In the recent Family law case of Kapsalis the parties entered into a “Prenuptial Agreement” pursuant to s 90B of the Family Law Act 1975. The effect of the Agreement was that each party would retain their own property in the event that they separated after their marriage. They married 2 years later and were together for a total of 10 years, bearing 2 children.
The wife applied to the Court to set aside the Agreement aside. The Agreement left her with very little in the way of assets as a result of the separation. The wife said that prior to signing the Agreement she knew the husband had a lot of businesses with his brother, but she didn’t know much about them. In cross-examination the wife agreed that she had every opportunity to ask the husband for information about his assets before she signed the Agreement but that she had made no enquiries of him.
She agreed that she understood, when she signed the Agreement, that she would receive nothing if she and the husband separated. The Court held that a financial agreement is a private contract between parties. A party may enter an agreement, and such agreement is capable of being binding, with little or no knowledge of the other party’s financial position if they chose to do so. The fact that she signed the Agreement without knowing much about the husband’s financial affairs was her decision and not enough to set the Agreement aside.
The wife also submitted that the Agreement should be set aside because “circumstances have arisen since the making of Agreement relating to the care, welfare and development of a child of the marriage, and she would suffer hardship if the court does not vary the Agreement.
The Court held that it is not enough that children have been born of a marriage after the Agreement was made. The fact that the wife suffered hardship as a result of the Agreement was not enough to set it aside. The Court held that there is no law which enables a binding financial agreement to be set aside merely because it is unfair.
Is it very important that people are fully aware of what it means to sign a Prenup. A prenup which can come into effect years down the track after children are born can still be binding even if it is perceived as having an unfair result.