Already big business in comparable jurisdictions such as the US, we have blogged previously on the recent rise in popularity of prenuptial agreements in England & Wales, following the Supreme Court’s landmark decision Radmacher v Granatino in 2010. News of another important judgment last week may herald a new era for pre-nups, also known as marital agreements, which may soon become the norm for wealthy individuals looking to get married, reports Mark Heptinstall.
Prenuptial agreements represent an increasing portion of the day-to-day work we do as family lawyers, particularly now that they carry ‘decisive weight’ (under certain circumstances, more of which below). The latest case, BN v MA, has been widely reported – a reflection of the fact that pre-nups have become more effective in respect of later divorce settlements. In his judgment Mr Justice Mostyn provides a useful summary of the law on prenuptial agreements, and how it applied in this instance to the wife’s applications for interim maintenance, and a legal costs order against her estranged husband, whom she was divorcing.
The parties had a prenuptial agreement in place dated 30th May 2012, shortly before their marriage which ended just 15 months later. There was substantial background wealth of nearly £14m; amongst the terms in the agreement was provision for interim maintenance for the wife in the event of a later divorce. In his judgement Mostyn J stated categorically that the prenuptial agreement should be applied ‘as closely and as practically as it can, unless the evidence of the wife in support of her application demonstrates, to a convincing standard, that she has a likely prospect of satisfying the court that this agreement should not be upheld’. On the basis that the wife was ‘not in any real predicament of need’, Mostyn J opted to apply the terms of the agreement.
In his judgment Mostyn J explains that ‘decisive weight’ was given to the pre-nup in this case as it passed the Radmacher test: it had been ‘freely entered into by each party with a full appreciation of its implications’ and there were no ‘circumstances prevailing [such that] it would not be fair to hold the parties to their agreement’. Mostyn J went on to make a costs order against the wife for the costs incurred by the husband in defending himself against her unsuccessful applications. Clearly there is room for interpretation concerning whether the ‘circumstances’ could justify ditching the agreement, however Mostyn J’s judgment suggests that the bar will be set high.
These developments have been closely monitored by The Law Commission, whose latest report concerning the status of marital agreements, ‘Matrimonial property, needs and agreements’ will be published later this month. Potentially prenuptial agreements will become directly enforceable on divorce, not just given ‘decisive weight’ as one of a range of factors the court must consider when dealing with financial settlements.
Watch this space …
For advice on pre and post nuptial agreements contact us on 0161 969 3131.