The question of the enforceability of a pre-nuptial agreement again came before the Family Court

In the case of Wallace & Stelzer [2011] FamCA 54 (31 January 2011) the husband and wife married in 2005. A short time prior to their marriage, the parties executed an agreement, which at the time they asserted was a financial agreement pursuant to the Family Law Act 1975 (Cth).

In the agreement the parties’ stated their intention was to put in place an arrangement for the division of their property in the event that their soon to be celebrated marriage failed. The parties sought to exclude the power of the Court.

The total worth of the Husband was approximately $16,500,000. The Agreement provided that the Husband pay the Wife $3,250,000, if their marriage broke down within four years. In fact the marriage lasted less than two years. The agreement also contained clauses that each party would retain the property that they already owned prior to the marriage and made adjustment for shared property.

The wife made application to the family court of Australia that the agreement be enforced.

The husband challenged the validity of the agreement

The first issue that the Husband’s counsel presented to the Family Court was that the Agreement was fundamentally flawed. There had been changes to the legislation in 2010, namely amendments to the Family Law Act. The Husband challenged their constitutionality.

The family court decided that the 2010 amendments were valid and that the agreement was not flawed.

The next issue that was presented by the Husband’s counsel was whether in this case the parties had received the required Independent Legal Advice, before signing the agreement and the negotiations that took place between the parties prior to entering into the Agreement.

Having considered the evidence the Family Court determined that the parties had received the required Independent Legal Advice and that:

• “The parties entered into robust negotiations as to the amount to be paid to the Wife in the event that the relationship failed. Following these discussions and negotiations the parties entered into the Agreement.”

The Family Court was satisfied that:

• “the parties entered into the Agreement voluntarily, after serious and considered reflection and in accordance with their then desires and intent.”

The Husband also presented the argument that the Wife had made false or fraudulent representations, to induce him to sign the agreement. Included in this submission by the Husband was that the Wife has pressured him into signing the agreement on the basis of a wedding soon after a period of separation and that representations were made as to marriage, children and togetherness, which were never fulfilled in the light of the subsequent events.

Having considered the evidence, the family court was not satisfied that the wife had induced the husband into entering into the agreement. The Family Court was of the mind that:

“The Husband had wanted a Financial Agreement and had instructed his legal practitioner to prepare that Agreement. He did that because of the events surrounding his property settlement with his former Wife. He wanted both the Agreement and the marriage, and he was successful in those endeavours.”

In this case the agreement was declared valid and enforceable. The Husband was ordered to pay to the Wife the amount of $3,250,000 plus interest.

Conclusion

If you are considering entering into a de facto relationship or a marriage, you should give serious consideration to entering into a Binding Financial Agreement.

Please do not hesitate to contact us to discuss your options in this regard. Our lawyers will be able to advise you of your options and as to the advantages and/or disadvantages to you.

Please Note: If you do intend to enter into a binding financial agreement there are very specific requirements that must be complied with before the agreement will be considered binding by the Court. As such it is imperative that you seek legal advice before entering into such an agreement