Pre-Nuptial Agreements in England and Wales

By: Paul Milligan

Ford & Warren Solicitors

Leeds, England

It has long been determined that as the State encourages and supports marriage, any attempt to contract out of the rights and obligations inferred upon married couples will be void. The starting point is that in England and Wales pre-nuptial agreements are void and unenforceable.

The law over the years has developed and, whilst the statement above is still accurate, there is now a function and a place for such agreements in English law.

In the 1970’s and 80’s the court would simply dismiss any attempt to introduce a pre- nuptial agreement into the court room. The judiciary closely guarded their inherent jurisdiction in relation to family matters and were not going to be told by the parties what the outcome of a case should be.

Over the last two decades things have moved on a pace.

The determination of the financial aspects of a divorce case in England and Wales is governed by s.25 of the Matrimonial Causes Act 1973 as amended. [1]

By virtue of s. 25 (1) the court is directed to have regard to “all the circumstances” of the case. The lawyers in pre-nuptial cases have relied on “all the circumstances”, pointing out that the existence of a pre-nuptial agreement is a significant circumstance of the case. The question for the Judge is to determine how much weight should be given to this provision, as opposed to the other provisions within the Act

The case of Crossley v Crossley[2] gave pre-nuptials a far greater significance than previously. The Court of Appeal confirmed that the judiciary can now require a party to show cause why such an agreement should not dictate the outcome of a financial claim. This approach has very recently been confirmed again by the Court of Appeal in Radmacher v Granatino. [3]

If the agreement is to become a material consideration for the court when considering what adjustments to make to a couples’ finances upon divorce, the courts have identified certain criteria that will have to be met:

• Each party should take or have had a  genuine opportunity to take legal advice.
• Each party should provide full and frank disclosure of their financial means.
• The agreement should be completed in good time before the wedding (generally at least 1 month).
• No undue pressure should be exerted on a party to enter into the agreement.
• Broadly speaking, the terms of the agreement should be “fair”.

The closer the actual circumstances are on divorce to those envisaged by the agreement, the more likely it will be that the terms of the agreement will have an impact upon the final order. So the unanticipated arrival of children or a dramatic change in a party’s finances will render the agreement less relevant. The length of the marriage is likely to be a significant factor, so that the longer the marriage, the less relevant the agreement will be.

Pre-nuptial agreements may be important in resolving jurisdictional issues and help prevent so called “forum shopping”. England is widely considered one of the more favourable jurisdictions for the less wealthy party upon divorce. A pre-nuptial can specify the jurisdiction in which claims arising out of the marriage should be heard. (This unfortunately does not apply between countries within the European Union because of European law (“Brussells II”) which says that the court first seized will generally have exclusive jurisdiction.)

In the Crossley case Lord Justice Thorpe expressly called for legislative reform to give greater opportunity for “parties to contract in advance of marriage to make provision for the possibility of dissolution”. The Law Commission is expected to look at the area and make recommendations in the near future.

The courts have recently held that an agreement entered into after marriage but before separation is binding – MacLeod v MacLeod [1]. In 1994 a very wealthy businessman married a woman some 22 years younger than him. There was a large wealth difference between the parties, the husband having acquired significant assets prior to the marriage. The parties were American but the year after the marriage they moved to the Isle of Man. They made 3 agreements during their relationship: one on their wedding day, and two after marriage but before separation (the second of which was only a variation to the pre-nuptial agreement). On each occasion both parties had separate legal representation, there was full financial disclosure, it was found that the wife was acting voluntarily and under no pressure at all and both parties fully intended to create legal relations. The court found the third agreement to be binding. It commented that post-nuptial agreements are very different from pre-nuptial agreements. A post-nuptial agreement is a “maintenance agreement” for the purposes of the Matrimonial Causes Act 1973 s. 34 and therefore has statutory basis. The same is true of an agreement entered into upon separation.  Provided they are fairly entered into then they will be binding. They may however be varied under the provisions of  Matrimonial Causes Act 1973 s.35 where circumstances have changed. The court found no statutory basis for upholding agreements between people who are not yet parties to a marriage and commented this was a matter for Parliament.

So how do you give as much certainty as possible to a couple who wish to regulate their finances in this way? The answer is to have a pre-nuptial agreement before marriage and to renew this after vows are exchanged. Each party will require separate legal advice (and the agreement should recite that fact, or at least that both parties were give the opportunity to take such advice) and it would be prudent to arrange for a review of the agreement every few years and/or on the arrival of children. Remember, marriage revokes a will so the two matters (pre-nuptial agreement and a new will) will usually go hand in hand.

[2] [2007] EWCA Civ 1491

[3]  [2009] EWCA Civ 549

[4][2008] UKPC 64