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Undue influence as a basis for setting aside a financial agreement

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Undue influence as a basis for setting aside a financial agreement

Description: The decision in Saintclaire is an example of an applicant failing to establish that a financial agreement should be set aside on the basis of undue influence.

Introduction

Financial agreements enable parties to a marriage – but not only parties to marriage – to enter into a private agreement in relation to property and maintenance. The agreements binds not only the parties, but also the courts by removing its power to make orders with respect to the matters dealt with in such agreements.

Of course, the court may set aside a financial agreement if the applicant is able to prove any of the grounds for doing so. One such basis for setting aside is “undue influence.” The decision in Saintclaire v Saintclaire [2015] FamCAFC 245 is an example of case where a party sought to have an agreement set aside on the basis for undue influence, but failed.

Background

This matter was an appeal from against Ryan J’s decision to have a financial agreement set aside. The parties entered into the agreement five months before they married, but the wife sought to have the agreement set aside. She relied upon undue influence as a ground for setting aside the agreement. In particular, the wife alleged that this ground had been established on the basis that:

  • She had been diagnosed with post-natal depression;
  • She was in debt; and
  • The husband was abusive and threatening.

The Full Court’s Reasoning

The Full Court allowed the husband’s appeal on the basis that the wife had failed to establish undue influence. If the agreement is to be set aside on the basis of undue influence, then undue influence must be proved by either evidence or presumption. This requires the wife to prove that either:

  • “…in making the agreement, she was not exercising her free and independent will” or
  • her relationship with the husband “…involved the exercise by him of dominion or ascendancy over her will and a concomitant dependence by her upon him or subjection to his will.”

The Full Court found that the wife had failed to satisfy either requirement. The parties entered into a “formal agreement” under NSW de facto legislation. There was no suggestion that this agreement was affected by undue influence. The wife was “financial professional of considerable experience.” The agreement was negotiated by solicitors for each party over a period of seven months. The wife’s solicitor was unable to lead evidence that the wife had either failed to understand the terms of the agreement. Nor was the wife’s solicitor able to lead evidence that she was pressured into the agreement. The wife’s general practitioner and psychiatrist did not lead evidence to support the wife’s case. Moreover, the Full Court determined that the wife had recovered from her post-natal depression 11 months prior to entering into the agreement. For these reasons the Full Court allowed the husband’s appeal.

Final Thoughts

The decision in Saintclaire is instructive in that it outlines a set of factual circumstances under which the court may refuse to set aside a financial agreement on the basis of undue influence.