Courts must not rip up precedent on pre-nups

In this blog by Jane Keir, which was first published in The Times, she writes about a recent decision not to implement an agreement, which has unsettled lawyers’ faith in the system.
 

Many family lawyers are currently tasked with upholding and enforcing prenuptial agreements that have been drafted and signed on the nine-year-old Radmacher ruling in the Supreme Court.

The central premise of that ruling was that “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”.

It is fair to say that Radmacher changed the emphasis that we place on both pre- and post-nuptial agreements. Before it was decided, standard advice would be that a court would be unlikely to give effect to a prenuptial agreement.

Since Radmacher, the emphasis has been on giving effect to its terms unless it would be unfair to do so. The decision in Ipecki, whereby the husband, a hotel worker, signed a prenuptial agreement with his wife-to-be, the great-granddaughter of the Avon cosmetics founder, limiting any divorce payment to half any increase in the value of three properties his wife owned, is therefore a surprise.

Given there has been no increase in the value of the houses, under the terms of the agreement, Mr Ipekci would get nothing. However, he has been awarded £1.3 million because the pre-nup apparently failed the fairness test. His “real needs” are said to be the cost of a new house and an allowance for the rest of his life.

Not only is this likely to make it more difficult to advise with confidence in terms of prenuptial agreements that are in the process of being drafted and about to be signed, but it raises the stakes in relation to those cases where the process of upholding the agreement is ongoing and in an increasing number of cases pending before the courts.

We now see people from all walks of life wanting pre-nups – couples where the parents want to preserve inherited wealth, those in second marriages seeking to protect what they are bringing to a new relationship, and modern successful couples wanting to be fair about the wealth they have created prior to marrying.

Interestingly, we are also seeing more and more examples of pre-nups needing to be implemented as sadly partners who made them in the last nine years are starting to split.

We need more judicial reassurance that our faith in the crafting of prenuptial agreements after Radmacher – and against the backdrop of detailed recommendations from the Law Commission in 2014 – has not been misplaced.

While we wait for the Ministry of Justice to finish its work in developing an online tool to assist separating couples in calculating the maintenance payments required to meet financial needs, we need to know that the field on which we have played for the last nine years will remain level.

Further information

If you have any questions about the issues raised in this blog, please contact a member of our family team.