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WHAT IS THE EFFECT OF A POSTNUPTIAL AGREEMENT ON DIVISION OF MATRIMONIAL ASSETS

Case Commentary – AUA v ATZ [2016] SGCA 41

postnuptial agreement

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The binding effect of a postnuptial agreement in the course of divorce proceedings was recently developed in the Court of Appeal case of AUA v ATZ [2016] SGCA 41. Specifically, the Court shed light on the judicial process of ascribing weight to the terms of a postnuptial agreement concluded by the parties in contemplation of a divorce relating to the division of matrimonial assets.

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What is a Postnuptial Agreement?

A postnuptial agreement is most commonly entered where there has been a significant change to the circumstances since the marriage. It can be entered into any time during the marriage but before parties seek a divorce.

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The Law on Postnuptial Agreements & Division of Matrimonial Assets

When the Court is determining the issue of division of matrimonial assets, a postnuptial agreement is one of the factors that the Court shall have regard to under Section 112(2)(e) of the Women’s Charter (“the Charter”). Such an agreement must be made in contemplation of divorce to be considered by the Court.

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 Developments from AUA v ATZ

An important consideration of the Court while deciding the division of matrimonial assets is the determination of the cut-off date for determining the parties’ contributions to the marriage. Although the general cut-off date is on the date of the final judgment of divorce, the Court of Appeal in AUA v ATZ held that the date of the conclusion of the postnuptial agreement was the cut-off date as the parties’ marital relationship had concluded as at that date. It was clear to the Court that from that date onwards, parties were merely waiting for time to elapse so either party could file for a divorce on a three years’ separation basis. This departure by the Court of Appeal from the general cut-off date is crucial as indirect contributions towards the children (if any), although not undervalued, would be viewed as done in the capacity of a parent rather than a spouse, therefore there would be no injustice that a postnuptial agreement takes no account of the other party’s continual indirect contributions in determining the division.

Furthermore, AUA affirmed the earlier decision of Surinder Singh [2014] SGCA 37 that postnuptial agreements should be given significant weight in determining the division of assets if it is the result of well-informed discussions and that the terms are equitable. As such, if parties have addressed their minds to the future circumstances of parties and arrived at an agreement on the division of their assets, the postnuptial agreement would be given conclusive weight.

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Conclusion

The Court’s position is that parties should be allowed the autonomy to negotiate and agree on the division of their matrimonial assets prior to divorce proceedings and should the postnuptial agreement be just and equitable in their view, the Court would readily defer to the parties’ assessment.  Hence, if you are entering into a prenuptial agreement, you should take care to ensure that you are comfortable with the agreement on division of assets, as it may be difficult to reopen the issue during the divorce.

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RELATED ARTICLES:

Division of matrimonial assets .

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