A recent case in Australia illustrates how that jurisdiction handles the matter. The remarkable thing about the case is that an appeal court took a view of the circumstances which would be wholly incomprehensible (one hopes) in a Scottish court. The fact that a later appeal reversed the decision makes the case only slightly less remarkable.
The case is cited as Thorne v Kennedy  HCA 49, although we do not know who the parties were because, according to the report,
"the names and some details of the parties were suppressed during the course of this litigation. That approach was generally followed on this appeal, including the use of pseudonyms to describe the parties".
We are used to cases being anonymised in reports by the use of initials. We have not quite got round to inventing names for the parties. The histories of the parties in this case make the choice of pseudonyms puzzling.
The parties met over the internet in 2006. Ms Thorne, who was from Eastern Europe, was living in the Middle East. She was aged 36. She had no assets. She had previously been married and divorced and had subsequently been in a four year cohabitation which ended when her partner moved to Kuwait for work. In contrast, Mr Kennedy was a 67-year-old Greek Australian property developer with assets worth between AUS $18 million and 24 million. He was divorced with adult children. One of the first things that he had ever said to Ms Thorne was that "if I like you I will marry you but you will have to sign paper. My money is for my children". About seven months after their meeting Ms Thorne moved to Australia to live with Mr Kennedy with the intention of being married. The wedding was set for 30 September 2007. On 8 August he instructed a solicitor to prepare a pre-nuptial agreement and on 19 September, 11 days before the wedding, he told her that they were going to see solicitors about signing the deed. He told her that if she did not sign then the wedding would not go ahead. He took her to an independent solicitor who was an accredited family law specialist and it was only during that appointment that Ms Thorne became aware of the contents of the agreement, by which time her parents and sister had been flown to Australia from Eastern Europe and accommodated for the wedding. Guests had been invited. The wedding dress had been made and the wedding reception had been booked.
The independent solicitor, not surprisingly, advised Ms Thorne against signing the agreement. It provided for maintenance of $4,000 per month during the marriage together with rent-free accommodation for her and her family in a property which had yet to be developed. Planning permission had already been refused.
According to the agreement, if there was separation within the first three years of marriage, with or without children, then Ms Thorne would get nothing at all and the accommodation rights would cease. If the separation occurred after three years without children then Mr Kennedy would only have an obligation to pay a single sum of $50,000. If he died when they were living together then she would be entitled to a property in the proposed development, together with $5,000 per month and a motor vehicle.
Bearing in mind the parties’ respective financial positions, this was an appallingly onesided and unfair agreement. The independent solicitor so advised her. On that same day, Mr Kennedy wrote to the independent solicitor saying that the agreement, with relatively minor amendments, should be signed that day, bearing in mind the fact that the wedding was only nine days distant.
The independent solicitor informed Ms Thorne in writing that it was the worst agreement which she had ever seen, that it was entirely inappropriate and that Ms Thorne should not sign it. Nevertheless, Ms Thorne signed the agreement just four days before the wedding. Very shortly after the wedding Mr Kennedy produced another agreement in substantially similar terms and again persuaded her to sign it, despite the independent solicitor’s renewed advice that she should not.
The parties separated slightly less than four years later, without children. During the course of the proof in which she sought to set aside the agreement, Mr Kennedy died and the case was continued by his two adult children as trustees of the estate.
The court at first instance agreed that the agreement should be overturned. There were various arguments presented to the court but the main one was in terms of s.90K of the Family Law Act 2000 which provided that the court may set aside a financial agreement if it was satisfied of matters including that "a party to the agreement engaged in conduct that was in all the circumstances, unconscionable".
A further ground of challenge was that Ms Thorne had been subject to undue influence. The court differentiated undue influence and unconscionable conduct by saying that in the former case the will of the innocent party is not independent and voluntary because it has been overborne. In the latter, the will of the innocent party is the result of "a disadvantageous position in which she is placed and of the other party unconscientiously taking advantage of that position".
The judge, at first instance, remarked that Ms Thorne had been in Australia only in furtherance to the parties’ relationship. She had left behind her life and minimal possessions. She brought no assets of substance to the relationship and if the relationship ended she would have nothing—not even a place in the community or a home. She would not be entitled to remain in Australia and had nothing to return to anywhere else in the world. The judge said "every bargaining chip and every power was in Mr Kennedy’s hands. Either the document, as it was, was signed or the relationship was at an end. The husband made that clear". Ms Thorne was entirely successful at first instance.
It is surely certain that the same result would apply in a Scottish court. However, when the case went to the first Appeal Court (the Full Court) the husband’s appeal was upheld because a finding of financial inequality could never provide a reasoned basis for duress and, in any event, the duress had not included threatened or actual unlawful conduct. The court said that Ms Thorne could not have been subject to undue influence because she had acquiesced in Mr Kennedy’s desire to protect his assets for his adult children. Mr Kennedy had not misrepresented his financial position and his determination that she should receive nothing after an early separation had always been made clear to her.
The matter was appealed to the Australian High Court who allowed the appeal in November 2017. Ms Thorne’s will, the court decided, had been overcome and, significantly, "an assessment of the willpower of a person is not an exercise of mathematical precision". Furthermore, the agreements were vitiated by Mr Kennedy’s unconscionable conduct because he had placed her at a disadvantage and also created urgency with which the agreement had to be signed. The circumstances surrounding the wedding had put further pressure upon her, as he was well aware, and he had taken advantage of her vulnerability.
Considering the issue in the light of s.16 of the 1985 Act it is surely unthinkable that a Scottish court would ever have countenanced any attempt to rely upon agreements such as we see in Thorne v Kennedy. The well-known test under s.16(1)(b) is that a party may challenge the agreement or any term of it "where the agreement was not fair and reasonable at the time it was entered into". It is certainly true that an agreement will not fail merely because it provides for an unequal division of assets—even a very unequal division—most recently affirmed in Bradley v Bradley  SAC (Civ) 29; 2017 S.L.T. (Sh. Ct) 201. But the agreement itself must have been fair and reasonable at the time it was entered into. Perhaps the broader difference between the Scottish and Australian policies is that whereas in Scotland we tend to look primarily at the agreement itself, the Australian way is to look at the attitudes and behaviour of the parties. Whether these two different policies would produce different results in a given set of circumstances may be open to doubt.