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EVERYDAY LAW: Dealing with prenups agreements


Cecil McCarthy

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THE ENGLISH SUPREME COURT is expected to deliver its judgement in the case of RADMACHER v GRANATINO anytime now. You may recall that in December last year I discussed the Court of Appeal decision in that case.

That decision upheld a prenuptial agreement entered into by the parties, overturning the decision of Justice Byron who had heard the matter at first instance.

The decision of the Supreme Court (which is sitting with a panel of nine judges) is very eagerly awaited. That decision is likely to have a significant impact on how prenuptial agreements are viewed in jurisdictions such as ours that have no legislation dealing with them.

Today, I begin a series of articles on the subject in anticipation of the judgement of the English Supreme Court.

A pre-nuptial agreement may be defined as an agreement between a man and woman entered into before marriage which seeks principally to regulate their financial obligations towards each other during the marriage and in the event of a break down of their marriage.

No agreement Prior to amendments to the Australian Family Law Act in December 1999 their courts have consistently held that no agreement can preclude the Court from exercising its powers under section 79 of the Family Law Act (our Section 57) or can prevent a party to a marriage from invoking the powers of the Court under that section.

Put another way, notwithstanding what agreement may be reached between the parties the Court can still exercise its powers with respect to property settlement and alter interest in the property of the parties.

Section 57(1) and (2) of our Family law Act provides:

“(1) In proceedings in respect of the property of the parties to a marriage or union, or either of them, the court may make such order as it thinks fit altering the interests of the parties in the property, including:

(a) an order for a settlement of property in substitution for any interest in the property; and

(b) an order requiring either or both of the parties to make, for the benefit of either or both of the parties or a child of the marriage or union, such settlement or transfer of the property as the court determines.

(2) The court shall not make an order under this section unless it is satisfied that in all the circumstances, it is just and equitable to make the order. This section grants the High Court a wide discretion to alter the interests of the parties in property provided that “it is just and equitable to make the order”.

It is submitted that our law with respect to pre-nuptial agreements is substantially the same as in Australia prior to the 1999 amendments which will be discussed in another article.

Pre-nuptial agreements are, therefore not binding upon the Courts.

In the Family Law Act, however, there is provision for maintenance agreements which, if approved by the court, are binding upon the parties.

The definition Section 2 of the Family Law Act defines a “maintenance agreements” as “an agreement in writing made whether before or after February 1, 1982, between the parties to a marriage, being an agreement in respect of financial matters, whether or not there are other parties to the agreement, and whether or not it provides for other matters, and includes any such agreement that varies an earlier maintenance agreement”.

Maintenance agreements may be entered into by parties to a marriage or union to settle the financial arrangements with respect to their property.

However, such agreements are not binding unless approved by the court.

The court’s power in this regard is emphasised in Section 67(4) of the Family Law Act which says in relation to “a maintenance agreement”, that “if the court is satisfied that the provisions of the agreement in respect of financial matters are proper, the court shall by order, approve the agreement, but if the court is not so satisfied, it shall by order, refuse to approve the agreement”.

May accept Some parties may also choose to stand by their pre-nuptial agreement and may accept an order by consent or may simply choose to obey them without any need for approval or intervention by the court.

In my view, pre-nuptial agreements are therefore not without value. However, parties entering into such agreements should be aware of their limitations under the current law.

• Cecil McCarthy is a Queen’s Counsel. Send your letters to: Everyday Law, The Nation, Fontabelle, St Michael. Send your email to [email protected]

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