Can a binding financial agreement be overturned in Australia? Yes, it is possible to overturn one as courts have the authority to revoke agreements. Separated or divorced couples often enter into binding financial agreements(BFA) to regulate their financial affairs and protect their assets.
However, circumstances may change, leading one or both parties to consider overturning a binding financial agreement. This typically includes a change in circumstances that would now make carrying out the Binding Financial Agreement impracticable, unjust or inequitable.
Do you want to know more answers to the question “Can a binding financial agreement be overturned?”. Read this article to find out more.
Understanding a BFA
A binding financial agreement is a legal document that outlines the division of a couple’s assets, liabilities, and financial resources. We also refer to this agreement as a “prenup” or “postnup.” These agreements provide a level of certainty and control over financial matters.
Thus, this allows couples to make their own decisions rather than relying on court determinations.
BFAs in Australia can be legally binding and enforceable, provided they meet specific requirements outlined in the Family Law Act 1975. For a BFA to be valid, it is essential that both parties obtain independent legal advice.
Can a Binding Financial Agreement Be Overturned: What Does the Family Law Act Say?
The Family Law Act is the primary legislation governing all family law matters in Australia. Section 90K of the Act provides circumstances under which a court may set aside a financial agreement or a termination agreement. The court may make such an order if it believes that:
- The agreement was obtained through fraud, which includes non-disclosure of a material matter.
- A party entered into the agreement:
- With the purpose of defrauding or defeating a creditor; or
- With reckless disregard for the interests of a creditor.
- A party entered into the agreement with:
- The purpose of defrauding another person involved in a de facto relationship; or
- The purpose of defeating that person’s interests in relation to potential legal applications or with reckless disregard for their interests.
- The agreement is void, voidable, or unenforceable. This is one of the main reasons that can answer the question “Can a binding financial agreement be overturned?”.
- It is impracticable to carry out the agreement or a part of the agreement. This is due to circumstances that have arisen since the making of the BFA
- There has been a material change in circumstances related to the care, welfare, and development of a child of the marriage, and setting aside the agreement is necessary to prevent hardship to the child or a party with caring responsibility for the child.
- In the case of a financial agreement, a party engaged in unconscionable conduct.
- A payment flag is in effect on a superannuation interest covered by the agreement, and there is no reasonable likelihood of it being terminated.
- The agreement covers at least one superannuation interest that is “unsplittable” for the purposes of Part VIIIB.
Can a Binding Financial Agreement Be Overturned: Case Example
The case of Thorne v Kennedy [2017] involved an unenforceable binding financial agreement. There were two parties in this matter – a wealthy property developer, Mr Kennedy, and his ex-wife Ms Thorne – who met online. Ms Thorne had few assets and lived overseas, while Mr Kennedy had substantial wealth.
Shortly before their wedding, Mr Kennedy took Ms Thorne to a solicitor to seek advice on a binding financial agreement. The solicitor warned Ms Thorne that the agreement heavily favoured Mr Kennedy and advised against signing it.
Despite this, Mr Kennedy pressured Ms Thorne by threatening to call off the wedding if she refused to sign. Feeling vulnerable and dependent on Mr Kennedy, Ms Thorne reluctantly agreed to the agreement.
Following their separation, Ms Thorne received a small lump sum payment based on the terms of the binding financial agreement.
However, after extensive legal proceedings, the High Court ruled that Mr Kennedy had taken advantage of Ms Thorne’s vulnerability. The court found that the agreement had been influenced by undue pressure, illegitimate influence, and unconscionable behaviour. According to Section 90K, all of these acts are unlawful and can overturn a BFA.
Ms Thorne, being in a foreign country with no support system, relied solely on Mr Kennedy for financial and emotional support. Additionally, Mr Kennedy had made promises to assist in relocating Ms Thorne’s family to Australia. As a result, the court declared the binding financial agreement unenforceable and set it aside.
Tips on Overturning a Binding Financial Agreement
Step 1: Seek Legal Advice
Before taking any action, it is crucial to seek independent legal advice from an experienced legal practitioner. Lawyers can assess agreement and answer more questions aside from “Can a binding financial agreement be overturned”. They will analyse the circumstances and advise you on the best course of action based on your specific situation.
Step 2: Gather Evidence
To challenge a binding financial agreement, you will need to provide evidence to support your case. This may include financial statements, correspondence, witness statements, or any other relevant documentation that demonstrates the grounds for overturning the agreement.
Step 3: Mediation or Negotiation
In many cases of “Can a binding financial agreement be overturned”, it is advisable to attempt mediation or negotiation. This can help resolve disputes more amicably and reduce legal costs. Mediation is a fruitful way to explore potential alternatives or modifications to the agreement that may satisfy both parties.
Step 4: Initiate Court Proceedings
If mediation or negotiation fails, you may need to initiate court proceedings and request to overturn a binding financial agreement. The specific court process will depend on the type of agreement (pre-nuptial or post-nuptial) and the grounds on which you are seeking its overturning.
Step 5: Present Your Case
During the court proceedings, your legal representative will present your case, including the evidence gathered, to support your claim for overturning the agreement. The court will carefully consider the circumstances, evidence, and applicable laws before making a decision.
Step 6: Court Decision
The court will make a determination based on the evidence presented and the relevant legal principles. If the court finds it in your favour, it may set aside or vary the terms of the binding financial agreement.
Step 7: Finalising Financial Arrangements
After the court’s decision, it is essential to review and finalise your financial arrangements in light of the new circumstances. This may involve:
- Negotiating a new binding financial agreement; or
- Seeking further court orders to establish a fair and equitable division of assets.
How Can Our Family Lawyers Help?
We hope this article has helped answer the question “Can a binding financial agreement be overturned”. JB Solicitors can provide the necessary expertise and guidance when it comes to family law matters. This may include:
- Property settlement;
- Divorce and separation; and
- Binding financial agreements
- Changing or fixing a previous financial agreement
We have mediation and arbitration services available for disputed couples who want to have amicable agreements. Our family lawyers can also assess your situation and figure out the best legal strategy for your case.
Message a family lawyer today if you have more questions aside from “Can a binding financial agreement be overturned”.
