WHEN SPOUSES AGREE

Citation(2006) 18 SAcLJ 96
Date01 December 2006
Published date01 December 2006

Financial agreements made between parties who are contemplating marriage, contemplating divorce, or in the throes of divorce attract public law concerns. The law respects the private rights and interests of individuals to make agreements in matters affecting their personal lives. But society is interested in seeing that fundamental family obligations are fulfilled and that the economically weaker family members are protected when a family unit breaks down. The law attempts to strike a balance between giving autonomy to spouses and retaining judicial control over such agreements. This article surveys the approaches taken in recent cases on agreements made between spouses.

I. Introduction

1 The title of this article may be somewhat paradoxical, particularly to divorce lawyers: Spouses embroiled in divorce proceedings constantly disagree on all sorts of issues; it is hard to conceive that they can truly agree to anything. When they can and do agree, it may be a cause for celebration.

2 Recent cases have developed a trend which gives much autonomy to spouses to make agreements to order their lives and settle their disputes. Today, are pre-nuptial agreements made between parties who are contemplating marriage and agreements made in contemplation of divorce valid and enforceable? Post-nuptial agreements made in contemplation of divorce have frequently been recognised by the courts. Pre-nuptial agreements, on the other hand, have been treated differently. The English courts were traditionally reluctant to enforce pre-nuptial agreements which sought to provide for matters upon a divorce. It was contrary to public policy to oust the jurisdiction of the court by agreement in matters over which the state was very much concerned.1 Further, there is concern that pre-nuptial agreements which contemplate divorce undermine the institution of marriage. However, the more recent

cases in England have given consideration to provisions in pre-nuptial agreements.2

3 The law encourages parties to resolve their own disputes within arrangements they have worked out themselves. As the character of familial relationships is intimate and unique to each family, the arrangements that emanate from the spouses themselves will be the most acceptable to them. They are also more likely to honour the terms that they have reached voluntarily. Sections 49 and 50 of the Women’s Charter3 illustrate the unique approach taken with respect to family issues. Mediation and counselling are believed to aid in the harmonious resolution of family disputes. Some of the greatest benefits of these processes are the reduction of acrimony, increased communication between the estranged spouses and the advantage of practical arrangements which are worked out by parties for themselves.

4 If settlement through mediation is widely encouraged in family proceedings, the law must correspondingly respect the parties’ autonomy to make agreements dealing with the ancillary issues upon divorce. If such post-nuptial agreements are encouraged, are pre-nuptial agreements of such a different character that they should be discouraged or even held to be against public policy? The following discussion examines the modern trend in dealing with post-nuptial agreements and suggests that the same approach may also be taken with respect to pre-nuptial agreements.

II. Autonomy of spouses in the public institution of marriage

5 Prof Leong Wai Kum has characterised the husband-wife relationship in this way:4

We may describe the law regulating the husband-wife relationship, including in the Women’s Charter, with three characteristics, viz., a spouse should conduct himself or herself vis-à-vis the other with reasonableness, rights and duties are mutually owed between them and spouses retain autonomy of decision-making.

6 Section 46(1) of the Women’s Charter exhorts that:

Upon the solemnization of marriage, the husband and the wife shall be mutually bound to co-operate with each other in safeguarding the interests of the union and in caring and providing for the children.

7 The law expects spouses to take their marriage seriously as a permanent union which they should safeguard together. They are expected by the law to co-operate and discharge their roles. However, the law avoids over-regulation. Respecting the rights of the spouses to order their lives as they wish is also important to the success of the marriage. In many aspects of the family relationship, such as whether to have children or how to divide the roles in the running of the household, parties have the necessary autonomy required to enjoy their family life.

8 In Kwong Sin Hwa v Lau Lee Yen,5 the Court of Appeal held that:6

[T]he law does not forbid the parties to the marriage to regulate their married lives and also the incidents of the marriage, so long as such agreement does not seek to enable them to negate the marriage or resile from the marriage … In particular, the law does not forbid them to agree as to how they should live and conduct themselves as husband and wife, when and where they would commence to live as husband and wife, when they would consummate their marriage, when they would have a child or children and how many children they would have. Such agreements made between husband and wife are not illegal or immoral or against public policy.

9 What may be against public policy is a pre-nuptial agreement not to live together as husband and wife after the marriage, such as the prenuptial agreement in Brodie v Brodie7 where the man agreed to marry the woman expecting his child on the condition that they would always live apart as if they were not married.

10 While the law respects the autonomy of spouses to make agreements to regulate their lives, it also imposes some limitation in order to ensure that certain fundamental family obligations are fulfilled. There are generally four areas in which the spouses’ freedom to contract may be curtailed. The first is in the area of preserving the fundamental character of marriage. Kwong Sin Hwa v Lau Lee Yen8 has held that an agreement

must not seek to enable the spouses to “negate the marriage or resile from the marriage”, such as a pre-nuptial agreement which provides that they will not live together at any time. However, an agreement to live apart which is made after marriage, particularly after the spouses have experienced difficulties in their marriage, is not against public policy in the same way that divorce is not against public policy.9 The second area of restricted autonomy is expressly stated in s 116 of the Women’s Charter which provides that agreements for the payment of capital sums in full settlement of future maintenance are not effective until approved by the court. The case of Chia Hock Hua v Chong Choo Je,10 discussed below, dealt with such an agreement. The third is in the area of division of matrimonial assets and provision of maintenance falling outside the ambit of s 116. Section 112 confers on the court the powers to rearrange the financial resources of the parties such that the assets are justly and equitably divided between the spouses. Finally, the court retains control over agreements relating to the custody of children and has powers to vary its terms in accordance with s 129 of the Charter. Since the court has powers to make orders in respect of these issues, to what extent do spouses retain the freedom to make their own arrangements within these areas? This article focuses only on financial agreements made between spouses. The court’s control over agreements on the custody, care and control, and access of children is beyond the scope of the present discussion.

III. Post-nuptial financial agreements

11 The recent trend of cases suggests that financial agreements between spouses, made validly in accordance with contract principles, is likely to be given effect as a consent order or may have its terms embodied in the court order. While some cases11 have firmly expressed that agreements violating the principles embodied in the Women’s Charter will not be given any effect, many more recent cases have in fact given effect to spouses’ agreements by incorporation of the terms into the court order.

12 There are a few ways of giving full or partial effect to the agreements reached by spouses. The most current approach is to convert the agreement into a consent order or incorporate some of the terms into the court order. Another way is to make an order under s 112 and have regard to the agreement as a guide on how the division of assets ought to be made. Alternatively, the court could simply enforce the agreement as a contract between the parties. These approaches are discussed more fully below.

13 In this area which is still developing, it is suggested that agreements between spouses should always be subject to the court’s scrutiny. If they do not violate public policy or the scheme in the Women’s Charter, they should be given effect as consent orders. Once an agreement is made into a consent order, its legal force is derived from the court order and no longer from the parties’ contract.12 This process of giving effect to the spouses’ agreement by converting them into consent orders serves both private and public interests: it upholds the autonomy of the spouses and at the same time, maintains the public interest of ensuring that all such agreements come under the court’s control as the ultimate adjudicator of issues in which society is interested. It also supports the Charter’s policy of encouraging the harmonious resolution of disputes through mediation.13 This approach is supported by the recent trend of cases and is one used by the English case of Xydhias v Xydhias.14

14 In England, after divorce became available based on the irretrievable breakdown of marriage, the “no-fault” divorce regime also introduced the culture of encouraging parties to settle their own affairs. But while the modern policy...

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