gold diggershow me the money

One senses rather an unpleasant approach from the judges here, both male and female, where there is an assumption that no woman with a free and rational mind would dare even consider marrying a wealthy man unless she was guaranteed a significant wad of cash.

Whatever happened to choosing a husband solely on the grounds of companionship, being a provider, and fitting the role of your future child’s father? Obviously no one on our High Court spends their free time watching chick flicks or reading romance novels.

 

Unconscionable Conduct

Perhaps suspecting that people might view it as rather a spurious to claim that Thorne was acting under undue influence not to take what appears to the most unproductive advice she could receive, the HCA decided on another cause which may vitiate the contract, unconscionable conduct.

To begin, they listed requirements prerequisite for such an action, as per paragraph 38 of the judgement:

  • a) the innocent party [is] subject to a special disadvantage
  • b) the other party knew or ought to have known of the existence and effect of the special disadvantage
  • c) The other party must … unconscientiously take advantage of that special disadvantage
  • d) "victimisation", "unconscientious conduct", or "exploitation" is required


In coming to the conclusion, “Ms Thorne's entry into the agreements was … procured by unconscionable conduct.” the factors they gave were Kennedy’s created urgency in asking her to sign only four days before the wedding ceremony when being aware of the specific contents for only a week, and not offering return passage home for Thorne and her family if she refused.
As these above four criteria have been held to apply to Mr Kennedy’s actions, it is interesting to note:

  • Is not winning a house the same as losing your house?
    • The “special disadvantage" in (a) was held to be Ms Thorne’s strong motive to marry so as to prevent deportation leading to a single and poor life back in eastern Europe. Special disadvantages may well exist, but that is a category where one is in imminent harm if the contract isn’t made. The problem with this argument of the court is that no one ever signs a contract without motive, or for the lack of a better term, the threat of ‘losing out’. However, it is very important to differentiate between positive losing out and negative losing out, between threatened with an actual loss, and ‘threatened’ with not gaining a benefit. For example, to be “forced to pay” $20 million dollars to be one of the guests on the only space ship to Mars in your lifetime, is because of the negative threat of losing out. It does not place you in a special disadvantage because you do not actually suffer by missing out. 
      The court spoke of Ms Thorne’ predicament as though she was a born and bred Australian citizen threatened with deportation to a second world country if she didn’t sign. Certainly an unwelcome threat to any member of the judiciary, but something that just wasn’t in fact the case. Being on nothing more than a nine-month tourist visa, she was only someone metaphorically standing outside the country, looking in at this nirvana, and wishing to enter. Before signing she had no right of residence and no right to Mr Kennedy’s wealth, and not signing would have done nothing more than maintain that status.
  • And what he should have done was?
    • The ‘taking advantage’ from (c) implies either that Kennedy paid a lot less than what he was prepared to pay, or that even though he was not prepared to spend more money, he exploited the situation to obtain a benefit he otherwise wouldn’t have allowed himself to obtain. As mentioned above21 the court accepted he would not have signed any other prenup, so Kennedy’s “crime” was the latter. However, there is a problem here. Whenever society declares some action is a crime, tort or otherwise wrong, it always goes hand in hand with describing what the culprit should have otherwise done. If Kennedy had done wrong by “taking advantage” of Thorne, then what would have been his alternative correct action?  
  • Here, just before you walk up the aisle, sign this.
    • An argument the HCA used to “prove” unconscionable conduct, which ironically did not come within the above criteria, was that the prenup was given to Thorne to sign less than a week before the marriage ceremony.  This might well be unconscionable conduct, to the degree that one can give a universal definition of that subjective term, if it wasn’t that:
      • The contents of the contract could not have been that much of a surprise, because for the seven months that she had known him, he had been insistent that he wanted the bulk of his wealth to go to his three children. As the primary judge declared, “Ms Thorne was certainly aware of that position [his wealth was his, and he intended it to go to his children.] from the outset.”
      • This contract was, by mutual agreement, revoked and replaced by another of more or less the same details five weeks after the marriage.
        • Curiously, the court spoke of the “haste surrounding the post-nuptial agreement and the advice upon it” but  without explaining how that in any way she was under pressure to sign.
  • I had to sign away all my rights and privileges, otherwise how would we get home?
    • Another argument the HCA used was Kennedy’s failure to promise costs to return home for her and family if she didn’t sign. For the following reasons this does seem rather spurious:
      • Even if it is international, should fear of transport problems be the reason to marry and have children with someone you otherwise don’t wish to marry?
      • He didn’t actually threaten not to pay, just failed to promise.
      • When it’s not about serious money, it is odd for a couple planning a wedding to speak of plans if the marriage fails to eventuate. Do they work out beforehand who will use the already paid-for honeymoon sea cruise if one leaves the other at the alter?
      • As recognised by the court, Kennedy had been very open and honest with Thorne, and it is reasonable to believe he would have paid the fares.
      • As declared by the court22 she was already the recipient of “expensive jewellery” from Kennedy, the sale of which may well have covered the costs.

 

How People Benefit from the Thorne v Kennedy Ruling

Justices Gordon ,Keane, Bell, Kiefel CJ, Gageler, Nettle, Edelman

Whatever other advantages judges who are fortunate enough to be appointed to Australia’s highest court obtain, surely one must be that of job satisfaction, that they are able to “make a difference” for the betterment of society.

One wonders how they would feel about the following three possible scenarios. Perhaps some might hide behind the questionable adage “hard cases make bad law”23, while others might believe that the, hopefully not that common, unhappiness or death caused, would merely be acceptable collateral damage in what they believe to be dispensing equity. 

 

Situation  #1

Ms Thorne has certainly profited from her international on-line dating experience for not only herself but also her family, but what is going to happen to the next downtrodden poor woman from Dystopistan; someone wishing to improve her lot in life by offering herself as a good wife to some wealthy and perhaps elderly Australian? For him, to marry anyone is always a gamble in knowing how they will turn out, but to choose one from a different culture makes it all the harder. The compensation to the blind dating was that, an immigrant being offered nationality of a first world country (which often also extends to family) makes the fiancé that less prepared to stake it all over a financial package. Thus when one might lose on the roundabout one still gains on the swing. But if the package now becomes mandatory and you can only lose, then why bother.  

 

Situation #2

Westley, a young farm hand, just out of his agricultural science apprenticeship, meets and falls in love with ‘his princess’, Marjory, a young woman who happened to have inherited an extremely large share portfolio. She is just as much in love with him and when he proposes marriage she accepts. As young as she is, she is smart enough to realize she is not yet mature enough to be a good judge of character. Even though she true lovecan live with her friends joking that “the farm boy” is only after her money, she does not want to begin her marriage with the gnawing doubt that that might be true. That, plus believing that she should not have to pay for love, leads her to ask her fiancé to sign a prenup to the effect that, in the event of divorce, he gets nothing. The newly qualified farmer considers his options. On signing:

  • He gets to marry, and be with, his beloved.
  • He moves out of his cold, partly furnished flat near the railway line and moves into what he jokingly calls her palace.
  • He no longer has to pay for rent, food and all other household expenses out of his wages.
  • If there is a subsequent divorce, he will definitely be financially, and possibly emotionally, better off than if he didn’t marry.

As much as, in all probability, she would be pleased to see him wishing to put pen to contract paper, the desired marriage would never happen due to the “grossly unreasonable” and “entirely inappropriate”24 property alteration25 and spousal maintenance sections of the prenup, which would be declared contrary to law.

 

Situation #3

Catherine, a recently widowed middle-aged woman, the owner of a very successful business she and her deceased husband created, is courted by Morris, a very charming man albeit somewhat unreliable.  Being financially destitute she allows him to move in with her, but after almost two years she realises their relationship will soon be recognised in law as a de facto marriage, with all the attendant ‘property alteration’ and ‘spousal support’ stipulations in case of separation.  She thus asks Morris to sign a prenup where the bulk of her assets are quarantined off for her four adult children, and his share would be extremely modest, bordering on non-existent. He realizes this is a better offer than being kicked out on the street, so he accepts.

On being informed by her lawyer that the prenup would be invalid in law, and knowing she could not trust Morris, she regretfully asks her companion to leave.

A few months after this, the depression of living alone, together with no longer living such an active life with a partner, has affected her in such a deep way that she suffers serious cardiac problems.  After a number of operations her surgeon has told her nothing more can be done and she has only six months to live. Her children are so concerned that they trace down an eccentric overseas surgeon who has been known to occasionally perform “miracles”. The colourful identity declares that his exceptional talents can only be retained for a fee of not less than $3 million dollars for an operation that would probably take less than 6 hours. When the children baulk at paying so much for an operation that might not even succeed, he adds that when he arrives in Australia he would be happy to be supplied with a special contract in which they would only have to pay the money if their mother lived for a set period of time after the operation.

Unfortunately for all concerned, before the children could follow through, the surgeon would be informed by his lawyers that such contract would obviously be ruled invalid due to the above listed prerequisites for unconscionable conduct:

  • As in (a) the innocent party, Catherine, would be subject to a special disadvantage, an unequivocal positive threat in that she will otherwise die.
  • As in (b) the other party is fully aware of this.
  • As in (c) the other party takes advantage of this by charging such a “grossly unreasonable” and “entirely inappropriate”26 price for his service.
  • As in (d) exploitation occurs.
     

Thus the outcome of our enlightened laws of equity would be that; Morris could very well be homeless, the surgeon would not be able to look forward to his money, Catherine to her life, and the children to more times with their mother.

 

 

 

1 Jenyns v Public Curator (Q), [1953] HCA 2.
2 Westpac Banking Corporation v Cockerill (1998) 152 ALR 267 at 290 per Kiefel J, Lindgren J agreeing
.
3 Thorne v Kennedy [2017] HCA 49, hereafter TvK paragraph 2
4 Justice Gordon  TvK para 78
5 TvK  para 30
6 Thorne v Kennedy [2017] HCA 49, hereafter TvK
7 Pseudonym given to both parties by the court.
Australia & New Zealand Banking Group v Karam (2005) 64 NSWLR 149 at 168 [66]. As cited Para 70 Family c of A
9 TvK Para 29
10
Concise Australian Legal Dictionary, Butterworths, Melbourne, 1997.
11 Johnson v Buttress [1936], HCA 41.
12  Louth v Diprose [1992] HCA 61.
13 Coomber v Coomber [1911] 1 Ch 723 at 730
14  Kakavas v Crown Melbourne Ltd & Ors
[2013] HCA 25
15 TvK para 54
16 TvK para 55
17
Case names actually change through the appeals process. Thorne v Kennedy became Kennedy v Thorne on appeal, subsequently becoming Thorne v Kennedy in the final appeal. 
18 TvK para 59
19 American Law Institute, Restatement of the Law Third, Restitution and Unjust Enrichment, (2011), §15, comment c
20 TvK para 46
21 TvK para 54
22
TvK para 10
23
The legal scholar Glanville Williams questioned the adage's usage in 1957, writing, "It used to be said that 'hard cases make bad law'—a proposition that our less pedantic age regards as doubtful. What is certain is that cases in which the moral indignation of the judge is aroused frequently make bad law." - Wikipedia – ‘Hard cases make bad law’, 1/8/2018
24 TvK para 55
25 Splitting up the matrimonial assets,
26 TvK para 55.

 

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