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EVERYDAY LAW: Prenuptials and the law

Cecil McCarthy

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Today I conclude my discussion of the landmark decision of the English Supreme Court in Radmacher v Granatino  where the court held that a pre-nuptial agreement properly entered into by the parties is one of the factors that a court must take into account when considering an application for ancillary relief in a matrimonial cause.
The British Home Office in 1998 published a consultation document Supporting Families in which the question  of prenuptial agreements was considered.
While delivering the judgment for the majority in Radmacher v Granatino (2010) Lord Phillips cited six safeguards from the document to which nuptial agreements should be subject and which would prevent them from being legally binding; namely:
• where there is a child of the family, whether or not that child was alive or a child of the family at the time the agreement was made;
• where under the general law of contract the agreement is unenforceable, including if the contract attempted to lay an obligation on a third party who had not agreed in advance;
• where one or both of the couple did not receive independent legal advice before entering into the agreement;
• where the court considers that the enforcement of the agreement would cause significant injustice (to one or both of the couple or a child of the marriage);
• where one or both of the couple have failed to give full disclosure of assets and property before the agreement was made;
• where the agreement is made fewer than 21 days prior to the marriage (this would prevent a nuptial agreement being forced on people shortly before their wedding day, when they may not feel able to resist).”
At Paragraph 75 of the judgment Lord Phillips advanced the following proposition concerning both ante and postnuptial agreements – (“nuptial agreements”): “The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.”
In today’s article I will consider the meaning of the above statement as distilled from the judgment of Lord Phillips.
First the agreement must be freely entered into by each party.  This means that factors which invalidate an agreement such as duress, fraud or misrepresentation will have a similar effect on the weight that will be attached to a prenuptial agreement.  
Additionally, unconscionable conduct such as undue pressure (falling short of duress) will also eliminate or reduce the weight to be attached to the agreement.  
So too will conduct such as exploitation of a dominant position to secure an unfair advantage.
Lord Phillips at Paragraph 69 of the judgment commented on the safeguards referred to above: “The safeguards in the consultation document are designed to apply regardless of the circumstances of the particular case, in order to ensure, inter alia, that in all cases ante-nuptial contracts will not be binding unless they are freely concluded and properly informed.  
“It is necessary to have black and white rules of this kind if agreements are otherwise to be binding.  There is no need for them, however in the current state of the law.
“The safeguards in the consultation document are likely to be highly relevant, but we consider that the Court of Appeal was correct in principle to ask whether there was any material lack of disclosure, information or advice.  
“Some legal advice is obviously desirable for this will ensure that a party understands the implications of the agreement, and full disclosure of any assets owed by the other party may be necessary to ensure this.  
“But it is clear that if a party is fully aware of the implications of any ante-nuptial agreement and indifferent to the detailed particulars of the other party’s assets, there is no need to accord the agreement reduced weight because he or she is unaware of those particulars.
“What is important is that each party should intend that the agreement should govern the financial consequences of the marriage coming on for an end”.
Some of the matters that could affect the fairness of such an agreement were mentioned by the court.
For example, it would not be fair to permit an agreement to prejudice the reasonable requirements of any children of the family.
The court also specifically, mentioned the desire of a party to make specific provision to protect existing property or property that is expected to be received from a third party.  The court felt that there was nothing inherently unfair in an agreement which is designed to treat such property differently.
The court also held that the longer the marriage endures after the agreement the greater is the possibility that it may not be fair to hold the parties to its terms because of unanticipated changes in circumstances.
If the decision in Radmache v Granatino is followed in our courts it means that parties intending to marry or already married may enter into agreements which provide for the distribution of their assets on dissolution of marriage.  Provided the agreements are fair and fully entered into with the benefit of full disclosure of assets and independent legal advice, the courts will give them “decisive weight” in the event of a divorce.
•Cecil McCarthy is a Queen’s Counsel. Send your letters to: Everyday Law, Nation House, Fontabelle, St Michael. email to [email protected]