PRENUPTIAL AGREEMENTS
| Date | 01 December 2012 |
| Published date | 01 December 2012 |
| Author | Debbie ONG LLB (Hons) (National University of Singapore), LLM (Cambridge); Associate Professor, Faculty of Law, National University of Singapore. |
Affirming TQ v TR in Singapore
The question of whether prenuptial agreements over matters such as maintenance and division of assets upon divorce ought to be binding on parties is not new but continues to be of great interest. Recent publications from various jurisdictions have offered diverse models of matrimonial property regimes and rules on marital agreements. This article argues that the position on prenuptial agreements reached in the Singapore Court of Appeal decision in TQ v TR remains the optimal one amongst the different models. It suggests how the position may be defended, interpreted and developed.
1 The question of whether prenuptial agreements over matters such as maintenance and division of assets upon divorce ought to be valid and binding on parties is not new but continues to be of great interest across the jurisdictions. Professor Leong Wai Kum has remarked:1
A plethora of interests are engaged by this question and all of them demand consideration. Should the autonomy of spouses, who are undoubtedly adult persons with the requisite capacity to regulate their own affairs, not be fully respected so that it is purely a matter of how to hold them to their agreement? On the other hand, should spouses be held to their agreement if its terms on division of matrimonial assets or maintenance fall short of what developed law would have the court order?
2 Family law the world over provides for some financial relief for family members upon the breakdown and termination of marriages. To what extent can parties opt out of default legal regimes? A very recent publication, Marital Agreements and Private Autonomy in Comparative Perspective,2 has usefully presented a comparative analysis of the different matrimonial property regimes and rules on marital agreements across
14 jurisdictions. In countries such as France and Belgium, spouses have autonomy to select a matrimonial property regime by way of a binding marital agreement and the default matrimonial regime is only a default rule. Prenuptial and postnuptial agreements there are binding and enforceable between the spouses and cannot be set aside by the court unless they are contrary to public policy. Prenuptial agreements in the Netherlands are in principle binding on the parties like other types of agreements. Ireland treats prenuptial agreements with caution, and the courts are not obliged to enforce or recognise as valid the fact or content of a prenuptial agreement. In New Zealand, a marital agreement that complies with the statutorily prescribed procedural formalities is valid but may be set aside if the court views that enforcing it would cause serious injustice. Common law in England has only recently taken the position that prenuptial agreements are not void and can be fully effective depending on the circumstances of the case.3 This article argues that the position reached in Singapore in the landmark Court of Appeal decision in TQ v TR3 remains an optimal one amongst the models offered by the platter of regimes across jurisdictions. It suggests how the position may be defended, interpreted and developed. While the book analyses principles that regulate marital agreements in general, this article focuses on prenuptial agreements.
4 In Singapore, the matrimonial regime applicable during marriage is that of separation of property. Upon a divorce, the parties' matrimonial assets are pooled together and subjected to division by the court. This default regime has been described as the “deferred community of property”.4 Section 112 of the Women's Charter5 provides:
The court shall have power, when granting or subsequent to the grant of a judgment of divorce, judicial separation or nullity of marriage, to order the division between the parties of any matrimonial asset or the sale of any such asset and the division between the parties of the proceeds of the sale of any such asset in such proportions as the court thinks just and equitable.
5 Section 113 of the Women's Charter provides that the court “may order a man to pay maintenance to his wife or former wife” upon the termination of a marriage.6
6 To what extent can parties contract out of this statutory regime? This article supports the legal position reached in the Singapore Court of Appeal decision in TQ v TR,7 which is also in line with the landmark UK Supreme Court decision in Radmacher v Granatino8 (“Radmacher”). Whether Radmacher will remain the UK's position in the further future is left to be seen: the UK Law Commission has published a Consultation Paper on “Marital Property Agreements” and a report is expected later in 2012.9
7 A driving reason behind private ordering is that individuals know better than other people, including judges, what is best for themselves.10 At a more general level, there is a value to personal liberty that should be respected. Economic analysis could offer this explanation for supporting private agreements: where people make private arrangements for themselves, there is greater efficiency and a higher chance that they are maximising the utility of their resources.11 The economic efficiency of a family unit is affected by the roles taken by the spouses, and to achieve the maximum efficacy, a financial and property arrangement that best suits a particular family should be taken, where each spouse has the incentive to work in her or his most productive role.12
8 The modern movements towards mediation in divorce proceedings actively support private ordering. In Singapore, the Women's
Charter13 was amended in 1996 with the addition of s 50 directing the court to “give consideration to the possibility of a harmonious resolution of the matter and for this purpose may, with the consent of the parties, refer the parties for mediation”.14 Private agreements are believed to reduce acrimony and protracted proceedings in court. This may be true to the extent that parties do not find a reason to litigate on the agreements themselves. Although such private ordering under s 50 occurs in the context of postnuptial agreements made in contemplation of divorce, the benefits of private settlements are not limited to postnuptial agreements.9 Upholding a prenuptial agreement by treating it like any other contract upholds the autonomy of parties and gives certainty that all contractually valid prenuptial agreements will be binding on the parties. There are consequences to the lack of certainty. It is not unreasonable for parties to seek assurance that prenuptial agreements are effective before they would enter into a marriage. The UK Law Commission's consultation paper on “Marital Property Agreements” noted:15
[W]e have heard from a number of solicitors who have been obliged to point out to their clients that the only way to achieve their objective of preserving certain assets is to cohabit rather than to marry. Some have told us of clients who, as a result, did not marry.
10 In Singapore, a lawyer specialising in family practice has said:
In the last two years, I attended to five clients who required a prenuptial agreement. Two of these were Singaporean men who had undergone traumatic divorces and had great difficulty with the question of division of assets. They were only prepared to remarry if the spouse committed to a prenuptial agreement.
11 There is value to respecting private ordering and autonomy, but is it fair to treat marital agreements like any other commercial or non-marital contract? Are there certain social relationships or transactions which should not be “contractualised” in the same way that commercial transactions are?
12 Let us examine some arguments for treating prenuptial agreements differently from other contracts.
A. Uncertain future
13 Is the marital context a sufficient reason to justify a different treatment towards what may otherwise be a valid and binding contract? In the marital context, the parties share an intimate relationship where parties may bargain with an attitude that is altruistic and generous, particularly where the relationship is subsisting lovingly. They bargain in a manner that is sensitive to the feelings of the other partner. The joint marital life of such parties is a journey where not every event can be foreseen, making it difficult for parties to make provisions where future circumstances are inevitably unpredictable. Children born to the parties complicate the matter as the state prioritises protecting vulnerable children. If marriage is seen as a journey where both parties adjust to each other, experience life together, and grow old together, then it seems unrealistic to make provisions for a future not yet learnt or experienced. Parties are pushed to “[e]nvisioning the end of a marriage not yet begun, prospective couples must divide property not yet acquired”.16
14 Lady Hale summed up the concerns of many in the UK Supreme Court decision of Radmacher:17
Marriage is not only different from a commercial relationship in law, it is also different in fact. It is capable of influencing and changing every aspect of a couple's lives: … A couple may think that their futures are all mapped out ahead of them when they get married but many things may happen to push them off course – misfortunes such as redundancy, bankruptcy, illness, disability, obligations to other family members and especially to children, but also unexpected opportunities and unexplored avenues. The couple are bound together in more than a business relationship, so of course they modify their plans and often compromise their individual best interests to accommodate these new events. They may have no choice if their marriage is to survive. … there is also a public interest in encouraging the parties to make adjustments to their roles and life-styles for the sake of their relationship and the welfare of their...
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