A Breath Of Relief For Those Who Signed Prenups – Hong Kong Family Court Upholds Prenuptial Agreements
Aug 29, 2023
Recently in the Hong Kong family court, the judge had to grapple with the question: how much weight should be placed on a prenuptial agreement which limited the wife's obligation to make a full disclosure of her assets? The law relating to prenuptial agreements has been settled in the Court of Final Appeal in 2014 when the court decided that such agreements should be given weight if both parties fully understood what they were signing up for and intended to be bound by the agreement. As with all agreements, there should not be any undue influence or duress and it is advised that both parties seek independent legal advice to prove and to show they both understood all the implications.
In addition, there should be such financial disclosure to enable the parties to make an informed decision. However, in recent years, there have been cases that the prenuptial agreement has such ‘magnetic force’ that it would be unfair not to take it into account and to order a full-blown discovery of all the assets. This is known as a ‘Crossley application’ after the English case of that name and can, as here, be heard prior to the full ancillary relief hearing where the judge would ultimately decide how much weight would be placed on the agreement. Prenuptial agreements can still not oust The Court’s discretion to find a fair result.
In this case, the wife applied to court to question why the husband should not be held to a prenuptial agreement which had been signed in 2005. Both parties were well educated, the wife, who was from a wealthy Hong Kong family, had an EMBA and the husband had an MBA. They have three children, all living with the wife. The prenuptial agreement sought to ringfence premarital assets, and any assets acquired during the marriage and held in their sole names, would be incorporated into a consent order with a dismissal of claims in the event of a divorce. At the time, both parties had around the same value of assets, and they both agreed that they were satisfied with the level of financial disclosure. Not so when the matter came before The Court the wife’ assets were in excess of $200 million and the husband alleged that he was penniless.
The wife contended that they had lived their lives in accord with the agreement and had dealt with their finances separately. The husband had left Hong Kong to work in Switzerland in 2015 with little connection with his family. She asked The Court to place full weight on the agreement and, if The Court considered that the husband should be held to it, then the scope of discovery that the husband was allowed to seek from her should be substantially limited, from the perspective of fairness and cost efficiency.
One of the problems with the husband’s case was that he had conceded that the agreement should be given weight. His argument was that he was in need and therefore a Crossley application was not appropriate. He also argued that it would not be fair to deal with the Crossley application as a preliminary issue. His arguments were insufficient to knock out the wife’s case. There was a case management consideration that disclosure could be limited if the agreement was of magnetic importance which the judge thought it was in this case.
The judge made some important findings:
1. The Court can decide that a Crossley application can be heard as a preliminary issue, although not invariably, and it can order the same without a formal application from the parties. Such an order would be appropriate if it avoided protracted delay and costs. As the judge said: “there is no straight jacket requiring a Crossley application to be rolled up with the ancillary relief trial”.
2. The Court should respect the parties’ freedom to agree on how their property should be apportioned, given the prenuptial agreement faithfully bore out the parties’ intention on that matter.
3. The Court would readily give less weight to a prenuptial agreement if doing so would cause unfairness to one of the contracting parties. In this case, the husband had not managed to establish anything that would suggest that enforcing the prenuptial agreement would be unfair towards him.
4. The Court did not take the view that the case should proceed with a full dispensation of discovery, and there was to be limited discovery so as to enable The Court to identify the marital assets for the purposes of their division according to the law in Hong Kong, within the parameters of the disputed issues.
With the increasing popularity of prenuptial agreements in Hong Kong, this decision can only be welcomed as a needed clarification of what can be a grey area. Where a court is sympathetic to a party who would like to uphold an agreement, and it makes good practical sense from a case management point of view, we can expect more parties to be held to these agreements in the future.
L v F (Crossley application, preliminary Issue)  HKFC108 J Thelma Kwan
Find out more about the Authors
Jocelyn Tsao – partner at Withers
Jocelyn is the managing director of Withers Hong Kong office and a partner who leads the Hong Kong divorce and family team. Jocelyn started her family law practice 15 years ago in 2007, and advises on all aspects of matrimonial law including divorce, prenuptial agreements, child care and custody and financial disputes. She is an experienced advocate in court as well as a seasoned negotiator in mediations. Jocelyn has been involved with some of the most high profile cases to come before the courts in Hong Kong as part of a team involving high net worth individuals with diverse and complex issues. She has considerable experience in divorce cases involving trusts, corporate structures and injunctions, as well as complex cross-jurisdictional divorces which requires co-ordinating with other solicitors overseas and experts, as well as leading counsel in Hong Kong and London. Jocelyn is passionate about cases involving children’s interests, custody, care and control, and has successfully dealt with a number of child relocation cases, with expertise on Hague Convention cases involving child abduction before the High Court.
From 2020-2023, Jocelyn is recognised as a Recommended Lawyer in Doyle’s Hong Kong Family & Divorce Lawyers Ranking. She is rated as a Future Star in Benchmark Litigation in the practice areas of Family and Matrimonial for 3 consecutive years (2020-2022) and as a Litigation Star in 2023. She is also recognised as an Up and Coming practitioner in Chambers and Partners in 2021-2023, Next generation partner in Legal 500 2023, the Young Lawyer of the Year (Law Firm) at the ALB Hong Kong Law Awards 2022, and was listed as Asia’s top 40 lawyers under the age of 40 by ALB in 2022.
Philippa Hewitt – senior knowledge lawyer at Withers
Philippa is a senior knowledge lawyer in the Hong Kong divorce and family team.
She is a matrimonial lawyer dealing with all aspects of family law, information management, legal writing and publications.