Examining the Legality of Prenuptial Agreements

Preface

Not so long ago, a spouse could not be certain that a prenuptial, or postnuptial, agreement would be considered binding in divorce. Now however, it is not unfair, a nuptial agreement carries decisive weight when divorcing spouses’ assets are divided, as was put in Prenuptial Agreements and The Presumption of Free Choice, Issues of Power in Theory and Practice. If you are navigating the complexities of divorce law, and require to seek guidance on the validity and enforcement of such agreements, consider seeking professional assistance, such as law dissertation help, to ensure your rights and interests are protected throughout the process.

Reform proposals have advocates for prenuptial agreements to be recognised and enforceable by statute, rather than leaving it at the discretion of the courts to decide on whether such agreements are fair and what weight should be given such agreements.

It does not come as a surprise that the issue concerning the enforceability of nuptial agreements has been a hot topic in family law and subjected to controversy. Many will likely take the view that a nuptial agreement defeats the traditional meaning of marriage, others may say that parties should to marriage should be free to make their choices concerning their assets, and this merely because there will almost always be two general views on something of this nature, usually ‘for and against’ arguments.

This thesis is now, however, concerned with whether the enforceability of prenuptial agreements in England and Wales is right or wrong, although references may be made to this. The purpose of this thesis is to identify the legal basis upon which nuptial agreements are enforceable, and draws a comparison with the issue in Australia.

Pre-nuptial agreements are not automatically enforceable in courts in England and Wales.

1. Sharon Thompson, Prenuptial Agreements and The Presumption of Free Choice, Issues of Power in Theory and Practice (Hart Publishing Ltd 2015) Preface
2. Catherine Fairbairn, Pre-nuptial agreements, House of Commons 2017 Accessed on 24 December 2020

Introduction

This thesis is concerned with the enforceability of prenuptial agreement in the jurisdiction of England, Wales and Australia. A court once described pre-nuptial agreements as a family law’s hot topic.

This thesis will seek to identify the current legal position on the enforceability of pre-nuptial agreements within England and Wales. The considerations shall involve evaluation relevant case law and legislation to draw a comparison of the position in England (and Wales) to that of Australia. And ultimately examine whether pre-nuptial agreements should be enforceable in England and Wales and Australia.

Pre-nuptial agreements are by partners that intend to marry for the purpose of avoiding financial orders dealing with apportionment of money and assets. Financial orders are available as relief to the parties of marriage should the marriage breakdown and ultimately be terminated. Take a deeper dive into Differentiating Fraud by False Representation and Breach of Contract with our additional resources.

A prenuptial agreement is not defined by statute in England and Wales, but rather by the interpretation of the courts. For the purposes of this dissertation, a nuptial agreement will be explained as an agreement that parties intending to marry may enter into, which governs, or intends to govern, the financial position of any future apportionment of assets should a breakup of the marriage occur.

It is also important to note, that an agreement purporting to have the same effect as a pre-nuptial agreement is available to couples, which is a postnuptial agreement which is an agreement entered into at some point after marriage, as opposed to before the marriage. A postnuptial agreement has the same aims and objectives of a pre-nuptial agreement, however.

In England and Wales, the primary legislation regulating marriage and relief in divorce proceedings is found in the Matrimonial Causes Act 1975.

1. NG v KR (Pre-Nuptial Contract [2008] EWHC 1532 (F) [36]

Historically, the courts in England and Wales have been extremely cautious as to approaching the enforceability of nuptial agreements and what they represent because of public policy. In contrast public perception is perhaps is more complicated as there is no uniform view on prenuptial agreements.

In Australia, the primary legislation regulating marriage and relief in divorce proceedings is found in The Family Law Act 1975.

Under s.90 (e) of the Family Law Act 1975, couples have the option to choose the requirements of the section of the Family Law Act 1975 which deal with how assets would be apportioned by the use of a valid prenuptial agreement. However, in a study conducted, it was established that, a small minority of 6% of Australian couples have a prenuptial agreement, which further means that. over a staggering 90% of Australian couples once separated would still be required to divide assets in accordance with what the Family Law Act 1975 defines as "just and equitable".

Before the decision of Supreme Court in Radmacher v Granatino, nuptial agreements were deemed enforceable by the Court of Appeal in Edgar v Edgar. Additionally, Baroness Hale, who is not a stranger to the family law, sitting in the Privy Council, is considered as a postnuptial agreement which is enforceable in Macleod v Macleod, further contending that, prenuptial agreements and postnuptial agreements were ‘very different’ to each other.

The Supreme Court in Radmacher turned this approach on its head. The court communicated that, a preference of terminology of ‘nuptial agreements’, encapsulating the financial agreements which are being made both prior to and after the date of the marriage. The impact of this decision is that the English courts will no longer draw a distinction between postnuptial agreements and prenuptial. As they both have the same aims and objectives as stated above. Accordingly, references to nuptial agreements herein shall refer to both the agreements of pre-nuptial and post-nuptial.

1. Law Commission, Marital Property Agreements – A Consultation Paper (Law Com No 198, 2011) [1.4].
2. Pre-nup or pre-yup: Pros and cons of prenuptial agreements Accessed 17 December 2020
3. [2010] UKSC 42
4. [1980] EWCA Civ 2
5. [2008] UKPC 64,
6. Ibid [36]
7. Radmacher v Granatino [2010] UKSC 42 [1]
8. Dalling Samuel (2013) Regulating Prenuptial Agreements: Balancing Autonomy and Protection , Durham theses, Durham University. Available at Durham E-Theses Online: Accessed on 30 December 2020

The main question of fact for which the research is conducted is:

1. What is the legal basis for the enforceability of nuptial agreements in England and Wales and Australia?

The sub-questions that arise are:

1. Why were nuptial agreements not enforceable prior to the case of Radmacher (formerly Granatino) v Granatino [2010] UKSC 42?

2. How does this compare to the Family Law Act 1975 provisions which set out the statutory provisions for enforceable nuptial agreements?

3. As a consequence of these legal developments, has the traditional definition of marriage changed in the two jurisdictions? If so, how?

4. Ultimately, should nuptial agreements be enforceable England (and Wales) and Australia?

It should be noted also that the matter referred to within this dissertation relating to divorce or breakdown of a marriage between opposite sex partners apply equally to same sex partners (also referred to as civil partners).

CHAPTER 1: NUPTIAL AGREEMENTS IN ENGLAND IN WALES

The History of Family Law

It has been suggested that there has been a substantial increase in the use of nuptial agreements.

1. Emma Hitchings ‘From Pre-Nups to Post-Nups: Dealing with Material Property Agreements’ [2009] Fam Law 1056, 1058.

Nuptial agreement was originally unenforceable on public policy grounds and nuptial agreements are still strictly speaking, not legally binding contracts. When a court now does attach weight to a nuptial agreement it does so, not based on the purported contact being legally binding, but based on taking the agreement into account as a circumstance of the case pursuant to s.25 of the Matrimonial Causes Act 1973.

There is a public policy that nuptial agreements cannot oust the jurisdiction of the court. The court has statutory duties and judicial discretion under the Matrimonial Causes Act 1973 and it is up to Parliament to create legislation acknowledging nuptial agreements as enforceable.

The enforceability of nuptial agreements was first considered (or at least it was first reported) in 1998. Ministers believed that the use of nuptial agreements should not limit to ‘pop and film stars’. Lord Justice Thorpe also expressed that nuptial agreements should not be reserved to the rich in a landmark decision of the Supreme Court. Notwithstanding this, the decision in Radmacher does protect the interests of rich who enter into such arrangement which seek to protect assets from division, but the courts expressed that nuptial agreements should not limited to couples that are rich.

Before the decision of the Supreme Court in Radmacher v Granatino [2010] UKSC 42, it was understood that it was only post-nuptial agreements that would have more weight than pre-nuptial agreements.

Key Legislation

The main legislation relating to divorce proceedings in England and Wales is the Matrimonial Causes Act 1973 which gives married couples rights in relation to what happens to the assets of the married couple, often referred to as ancillary relief.

Other relevant legislation includes:

1. Sharon Thompson, Prenuptial Agreements and The Presumption of Free Choice, Issues of Power in Theory and Practice (Hart Publishing Ltd 2015), 25
2. Home Office, Supporting Families: A Consultation Document (Cm 3922, 1998)
3. Colin Brown, ‘Prenuptial Deals Backed in Family Green Paper’ The Independent (London, 29 October 1998) < https://www.independent.co.uk/news/prenuptial-deals-backed-in-family-green-paper-1181308.html >accessed 22 December 2020
4. Radmacher v Granatino [2010] UKSC 42 [27]
5. MacLeod v MacLeod [2008] UKPC 64
6. Part 2 of the Matrimonial Causes Act 1973

• Married Women's Property Act 1882
• Domicile and Matrimonial Proceedings Act 1973
• Matrimonial and Family Proceedings Act 1984
• Matrimonial Causes Act 1857
• Family Law Act 1986
• Family Law Act 1996
• Civil Partnership Act 2004
• Marriage (Same Sex Couples) Act 2013
• The Civil Partnerships, Marriages and Deaths (Registration etc) Act 2019

Prior to the Matrimonial Causes Act 1973, the first statute to govern divorce was the Matrimonial Causes Act 1857.

Since the enactment of the Matrimonial Causes Act 1857, the law has substantially changed as there have been on-going developments to the statute that governs divorce. The alterations throughout the last century include; wife and husband being equal, which was adopted by the Matrimonial Causes Act 1923. The purpose of the Divorce Reform Act 1969 was to develop a settlement for incorporating a change about the views of the society after the Second World War. In this time, there appeared to be a substantial rise in the number of divorce cases. There were rising hopes from society for the case of divorce to be achieved more easily.

As per the Divorce Reform Act 1969, the legislative structure for divorce is consolidated with Matrimonial Causes Act 1973. The act and legislative structure is effective which refers that divorce cannot be achieved until the couples spend 12 months of their married life. There are different ground of divorce which are desertion for a continuous period of 2 years, unreasonable behaviour, adultery as well as the parties need to live apart for a continuous period of 2 years and the parties have to live apart for a continuous period of 5 years. s1 (1) of the Matrimonial Causes Act 1973 is considered as the ground of the petition of divorce and it further states that, ‘the marriage has irretrievably broken down’.

1. Law Teacher, Matrimonial Causes Act 1973, 2017
2. Section 1 of the Matrimonial Causes Act 1973
3. Law Teacher, Matrimonial Causes Act 1973, 2017 Accessed on 26 December 2020

Section 25 of the Matrimonial Causes Act 1973 provides the court discretion related to a nuptial agreement, when exercising its power in relation to ancillary relief. The primary consideration for the court under s.25 of the Matrimonial Causes Act 1973 is the welfare of any children who have not reached the age of 18.

The particular provision giving the court a wide discretion to take into account a nuptial agreement is s.25(1) of the Matrimonial Causes Act 1973 which states “It shall be the duty of the court in deciding whether to exercise its powers…to have regard to all the circumstances of the case…”. – Emphasis added.

Traditionally, nuptial agreements were not on the basis of the agreements that were against public policy. However, the courts then became willing to attach weight to nuptial agreements, as one of the circumstances to be taken into account (under s.25 of the Matrimonial Causes Act 1973) when deciding the division of assets.

The Key Cases

It is no surprise that as result of the absence of any legislation directly governing nuptial agreements, the enforceability of nuptial agreements has fallen into the hands of courts, from the Family Court to the Supreme Court, the highest court in the land.

The Privy Council of the High Court of Justice of the Isle of Man in the case of MacLeod v MacLeod [2008] UKPC 64, had decided that pre-nuptial agreements were not binding, whilst post-nuptial agreements were binding contractually.

However, the Supreme Court has now simplified, in Radmacher v Granatino [2010] UKSC 42, that the legal status of a pre-nuptial agreement and post-nuptial agreement are no different from one another as they both hold the same aims and objectives, but are merely entered into at different times.

The parties to a nuptial agreement cannot override the wide discretion of the court derived from the section 25 of the Matrimonial Causes Act 1973, to select the way to divide their assets and income on any claim for further financial remedy that a party can make. When considering a claim for financial relief, the court is however, it is required to consider the important factors set out in section 25 of the Matrimonial Causes Act 1973, which includes attaching decisive weight to a nuptial agreement as a ‘relevant circumstance of the case’. It further follows that, whether or not a court will apply decisive weight to a nuptial agreement is dependent on the circumstances of the cases, which was expressed and explained further in the landmark decision, the case of Radmacher v Granatino [2010] UKSC 42.

1. Section 25(1) of the Matrimonial Causes Act 1973
2. Catherine Fairbairn, Pre-nuptial agreements, House of Commons 2017 Accessed 24 December 2020

In Radmacher v Granatino [2010] UKSC 42, the Supreme Court was faced with the task of considering whether weight should be applied by a court to a nuptial agreement and if so, how much weight when the court was to exercise its power and wide discretion under section 25 of the Matrimonial Causes Act 1973. The Supreme Court held:

"The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to the agreement."

The main question is that what is the definition of fair for the purpose of a nuptial agreement?

In Radmacher the Supreme Court lay emphasis on the cases of White v White [2000] UKHL 54 and Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 (joint appeals) recognised that fairness should be defined, for the purposes of a nuptial agreement, by the following three principles:

Need. Fairness is important with a nuptial agreement that includes the specific terms for both the parties' housing and financial needs. The court should take into account a huge range of factors, including financial condition, earning capacity, the parties' ages and current standard of living while assessing the needs and preferences of the individuals during judgement.

Compensation. During the decisions making process by the court, it is necessary to identify the financial situation of the parties for understanding that is stronger as per their financial situation and according t that the responsibilities are divided between the parties. In such a case, fairness is necessary in the court to award an effective element of compensation to the party, who is financially weaker.

1. Section 25 of the Matrimonial Causes Act 1973
2. Radmacher v Granatino [2010] UKSC 42 [1] – [10]
3. Thomas Reuters, Nuptial Agreements: Overview 2017 Accessed 30 December 2020
4. Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 paragraph [139]

Sharing. There is a fairness and partnership in marriage where each partner will require being entitled with equal asset unless there is no such reason for contrary. One such reason is that the distinction between matrimonial property during the marriage as well as non-matrimonial property brought by one party into the marriage or inherited by one party during the marriage or an agreement requiring otherwise.

The nuptial agreement deals with the assets and income in the event of a breakup of the parties in a way that is consistent with the principles set out in White and Miller and it is likely the agreement that will be upheld by the court. This highlights the wide discretion a court have, in one case, a court may attach no weight to a nuptial agreement that is inconsistent with White and Miller, whereas in another cases, the court may make an divide assets in accordance with a nuptial agreement.

The court will require considering the guidance that are provided by the Supreme Court in Radmacher, as to what may be fair (or not). The Supreme Court further puts emphasis on the nuptial agreement, which is capable of altering what is fair.

Fairness test through three-stage

The court had set out a three stage test in order to assess the fairness of a nuptial agreement; this three stage test was laid by the court in Radmacher (at paragraph 75):

The nuptial agreement must have been freely entered into.

For the implication of the agreement, the parties must have full appreciation

In the prevailing circumstances, it is necessary to handle the arties fairly

Every stage of the test however, is not as simple as it may appear in the first instance.

1. White v White [2000] UKHL 54
2. Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 paragraph [138].
3. https://ca.practicallaw.thomsonreuters.com/5-521-8765?bhcp=1&
   contextData=%28sc.Default%29&firstPage
   =true&transitionType=Default Accessed on 30 December 2020

Agreement must be freely entered

On a voluntary basis, both the parties must be engaged with the agreement and it is free from the undue influence or pressure from outside. If there are issues related to fraud, misrepresentation, unconsciousness conduct, exploitation of dominant position, unfair advantages and evidence of duress, the agreement will be upheld by the court.

The court stated the following in in Radmacher:

“If an ante-nuptial agreement, or indeed a post-nuptial agreement, is to carry full weight, both the husband and wife must enter into it of their own free will, without undue influence or pressure, and informed of its implications. The third and fifth of the six safeguards proposed in the consultation document (see para 5 above) were designed to ensure this. Baron J applied these safeguards, found that they were not satisfied, and accorded the agreement reduced weight for this reason. The Court of Appeal did not consider that the circumstances in which the agreement was reached diminished the weight to be attached to it. In so far as the safeguards were not strictly satisfied, this was not material on the particular facts of this case.”

A court must also consider the emotional state of the parties at the time of making the nuptial agreement; this is an appropriate circumstance, together with other aspects such as the maturity, age and previous experience of relationships that parties have had. It may be inferred from these factors as to what, if any, pressures a party felt to sign the nuptial agreement. It is possible that if party was pressured to sign a nuptial agreement that little, or no weight, would be attached to it.

The court also stated the following in in Radmacher:

“The court may take into account a party’s emotional state, and what pressures he or she was under to agree. But that again cannot be considered in isolation from what would have happened had he or she not been under those pressures. The circumstances of the parties at the time of the agreement will be relevant. Those will include such matters as their age and maturity, whether either or both had been married or been in long-term relationships before. For such couples their experience of previous relationships may explain the terms of the agreement, and may also show what they foresaw when they entered into the agreement. What may not be easily foreseeable for less mature couples may well be in contemplation of more mature couples. Another important factor may be whether the marriage would have gone ahead without an agreement, or without the terms which had been agreed. This may cut either way.”

1. Radmacher v Granatino [2010] UKSC 42 [68]
2. Practical Family Law, Nuptial agreements: Overview Accessed on 30 December 2020

Parties must have a full appreciation of the implications of the agreement

At the time of singing a nuptial agreement, both parties should hold all of the material information to ensure they are able to make their desired decision, and the decision that they would reach in possession of all relevant information. For example, if a party misrepresents how the nuptial agreement shall distribute assets and the other party agrees to it, not holding all true and relevant information, which if provided, would likely have resulted in the party not agreeing to the nuptial agreement, the party to whom the misrepresentation was made cannot have full appreciation of the implications of the agreement.

This means that the parties should make a ‘full and frank’ financial disclosure, but it is not mandatory for a party to have full details of the other party's assets and income, if the party is fully concerned of the implications of the nuptial agreement.

Independent legal advice is strong evidence of a party's understanding of the implications of the nuptial agreement, though this is not a strict requirement as party’s have the right to represent them. The parties should also both intend that the agreement will conclude what will happen to assets and money in the event of divorce.

In the case of Radmacher, at paragraph 69 the court stated:

“…we consider that the Court of Appeal was correct in principle to ask whether there was any material lack of disclosure, information or advice. Sound legal advice is obviously desirable, for this will ensure that a party understands the implications of the agreement, and full disclosure of any assets owned by the other party may be necessary to ensure this. But if it is clear that a party is fully aware of the implications of an ante-nuptial agreement and indifferent to detailed particulars of the other party’s assets, there is no need to accord the agreement reduced weight because he or she is unaware of those particulars. What is important is that each party should have all the information that is material to his or her decision, and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end.” – Emphasis added.

1. Radmacher v Granatino [2010] UKSC 42 [72]
2. Practical Family Law, Nuptial agreements: Overview Accessed on 30 December 2020
3. Radmacher v Granatino [2010] UKSC 42 [69]
4. Radmacher v Granatino [2010] UKSC 42 [69]

Fairness is mandatory to hold the parties for their agreement in the circumstances of the Supreme Court guidance and the guidance is such as,

It is unfair to allow an agreement with the prejudice requirements of any child of the family.

The autonomy of the adults is mandatory to be maintained and on the basis of "the court knows best", it is necessary to override the terms "paternalistic and patronising".

It is not unfair of the agreement seeks to rung the non-matrimonial property including assets before marriage and the assets that the parties anticipate in receding from the third party during marriage through gift and inheritance.

In general terms, it may not be fair to sign the nuptial agreement if the marriage is lasting for long because of unforeseen changes in circumstances where upholding the parties is possible for the cases. This is more likely to be an issue where the parties to an agreement are a young couple starting married life with few assets than where, for example, a couple who have both been married previously each bring significant assets to a second marriage.

Fairness may also be applied by the stands of need, sharing identified and compensation in White and Miller, which can be explained further,

If one party has effective argument for compensation, then the agreement that ignores compensation is unfair to the case. For example, if one party loss their earning power, spouse then give up lucrative career to look after the children (paragraph 81).

1. Radmacher v Granatino [2010] UKSC 42 [77]
2. Radmacher v Granatino [2010] UKSC 42 [78]
3. Radmacher v Granatino [2010] UKSC 42 [79]
4. Radmacher v Granatino [2010] UKSC 42 [80]

If there is requirement of compensation, a nuptial agreement may prohibit further sharing of the asset with other parties (paragraph 82).

It is unlikely unfair if the impacts of the agreement would leave one party in a state of real need (paragraph 81).

International issues often arise in cases which are involved with the nuptial agreements. This is largely because of the type of people, who have traditionally entered into the nuptial agreements: with significant assets that may include international lifestyle, own property abroad and those who are nationals of the countries, where the agreements relating to ownership of marital property are prevalent, as in Radmacher.

In Radmacher, the Supreme Court explained that, the English courts will normally apply the English law during exercising its jurisdiction for making an order for the financial remedy under the Matrimonial Causes Act 1973, irrespective of the domicile of the parties or any foreign connection.

In Radmacher, the parties were nationals of France and Germany, executed a German pre-nuptial agreement and included a clause in the agreement by stating that German law should govern their matrimonial property in the future, which did not prevent the English court from dealing with the parties' finances on the breakdown of their marriage.

Future of nuptial agreements

The Law Commission introduced a project in October 2009 for examining the status and enforceability of pre-nuptial agreements, post-nuptial agreements and separation agreements. The Commission uses the term marital property agreements to refer to all three types of agreement. In January 2011, the Law Commission published a consultation paper discussing whether these agreements should be legally binding subject to certain safeguards and formation requirements (Law Commission: Marital Property Agreements (Law Com No 198) (11 January 2011)). The Commission utilised the term "qualifying nuptial agreement" for an agreement, following reform, be enforceable as a contract provided certain conditions are met. For more detail, Legal update, Law Commission consults on whether pre-nups and post-nups should be enforceable in the system. In September 2012, a supplementary consultation paper was published (Law Commission: Matrimonial Property, Needs and Agreements (Law Com No 208) (11 September 2012)). In February 2012, the Law Commission extended its project for further reform of the law, related to the needs and the legal status of non-matrimonial property.

1. Radmacher v Granatino [2010] UKSC 42 [03] – [108]

Under Matrimonial Property, Needs and Agreements project on 27 February 2014, it is possible to publish the final report by the Law Commission, where draft nuptial agreements bill (Nuptial Agreements Bill) (Law Commission: Matrimonial Property, Needs and Agreements (Law Com No 343) (27 February 2014)) is also developed. The nuptial agreements will continue to be treated successfully as a "relevant factor" under section 25 of the Matrimonial Causes Act 1973 and it is subject to the fairness test, set out in Radmacher. The court would be prevented for making final judgements in terms of qualifying nuptial agreement. Hence, the report recommends that qualifying the nuptial agreements are necessary with the courts power for making financial orders on dissolution or divorce.

What is the legal basis for the enforceability of pre-nuptial agreements in England and Wales

The legal basis upon which a nuptial agreement is enforceable in England and Wales is a combination of statute and common law. In particular, the currently basis upon which a nuptial agreement can be enforced is s.25 of the Matrimonial Causes Act 1973 and the landmark decision made by the Supreme Court in Radmacher v Granatino [2010] UKSC 42.

Though nuptial agreements are enforceable in England and Wales, they are not automatically enforceable. How much weight a court is to apply to a nuptial agreement is decided by the factors set out in Radmacher.

1. "https://uk.practicallaw.thomsonreuters.com/
   0-537-9713?originationContext=document&transition
   Type=DocumentItem&contextData=(sc.Default)&firstPage=true" Accessed on 30 December 2020
2. Accessed 30 December 2020
3. Accessed on 30 December 2020

The primary factors the court shall have regard to when considering, which create the legal basis upon which a nuptial agreement can be enforced, can be summarised as follows. The nuptial agreement must be voluntarily agreed to, it must be fair, the parties need to have a full appreciation of the implications of the agreement and it must be fair to uphold the parties to their agreement in the circumstances prevailing.

Before to the Supreme Court decision in Radmacher v Granatino, nuptial agreements were deemed enforceable by the Court of Appeal in Edgar v Edgar. In Edgar, Lord Justice Ormrod said:

“To decide what weight should be given in order to reach a just result to a prior agreement not to claim a lump sum, regard must be had to the conduct of both parties leading up to the prior agreement, and to their subsequent conduct in consequence of it … Important too is the general proposition that formal agreements properly and fairly arrived at with competent legal advice should not be displaced unless there are good and substantial grounds for concluding that an injustice will be done by holding the parties to the terms of their agreement.” – Emphasis added.

In Edgar, the court proceeded on the basis that it must consider the entire circumstances related to the case as required by statute, the same reason the court were able to reach the decision in Radmacher. However, the court developed the law further in Radmacher by clarifying that the legal status’ of pre-nuptial agreements and post-nuptial agreement were not different. The court more importantly developed the law to clarify the circumstances in which an enforceable nuptial agreement may be made and what constitutes ‘fairness’ for the purpose of a nuptial agreement.

The courts’ decision in Radmacher has been described as being ‘a new respect for autonomy’. The courts view now as to nuptial agreements, is that the court should not interfere with a lawful agreement entered into by adults freely, subject to fairness and the needs of the parties. It could be said that this development derives from the rising use of nuptial agreements and a shift on public policy as it used to be the case the nuptial agreements were not enforceable on public policy grounds.

1. Radmacher v Granatino [2010] UKSC 42 [75]
2. [2010] UKSC 42
3. Section 25 of the Matrimonial Causes Act 1973
4. Sharon Thompson, Prenuptial Agreements and the Presumption of Free Choice (Hart Publishing 2015), Contents

Chapter 2: NUPTIAL AGREEMENTS IN AUSTRALIA

History of family law in Australia

Nuptial agreements are known are "binding financial agreements," in Australia and first became enforceable in Australia in 2000 with the enactment of the Family Law Amendment Act 2000 which brought amendments to Part VIIIA of the Family Law Act 1975.

In 1929, the House of Lords held that, an agreement could not exclude the power of the courts, which had existed since 1857, for making the financial adjustment between the parties during the breakdown of a marriage. The agreement might be taken into account when the court quantifies the amount of maintenance but it would not be binding. Section 87(1)(k) of the Matrimonial Causes Act 1959 modified that principle by empowering a court to "sanction" pre-nuptial or post-nuptial agreements concerning property distribution or maintenance. That Act was repealed and replaced by the Family Law Act, which introduced a regime for registration of certain types of maintenance agreements and a regime for certain other maintenance agreements to be approved by the court.

On 27 December 2000, the Family Law Act 1975 was amended to "encourage people to agree about the distribution of their matrimonial property and thus give them greater control over their own affairs, in the event of marital breakdown". The amendments to the Family Law Act 1975 introduced Pt VIIIA, which allows couples to make regulated financial agreements.

Australia has ‘no-fault divorce’ ground in which the only ground for divorce is claim that the marriage has irretrievably broken down and that the parties have been separated for at least 12 months. This is enacted under the Family Law Act 1975.

1. Mediation Institute, Thorne v Kv ennedy Accessed on 03 January 2021
2. Thorne v Kennedy [2017] HCA 49 [17]
3. Section 48 of the Family Law Act 1975

Then parties may still live together, but be considered as separate if the parties no longer consider themselves to be in a relationship, it is not a requirement, to meet the separation criterion that the parties have physically lived part.

There is effective jurisdiction of the federal Circuit Court of Australia to deal with the cases of dissolution of marriage or divorce under the family Law Act 1975. Granting divorce does not determine the financial support, property distribution and the arrangement of the children, as it simply determines the end of marriage.

The Matrimonial Causes Act 1961 is continued with the fault based system under the state authority. Though the Commonwealth had the power since federation in 1901 and it is also effective to ensure maintenance and custody when the Matrimonial Causes Act 1961 came into operation.

Under the Commonwealth law a spouse establish one of the 14 grounds for divorce set out in the Matrimonial Causes Act 1961, including desertion, adultery, habitual drunkenness, cruelty, imprisonment and insanity. The Matrimonial Causes Act 1961 was replaced by the Family Law Act 1975.

In reality, the system was very expensive and humiliating for the spouses, necessitating appointment of barristers, often private detectives, collection of evidence, obtaining witness statements, photographs and hotel receipts, etc. Failure to prove a spouse's guilt or wrongdoing would result in a judge refusing to grant a divorce.

Australia is a fair country with equal distribution which further means that the net wealth is not split equally as community properly in case of divorce or death of spouse. The courts have the owner to take into account the statutory factors to determine the practice of "just and equitable" so that division of wealth can be managed well. The division of the property for wife is about 55% to 65%, if it is in favour of economically weaker spouse.

Key Legislation

1. Section 49 of the Family Law Act 1975
2. The Matrimonial Causes Act 1959
3. Marg Harrison, Family Law Briefing Accessed on 30 December 2020
4. Australian Law Reform Commission Report, 30 April 2019 Accessed on 30 December 2020

In Australia, a prenuptial agreements are legally binding contracts recognised by legislation, being the Family Law Act 1975 and are referred to in such legislation as Binding Financial Agreements (which will be referred to as prenuptial agreements).

A prenuptial agreement is a legally binding financial agreement between two people who are planning to get married and governs how assets and money would be distributed in the event of a divorce, essentially, a prenuptial agreement in Australia has the same aims and objectives as nuptial agreements in England and Wales.

The Family Law Act 1975 set outs specific requirements that a prenuptial and post nuptial agreements (collectively referred to as nuptial agreements) must comply with to be binding and enforceable. Section 90B of the Family Law Act 1975 deals with prenuptial agreements whilst Section 90C of the Family Law Act 1975 deals with postnuptial agreements. Nuptial agreements are governed by ss.90B to 90KA of the Family Law Act 1975.

The strict requirements for a nuptial agreement to be legally binding in Australia are:

1. Nuptial agreements must be in writing.

2. Both parties to the nuptial agreement must obtain independent legal advice before signing the nuptial agreement.

3. The legal advice obtained by each party to the nuptial agreement must be provided by a lawyer practicing in Australia.

4. Each party to the nuptial agreement must have voluntarily signed the prenuptial agreement (free from influence or duress).

5. The nuptial agreement must be provide complete disclosure of both parties financial position.

There are circumstances in which a nuptial agreement will not be enforced in Australia, in addition to failing to comply with the requirements of the Family Law Act 1975. Specifically, s.90K of the Family Law Act 1975 sets out the circumstances in which a court may set aside a nuptial agreement.

1. Ss.90B – 90KA of the Family Law Act 1975

A court may make an order setting aside a nuptial agreement or a termination of the nuptial agreement if and only if, the court is satisfied that:

a) the agreement was obtained by fraud (including non-disclosure of a material matter);

b) a party to the agreement entered into the agreement:

for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors of the party; or

with reckless disregard of the interests of a creditor or creditors of the party a party (the agreement party) to the agreement entered into the agreement:

for the purpose, or for purposes that included the purpose, of defrauding another person, who is a party to a de facto relationship with a spouse party; or

for the purpose, or for purposes that included the purpose, of defeating the interests of that other person in relation to any possible or pending application for an order under section 90SM, or a declaration under section 90SL, in relation to the de facto relationship; or

with reckless disregard of those interests of that other person; or

the agreement is void, voidable or unenforceable; or

in the circumstances, which have arisen, since the agreement was developed, it is impracticable for the agreement or a part of the agreement to be carried out; or

since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (2)), a party to the agreement will suffer hardship if the court does not set the agreement aside; or

in respect of the making of a financial agreement—a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable; or

1. Section 90K of the Family Law Act 1975

a payment flag is operating under Part VIIIB on a superannuation interest covered by the agreement and there is no reasonable likelihood that the operation of the flag will be terminated by a flag lifting agreement under that Part; or

The agreement covers at least one superannuation interest that is an unsplittable interest for the purposes of Part VIIIB.

The circumstances in which a court may set aside nuptial agreements can be summarised as follows:

1. Children – it may be set aside if the agreement is not relevant with the future of the children

2. Non-disclosure – If a party does not disclose the full extent and value of their assets at the time when the prenup was drafted and signed, it may be set aside.

3. Unreasonable Pressure – it is unfair if a party unreasonably pressures or coerces the other party in signing the agreement, and it may be set aside.

4. Last Minute Decision – If a party requires the other to sign the agreement shortly before the wedding as a condition of the wedding continuing, it may be set aside.

5. Unfairness – it may be set aside if the agreement is not equitable (fair).

Key Cases

The case of Thorne v Kennedy [2017] HCA 49 has been described as landmark decision by lawyers in Australia.

This case concerned an eastern European woman, Ms Thorne, who signed a prenuptial agreement on the evening of her marriage with a wealthy Australian property developer named Mr Kennedy.

This appeal is concerned with the financial agreement, one is pre-nuptial agreement and other is post-nuptial agreement and these agreements are developed under Pt VIIIA of the Family Law Act 1975 (Cth). The agreements were made between the parties, Mr Kennedy and his fiancée, Ms Thorne. The partied met each other through an online website and they were engaged. Ms Thorne came to Australia after leaving her life and other obsessions and in this stage, if the relationship ended, she would have nothing in future, including no such home, no place to live, no social community, no visa and no job, which raise the issue for her to survive. The pre-nuptial agreement was signed, at the insistence of Mr Kennedy where Ms Thorne was given legal advice during the wedding circumstances, and she is advised that she should not sign the agreement for divorce.

1. Anneka Frayne, Australia: Prenuptial agreements on shaky ground after High Court decision 2018 < https://www.mondaq.com/australia/family-law/673252/prenuptial- agreements-on-shaky-ground-after-high-court-decision> Accessed 01 January 2021

After four months of wedding, the couple have been separated and three years later the marriage was over. Ms Thorne applied to the court for seeking the nuptial agreement in order to get financial assistance and environment to live. The nuptial agreement is overturned and she was awarded with the settlement of $1.24 million.

Mr Kennedy died, but his estate, with two of his children as executors, is continuously fighting against Ms Thorne's claim for getting a bigger share of his wealth. The Federal Court found in her favour on the basis that the prenup was conducted under duress contrary to the requirements of the Family Law Act 1975 and pursuant to s.90K of the Act, set aside the nuptial agreement, on appeal by Mr Kennedy’s estate, the matter ended up in the High Court.

The High Court decided that the nuptial agreement should be set aside for unconscionable behaviour and duress.

If there is fraud information, the agreement cannot be developed and it was made under duress, by mistake, by virtue of undue influence. There are other issues such as if one spouse is at a disadvantage and the agreement run on the contrary, as well as impracticable agreement, material changes, child hardship, which hampers the development of the agreement.

The landmark case of Thorne v Kennedy, [2017] HCA 49, was later evaluated in both the cases in 2019. In Chaffin v Chaffin [2019] FamCA 260, the court set aside the prenuptial agreement while in Delrio v Jindra [2019] FCCA 1186 the court enforced it. In both the cases, the weaker parties were represented by an independent counsel, and each of whom recommended that, their client should not sign this agreement.

Under Chaffin, the court further determined that, the weaker party is subject to special disadvantage which may affect the ability of Ms Thorne to make the suitable judgements with her best interest so that the other party can take advantage. However, there is no such special disadvantage under Delrio

CHAPTER 3: DRAWING A COMPARISON BETWEEN THE JURISDICAITONS

The enforceability of nuptial agreements in England, Wales and Australia

Nuptial agreements are legally binding and enforceable in Australia under statute. State (the Family Law Act 1975) seeks to not only recognise nuptial agreements but govern such agreements to the extent that the legislation sets out a checklist of what must be complied with for a nuptial agreement to be enforceable and setting out the conditions under which the court may set aside a nuptial agreement. The Australian courts still have a degree of discretion when interpreting the legislation, and in particular interpreting s.90K of the Family Law Act 1975. For example, a circumstance where a court may set aside a Nuptial Agreement, if the agreement was entered into due to unconscionable behaviour, which raises the question, what is unconscionable behaviour? The courts have been faced with interpreting this and did so in Thorne v Kennedy [2017] HCA 49.

The way in which nuptial agreements operate in Australia is more conclusive that the way in which such agreements operates in England and Wales.

In England and Wales, nuptial agreements are not legally binding agreements and are not recognised by statute. A court however has a statutory duty under s.25 of the Matrimonial Causes Act 1973 to ‘consider all the circumstances of the case’ which includes taking into consideration a nuptial agreement and consider what, if any, weight should be involved to such agreement.

There is no presumption in England and Wales that a prenuptial agreement will be enforceable, though if a nuptial agreement does follow the guidance laid by the court, a court should not interference with the autonomy of the adults who freely enter into a nuptial agreement which is regarded as a fair arrangement.

1. Radmacher v Granatino [2010] UKSC 42 [75]

The core difference between the enforceability of nuptial agreement in England, Wales and Australia is that nuptial agreements are not legally binding in England and Wales and a court may, in exercising its wide discretion make an order to the effect of a nuptial agreement. In contrary, a nuptial agreement is recognised by statue as legally binding in Australia in which there is a presumption that such agreements will be enforceable so long as they do not contrive the stator requirements of such agreement.

Notwithstanding the differences as to the basis upon which a nuptial agreements can be enforced in the two jurisdictions, the rationale behind the enforceability of nuptial agreements in both these jurisdictions is not that far apart. The Courts of England and Wales, similar to the statue of Australia, recognise that the adults should be able to freely and fairly decide how assets are distributed and the circumstances in which such agreement should not be enforced.

The decision of the Supreme Court in Radmacher, similar to s.90K of the Family Law Act 1975, recognises that a nuptial agreement should not be enforced if, inter alia, it is entered into due to duress, unconscionable behaviour or if it simply unfair. There is almost a uniform approach between the jurisdictions as to the circumstances in which a nuptial agreement may not be enforceable, save for the fact that it is the common law in one jurisdiction, and statute in the other, upon which nuptial agreements can be enforced.

Should nuptial agreements be enforceable?

Nobody gets married with the thought of later divorcing their partner in which case there undoubtedly many couples who do not enter into a nuptial agreement.

Nuptial agreements should be enforceable in Australia, based on compliance with the relevant provisions of the Family Law Act 1975 and enforceable in England and Wales having complied with the test laid by the court in Radmacher.

Whether nuptial agreements should be enforceable from a moral perspective as opposed to a legal perspective is perhaps a different and more complex matter as there will be many different views of individuals on the subject.

As the court expressed in Radmacher, the autonomy of adults should be respected, adults should be able to freely enter to into a nuptial agreeable which is enforceable so long as it is fair, within the meaning of fair given in Radmacher; and this approach is consistent with public policy and the legislation in England and Wales and law of equity. In Australia, nuptial agreements are enforceable under statute.

There benefits to nuptial agreements, such as certainty as to how assets would be distributed in the event of a divorce. It could be said that there are also disadvantages to a nuptial agreement, such as the agreement detracting from the common societal view that marriage is a ‘50/50’ relationship and that nuptial agreements are unromantic and unfair.

It is possible that views on this matter may be impacted by the meaning of marriage in different religions which is very relevant as England, Wales and Australia are very diverse places. Overall, having regard to the key legislation and key cases referred to in both jurisdictions, it does not appear that the development of nuptial agreements have impacted the traditional meaning of marriage.

Equally, it could be said that marriage is a 50/50 relationship and a nuptial agreement can defeat the objectives of a marriage by considering what should happen in the event of divorce.

Nuptial agreements should be enforceable provided they are regulated, as per the test laid by the court in Radmacher and the provision set out in the Family Law Act 1975. If a party freely wishes to enter into a nuptial agreement which does not put them to an unfair disadvantage in the event of a divorce, the parties should have the free choice to do so and courts should have regard to the wishes and intentions of the parties without undue intervention.

Conclusion

The development of nuptial agreements in England, Wales and Australia is a very interesting topic and remains a hot topic in family law.

Take a deeper dive into Examining the Impact of Section 8 with our additional resources.

Nuptial agreements are legally binding in Australia governed by statute; in contrast, such agreements are not binding or recognised by statute in England and Wales, but rather the common law developed by the courts.

1. Martin Lane, Are nuptial agreements fair or unromantic? Accessed on 03 January 2021

Nuptial agreements were enforceable in some circumstances in England and Wales before the decision in Radmacher pursuant to, but Radmacher laid a conclusive test which governs nuptial agreements.

The reasons in which nuptial agreements will be given more weight by a court in England and Wales, and the reasons that such agreement may be disregarded, are very similar to those set out in the Family Law Act 1975. A logical approach, similar to the principles of contract law, is applied to nuptial agreements in both jurisdictions, such as matters relating to misrepresentation, duress and unfairness.

Despite the developments of nuptial agreements, it does not appear that the so called traditional definition of marriage has changed in either jurisdiction; parties merely have a higher degree of control of how the assets are required to be distributed during the case of divorce.

Nuptial agreements should be enforceable so long as they are regulated to ensure equity prevails and to give respect to the autonomy of adults choosing to enter into a nuptial agreement.

Bibliography

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Law Commission, Marital Property Agreements – A Consultation Paper (Law Com No 198, 2011) [1.4]

Legislation

The Matrimonial Causes Act 1959

Family Law Act 1975

Matrimonial Causes Act 1973

Cases

MacLeod v MacLeod [2008] UKPC 64

Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 paragraph [139]

White v White [2000] UKHL 54

Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 paragraph [138]

Thorne v Kennedy [2017] HCA 49

Radmacher v Granatino [2010] UKSC 42

NG v KR (Pre-Nuptial Contract [2008] EWHC 1532 (F) [36]