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Henaghan, Mark --- "Book review - Marital agreements and private autonomy in comparative perspective edited by Jens Scherpe" [2012] OtaLawRw 12; (2012) 12 Otago LR 855

Last Updated: 27 May 2014

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Marital Agreements and Private Autonomy in

^{Comparative Perspective}

(edited by Jens Scherpe, Hart Publishing, 2012)

Marital Agreements and Private Autonomy is a book of the highest quality that provides a fascinating and detailed analysis of the age old legal conundrum of providing the maximum autonomy for individuals to make their own choices and protecting the vulnerable who may be exploited by the choices of others. The editor Jens Scherpe is to be congratulated for conceiving the idea and for assembling such an outstanding group of heavyweight international specialists in the field to show how each country plays out the choices between giving spouses the freedom to define for themselves how their property and finances will be divided if they separate and when the law should intervene to override those choices if they appear unfair and unjust to one of the parties. The book focuses solely on marriage and does not look at couples who live together apart from the erudite chapter by Margaret Briggs which shows that New Zealand law on this issue covers both married and living together couples.

The book covers the law in 14 countries ranging from Australia and New Zealand through to the European countries of Austria, France, Belgium through to the United States. The breadth of the analysis means that this is a truly international book which provides a rich context of the different ways that each country faces the challenge of how much autonomy should be given to spouses to regulate their own financial and property arrangements. Each author provides the context in their country of how property and financial matters are determined by the law. This in itself is fascinating as the starting positions differ. For example, the Netherlands starts from a strong community of property position as the backstop whereby all property is owned jointly by the couple. At the other end is the United Kingdom, where there is a general discretion to decide how the property and finances will be divided at the end of the relationship. In the middle are countries like New Zealand and Australia which have statutory frameworks for equal sharing of property. There are also major differences between countries whereby some countries treat property and financial matters as distinct and discrete issues, while others treat them holistically. The holistic treatment, because it covers so much of all the resources of the couple, is more likely to give less autonomy to contract out. All the authors are to be congratulated for the very high standard of analysis, research and finely crafted conclusions to their chapters.

Because the default positions in each country differ, in terms of what the law provides without the parties’ own agreement, when assessing marital agreements in different jurisdictions one has to be careful to fully understand the background context before making judgments as to whether the law is fair and appropriate. Notwithstanding differences, there are some core elements amongst all the jurisdictions with regard

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to the sharing of assets. First, all countries agree on a broad basis that assets should be shared equally and particularly in marriage because it is a partnership: one should not distinguish between homemaker and breadwinner. There is also a general consensus that certain assets do not come into the pool for sharing. These are assets owned before the marriage and gifts and inheritances received during the marriage. Because these are not fruits of the marriage partnership, they fall outside equal sharing. A third commonality across all jurisdictions is that short marriages do not have the entitlement to equal sharing because the partnership has not operated sufficiently for them to be recognised.

Another matter common across all jurisdictions is that they all provide for an out clause to set aside or adjust marital agreements if they are unfair or unjust. There are varying degrees of when the courts will interfere. Some countries apply what Jens Scherpe describe as a simple fairness test in determining whether to set aside a contract. This includes countries such as England, Wales, Singapore, Ireland, Scotland, Austria, Spain, Netherlands and Australia. Other countries like New Zealand and the United States apply a qualified fairness test whereby the unfairness has to be at a serious level before the courts will intervene. In practice, Jen Scherpe shows there is little gain by qualifying a fairness test as a general fairness test can have a high threshold even without including words such as “serious”. What is really crucial is to identify what the content of what an unfairness really is.

In the concluding part of the book Jen Scherpe very helpfully sets out the core elements of unfairness. The first, which applies across all jurisdictions, is a change of circumstances, particularly circumstances which could not be foreseen. There is also a common thread that contracting out of sharing property is generally permissible and fair. This is to be compared with contracting out of need or compensation requirements, which is generally seen as not fair.

The book makes a distinction between pre-nuptial and other post- nuptial agreements when the future is uncertain, as compared with separation agreements, which are a result of the parties at the time of divorce settling all their property and financial matters. Because there is more certainty, the latter such agreements are seen to be less reviewable than those when the situation is more uncertain. It is seen to be fair to hold the parties to the agreement if they entered into it in full knowledge of the circumstances and consequences.

Procedural fairness is an essential part of contracting out provisions and the idea behind it is to make sure each party is making a fully informed and conscious choice and in that sense exercising their full autonomy.

The book rightly concludes that cast iron pre-nuptial and post-nuptial agreements which would be enforced no matter what happens in the future (provided procedural safeguards are fulfilled) can never be absolutely guaranteed. Some countries provide more certainty than others and are closer to the cast-iron position. The bottom line is that marital agreements are likely to be deemed unfair and unconscionable if

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the needs of the spouses and their children are not met and where there is insufficient compensation or disadvantages suffered by one spouse because of the marriage, particularly as a result of the division of labour in the relationship. This overall conclusion is particularly heartening as it reinforces core values of family law, which are generally to protect the vulnerable at the time of separation and to make sure that the outcome reflects what has actually happened in the relationship.

I hope that judges, lawyers and members of the public read this book widely. Its thoroughness and clarity as to what the choices are means that it will be the leading book to refer to whenever the scope of marital agreements are debated in the courts. Hart Publishing, as always, is to be congratulated for the highly professional way the book has been produced. The quality of the type, footnoting and overall binding of the book add to the long-lasting nature the ideas in this book will have.

Mark Henaghan, Faculty of Law, University of Otago.