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.

Will London Become the Divorce Capital of the World?

By Catherine Boyle

In an era where divorce tourism is becoming increasingly common, with the globe-trotting super-wealthy trying to split up wherever will give them the best deal, London has the potential to become the divorce capital of the world.

Some divorcing couples battle over who keeps the wok they got as a wedding gift.

In cases where multimillionaires divorce, multiple properties, hefty offshore assets, and substantial trust funds can make the fighting even more prolonged and bitter.

One such case, the divorce between Elena Golubovich and Ilva Golubovich, both in their twenties and from wealthy Russian families, saw the former spouses pay out legal costs of more than 2 million pounds ($3.22 million). Mrs Golubovich tried to get the divorce heard in London, where the couple had lived, while Mr Golubovich, a financier, rushed through a divorce in Russia.

British courts are historically seen as more favorable to the less wealthy partner in the marriage than other jurisdictions. In China, for example, there is no legal obligation to pay child support.

The McFarlane case, where wife Julia McFarlane was awarded 250,000 pounds annually and about 3 million pounds in capital for her contribution to her husband’s career as a wife and mother of their three children, is one of the best-known recent settlements.

The judge ruled that Mrs McFarlane was entitled to a large slice of her husband’s earnings because she had given up a promising career as a lawyer when they married.

The British legal system is also attractive to some people because both partners are legally required to make full disclosure of their assets, while in some countries, including Spain, the onus is on the spouses to prove how much their soon-to-be former husband or wife is worth.

The international super-rich can get divorced in London even if they are not British-born or wed, because under a British regulation known as Part 3 jurisdiction, they can get divorced here if they have substantial links to the UK, such as owning a property.

“It’s obviously very international here, and London has lots of international couples,” Frank Arndt, head of the international department at Stowe Family Law, told CNBC.com. “You do need some substantial presence in the UK.”

The decision over how much child support or alimony should be paid can continue in the UK even if one party has got a decree absolute issued elsewhere, as in the case of the Goluboviches.

In a recent case involving a divorcing Nigerian couple, Agbaje v Agbaje, the wife was able to get a higher settlement under British law because the couple owned a home in the country and their children had been educated there.

“Even if you start proceedings somewhere else, one partner can come back to the UK. That’s a very nasty tool against the wealthier partner,” Arndt said. “A lot of them will try to get as far away as possible.”

Wealthier partners may have good reason to stay clear of London.

In 2006, Melissa Miller walked away from a childless marriage of less than three years with 5 million pounds of her fund manager ex-husband’s 17.5 million pound fortune.

“Every husband saw that with fear,” said Arndt.

And former Beatle Paul McCartney paid out 24.3 million pounds to former wife Heather Mills in 2008, after six years of marriage.

This settlement is dwarfed by the rumored 100 million pounds paid out by Russian tycoon Boris Berezovsky when he divorced his second wife Galina. This figure has never been confirmed.

While pre-nuptial agreements, or pre-nups, are not formally recognised under British law, they are increasingly common and can be binding.

In the case of German paper heiress Katrin Radmacher, appeal judges in the UK ruled last year that her ex-husband Nicolas Granatino was only entitled to 1 million pounds of her fortune, as stated in their pre-nup.

Arndt said that he would advise all high net worth individuals to sign pre-nups as they are being formally recognised more often.

[Will London Become the Divorce Capital of the World?]

© 2011 CNBC.com

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.

What a cracking phrase that is! It uplifted me, because I spent a long time last weekend considering the content of the post I was writing about prenuptial agreements in advance of the Law Commission’s consultation paper.

I know that frequently, without trying, I find myself in conflict with those who simply “toe the line”. But if you believe in doing what is right, sometimes you have to raise your head above the parapet.

Staying quiet if I spot something wrong and unfair is not me, never has been and I doubt ever will be. But it’s not always easy: sometimes you take a risk, speak out and then wonder why you bother. From now on, I’m going to stick with my new motto and go for Justice with Courage in all that I do!

The London dungeon

My next stop was London and a three hour meeting in a whitewashed dungeon. Or at least that’s what it looked like. I was actually sitting deep in the heart of the Law Society’s Hall in Chancery Lane. It is quite a building: the first time I visited was to be admitted as a solicitor many years ago, and I will readily admit that it terrified me! Now I go there quite often, and it is still just as imposing. The room I was in is actually fancifully termed The Members Private Dining Room, but I prefer my own name for it: The Dungeon.

At the meeting, no doubt overcome by the lack of daylight, I “volunteered” to draft an up-to-date version of the current Assessment Questionnaires for applicants who wish to join the Law Society’s Family Law Panel. I was heavily involved in drafting the original versions more than ten years ago – and it’s now time for a serious overhaul. If any Family Law Panel Assessors or members of the Family Law Panel would like to contribute some suggestions, please do! All suggestions will be gratefully received.

On the very same day, while I sat in the dungeon, the Law Commission published its consultation paper. The Yorkshire Post asked me to write a comment piece about it, which I did, trying my utmost to squeeze my opinions into 850 words. It meant working late into the night and having to read the very lengthy Resolution response, which seems to go even further than the Law Commission is recommending.

My newly adopted motto notwithstanding, I have always tended to side with the needy, weak and defenceless. I am not afraid to say that I do not see the need for any new legislation at all, given the Radmacher decision, which I believe is quite sufficient. Instead, I continue to place a high value upon judicial discretion and our common law, which nearly always works (well, almost always – let’s not forget Imerman). Justice with Courage…

Wringing out CMEC

The next day, accompanied by my stalwartly patient and wise assistant, Paul Read, I had some clients to see. However I had time to note the Government’s latest proposal, to charge couples £100 if they use CMEC (the Child Support Agency’s replacement) to sort out their maintenance arrangements. In the past I have been highly critical of the Child Support Agency. It went wrong right from the start, with a farcical formula that nobody could calculate without a computer. Even then, two people on the same case would most likely arrive at different answers.

When the CSA launched I was a Tribunal Chair. This was termed a judicial position, but I soon became disillusioned and resigned after it became clear that I had no powers to administer justice and fairness between couples. Instead I was locked into a rigid inflexible administrative system and the best I could ever do was send the calculation back for reassessment.

If the volume of adverse comments about the CSA that this blog receives is anything to go by, matters have not improved. The most common complaints are the complexity of the rules and calculations, the bureaucracy, the rigidity of the conclusions, the slowness, the lack of proper enforcement powers, the unfairness and many, many mistakes.

This system should have been abolished years ago. And now mothers and fathers, many of whom have no alternative, may have to pay £100 for the privilege of locking themselves into it!

So here’s a tip for divorcing couples:

In many cases, family lawyers have been able to get round problems with CMEC by negotiating global maintenance figures for spouse and children. Canny spouses know that a year later, they can go to CMEC and, with some footwork with the figures, can secure a lower maintenance order.

To prevent this from happening to you, make sure that the original order provides against it. You should ensure the order is technically and automatically renewed each year. It has a lovely title and is therefore easy to remember: it’s called a Christmas order!

This weekend I’ll be listening to Stowe Family Law’s Stephen Hopwood review the papers on Radio York, which should be good.

And how do I plan to spend the weekend, apart from a complete rest?  Well, in return for a beautifully cooked dinner by my son Ben in London, I’ve brought back…two loads of washing! I always moan at him for landing me with washing, but I wouldn’t have it any other way. Even if I’m not great with shirts…!

As I believe in a legal system for all, of fairness and justice, I don’t believe in legally “handcuffing” the weaker party to a relationship. I don’t believe a divorce lawyer should be consulted even before a marriage has taken place.

However I am also a realist. There are those who, understandably, wish to protect their assets and pass substantial wealth down through their own families. Let’s take the Royal Family as a working study: they are, after all, the most obvious (if extreme) example of a family in this bracket. As we will see, changes to the law on prenuptial agreements are likely to benefit the relatively few families with dynastic wealth – but at the expense of the less wealthy.

Although members of the Royal Family belong to the ruling family in this country, they are still subject to current financial family law, which deliberately provides for uncertainty. For the vast majority of us, judicial discretion works very well. For millions of couples, it meets those varying needs which cannot all be legislated for. However it doesn’t work so well for the elite group of people wishing to ring fence substantial wealth, whether earned or inherited, before marriage.

The wealth, privilege and extraordinary status of the Royal Family would seem to make its members more vulnerable, not less, to marital breakdown and divorce. In the past twenty years, three of the monarch’s four children have divorced. And these were no ordinary divorces: they exposed intimate details to immense public scrutiny, and the monarchy was damaged as a result.

It wasn’t always this way. Henry VIII, of course, had his own way of dealing with troublesome spouses:  not for them a divorce settlement fit for a queen. George I imprisoned his wife for the last 30 years of her life. However the modern Royal Family is subject to the vagaries of our current law, which takes into account all the resources of a spouse, earned or otherwise. Although many Royals live off inherited wealth and have never earned a penny in their lives, in modern times they are as financially vulnerable to a divorce settlement as the average man or woman on the street.

What would a prenup do for a royal?

Given the Royal Family’s growing vulnerability to broken marriages and the ghastly experiences of the past, its members would be likely to benefit from tougher divorce law.

When Prince William announced his engagement to Kate Middleton in November 2010, certain “well wishers” and family lawyers urged him to sign a prenuptial agreement. At the time this struck me as a distasteful reaction to the happy announcement, and I stand by that sentiment for reasons that I have described in previous posts. On the other hand, I can certainly understand how a requirement to sign a prenuptial agreement, made of anyone who wished to marry into that family, could be regarded as a necessity.  Such a requirement would protect the Royal Family for the future, while preventing past experiences from being repeated.

Tough clauses would aim to keep a future royal spouse as discreet as possible and married for all time. They might include absolute prohibition against any form of consultation with the media in the event of divorce, and a draconian financial divorce settlement to protect the dynastic nature of the family. In other words, you marry into the Royal Family – with all its unique privileges, promises and obligations – and you make your choice. It could be argued that because the members also constitute the institution of monarchy, this puts them into a special, one-off class.

To better protect the Royal Family, a prenuptial agreement would help to close off any existing loopholes and have fault-free divorces proceeding quickly, to contain media speculation. A “belt and braces” approach, including strict division of pre-owned or inherited assets, would also require radical new legislation.

Is this likely to happen and, more importantly, would such changes suit the rest of us?

Following the decision in Radmacher v Granatino, current prenup law states that providing certain formalities are satisfied (and thus introducing room for doubt), there is a presumption that a prenuptial agreement voluntarily signed in accordance with those formalities will be considered binding.

A spanner in the works was the judgement of Baroness Hale, the only family judge in the Radmacher case, whose dissent cast doubt on the legality of this judgement at all. She pointed out that the Law Commission could develop options for reform and put these before Parliament, which, she argued, was “the democratic way of achieving comprehensive and principled reform”. Given these serious doubts and given that judge-made law can change, who knows what could happen in the future?

So even if Prince William, Zara Phillips, Peter Phillips and all the rest of the Queen’s grandchildren have signed or will sign prenuptial agreements, they will all currently be advised that there is still a doubt as to their legality. They will also be advised that a prenup should be reviewed at regular intervals. So there is no cast iron guarantee of prenups’ infallibility. Only a change in legislation could do that.

Prenuptial agreements cannot (yet) be regarded as fully binding.

The fact that judges are calling for new legislation, however senior they may be, does not automatically mean that legislation will come. The august Law Commission, which this week produces a consultation document on the subject, may ultimately, recommend a change in the law – although this too does not necessarily mean that change will happen.

Professor Elizabeth Cooke, the Law Commissioner responsible for reform in family law, has spoken out in the press to reinforce the possibility that a prenup will be valid if it only excludes inherited assets or pre-marital assets owned by a spouse. This is fine and dandy if you happen to be a member of the Royal Family. It isn’t so fine if a wealthier spouse earns nothing during the marriage or gets into debt, but retains the lion’s share on divorce, leaving the other spouse with several children to house and reasonable needs that are left unmet.

Some family lawyers will already be familiar with very difficult cases, in which assets that are not owned but are only classed as “resources” of one party, such as income and property tied up under a family trust, will nevertheless be taken into account by the court in order to meet the spouse’s reasonable needs. What if a prenuptial agreement were to entirely exclude these? What then for the wife left with nothing? Would she lose her children if she couldn’t rehouse them, but her spouse could? Throwing the bedrock of current legislation out of the window cannot be right, in the interests of fairness to all. It is a very tough call indeed, to balance fairly the needs of those with an interest in change against those with none at all, and we will have to wait until after the consultation period to see exactly how and why they recommend the law is changed.

The Law Commission has made many extremely sensible recommendations for changes of the law, which never see the light of day. Millions of couples are currently in cohabiting relationships, but despite the framework of potential legislation recommended by the Law Commission (I was one of the legal advisers to the Law Commission for that report) and despite the existence of successful, similar law in Scotland, there is still no law in this country to regulate the breakdown of cohabitees’ relationships. Couples and children of those relationships are treated as second class citizens in the current legal framework. Are their needs not as important,as those of rich couples signing prenuptial agreements? Perhaps not, given the deafening silence in Government and the lack of Parliamentary time allotted to this issue.

On the other hand, we are told that non-urgent divorce reform is coming.

The recently ennobled family solicitor, Baroness Shackleton of Belgravia, who is to sit as a Conservative working peer in Parliament, has considerable experience of client divorce in the grandest of family fields. She, more than most, knows all the pitfalls of royal divorce.  She represented the heir to the throne, Prince Charles, in his lengthy, far-too-public separation and subsequent divorce.  She was also the solicitor to the unfortunate Mr Granatino, who lost his case in the Supreme Court and has played a role in setting out the law on prenups. Lady Shackleton currently represents Princes William and Harry. She knows how new law could protect the most privileged people in this country.

Time will tell. My money is on new legislation for swift, fault-free divorce and tough, rigidly enforceable prenups becoming law. Other sweeping changes, designed to protect the wealth of the privileged people of this country, may be planned. While I would certainly welcome a speedier, more dignified procedure to end a marriage, other reforms could result in unfairness for the rest of the population of this country. Those most clearly in need of law reform right now are cohabitees and their children, who would have to keep waiting their turn. But if I am right – and if, of course, the Coalition Government survives – divorce reform will not be long in coming.

Image: The Penny Wedding by Sir David Wilkie.

Justices are fiddling with top-dollar divorces while normal families burn, says Marilyn Stowe

I have never known a summer like this one. For a family lawyer it is like standing in no man’s land, with the ‘haves’ on one side and the ‘have nots’ on the other. In more than 25 years I have never seen family law riven by such manifest inequality.

At the height of the holiday season, the Legal Services Commission (LSC) has slashed the number of firms offering family law legal aid by 46 per cent – from 2,400 to just 1,300. Pity the legal aid family lawyer now returning from a hard-earned summer break. The charter flight was probably delayed; the lawyer was probably laden down with kids and suitcases. They get up early to go into the office and face the correspondence that always arrives when you are away. But this time that correspondence is far, far worse: the lawyer has been thrown out of a job.

The LSC is putting lawyers out of business with the swing of an axe, while telling the media that it is “putting quality of services above cost”. I am pleased that the public is not buying this glib argument. The truth is that for clients, particularly those from less well off or disadvantaged backgrounds, justice has suddenly become less accessible than it was. Now it will be about having the means, while an already overloaded service collapses into meltdown. In the meantime, how many tragedies will there be?  Continue reading»

The Law Commission, which recommends potential changes in the law to government, is also currently considering this area of the law. Professor Elizabeth Cooke of the Law Commission has now confirmed that various options will be put forward to Government, including recognition of prenuptial and postnuptial agreements and that the report will be accompanied by a draft bill for consideration by Parliament.

The argument in favour of change, according to her, is that people are being deterred from marriage by big pay-outs under the current law, and she states: “There is a certain amount of financial carnage when people get divorced. A well drawn up prenup can give greater predictability”.

With great respect to Professor Cooke, I do not think it is appropriate to describe a financial settlement between the parties as “carnage”. Nor do I agree with the argument that by signing a prenup, hundreds of thousands of people in this country who currently aren’t getting married will be heading off to the altar.

Couples are deliberately choosing not to marry, not because of the law, or any change to the law as envisaged, but because society has irreparably changed. Most people now aren’t now marrying too young or immaturely and then bitterly regretting it– whether shortly afterwards or years later. They aren’t leaping into the legalities until they are absolutely sure that they are making the right decision. Others that don’t marry, including some of those who are dependent upon state benefits, won’t marry either – with or without this proposed change in legislation.

I will be exploring the subject of prenuptial agreements in greater detail in a later post.