The Legal Effect of Marital Property Agreements under Common Law – Overview
The Effect of Marital Property Agreements at Common Law – Preface
Regarding matrimonial property agreements, I wrote an article ‘Hong Kong Divorce Lawyer: How to Make a Prenup Agreement in Hong Kong?’ in early 2014 on the legal issues relating to matrimonial property agreements in Hong Kong, in which I talked about, ‘The English case of Radmacher v Granatino [2010] UKSC establishes a new position of English law in relation to prenuptial The English case of Radmacher v Granatino [2010] UKSC has established a new position in English law on prenuptial property agreements. According to that case, if a prenuptial property agreement is made voluntarily and with full understanding between the parties, and the contents of the agreement are fair and reasonable, the court should be inclined to recognise the prenuptial property agreement in order to respect the principle of contractual autonomy. In Hong Kong, there are no cases which have explicitly followed Radmacher. However, considering the significant influence of English law on Hong Kong law and the trend of social development, it is only a matter of time before the courts in Hong Kong accept the principle of the above case.’
In a casual review today, I found that since the writing of that article, there is a new Hong Kong Court of Final Appeal case SPH VS. SA (FACV No. 22 of 2013), which confirms Hong Kong’s formal acceptance of the legal principles established in Radmacher v Granatino [2010] UKSC, recognising the validity of matrimonial property agreements. I would like to recapitulate and review the relevant issues.
The traditional position on matrimonial property agreements under common law
Traditionally, the English common law has not recognized the legal validity of matrimonial property agreements (including prenuptial property agreements and marital property agreements such as separation agreements) on the grounds of notarial policy. The inherent logic is that it is immoral for a man and a woman to calculate the property that is the subject of a divorce before they are even married; at the same time, a couple’s duty of support to each other in the event of a divorce relates to a person’s responsibility to the community, which cannot be waived by agreement.
Validity of Matrimonial Property Agreements – First Breakthrough in the Common Law: Edgar v Edgar
The breakthrough from the traditional common law position outlined above first occurred in the recognition of the validity of a separation agreement (a type of matrimonial property agreement which sets out the property arrangements of a couple after separation). In Edgar v Edgar [1980] 1 WLR 1410, the court recognised that, although a separation agreement does not have the effect of depriving the court of the right to deal with matrimonial property on divorce, the court should give the separation agreement due weight in the circumstances in deciding how to deal with matrimonial property, and that the court should uphold the property arrangements in a separation agreement unless there are particularly strong grounds for objection.
It was not until more than twenty years later in L v C [2007] 3 HKLRD 819, decided by the Court of Appeal, that Hong Kong’s position, following the basic recognition of separation agreement arrangements set out in Edgar v Edgar above, was clearly established.
Validity of Matrimonial Property Agreements – A Second Breakthrough in the Common Law: Radmacher v Granatino
Whilst Edgar v Edgar essentially established the legal validity of matrimonial property agreements (but still not absolutely), it did not apply to prenuptial property agreements. The traditional common law principle of denying legal validity to prenuptial property agreements. For example, in MacLeod v MacLeod [2008] UKPC 64, [2010] 1 AC 298, the Privy Council confirmed that the traditional principle of the legal validity of prenuptial property agreements was still in force, and that if there was a need for change, it should be made by the legislature through legislation, and not by the courts.
Two years later, the Supreme Court of England rewrote this chapter in Radmacher v Granatino [2010] UKSC 42, [2011] 1 A.C. 534. In that case, the court ruled that ‘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.’ In layman’s terms, this means that if the husband and wife are really acting of their own free will, without undue influence and without being informed of its legal implications. undue influence, and informed of its implications, a marital property agreement should be given the full force and effect of law, regardless of whether it was entered into before or after the marriage.
However, up to the time when I wrote the article ‘Hong Kong Divorce Lawyers: Pre-Marital Property Agreements and their Legal Effect in Hong Kong’ in early 2014, I had yet to see a case in which the Hong Kong courts had expressly accepted the legal principles established by Radmacher v Granatino. Consequently, at that time, when I encountered clients enquiring about signing prenuptial property legal agreements, from a prudent point of view, I always explained to them very carefully the relevant traditional common law position, the change of Radmacher v Granatino in England and the uncertainty in Hong Kong.
Validity of Matrimonial Property Agreements – Hong Kong Follows English Case SPH VS. SA
In a judgment issued in June 2014, Hong Kong has finally confirmed that it follows the legal principle established in the English case of Radmacher v Granatino by recognizing the validity of matrimonial property agreements through the case of SPH VS. SA (FACV No. 22 of 2013).
Please feel free to contact our matrimonial and family law team for advice on matrimonial property agreements. We provide advice, drafting and witnessing of matrimonial property agreements.
For more information on Hong Kong divorce procedures, Hong Kong divorce child custody, Hong Kong divorce maintenance and property division, Hong Kong prenuptial property agreements, Hong Kong marriages registration and other related legal issues, please refer to our Hong Kong Matrimonial and Family Law Services page.
(Bob Yan, principal solicitor of Yan Lawyers, solicitors. Email: [email protected], Tel: +852 31881995, +86 15018939249, WhatsApp: +852 5103 9249)