If the relationship breaks down, she may find herself trapped in the marriage for fear of the consequences of divorce – and trapped if she leaves, because of the constraints of the prenup. She is at the mercy of her spouse. Such a scenario is not uncommon in other countries but in England and Wales, despite the ruling in Radmacher v Granatino last year, we still do things differently.

In my experience – and I accept, of course, that I am instructed when things go wrong – the existence of a prenup can cause resentment to build and anger to surface. Eventually, the couple’s relationship can wither on the vine. I’ve seen it happen, and I have also been contacted by readers of this blog who have been caught up in these types of agreement and don’t know what to do.

It can be argued that that you enter into a prenuptial agreement freely and of your own will. You are not forced to sign, and you know what you are doing. So why should you not be held to your bargain? It happens in Europe and it happens in the USA. The Supreme Court certainly thought so in Radmacher v Granatino. That case featured a prenuptial agreement signed in Germany and which, to many English lawyers, seemed grotesquely unfair. But the poorer spouse, in this case the husband, was held to his bargain. He had signed it and he had to live with the consequences, leaving his marriage with nothing from his heiress wife. He had signed away his entitlement to capital or income.

Or had he?

Radmacher v Granatino

When the Supreme Court handed down its judgment in the case, it left a window open:

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.

Although the judgment gave prenuptial agreements “decisive weight”, it is still not necessarily the case that prenups are upheld by English law. To fill the gaps and avoid any further possibility of “fairness” raising its irrelevant head, new legislation may be on the way next year.

In the meantime, how much wriggle room is there in reality?

There were critics of the Radmacher decision who wondered if a similar fate would have befallen a woman in front of the Supreme Court. Had the roles been reversed, and Mr Granatino had been the one worth £100 million, would Ms. Radmacher have left the marriage with nothing? Or would the court have found a way of meeting the needs of a wife and mother? Perhaps the effect of Radmacher v Granatino could only truly be understood when such a case came before the courts…

This then was the speculation swirling around the newly appointed Mr Justice Moor in one of his first cases, Z v Z [2011] EWHC 2878.

Z v Z

In this case, it fell to Mr Justice Moor to adjudicate the merits of a French prenuptial agreement – a Separation des Biens – between two French citizens living in London. In that agreement, the wife had surrendered any right to share in the couple’s shared assets. Only the assets in their own names would ever remain their own. However there was no mention of maintenance in the agreement.

Acting for the wife, Tim Scott QC won the first round before Mr Justice Ryder, securing English jurisdiction. It then took three years before the wife’s application for a financial settlement was finally heard, before Mr Justice Moor in October 2011. The judge had to decide whether to give full intent and effect to the draconian French agreement signed by the wife in France in 1994, days before the couple’s marriage.

The couple had gone on to have three children. The assets involved were £15 million, of which the wife had £1.3 million in her name. The husband was an extremely high earner: between 2006 and 2011, his average annual income was in the region of €3 million. His income was thereafter projected to drop, to exclude bonuses.

The husband’s position was that sharing, per White v White, was excluded as a consequence of the 1994 agreement. He accepted the narrow window afforded by that particular agreement – that the wife’s needs should be met – and, assessing and capitalising her housing and maintenance needs, he offered an overall total of 35 per cent of the assets.

The wife sought 50 per cent of the total assets. During the marriage she had hoped that he would agree to vary the agreement, but the court found it was never varied. Was she entitled to “share” in the assets, despite having given up her entitlement to do so? Otherwise was she entitled, at the very least, to have her needs met and to be compensated for having given up her job and having children?

Or was the case to be dealt with by reference to French law only, which would have applied had the parties been living in France?

The judgment

Mr Justice Moor rejected the argument about the application of French law. In England, English law is always applied. He then considered the state of the relevant law in England.

The judge referred of course to Radmacher, focusing on the Supreme Court’s comments about the various elements of any financial award: needs, compensation and sharing.

With regard to sharing, he pointed out that even though Lady Hale dissented in Radmacher, she still commented as follows:

In the present state of the law, there can be no hard and fast rules save to say that it may be fairer to accept the modification of the sharing principle, than of the needs and compensation principles.

It seems to me that this is what Mr Justice Moor did. He upheld the agreement and rejected the compensation argument. He then made provision for the wife’s needs, which he accepted could not be fully met out of her own capital. He awarded a lump sum for a house and capitalised her income requirements per Duxbury.

He assessed the wife’s income needs at £100,000 per annum. For most of us this is a small tax-free fortune each year, but surely not for a wife in these circumstances, with such a high-earning husband and a substantial lifestyle? The judge did, however, add £75,000 per annum for the three children.

When totted up, the total she received amounted to 40 per cent of the assets. What a neat sum – so neat, in fact, that I wondered if it had been in the judge’s mind and if he had worked back from there!

Final thoughts

I have put off writing about this judgment because I wanted to consider its overall effect. I think it is full of common sense. Mr Justice Moor made it clear that if there had not been a prenuptial agreement, the wife would have received 50 per cent of the assets. But because there was an agreement, and because the judge gave effect to that agreement, he was left with no alternative but to make sure that the wife’s needs were met.

What is wrong with that?

After 14 years of marriage, three children and vastly changed circumstances, it seems to me that the decision in this case was spot on.

What comes next year may change everything again but, in the meantime, I can see nothing wrong with the law as set out in Radmacher v Granatino, and applied in Z v Z. I said it when the Radmacher judgment was handed down and I’ll say it again: there is no need for any further legislation. The judiciary are doing a fine job of applying the law.

The Experts: Has Kate signed a royal prenup?

Marilyn Stowe

Come Friday, I’ll be watching the royal wedding on television along with everybody else. I’m looking forward to enjoying a glass of wine, checking out what the families are wearing and finally finding out who has created the bride’s wedding dress.

Being a family lawyer, however, I have found that when the Big Day comes up in conversation, people ask me about another “royal wedding secret” – one that is rather less romantic than gowns or tiaras. They want to know if I think Kate has signed a prenuptial agreement.

There has been a lot of speculation about this, particularly on the other side of the Atlantic where prenups are more common and royal wedding fever is running high. Personally I dislike prenups. Marriage is an equal partnership and I believe that it should begin as one.

At the same time the pressures of a royal life lived in the spotlight are well documented. The public divorce of the groom’s parents almost toppled the monarchy. Few would be surprised if sensible royal advisors wanted to minimise the risk, however small, of another public divorce and multi-million payout.

On 20 October 2010, the UK Supreme Court handed down its long-awaited judgment in the leading prenup case, Radmacher v Granatino. The President of the Supreme Court, with an unassailable judicial majority of eight to one, stated that prenups will now be upheld unless there are compelling reasons to the contrary.

The date of that groundbreaking judgment has been overlooked, but I think that it provides a significant clue for those who are intrigued by the possibility of a royal prenup. It was also on 20 October that, far away in Kenya, Prince William finally proposed to Kate and gave her his beloved mother’s iconic engagement ring. Would he have done so unless there was a default agreement in place about its ownership? In law an engagement ring otherwise becomes the absolute property of the recipient. It seems unlikely, so why restrict an agreement only to the ring? The judgment in Radmacher v Granatino means that such an agreement could now be legally “bombproof”.

Ultimately, does it matter if Kate walks down the aisle with a divorce settlement already signed? She strikes me as a tough cookie and has proven staying power. She loves her man, he loves her and I’d like to think that any agreement will be left to gather dust.

Times Law: The Experts

For me, Sara’s comment was well-timed, coming as it did after the Law Commission had published its provisional proposals for the legal status of prenuptial agreements. An editorial of mine had just been published in the Yorkshire Post. In it, I concentrated on the emotional impact of prenups. I noted that in my experience, the resulting power imbalance between a couple can serve to increase hostility and resentment. Far from saving a marriage, a prenuptial agreement may be the cause of its irretrievable breakdown.

Although Sara isn’t married, I wonder if her words don’t add weight to this argument:

“There are people like myself, who have been in a 10-year-plus relationship, who have never been married but would very much like to get married. My partner is divorced, has been stung by his ex wife who took everything she “was entitled” to – although she had never worked, lazy and contributed very little, hence why the marriage broke down. He now, even though I have had the same job for last 15 years, pay my way, have a mortgage with him albeit in unbalanced shares, and his proposal was “subject to you taking the same percentage out of the house as you financially contributed” (approx 10%), I can have a car and that’s it.

“I work very hard, I am the driving force behind home, I organise everything and quite frankly, he would be lost without me. We will never be on the same salary – he earns a lot – I earn approx 0.25 of his salary. But do you really think that is fair? I am now 40 years old, being asked to consider children out of wedlock – which yes is possible but not something I am comfortable with in the slightest. Do you also think it is fair that our relationship should be “because we choose it”? No – it is because of what happened to my partner in his divorce and he doesn’t want to have that happen again. Do you think it’s fair that because of his situation, I either can stay as a partner, never have the experience of a marriage ceremony, and God forbid should I sign the document and something goes wrong, I end up having to start all over again whilst he stays in the house, benefits from all my hard work (decoration etc) and I end up working the same hours as I did when I first scraped together the deposit on my first flat, which was sold to put the funds into the house? And if I have a child – I would have that to contend with too?

“Is security of a marriage not a two-way thing? Is it no longer about knowing the person before you marry them? I am 40 as I’ve said, my partner is 47. We have been together for over 10 years, known each other for 12 years and that apparently, holds absolutely no value. What for me would be a fair document in the event of a split (i.e. keep the proportional split in the house but split 50/50 any increase in the value of the house) is apparently not acceptable.

“Quite frankly, am sick to death with it all! I cannot blame my partner – it is the law that stops things being about values and instead about deal breakers before you head down the aisle…….marvellous!”

So let’s summarise Sara’s position, which I would describe as unhappily unmarried. She has been in a relationship with her partner for 12 years. She has actually been cohabiting with him for 10 of those years. When they began living together, they agreed that they would own their house in unequal shares, the same as their respective financial contributions, and that when the house was sold, the net proceeds would be split in those same proportions. They agreed nothing else, because Sara didn’t see the need or perhaps had no choice, because her partner has been divorced. He has had one divorce payout, and he did not wish to be “caught out” again. So this was the only deal to which he would agree and Sara went for it.

Despite the passage of time, all that they have shared and done together, all she has done for him, for them both, his position has not changed. He won’t marry her, even though he would appear to know full well of all her fears about finances as she gets older. He knows that she works hard in the relationship. He knows too of her perception that the contribution she has made deserves greater recognition. But he won’t budge or alter his deal. It’s take it or leave it for him.

Sara, on the other hand, is increasingly anxious. She has become acutely aware that her own contribution to the relationship has been completely undervalued. His former wife did far better and never worked, although she presumably made her own contributions. His former wife had needs, which the court recognised. Such is the value of marriage in current law.

Decision time

There is little that Sara can do about her own situation which, probably correctly, she assesses as more financially valuable than that of her partner’s former wife. But once bitten, he won’t even agree a prenup. He won’t change his mind.  Why should he?

As far as she can make out, in law she can only be pinned into place by the equivalent of a watertight prenup, which her partner holds in the palm of his hand. Worse still, from what I can gather, it appears to be only on that basis that he would have a child with her. She has given and given. Now she is finding out that he intends to stick to this quasi agreement.  She is being held to her bargain.

The decision is now hers. Does she stay or does she go? Clearly, she has no chance of convincing her partner to marry. If he won’t even give a child of his the stability, comfort and security of marriage, what will convince him?

Sara blames his former wife and our current divorce law for her predicament. But I don’t. The decision was his, is his and remains his. He could alter his position at will, but he won’t.

So what does Sara do?

The Law Commission is proposing that clauses in prenups would be overturned if they made insufficient provision for children. So if Sara did marry and was held to a prenup under the terms described above, she could legally obtain provision for her child. This would be exactly as the court ordered for Mr Granatino’s children, even though they dismissed his own claims and held him to his prenuptial agreement, unfair as that prenup appeared to be.

But Sara isn’t married. Can the law help her?

One option, of course, is that she could simply walk away. Perhaps she would rather live alone than be part of an unequal relationship that causes her such distress. She could take it on the chin, cut her losses and start again. He might even miss her, recognise he loves her… and who knows? Anything is possible when emotions are involved.

If he remains immovable, should she willingly bring a child into the relationship? That is a difficult question, and is one for Sara to answer.

But if Sara did decide to bite the bullet and have a child, her situation in law would dramatically change if her relationship with her partner broke down. Ironic, isn’t it? She would be able to make financial claims against him – and he would not be able to contract out of them. A Carer’s Allowance, payable to Sara during her child’s minority, would be calculated in a similar way to spousal maintenance, plus housing, lump sum and income claims for the child.

Overall, however, if proof of the appalling impact that a binding prenup can have upon the weaker spouse is required, this is it. And there isn’t even a prenup.

Lord Justice Munby, the chairman of the Law Commission, who also sits as a judge in the Court Of Appeal (and was one of the judges in Imerman), made a very wise observation last week.

As the Law Commission prepared to publish its report and provisional recommendations in relation to prenuptial agreements, he told the FT:

Emotions are engaged in a way in which one suspects emotions are not engaged in litigation carried out through Queen’s Bench division or Chancery court.

I couldn’t agree more.

As a solicitor practising at grassroots level, I get to know a client for better (or worse) during the course of his or her case. Indeed, it could be argued that as a solicitor I get to know a client much better than his or her barrister, who may get to meet the client on a few occasions only. Even then the client is buffered by the solicitor for the most part.

In fact, few barristers and even fewer judges will ever see a client in all the differing emotional states that we solicitors do.

A typical case: from denial to acceptance

The example to which I am about to refer describes a female client, but applies to male clients in equal measure. Both are the “innocent parties”, having been left for another person.

Typically I will first see the client, who has been deserted by her husband for another partner, when she is deep in shock. She will be seeing me because her friends or family members think it is the right thing for her to do, in the circumstances. They are probably right, but usually the client isn’t receptive to any of it. The last person she wishes to see is a divorce lawyer, who is there to help her get out of a marriage that she desperately wants to save. This can be the case even when it is clear that the client’s husband, with the advantage of months or even years of planning, has other ideas.

In all likelihood, she is still stubbornly in denial when I see her for the second time. Perhaps she has tried to come to terms with the loss of her spouse, her home and the distress of her children, but it is all too much to bear.

It isn’t happening.

He may still come home.

He just needs time.

Months later, when she begins to move forwards, she will become angry. He has rejected her. The utter coward gave her false hope. How dare he ruin her life and the children’s lives too?

How dare he?

The next time I see her, she is enraged.  Often this is the time when the financial disclosures are being made and she believes that her husband is being less than truthful. Everyone will be getting the flak. It’s everybody else’s fault and above all, it’s his, or his lawyer’s, or his family’s. They are all conspiring against her. She may even be right.

Then, as the truth that he is never coming back home begins to dawn, she will be prepared to bargain, as a last resort to stop the divorce happening. But it takes two to tango, and he’s too far ahead of the game to even consider it. Nothing works. He wants to take full advantage of her weak state of mind to try and get her to settle for too little.

And she finds it incredibly tough.

Time passes. She finally realises that the past is in the past and he isn’t coming back. She accepts that she must come to terms with her family circumstances. She finds herself ready to face the future and her new life without him.

And she does.

However it takes time and courage to get to this stage. It doesn’t always happen quickly, and the court case may be over before she’s even ready for it. I reckon that on average, it can take at least a year for a distraught client to realise she has no choice and to reach this acceptance stage.

For a solicitor, it can be challenging to manage a client who is trying to cope with such an array of emotions. The client can’t help it. Everything she feels is real. Her ups and downs; her highs and lows.  Her pain and devastation may even cause her to react in ways she wouldn’t dream of doing if life was great.

But life in divorce isn’t great. It is far from it.

It can be horrible and lonely. The client can’t help how she feels and she must deal with the pain of divorce at her own pace. And deal with it most of our clients do, physically and mentally.

By the time she reaches the acceptance stage, the typical client will have her urges to text “him” under control. She may have steadied see-sawing weight or had a new hairdo. She will have retrieved her dignity and self-confidence.  Finally the client finds closure, all by herself.

It is a cathartic process, one which all those who have experienced divorce or bereavement will recognise as normal and will have experienced to some degree.

It is of course made much more difficult if the wife is also physically ill. For example, what if she is a cancer sufferer, whose husband has turned to another for comfort? This isn’t as infrequent as you might think. She is fighting two battles, one of them for her life.

I wonder, would binding prenuptial agreements help or hinder this emotional recovery process?

If I were a wealthy man with a newer, more inviting model in the wings, I would – naturally – vote in favour of an advantageous, rock-solid prenup to remove myself from my current marriage. How much simpler life would be!

No messy divorce.

No legal fees.

Trade in one spouse for another.

She would just have to deal with it.

Similarly, if I was a wealthy man and was minded to protect the interests of the wealthy family from which I hailed, I would vote similarly. I’d crunch the older model into the ground: my new wife would be hovering on the horizon – and she would come and go as cheaply as her predecessor did.

How cheap and easy marriage would become!

Consider the needs of the deserted wife.  She is left bereft, alone, with no real income capacity to maintain herself. Her self-confidence is worn down and her dignity is in shreds.

Her husband has shamed her by moving on and worse still, if these prenups with their renewal and exclusion clauses have become binding, and she has been obliged to sign one, there is little that can be done. Nothing is left to the wife other than what her husband has graciously decided to bestow upon her.

As judges know, these wives sign because they trust their partners.

It is difficult enough in cases that involve rich men, with assets in trusts, meeting their wives needs. If these women are tied into harsh prenuptial agreements, their fates would be far worse. The wives would be ruined while their husbands would not.

All our law would be turned on its head. Meeting the spouse’s reasonable needs and standard of living during the marriage? Not a chance.

Let’s consider the emotional states of the parties when they entered into such an agreement. Pre-marital stresses are known to exist. This should be a happy, fun time – but in many cases it is fraught with nerves and worries on both sides. Brides will find they gain or lose weight, arrangements for the wedding are often complicated and expensive, families may be quarrelling, there will be a home to consider, a wedding list, the guests, the cost of it all and the honeymoon. All parties will be treading on eggshells.

Is this the best time for a coldly impersonal marital agreement that, years down the line, could leave one spouse virtually destitute?

Perhaps you would argue that people have a choice and don’t have to sign up to a prenuptial agreement.

But guess what? They are emotionally involved and they trust their partners, even when everyone round them thinks they are fools. They don’t care about lawyers and the future because their emotions are preventing them from thinking rationally. If they were rational, cold-hearted and commercial, they’d never sign a tough prenuptial in a month of Sundays.

Relationships (and not forgetting the intimacy of a sexual relationship which has produced absolute trust in the other) produce normal but highly turbulent emotional reactions which, observed objectively, are off the scale. It is because of those emotions that people decide to marry and for the same reason, why people decide to divorce.

So, if we understand how foolish emotionally involved people are when they sign the prenup, when lawyers can’t stop them, why on earth are we trying to hold them to their crazy bargain? Especially at a time when we need not do so, because we still have the fallback position in Radmacher?

Last week I heard the most unbelievable comment from one client.

Why, she wondered, had her husband decided to divorce her when his company, predicted to be sold in the next few years, was doing so badly right now? Was it because he was so mixed up, having started an affair?

I kid you not.

My client couldn’t see that this was absolutely the best time for him to divorce her, before the business picked up again. That’s because, in classic denial, she just didn’t want a divorce. So she was clutching at anything at all that might mean he was the emotionally unbalanced one of the two.

The First Wives Club

This weekend I watched one of my favourite films – again. The First Wives Club is terrific: it follows three wives through the full range of emotions that are so familiar to my clients, when all three are dumped by their husbands for younger women. The story is of course exaggerated, but the film is brilliant. At the end of it, all three reach the acceptance stage and begin to move on.

The clip above is from the end of the film, when the three wives literally dance off the set, their self-confidence and dignity returned. They accept the past and are ready for whatever the future may bring. And because they are played by Goldie Hawn, Diane Keaton and Bette Midler they all look fabulous.

The First Wives Club is raw, funny and at the same time, truly demonstrative of real life divorce and all its pain. It shows it can be overcome.

I never tire of this film. It’s unashamedly pitched at all divorcing women and if you are a woman going through divorce, I recommend that you download it and watch it immediately.

And laugh!

A final word

It is important to remember, particularly after the ruling in the Imerman case, that if YOU need to draw upon self-help in your case against your spouse, it can be very difficult. The judges are clearly aware of your emotional state, and they may even recognise that emotions don’t occur in the same way in the other divisions of our court system. However this does not mean that allowances will be made for any form of self-help.

The judges will have no sympathy whatsoever and, unlike the triumphant three women in the movie, if you decide upon any self-help you could find yourself in trouble. You could even, heaven forbid, end up in jail.

I wish our judiciary would watch The First Wives Club, and act on it. It should be compulsory viewing!

From the Opinion pages of the Yorkshire Post, 14/01/2011.

Prenups and the law are an uneasy marriage

By Marilyn Stowe

Some are wealthy, some are superwealthy and others are not wealthy at all. What they share are concerns about what will happen if their marriages – or in the case of parents, their children’s marriages – break down. They don’t want any of the family wealth to pass to the divorcing spouses, and they are determined to keep a tight grip on their money.

As a family lawyer, I am a realist who appreciates and will act upon a client’s wish to protect assets or ring-fence family wealth. As a wife and a mother, however, I am not a fan of prenuptial agreements. I would not have signed one, nor married anyone who asked me to as a precondition of marriage. I would not wish to see my son or a future daughter-in-law locked into a prenup, for reasons that I shall explain.

At the time of writing, prenuptial agreements may be upheld in England and Wales – but only at the judge’s discretion. Change, however, is in the air. To great fanfare, the Law Commission, a government-funded body tasked with making recommendations for law reform, has this week published a 150-page consultation document. In it, the Commission sets out “provisional proposals” to give some prenups, those dealing with inherited wealth and preowned assets, automatic force of law.

This development follows the Supreme Court’s decision in the long-running case of Radmacher v Granatino, which involved a German heiress, a £100m fortune, a French former banker and a hotly-contested prenup. The case made headlines last October when eight out of nine Supreme Court justices upheld the agreement and ruled that, provided certain formalities are complied with, a prenup can hold “decisive” weight – even if, as Mr Granatino complained, the agreement seems to be unfair.

Note that the Law Commission’s new consultation document is a lengthy, intellectual and extremely careful recommendation in favour of legally binding agreements. There are few “get out clauses” designed to protect pre-owned assets or inherited wealth – irrespective of fairness, which is the basis of current law.

If these proposals become law, it looks as if the court could intervene to dismiss such an agreement only if insufficient provision was made for the children of the family, or if the weaker spouse was thrown onto the State.

I can understand how, in certain high-profile cases, a binding prenuptial agreement would forestall much of the potential fallout and safeguard dynastic wealth. For example the members of the Royal Family, for all their wealth and privilege, seem peculiarly vulnerable to divorce; indeed, the divorces experienced by certain of the Monarch’s children have been prolonged, unpleasant affairs played out in the public eye.

The marriage and subsequent divorce of Sir Paul McCartney and his second wife, Heather Mills, also come to mind.

In such cases, if significant inherited or pre-owned assets are not used to meet the reasonable needs of the parties during the marriage, I see no reason why, in the interests of fairness, those assets could not be ring-fenced.

Then there are the “everyday” couples who, in an increasingly risk-averse society, simply wish to protect assets in the event of divorce and may benefit if, and when, prenuptial agreements are given automatic force of law. They could include couples who are entering into second marriages, who wish to protect the children from their first marriage.

What is often overlooked, however, is the effect of a prenuptial agreement on the marriage itself. I have seen cases in which a prenup has actually “legally handcuffed” the weaker party to a relationship, and the marriage founders upon increasing resentment. As marriage is an equal partnership, I believe that, generally, it should begin as one – although it is true to say that with or without a prenup, there is no guarantee of a successful marriage.

The bedrock of our family law system is its fairness, exercised through judicial discretion. It can protect the vulnerable from what is manifestly unfair. At present, our family law is not based on a one-size-fits-all approach; instead, each case is treated differently, within the context of each couple’s finances.

A binding prenuptial agreement, which completely ignores this principle, does not sit easily with current law. Yet it seems that, despite this being a non-urgent area of law involving relatively few couples, there is a clear appetite for change. I expect we will see swift, fault-free divorce and tough, uncompromising law enforcing these prenups.

However, I can’t help thinking that the length of time it has taken the Law Commission to produce this consultation document, the length of the document itself, its uncertainties and complexity, all point to one thing. This is the incompatibility of the uncompromising prenup with our current law.

So what next? If new legislation is indeed on the way, it will likely be accompanied by family law reform that is tougher and more radical than any of us could have foreseen.

Marilyn Stowe is the Senior Partner at Stowe Family Law in Harrogate.

From the comment pages of The Independent, 03/07/09.

No longer the capital of divorce

By Marilyn Stowe

Yesterday, I thought about placing a bet on the outcome of the Radmacher v Granatino case. I would have backed the outside chance that the Court of Appeal would uphold the pre-nuptial agreement, even with all the odds stacked against me.

English law doesn’t automatically recognise such agreements. It is about needs, obligations and distributing assets and income fairly. Yet, I thought, times have changed. We are living in a European country. English law gives the courts discretion to reinterpret the law. Would the same judges who once pooh-poohed pre-nuptial agreements dare to change their minds? They did. Continue reading >

If worst comes to worst, make sure you have back-up.

If your intended spouse is a foreign national and you are going to move overseas to be with them, are you aware that if your marriage breaks down, you may be unable to return home to your family with your children?

You could, for example, be held to a pre-nuptial agreement in a foreign language that you did not understand when you trustingly signed it. What if it makes no proper financial provision for you or your children?

You may be submitted to the mercy of a foreign court – a religious court, even. What if it enforces a decision weighted against you, a decision that a court in your home country would not contemplate? At best, your departure would be authorised and you would then have to uproot your children and change their entire way of life.

At worst, that court’s decision could leave you in a terrible situation: legally unable to leave that country with your children. 

As for fleeing your spouse’s country without permission: I have been involved in child abduction cases all over the world. The outcomes can be heartbreaking, with parents permanently separated from their children until adulthood. Would you wish that to happen to you?

As the head of an English family law firm specialising in international cases, I have litigated many such cases and encountered the scenarios outlined above. I know that when you are in love and your heart is ruling your head, such possibilities seem distant.

However, if you are about to marry and move abroad to be with a foreign national, I recommend that you do what you can to ensure that if worst comes to worst, you can extract yourself with minimum difficulty.

If you are English, do not under any circumstances sever your links. I strongly recommend that you maintain a place of residence in England – even if it is your parents’ home. Visit as frequently as possible. If you can do some work in England, do so.  Maintain an English bank account and save as much as you can, in case of a rainy day. If you must hand money or property over to your spouse, take every step you can to ensure that it is protected. Do maintain a doctor, dentist and other links with England. Make sure your children visit England frequently and stay there as long as possible during their frequent visits. Make sure they speak and understand English and are comfortable and confident in an English environment. When they are in England encourage them to make friends, attend activities and feel settled, just in case they ever move there – as a result of divorce or otherwise.

But first, dare I say it: draw up a prenuptial agreement that will also be recognised in the country in which you intend to live, agreeing that in consideration of the forthcoming marriage:

1. Both parties irrevocably submit to the exclusive jurisdiction of the English court in relation to any matter arising out of the agreement, including any challenge to its validity.
2. Both parties irrevocably consent to the English courts exclusively making orders in relation to the marriage including orders in relation to finances, residence and contact with the children.
3. Both parties irrevocably consent to fully comply with and fully execute any order made by the English court, and irrevocably authorise the foreign court to enforce any such order in the event of default.
4. Both parties irrevocably undertake not to institute marital or family proceedings against each other in any other country, notwithstanding any entitlement or connection the parties may have with that country.

(Please note: this checklist is intended as a preliminary guideline only, and is not comprehensive. You must not rely on it and you may need advice from lawyers in both jurisdictions, but I believe it will be worth the expense.)

The provisions of such an agreement should also include full disclosure of the parties’ finances and a financial settlement (and how it is to be paid and even security for payment). Proposed arrangements for any children should include their main country of residence post-divorce, where they are intended to be educated and how their time is intended to be divided between their parents. In cases of serious risk there may be security provisions; for example, governing the obtaining and deposit of the children’s passports.

Provisions may also include a review after a certain passage of time. Any agreement should be negotiated at arm’s length, with both parties being fully and independently advised by the lawyers in a language they understand.

For me, the most important consideration is one that I have dwelt upon in another recent post: how prenuptial agreements affect the balance of power in a marriage. In the case of marriage and a move overseas, the bride is taking all that risk upon herself and her unborn children. It seems to me that by signing a prenuptial agreement, the future husband would be acknowledging and safeguarding his future wife against the unfair consequences of that risk.

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 withness intitiall skirmishes, as Mrs Sangster did not wait for the final ruling before abandoning her challenege.

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.

Parents of prospective brides and grooms are coming to see me in increasing numbers, to ask about prenups.

My opinions on prenuptial agreements are well known. I don’t like them, do not believe that they are “socially necessary” and do not believe that they should be automatically legally binding. I would not have signed one myself – nor married anyone who asked me to as a precondition of marriage.

However, parents of prospective brides and grooms are coming to see me in increasing numbers, to ask about prenups. Many of these parents are wealthy, some are super-wealthy and others are not wealthy at all. What they share are concerns about what will happen if their children’s marriages break down. They don’t want any of their hard-earned cash to pass to the divorcing spouses, and they are determined to protect their money.

It’s understandable. But is it reasonable – or advisable – to expect a future son or daughter-in-law to enter into a prenuptial agreement? I’m not so sure. What is often overlooked is the effect of a prenuptial agreement on the marriage itself. 

I believe that in many cases, the existence of such an agreement can actually bring about a divorce.

Consider the vulnerability of any newly married couple, working to make their marriage a success. Suppose they are showered with wealth by one side of the family. Then consider the effects of the imbalance that results if a prenuptial agreement is added to this equation. One party has the money; the other party is shackled to a piece of paper that – in theory – leaves him or her unable ask the court to use its discretion and consider needs and entitlements in the normal way. They are married, but they do not have an equal footing within their marriage. Their attempt to forge a life together can only be hampered by such pressures.

If family members feel the need to protect their money, they should ring-fence it so that no outright gifts are made until they are satisfied that the marriage will work. Here at Stowe Family Law we often advise parents on suitable trust structures and acquisitions of assets, loans and mortgages, in order to protect family money or assets.  It isn’t ideal and isn’t necessarily tax effective either, but it’s a practical option. It means that unwelcome and unpleasant pressure is not placed upon a young couple about to begin their life together, and it means that the balance of power between them is not disturbed.

In my work, I have all too often witnessed the catastrophic effects that wealth can wreak.

Common sentiments include, “You only have this house because my family bought it”, and “All you care about is your family and their money”. I have come to believe that a great deal of money placed into young, inexperienced hands – particularly if it is tangled up in legal “gobbledegook” – is a recipe for disaster.

My advice to parents who intend to give large sums to their children on marriage is this: protect your money, but don’t subject your loved ones to unnecessary pressures and constraints. In the worst case scenario, you could end up exposing your child to the very divorce from which you are trying to protect them.