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Prenuptial and post-nuptial agreements in the High Court

December 4, 2017 - 22:06 -- Admin

So, y’all would have noticed that I don’t post much on this blog any more, but I still occasionally blog over at Opinions on High, the Melbourne Law School blog covering the decisions of the High Court of Australia, where I am one of the editors (along with Professor Jeremy Gans).

I’ve just written a post on the High Court’s recent decision in Thorne v Kennedy [2017] HCA 49, in which the High Court set aside pre- and post-nuptial agreements made by an immigrant bride in deeply disadvantageous circumstances. Skepticlawyer (@_HelenDale) has described it on Twitter as combining “family law, behavioural economics, & ‘libertarian paternalism’ in just the right doses”. Here’s a taster:

There is a difficulty with the notion that parties to a marriage will effectively plan for division of property at the outset of the marriage (whether in a pre- or postnuptial agreement). The problem is that when people marry, most parties don’t expect to divorce. In Richard Thaler and Cass Sunstein’s book Nudge (2005), it is observed that, although people are very good at anticipating the divorce rate of other couples, almost all couples are certain or almost certain that they personally will not divorce. We all like to think that our relationship are stable, and so we are bad judges of our own chances of relationship success, although we are good at judging the success of others. If we enter into a pre- or postnuptial agreement, our decisions may not be wise.

But it is also difficult to sort out entitlements after a relationship has broken down, because of what Thaler and Sunstein call the ‘self-serving bias’ problem. When a relationship breaks down, people tend to see things differently, and think that they were entirely in the right, and the other party is entirely in the wrong. A will say, ‘I never intended B to have an interest in my house!’ and B will say, ‘But A told me he’d share the house with me!’ We all suffer from this. As Thaler and Sunstein point out, after a World Cup match between Brazil and Italy, ask the fans from each country in whose favour the referees were biased, and the answers will be quite different. This is why family law cases are messy, protracted and expensive.

Go read the whole post! You know you want to!