Prenuptial agreements have traditionally been associated with celebrities or wealthy people but they are becoming increasingly common, writes Boase Cohen & Collins Partner and Family Law practitioner Lisa Wong.
Hong Kong, 21 March 2017: You don’t have to be rich or famous to require a prenuptial agreement. “Prenups” are gaining in popularity in Hong Kong as couples seek to exert more control over their futures. Such arrangements made prior to marriage are mainly designed to regulate the financial affairs and property division of a couple in the event of divorce.
Advising on and drafting prenuptial agreements is part of our service and in this regard we are receiving more and more requests for assistance from clients. My colleague Usha Casewell – a Partner in Boase Cohen & Collins and Vice Chair of the Hong Kong Family Law Association – and I both have experience drafting prenuptial agreements.
A prenuptial agreement is increasingly seen as a rational choice especially when two people each bring personal or business assets into their marriage. A basic agreement would include a list of premarital assets and inheritance that, in the event of a divorce, would remain the property of their original owner. But being an agreement between the parties, prenups can also include other financial arrangement, for example how to share future income from a business, or assets accrued during the marriage.
It has been established in the UK that a prenuptial agreement would stand a better chance to be upheld and enforced if it is fair and equitable and that there is (1) full financial disclosure, (2) a cooling off period of at least 28 days prior to the marriage, (3) proper independent legal advice with proper negotiations, and (4) no children born to the marriage
While prenups are becoming more popular, their legal status in Hong Kong calls for greater clarity from the courts. In the landmark case (SPH v SA [2014] 17 HKCFAR 364) in 2014, the Court of Final Appeal saw the case as an opportune time for Hong Kong Courts to state the law. The CFA explained that the ante-nuptial agreements were traditionally considered to be contrary to the public policy, on the grounds that they appeared to affect the marriage institution, and ousted the jurisdiction of the court to grant ancillary relief.
The CFA made reference to Radmacher v Granatino [2010] UKSC 42, [2011] 1 A.C. 534, in which the UK Supreme Court decided, when it was fair to do so, to give appropriate weight to an agreement made between a couple prior to and in contemplation of their marriage to regulate their financial affairs in the event of their separation. The CFA followed the position of the UK and recognised the principles in Radmacher v Granatino. The agreements providing for future separation were no longer seen as being contrary to public policy.
But in a case before the Family Court in 2015 (B, L v K, WS [2015] HKFAMC 71), where the Court did not form a definite view on the case of the petitioner wife, the Court found that the arguments between parties would be raised around the issue on the fairness of the prenuptial agreement. The Court concluded that the terms of the order should be as close to the prenuptial agreement as fairness dictates in the circumstances. In making financial orders as to maintenance pending suit and litigation funding, the judge did not apply the exact terms stipulated in the prenuptial agreement but what was fair in the circumstances.
The status of prenuptial agreements was further brought into focus by a Family Court judgment (LCYP v JEK [2016] HKEC 2033) in June last year concerning a wife’s application for maintenance pending suit. The case involved a couple who had signed a prenuptial agreement in the United States which restricted the wife’s entitlement to maintenance in the event of a divorce. The wife was not challenging the validity of the prenuptial agreement but argued that no weight should be put on it by the court in view of the overall circumstances.
The Family Court, by reference to the terms in the prenuptial agreement, held that if the parties should intend any restrictions on ancillary relief upon separation prior to marriage, such intention should be clearly spelt out in the prenuptial agreement. In mind of the fairness to parties, the Family Court ruled that any ambiguity in the prenuptial agreement at an interim stage should be interpreted in favour of the petitioner wife to protect her interest.
While we have seen some limited guidance from the courts, prenuptial agreements are still something of a grey area in Hong Kong. With more cases due before the courts, it is to be hoped we will start to see some consistency in rulings. Let us hope some clearer guidance from the courts will be available in the near future.