A recent case (Wylie v Wylie) provides assurance that Contracting Out Agreements (Prenups) protect your assets so you can enjoy your relationship without worrying about your future.

In this case, Kirsten and Shaune had signed a Prenup that they would each keep the assets that they had owned before the relationship and their own business interests as their separate property. After the relationship ended, Kirsten sold her successful veterinary clinic for a substantial sum of money. Shaune’s business had very little value. Shaune seeing dollar signs decided he wanted half of Kirsten’s money from selling her vet clinic. To do that, Shaune needed to have the Prenup set aside. He failed!

Shaune first went to the High Court claiming he was entitled to half of the sale proceeds of his wife’s business, partly on the ground they made an oral agreement during the marriage to merge their business interests. The High Court rejected his claim.

Shaune then appealed to the Court of Appeal, arguing, among other things, that the Prenup was void because he did not receive truly independent advice as required by the Property (Relationships) Act. The Agreement was prepared by Shaune’s usual solicitor on instructions given by both Shaune and Kirsten. Shaune received advice from his lawyer and Kirsten was referred to another lawyer before signing the Agreement.

Shaune’s legal team argued that he did not receive adequate or independent advice regarding Kirsten’s vet clinic from his lawyer and therefore, the Prenup was void for non-compliance with the requirements of the Act. The argument was that Shaune’s lawyer had met with both parties to obtain instructions and therefore Shaun couldn’t talk frankly about what he wanted.  As such, his lawyer had been compromised by the joint meeting and unconsciously influenced when advising him as to the wisdom of the Prenup.

Under the Act, each party to a Prenup must have independent legal advice before signing it. The signature of each party to the Prenup must be witnessed by an independent lawyer. The lawyer who witnesses the signature of a party must certify that they explained the effects and implications of the Prenup to that party before they signed it.

Advising on the effects and implications of the Prenup requires the lawyer to advise on the fairness of the Prenup and how far the Prenup deviates from the Act. The lawyer must advise on the wisdom of entering into the Prenup. In this case, the court considered that it is not uncommon for parties to engage the services of their usual solicitor to prepare the Prenup intended to give effect to their joint wishes. The receipt of such joint instructions would not normally disqualify the solicitor from being able to give independent advice to one of the parties with the other being referred to another solicitor for independent advice before either party signs the Prenup.

“The question is whether there is any impediment to the solicitor discharging his/her obligations to the party being advised and this will usually depend on whether there is any potential conflict of duty”. The court held that there will not be any conflict of duty if there is full disclosure of all the property owned by the parties. 

This is why I will always ask for all your bank statements, superannuation statements, personal loans & credit card debts, company shares, vehicles, Trust Deeds, addresses of properties owned and any other assets or liabilities owned by you and/or your partner. This ensures the Prenup will be binding.

In this case, the court held that they were not convinced that the acceptance of joint instructions had any influence on the impartiality of advice given by Shaun’s solicitor. In fact, Shaun confirmed that he had found it “frustrating” to have to listen to his lawyer work through the Prenup in detail when he said he could read and understand it himself perfectly well.

This case shows that Prenups provide assurance that your assets are protected for your future and your children’s future. It also shows how important it is to obtain a lawyer who will prepare a well drafted Prenup, obtain full disclosure and advise you fully on the wisdom of entering into the Prenup.

Feel free to contact me, Hayley Boud on 021 077 7785 for a free 15 minute phone call.