A recent case in the family courts has brought up issues around the concept of “duress” when it comes to signing an agreement. So let’s take a look at the slightly different, related concepts of “duress”, “undue influence” and “special disadvantage”, all of which the wife raised in a recent case.
The case of Scott & Scott (court-issued pseudonyms) was a dispute over a Binding Financial Agreement (BFA). The wife argued she had been subjected to “duress” and “undue influence” and had felt pressured to sign the BFA. She also argued she suffered from a “special disadvantage” that the husband had taken advantage of. As a consequence, she felt she signed the BFA under duress. She asked for the BFA to be set aside and other property orders made. However, her applications were eventually dismissed.
The danger zone
In relation to BFAs, the colloquial expression for duress is “ink on the wedding dress”. It refers to situations where partners have attempted to get future spouses to sign BFAs days or weeks before a wedding (or even, in one matter, on the way to the wedding venue). Courts see this is a sign of possible pressure to on a partner to “sign or have the wedding called off”.
As with reaching any agreement, negotiations take time and parties need time to reflect on the decisions they are about to make. In family law, best practice also demands financial documents are exchanged for transparency reasons. This isn’t done overnight, which is why experts warn of a “danger zone” of signing a BFA within six months of a wedding.
Each party must have enough time to gather information and potentially consult with lawyers several times. In the case here, the husband and wife’s BFA had been refined over three years of negotiations between them. It was hard for her to argue that a gun was held to her head to finally make her sign a BFA whose terms she was unhappy with.
And unless you are actually in that “danger zone”, it can be hard to succeed with a duress argument for some other reason, such as feeling under threat of violence.
Duress due to threats
We recently discussed duress in relation to reopening a property settlement, noting how difficult it is to prove you felt forced or pressured to sign an agreement. In a case mentioned in that blog, the court said that proving duress means proving more than “a sense of constant harassment”. Rather, a person has to prove that they actually felt fear for their life if they did not sign on the dotted line. And that fear has to be more than a subjective perception on the person’s part—it has to be objectively “reasonable” to others. The same principles applied in this case.
The wife’s arguments about duress
In asking the court to set aside her BFA, the wife said she’d signed the agreement under duress since she was the victim of family violence perpetrated by the husband. She said she was a vulnerable party, at significant disadvantage, with inferior bargaining power.
However, while agreeing with the wife that “two core complaints of actual physical violence” had occurred, the judge found she didn’t suffer from any significant disadvantage in these financial negotiations and hadn’t been taken advantage of by the husband.
The court found the wife admitted she was “highly motivated” to achieve the agreement:
It is difficult, if not impossible, to reconcile the wife’s admitted eagerness to enter the agreement with her alleged reluctance to do so.
“Undue influence” argument
The judgment discussed how there’s a blurred line between “duress” and “undue influence”. With undue influence someone’s judgment has been actually altered by the will of another person. Unlike with duress, the pressure doesn’t have to be “illegitimate or improper”, but the person’s judgment has to become “markedly substandard” so that they can’t make rational decisions.
According to the judge, determining if undue influence has occurred includes looking at things like:
- The opportunity for negotiation
- The emotional circumstances in which the agreement was entered
- Whether any threats were made
- If there was time for reflection
- The parties’ relative finances
- The parties having received independent legal advice and had time to consider it
But “undue influence” didn’t apply here because the wife was highly motivated to achieve the agreement, was so heavily involved in its creation and negotiation, shared control over the spouses’ corporate and trust arrangements, and had at least six weeks to consider the agreement before the spouse signed–among other reasons.
“Unconscionable conduct” argument
This is when someone has to have a “special disadvantage” which other people might have take advantage of, lawfully or not. A party has to be seriously weaker in negotiations, not just at a power differential. The judge noted that this could mean if someone’s decision-making was affected by “illness, inexperience, impairment, financial need, or strong emotional dependence upon or attachment to the husband”, among other things.
But here again the wife was completely unsuccessful and her case was dismissed. To read more about this case, which also covers other issues, you’ll find the whole judgment here.
Do you need help with a Binding Financial Agreement or with some other family law matter? Please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Legal Services on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Legal Services.
