The validity of prenuptial agreements is made more certain by Family Court ruling.

The validity of prenuptial agreements governing property settlements in divorce is made more certain by Family Court ruling. The Family Court upheld a prenuptial agreement governing a divorce property settlement that requires an ex-husband to pay his ex-wife more than $3 million. It seems safe to assume that the ex-wife will have no need to return to her former career as a pole dancer.

The prenuptial agreement provided that the husband, identified in court as Mr Wallace, would pay the wife, identified as Ms Stelzer, $3.25 if their marriage lasted less than four years. They separated after only two years. The couple married in 2005, seven years after they first met in the Sydney club where Ms Stelzer worked. Mr Wallace reportedly has a net worth of $16 million, while Ms Stelzer owns assets that are worth about $10,000.

Also known as a Binding Financial Agreement, a prenuptial agreement governs the disposition of assets in anticipation of marriage and divorce. They are commonly made when one party brings more assets into a marriage than the other and wishes to protect those assets from a property settlement imposed by a court. A prenuptial agreement often specifies the terms of the property settlement if the marriage ends in divorce.

Prenuptial agreements are permitted by the Family Law Act 1975, although specific legal requirements must be met to assure their validity. Certain decisions of the Family Court nonetheless cast doubt upon the enforceability of many prenuptial agreements. Those decisions interpreted a provision of the Family Law Act that requires the parties to receive legal advice before entering into prenuptial agreements. Many prenuptial agreements were set aside because they did not expressly state that the required legal advice had been provided. The Family Court is a federal court that deals with cases arising under the Family Law Act.

The validity of the agreement that Mr Wallace made with Ms Stelzer depended upon an amendment to the Family Law Act that permitted agreements to be enforced even if they did not include the technically required language concerning legal advice. Mr Wallace argued that the amendment was unconstitutional because it applied retrospectively. He also argued that he received inadequate advice from his solicitor and that he was defrauded by Ms Stelzer’s untrue claims that she was in love with him and wanted children. The full bench of the Family Court rejected those arguments, upholding a 2011 decision of Judge Robert Benjamin.

Thousands of prenuptial agreements have been drafted in reliance on the Family Law Act. The Family Court’s decision provides a measure of relief to individuals who rely upon prenuptial agreements to protect their assets if they divorce. Many lawyers are nonetheless urging further revision of the law to clarify uncertainty about the Family Court’s role in evaluating the legal advice that parties to a prenuptial agreement receive.