Australia Day, Captain Phillips and Prenuptial Binding Financial Agreements – Nothing New But Something Old

The idea of a party entering into an agreement to protect their financial wealth upon marriage is nothing new. On 19 July 1763, Captain Arthur Phillip (and later first Governor of New South Wales) married Margaret Tybott, a wealthy widow of merchant John Denison who was 17 years his senior. Margaret insisted he sign a “pre-nuptial” agreement the day before their wedding. While Captain Phillip farmed during this time, his yearning to be back at sea remained. Not surprisingly the marriage was not long (4 years).  Not long after his return to sea, Captain Phillips was invited to lead the First Fleet to found the colony of New South Wales.

Prenuptial Agreements in the 1700s

The “pre-nup” agreement that Captain Phillip signed go back to Egyptian Times and possibly beyond. Typically, however, the arrangement was to predetermine the property rights of the couple by embedding these rights in the marriage contract itself, rather than having a separate agreement. The Hebrew marriage contract, the ketubah attempted to predetermine the property division upon divorce or widowhood. Many earlier agreements were entered by the parents of the bride and groom on their behalf to protect family wealth and predetermine inheritances.

However, many societies sought to stabilise marriage by imposing a financial penalty, particularly on husbands if the marriage contract was broken, reflecting the contractual basis of marriage.

By the mid-19th century, husbands were responsible for the provision of their wife’s property interests upon their deaths by way of providing the wife with Dower Rights. In addition, if a dowry was brought into a marriage, then an agreement could be drafted before the marriage as to how the dowry would be dealt with upon separation.

Divorce Applications in the Ecclesiastical Court

Prior to the English Divorce and Matrimonial Causes Act of 1857, Ecclesiastical Courts applied Canon Law for matrimonial causes such as pronouncing nullity of a marriage but not divorce of a valid marriage, as marriage was seen as a sacrament and indissoluble. Divorce of a valid marriage would only occur upon a petition to Parliament, making this remedy only available to the very wealthy. Women would rarely apply for a divorce and only in exceptional circumstances.

In England, both the common law courts and the ecclesiastical courts did not automatically and were reluctant to enforce agreements entered into before marriage that displaced the rights and responsibilities of husbands and wives according to the marriage contract as this was viewed as being against public policy.

During the 20th century, while not enforceable, courts gave increasing weight to these agreements in determining the division of assets upon divorce.

Prenups in Australia

In Australia, pre-nuptials became enforceable by the introduction of the Family Law Act in 1975.  Now, any couple either in a married or unmarried relationship can oust the jurisdiction of the Family Court and decide for themselves how they will divide their property prior to entering a relationship. The traditional benefit of protecting family wealth remains, however, now couples can avoid costly future litigation upon the breakdown of their relationship by determining amongst themselves with legal advice how they will divide their assets at the outset of their relationship.

To discuss prenuptial or financial agreements please contact Leach Legal.

[1] Dalton T, & Lobbecke E, The Weekend Australian 20-21 January 2018

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