Issue No. 2 of this newsletter featured an article titled For Better or Worse: A Reflection on the Matrimonial Property Act, 2013 (the Act), in which we explored the salient features of the Act and introduced our readers to section 6(3) of the Act on prenuptial agreements. In the present article, we take a closer look at prenuptial agreements, which are gradually gaining recognition in Kenya as an efficient and cost effective way for couples to iron out, before entering marriage, property rights issues that could arise in the event of separation, divorce or death.
Legal Framework Governing Prenuptial Agreements Article 40(1)(b) of the Constitution of Kenya, 2010 (the Constitution) provides for the right to own property in any part of Kenya either individually or in association with others. Further, Article 40(2)(b), as read with Article 27(4), provides that Parliament shall not enact any laws that permit the State or any person to limit or in any way restrict the enjoyment of any right to own property on the basis of marital status.
Nevertheless, it was not until the enactment of the Act that prenuptial agreements gained official recognition in Kenya. The Act came into force on 16th January, 2014 and repealed the Married Women’s Property Act of 1882, which made no provision for prenuptial agreements. Its main objective is to provide for the rights and responsibilities of spouses in relation to matrimonial property and connected purposes. Section 6(3) of the Act provides that parties to an intended marriage may enter into an agreement prior to their marriage to determine their property rights. Indeed, in the case of MBK v MB (2016) eKLR, the Court was called upon to determine whether an apartment thatnthe defendant had bought prior to the marriage formed part of the
matrimonial property. The prenuptial agreement had only two clauses and provided, inter alia, that any property acquired by either party prior to their intended marriage would belong to that party after marriage. The Court held that since there was no evidence that the parties had agreed that the apartment would form part of the matrimonial property, it followed that the property belonged exclusively to the defendant.
Grounds for Invalidating a Prenuptial Agreement
Section 6 (e) of the Act provides that prenuptial agreements should be entered into freely by the spouses while section 6 (4) states further that a party to a prenuptial agreement may apply to the Court to set aside the agreement on the ground that the agreement was influenced by fraud, coercion or is manifestly unjust. However, the Act is silent on what amounts to fraud or coercion or what would render an agreement manifestly unjust.
It should be noted that common law principles and other laws of England have played an important role in shaping the history of Kenya’s legal framework. Kenyan jurisprudence has continually been influenced by that of England and as a result, English jurisprudence is still influential in Kenya. In fact, it is not uncommon for Kenyan Courts to refer to and apply English cases, particularly to fill gaps in the legislation or where certain matters have only recently been given force of law in Kenya and have not been dealt with in depth by the Courts, as is the case with the provisions on prenuptial agreements under the Act.
In England, the case of Radmacher v Granatino (2010) UKSC 42 provided the first significant judgment about the status of prenuptial agreements. In its judgment, the United Kingdom Supreme Court set out the following factors that increase the likelihood of a prenuptial agreement being binding the parties:
(i) The agreement must be freely entered into.
(ii) The parties must have a full appreciation of the implications of the agreement.
(iii) It must not be unfair to hold the parties to their agreement in the circumstances prevailing.
Before entering into a prenuptial agreement, it is important that each party seeks independent legal advice. Taking independent legal advice will aid in establishing that an individual was fully aware of the terms of the agreement and therefore freely entered into it, particularly if warnings were raised at a preliminary stage. For instance, in the case of DB v PB (2016) EWHC 3431 (Fam), the wife’s assertion of misrepresentation failed because it revealed that she had received independent legal advice in the United States advising her not to sign the agreement.
A person’s emotional state at the time of making the agreement is also relevant to whether the person entered into the agreement of his or her own free will, without undue influence or pressure. The Courts will also take into account the individual’s age and maturity and whether either or both had been married or been in long-term relationships before.
Timing is equally important and signing the prenuptial agreement immediately before the marriage increases the risk that one party will be considered to have put undue pressure on the other. The parties should have a full appreciation of the implications of the prenuptial agreement. This requires an exchange of financial disclosure before the agreement is signed to ensure that each party is aware of the extent of the claims he or she may potentially be giving up. On this point, in the case of Y v Y (2014) EWHC 2920, the Court refused to give effect to a French-style prenuptial agreement entered into by a French coupleliving in London who signed the agreement barely two days before their wedding. The Court took the view that while the wife had understood the function of the agreement when she signed it, she had not had any understanding of the financial consequences should the marriage breakdown.
The agreement must also be fair in the circumstances of the case. Concept of fairness has been subjected to much debate. The English courts have a broad discretion in financial remedy proceedings and at an absolute minimum will seek to ensure that both parties’ needs, and in particular the needs of the financially weaker party, and the needs of any children of the family are met. As a general rule, the longer the marriage, the lower the chance that the prenuptial agreement will be upheld, particularly if there have been significant or unforeseen changes in circumstances. In the case of WW v HW (2015) EWHC 1844, the Court accorded significant weight to the prenuptial agreement and went on to find that it would be fair to hold the husband to its terms unless his needs dictated a different outcome.
In view of the provisions of the Act on prenuptial agreements and the jurisprudence, couples contemplating signing a prenuptial agreement should be mindful of the following points:
• The parties should seek independent legal advice as a prerequisite to signing the agreement, even where one of the parties insists that he or she has read and understood the terms of the agreement, the rights and obligations that he or she will be surrendering. This is an essential element as it tends to show that the agreement was freely entered into by the parties without coercion or fraud.
• The parties should make full and frank disclosure of all of their assets including those that they intend to exclude under the prenuptial agreement. This is a requirement at common law.
• The parties should note that the agreement could be set aside by the Courts on the ground that it was unfair or manifestly unjust; therefore, the parties should ensure that the agreement does not have the effect of producing gross inequality between them either at the time of execution or during the marriage and that the division of assets is not weighted too heavily in favour of one party.
• The right of the child to support should be addressed prior to signing the Agreement, noting that the interests of the child take precedence over all other interests under Kenyan law. As was held in Radmacher v Granatino, the agreement cannot be allowed to prejudice the reasonable requirements of any children of the family.
• While there is no minimum time requirement for a party to review and sign a prenuptial agreement under the Act, the position at common law appears to be that prenuptial agreements must not be entered into less than twenty-one (21) days before the marriage.
• Signing the prenuptial agreement closely before the wedding is not recommended. The party initiating the process should therefore ensure that the other party is provided sufficient time to review the prenuptial agreement and the financial disclosures.