Ezane Chong shares her views on the validity of prenuptial agreements in Malaysia

THE POSITION IN ENGLAND AFTER CROSSLEY

The landmark ruling of the Court of Appeal in the case of Crossley v Crossley [2008] 1 FCR 323 confirms that prenuptial agreements, that is, contracts made between two persons planning to marry which seek to pre-determine their financial liabilities and responsibilities towards each other should they happen to get divorced, can be valid in English divorce law.

In the ruling delivered in December 2007, the Court of Appeal upheld a prenuptial agreement between Susan Crossley and Stuart Crossley whereby each party agreed that neither of them would make any claim on the other’s wealth if their marriage broke up. The Court arrived at its decision notwithstanding Mrs. Crossley’s claim that her husband had not disclosed every aspect of his £45 million fortune. Thorpe LJ observed that “If ever there is to be a paradigm case in which the court will look to the prenuptial agreement as not simply one of the peripheral factors but a factor of magnetic importance … this is just such a case”.

Although still not regarded as legally binding per se – the Court of Appeal acknowledged that only legislation could make such agreements enforceable – the decision clearly signals a change in the attitude of the English courts.

Historically, prenuptial agreements were frowned upon as corrupting the sanctity of marriage and so for many years in England, they were considered void for public policy reasons. Today, prenuptial agreements, also known as antenuptial agreements or premarital agreements, or ‘prenups’ as they are commonly abbreviated to, are recognised by the English courts as being highly influential, or even definitive if the circumstances are right.

AGREEMENTS MADE BETWEEN MARRIED COUPLES IN MALAYSIA

In Malaysia, any agreements made between spouses to a civil marriage must be without prejudice to the Law Reform (Marriage and Divorce) Act 1976 (“the Law Reform Act”) and will always be subject to approval by the court.

Although parties to a marriage may execute a contract to provide for what should occur when their marriage comes to an end, they cannot preclude the court from exercising jurisdiction over their rights on divorce because those rights are specifically provided for by legislation. In other words, only the court can give binding legitimacy to any arrangements made between married couples. These agreements can however be used as evidence of the parties’ intentions as to the manner of distribution of their assets and can carry evidential weight when the terms of the agreement are relevant to an issue before the court in any subsequent divorce proceedings.

The degree of weight, if any, which the court may attach to the terms of a prior agreement, will vary from case to case. The courts are more likely to uphold a bargain which was freely negotiated with independent and competent legal advice, full disclosure of all earnings and assets and/or, as in the Crossley case, where a childless marriage between two independently wealthy individuals breaks down within a short period of time. The courts will also look at the circumstances surrounding the completion of the agreement, the conduct of the parties leading up to it and their conduct as a consequence of it.

As long as the terms of a properly and fairly arrived at agreement do not militate against or contravene the spirit and letter of the Law Reform Act, there is no reason why our courts cannot be persuaded to look at it when determining the distribution of matrimonial assets on divorce.

VALIDITY OF PRENUPTIAL AGREEMENTS IN MALAYSIA – EFFECT OF

CROSSLEY’S CASE

There does not appear to be any reported decisions in Malaysia which have specifically dealt with the issue of the validity of prenuptial agreements as distinct from agreements made after an already solemnised marriage has broken down, but before its legal dissolution.

In the absence of local case law or legislation on point, we generally look to English law for guidance. Section 47 of our Law Reform Act makes the principles on which the High Court in England gives relief in matrimonial proceedings relevant when issues pertaining to matrimonial relief are considered in our courts.

It is too early to say what effect, if any, the Crossley decision would have on the state of matrimonial law in this country. In the not so unlikely event that our Family Courts do get an opportunity to decide on the matter, the English Court of Appeal’s ruling could certainly be persuasive.

Until such time, for soon-to-be newlyweds who wish to take a pragmatic but perhaps unromantic approach to their prospective marriage or for those, particularly high-net-worth individuals entering into a second marriage who want control over the resolution of their financial affairs in case things go wrong, a prenuptial agreement could provide a cut and dry solution that may eliminate acrimonious and often costly litigation over assets.

Ultimately, our courts still have the final word. The inherent jurisdiction retained by our judges to prevent injustice should provide some comfort to those of us who marry “for better or for worse, for richer or poorer, in sickness and in health … till death do us part”.

EZANE CHONG ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )