Pre nuptial agreements however well drafted cannot usurp the jurisdiction of the Court. There is a rebuttable presumption that courts should give effect to pre nuptial agreements. The contents of a pre nuptial agreement must be fair.
The Supreme Court decision in Radmacher (formerly Granantino) v Granatino significantly changed the law on the enforceability of pre-nuptial agreements. The Supreme Court decided in principle that Judges when dealing with financial claims on divorce should give effect to Pre-Nuptial agreements. The presumption in favour of upholding them is subject to:-
- The agreement must have been freely entered into by the parties with a full appreciation of its implications.
- The Judge must consider whether or not it would be fair to hold both parties to the agreement
- Those who enter into Pre-Nuptial agreements will be considered to have intended their agreement to take effect.
- The existence of the agreement is capable of altering what the court would otherwise consider to be “fair” division of assets.
This means that the court should give effect to a Pre-Nuptial agreement that is freely entered into by each party and with full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to the agreement. This decision provides greater certainty in the enforceability of Pre-Nuptial agreements and the likelihood of them being upheld by the court.
There are likely to be an increase in the growth in the request by clients for Pre-Nuptial agreements not only from the super wealthy but also from the increasing number of people who enter second marriages where they have accumulated assets and experienced the reality of divorce.
Summary; the court has not concluded that pre-nuptial or ante-nuptial agreements should as a matter of law always be binding.
The language used by the majority in the Supreme Court suggested there was a rebuttable presumption which raises issues as to the burden of proof. The burden of proof may not be possible to reconcile with the exercise of the statutory discretion under the Matrimonial Causes Act when Judges are intended to apply the overriding objective to achieve a fair outcome.
If the issue of the enforceability of a post-nuptial or ante-nuptial agreement was elevated to that of a preliminary issue the court may be invited to treat the issue of the enforceability of the pre-nuptial agreement as a quick and cheaper method to resolve a case but if the court has to consider whether or not it is fair to uphold it the court will have to consider the parties full financial circumstances and decide how much weight has to be given to the agreement and would presumably have to hear all of the evidence in the case before reaching a conclusion.
There is every prospect the court will have to consider all the circumstances of the case including the duration of the marriage in some detail. If a marriage was short and childless it could be easier to rely upon an agreement but a 20 year marriage with children of the family presents different issues for the court to consider whether the agreement exists or not.
When the court grants a Decree of Divorce, Nullity of Marriage or Judicial Separation it has the power to order ancillary relief. Ancillary Relief governs the financial arrangements between the husband and the wife on the breakdown of their marriage. Sometimes the husband and wife have already made an agreement governing these matters. The agreement may have been made before the marriage (“an ante-nuptial agreement”) or after the marriage (“a post-nuptial agreement”). Post-Nuptial agreements may be made when the husband and wife are still together and intend to remain together or when they are on the point of separating or have already separated. The latter type post-nuptial agreement can be described as “a Separation Agreement”.
A court when considering the grant of Ancillary Relief is not obliged to give effect to nuptial agreements whether they are ante-nuptial or post-nuptial. The parties cannot by agreement oust the jurisdiction of the court. The court must however give appropriate weight to such an agreement.
If an ante-nuptial agreement or a post-nuptial agreement is to carry the fullest weight both the husband and wife must enter into it of their own free will, without major influence or pressure and be informed of its implications. Sound legal advice is obviously desirable. This will ensure the party understands the implication of the agreement and full disclosure of any assets owned by either party may be necessary to ensure this.
It is of course important that each party should intend that the agreement should be effective. In the past it may not have been right to infer from the fact of the conclusion of the agreement that the parties intended it to take effect because they may have been advised that such agreements were void under English law and likely to carry little or no weight. That will no longer be the case. In future will be natural to infer that parties who enter into an ante-nuptial agreement to which the law is likely to be applied intend that effect should be given to it.
If the terms of the agreement are unfair from the start, this will reduce its weight, although this question will be overtaken by the question of whether the agreement operates unfairly having regard to the circumstances prevailing at the time of the breakdown of the marriage.
The overriding criterion to be applied in ancillary relief proceedings is that of fairness and identify the three strands of need, compensation and sharing that are relevant to the question of what is fair. If an ante-nuptial agreement deals with those matters in a way that the court might adopt absent such an agreement there is no problem about giving effect to the agreement. The problem arises where the agreement makes provisions that conflict with what the court would otherwise consider to be the requirements of fairness. The fact of the existence of the agreement means that the agreement is capable of altering what would otherwise be described as being fair.
That leaves outstanding the difficult question of the circumstances in which it will not be fair to hold the parties to their agreement. That will depend upon the facts of the particular case, and the Supreme Court would not lay down rules that would fetter the flexibility of the court to reach a fair result. However the court did go on to give some indications including:-
- Children of the family; because first consideration must be given to the welfare while a minor of any child of the family who is under 18. An agreement cannot be allowed to prejudice the reasonable requirements of any child of the family.
- Autonomy; the court should give weight to a nuptial agreement because there should be respect for individual autonomy. The court should respect the decision of a married couple as to the matter in which their financial affairs should be regulated. It would be paternalisitic and patronising to override their agreement simply on the basis that the court knows best.
- Non matrimonial property; parties to a marriage may be motivated in concluding a nuptial agreement by a wish to make provision for existing property owned by one or other, or property that one or other anticipates receiving from a third party. There is a distinction between such property and matrimonial property accumulated in the course of the marriage. That distinction may be particularly significant where the parties make express agreement as to the disposal of such property in the event of the termination of the marriage.
- Future circumstances; Where an ante-nuptial agreement attempts to address the contingencies, unknown and often unforeseen, of the couple’s future relationship there is more scope for what happens to them over theyears to make it unfair to hold them to their agreement. The longer the marriage has lasted the more likely that will be the case.
In achieving the desired outcome of fairness the court will always look at need, compensation and sharing. The parties are unlikely to have intended that their agreement should result, in the event of the marriage breaking up, in a situation where one partner is left in a predicament of real need, while the other enjoys a sufficiency or more, and such a result is likely to render it unfair to hold the parties to their agreement. Equally if the devotion of one partner to looking after the family and the home has left the other free to accumulate wealth, it is likely to be unfair to hold the parties to an agreement that entitles the latter to retain all that he or she has earned. However these considerations do not apply where each party is in a position to meet his or her needs and then fairness may well not require a departure from their agreement as to the regulation of their financial affairs in the circumstances which arise. In relation to the third issue of sharing the court will be most likely to make an order in the terms of the agreement in place of the order that it would otherwise have made in the absence of the agreement.
The High Court has considered the descision of the Supreme Court in Radmacher in a case called Z v Z. The High Court expressed the view that Pre Nuptial agreements must be fair and therefore not enforceable if do not address the issue of the parties reasonable needs. It may be prudent for a Pre Nuptial agreement to identify and provide for reasonable needs and then deal with the issue as to how assets before need might be exclided from the sharing principle which the Court would apply in the absence of the agreement.
A glossary of some of the terms that you might hear if you go to court can be found by clicking here
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