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Published: Fri, 02 Feb 2018
Family and welfare law
Family and Welfare Law
“It is hard to see why adults should not be free to contract at the point of marriage for the financial consequences of any divorce, subject to inbuilt fairness tests. There would need to be provision for children if any; and a definition of what assets were to be included. Now that there are so many divorces, it seems anachronistic to hold to the principle of the old law that parties may not oust the jurisdiction of the court lest they become burdens on the state or are cheated out of their due support”
To what extent do you agree with this statement?
A starting point is that pre-marital agreements are not currently enforceable within Wales or England, but there is now a greater desire concerning the cost of litigation. The courts themselves give very little weight normally to any kind of prenuptial agreement and have in the past viewed the enforcement of such agreement to be against public policy.
The current law concerning pre nuptial agreements results from a decision as to the status of marriage more than 75 years ago. It was in 1929 that Hyman v Hyman settled the principle that public policy should preclude enforcement of pre nuptial agreements that provided for the eventuality of a divorce. The House of Lords declared that such agreements violated public policy in that (a) it would weaken the emotional sanctity of marriage if people entered into it with a view to what should happen if the marriage were to fail and (b) the parties should not be permitted to oust the jurisdiction conferred exclusively upon the courts to dissolve or alter their marital status.
In F v F (Ancillary Relief: Substantial Assets), it was stated that a prenuptial agreement is of little importance as the distribution of assets in accordance with the statutory formula and not influenced by any contractual terms. Judge Thorpe confirmed in this case that there was very little significance of pre-nuptial agreements, the rights and responsibilities of those couples whose financial affairs are regulated by statute cannot be influenced by contractual terms, which were devised for the control and limitation of standards that were intended to be of universal application throughout society.
In Beach v Beach the wife received part proceeds of the sale of the couple’s farm, the husband was subsequently made bankrupt and the case concerned whether the husband was entitled to a lump sum payment contrary to the separation agreement. The court stated that the wife had not received her full entitlement under the post nuptial agreement therefore, the husbands claim was rejected.
The court refused to enforce a prenuptial agreement in N v N (Jurisdiction: Pre-nuptial Agreement), stating that even if one tries to divide some parts of the agreement, it avoids the fundamental proposition that each part of this agreement was entered into before the marriage, therefore, the public policy argument continues to apply.
In M v M (Pre-nuptial Agreement) the court was prepared to take into account the couple’s prenuptial agreement, which reduced the wife’s final award and in K v K the court held that the wife was limited to what had been agreed within the contract, and it would be inequitable to disregard the agreement under Matrimonial Causes Act 1973, s25 (2) (g).
It was also decided that under the English court system at times cultural factors should be considered. Baron, J. in A v T (ancillary relief: cultural factors) said that all the circumstances of the case should be considered, where the parties are from an ethnic background, it was relevant to consider the prenuptial agreement, which had been made under Sharia law.
Pre nuptial agreements can be traced much further back than the common law. The Jewish marriage contract known as the ketubah dates back at least 2,000 years and has traditionally a strong contractual component. In France, the customary pre nuptial derives from the dowry, first recorded in the ninth century. For most of the history of the common law, premarital agreements regulating the financial rights and obligations of spouses during their marriage were fully enforceable.
In the UK they were traditionally known as marriage contracts or marriage settlements, they were customary among wealthy families, especially before the Married Women’s Property Acts 1872 and 1882 removed restrictions on a married woman’s right to own property. Since divorce was not permitted in England until 1857 except by special Act of Parliament, marriage contracts were primarily designed to deal with the eventuality of death, not divorce.
Society itself has evolved and changed it is not just prenuptial agreements that have arisen; there have been a number of cases involving post-nuptial agreements. These agreements or contracts are made between husband and wife while they are living together. Normally the couple have signed a pre-nuptial agreement before the wedding, but then want it amended so they then can end up with a number of agreements. This was seen in Macleod v Macleod where the case concerned the validity of a post-nuptial agreement.
A leading case concerning how much weight should be placed on such agreements is Edgar v Edgar, where a separation agreement was made when the marriage had broken down and the wife wanted a divorce. Ormrod LJ stated that the general position should be that formal agreements, which are properly and fairly arrived at with the proper legal advice, should not be set aside unless there are strong grounds for concluding that an injustice has been, if the parties are held to the agreement.
Sections 34-35 of the Matrimonial Causes Act 1973, does not apply at the present time to pre-nuptial agreements. It governs or applies to both separation agreements and post-nuptial agreements, which make financial arrangements concerning separation in the future. The agreement itself must be in writing and would be seen as valid under the ordinary laws of contract. The court may set aside an agreement because of circumstances in which the contract at the time was concluded as was the case of NA v MA, where even though the principles in Edgar were used the case was set aside because of undue pressure and undue influence from the husband.
In 2007 the Court of Appeal held that a judge had discretionary power in ancillary relief proceedings to require a party to show good cause why a pre-nuptial agreement should not govern the division of assets concerning the ending of a marriage. Agreements compromising of a claim for ancillary relief, but have not been enshrined into a consent order, do not create legally binding contracts as in Xydhias v Xydhias, but they can be treated like post-nuptial agreements if one party seeks ancillary relief under the Edgar principles.
Under section 25 of the Matrimonial Causes Act 1973, the court has a wide discretion concerning the division of any assets the couple have upon divorce, it states that it must take into account all the relevant circumstances of the case. A pre-nuptial agreement may be one of the relevant circumstances, which the court would look at in order for a fair and just conclusion.
Pre Civil Partnership Agreements
Pre-Civil Partnership Agreement is the same as a Pre-Nuptial Agreement, in all but name. It sets out what each party’s financial circumstances are before the registration of the Civil Partnership. It sets out what each party would like to happen, so far as those assets are concerned, in the event that the Partnership is dissolved. Section 73 of the Civil Partnership Act 2004 states that civil partnership agreements are not enforceable in the UK, but they can be persuasive concerning financial arrangements providing that;
- each party gives full and frank disclosure of their financial circumstances;
- each party obtains independent legal advice and
- The Pre-Civil Partnership Agreement is entered in to in good time before the Civil Partnership (not the day before).
Because civil partnerships will be governed by the same laws as marriage, the likelihood is that pre-partnership agreements will be treated in much the same way as pre-nuptial agreements. However, there is speculation that the courts may in the future be more inclined to uphold agreements made by civil partners, because civil partnership is legally distinct from marriage.
Further The Civil Partnership Act  already provides for the possibility of an agreement on dividing up the assets of the registered partners during dissolution proceedings. Moreover the argument for same-sex couples prenuptial agreements are further strengthened by the case of Sutton v Mishcon de Reya & Gawor & C  where the court ruled that financially based agreements between same- sex couples are legally binding.Under contract regulations
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