“Prenuptial agreements: a rethink required”

Divorce|Relationships|August 14th 2008

I was interested to read an excellent article called Pre-nuptial agreements – a rethink required in this month’s Family Law journal. By Christopher Sharp QC of St John’s Chambers in Bristol, it contains an interesting review of the law in that area.

He begins with the famous case of Hyman v Hyman in 1929, where the House of Lords ruled that two parties could not agree to exclude the jurisdiction of the court, a position which remains to this day.

It means that in England and Wales, a prenuptial agreement will not be automatically upheld. Instead, an agreement of this kind is a matter for the court to take into account.

Since then various cases have sounded judicial warning bells, with judges questioning this approach, while informed judicial thinking has no doubt helped to shape the recent reference to the Law Commission who are examining whether a change of law is required to make these types of agreement automatically legally binding.

Mr Sharp canters through current law, including some well known cases such as Crossley v Crossley,(2008) 1FLR1467, where predictably the Court of Appeal indicated it was likely they would uphold the agreement, recognising that each party was in their own right a multi-millionaire, several times married and divorced. As I have previously posted, unfortunately the court only had the opportunity to witness initial skirmishes, as Mrs Sangster did not wait for the final ruling before abandoning her challenge.

It is clear that parties to a PNA should not assume they are unlikely to be upheld. To the contrary, it seems clear that PNA’s will be upheld – or at least parts of them -provided they are not unreasonable.

For example, In Ella -v- Ella (2007) 2 FLR 35 the PNA stated that in the event of a dispute, Israeli law would apply. Although the couple were resident in England at the time of the divorce, they had married in Tel Aviv and retained close links with Israel. The English court ordered the divorce to be heard in Israel, even though the PNA had been drafted by the husband’s lawyers and the wife had received no independent legal advice.

The issue of fairness in drafting the PNA was at issue in K-v-K (2003) 1FLR120, where the wife was pregnant at the time she signed the PNA. From a religious background and desperate to marry as a consequence of the pregnancy, she entered into the agreement with her future husband, on less than beneficial terms although she was at the time legally advised. When the marriage ended, she was held substantially to the terms of the PNA. Her pregnancy apparently was not regarded as sufficient to nullify the finding “she signed it without pressure.”

Contrasting opinion prevailed in J-v-J (2004) 1FLR1042, where the PNA, which was signed on the eve of his wedding without full legal advice to the future wife, was not upheld. The court felt that the husband’s actions in hiding his assets, and the PNA not having regard for the arrival of children, rendered it without force.

Mr. Sharp advises how best to ensure that if a court has to reach a decision upon such an agreement, how the agreement can be effective. A wide range of factors have been identified as pertinent, ranging from duress, time, disclosure, independent and competent legal advice beforehand, to the provision for regular reviews and equality of bargaining power.

He adds that as there is no certainty that a PNA will be upheld, because they are not automatically legally binding people have to resort to litigation to test them. I would argue this is a positive process, as the Court retains its right to consider the terms within the context of an overall s25MCA 1973 exercise, in pursuit of a fair result for both parties.

It is certainly my experience that with very few exceptions indeed, (such as previously divorced parties of equal wealth wishing to protect their respective children’s inheritances) PNA’s are by their very nature manifestly unfair and biased in favour of the paying party, otherwise they become redundant. They are signed at a time when the weaker party is emotionally unfit to act and by then his or her hands are tied;- they don’t want to jeopardize the marriage, especially if the wedding date is almost upon them.

It is becoming commonplace to require at least three weeks before the wedding for a PNA to be signed, as an acceptable time limit. Yet three weeks before a wedding, a great deal of arrangements have already been made – the guest list is complete, the honeymoon is booked, the dress purchased, the flowers, the reception, the food and drink all paid.

In other words, three weeks before the wedding, the not insubstantial costs have already been incurred – it is not is not nearly long enough in advance of the wedding and for the weaker party, worried about the legal consequences of jeopardizing the commercial arrangements for the wedding, it is far easier to concede and sign, than not.

Arguments have been made that the PNA should form a “bridge” between civil and family proceedings with automatic legal recognition of a PNA. However, in commercial transactions both parties are not emotionally tied, they negotiate at arm’s length and importantly, for value;- both stand to gain from the deal. In the case of a PNA, the weaker party stands to lose and would do so twice over if a legal hurdle were put in place.

Furthermore it is argued, we should bring our law in line with other member states of the EU and accept them as a part of our family law framework? I don’t see why we should – we retain our independent thinking in relation the rest of our family law, so why harmonise here?

Finally, should a PNA be legally binding because of social concern that marriage is declining? Does the fact that PNA’s are not automatically binding stop people getting married?

I would say not. Rather I believe it is far better that fairness which is the aim of our family law arising out of our peculiarly English championing of the underdog, stays that way.

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  1. Pre-Nups « Pink Tape says:

    […] 31, 2008 by familoo Interesting post from Marilyn Stowe about Pre-Nups. She has beaten me to Christopher Sharp QC’s recent article […]

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