Prenups Flashcards
Why do courts depart from equality
´ The needs of the children and their carer (B v B [2002])
´ The money maker made an exceptional, stellar contribution (Cowan)
´ The husband’s family had helped the couple financially (White)
´ The couple set aside the wife’s personal inheritance for herself (K v L)
´ A relationship generated disadvantage was experienced (private case 2020)
´ Short marriage, no work, no children, but legitimate expectations (Miller)
´ Business and Investments
´ Matrimonial and non-matrimonial properties
How do courts consider the nature of business and investments in non matrimonial/matrimonial properties
´ This is a complex area and one that feeds directly into the rationale for prenups
´ In Miller/McFarlane Baroness Hale held: ‘family assets should be divided’.
´ Family assets: all money earned by either party and their home and the contents, but not inherited money or assets or gifts, or business generated by either party solely on their own.
´ Lord Nichols : ‘matrimonial assets are should be divided’.
´ Matrimonial assets: all property created by both spouses during a marriage except inheritance and or gifts.
´ Herring suggests more Law Lords follow Baroness Hale’s argument, in which case, how does a home maker or child carer argue they contributed to the creation of their spouse’s assets. Easier to do if the spouse has a job, but not if they are an entrepreneur.
Who wants a prenup
´ Consequently, only very wealthy ‘self made men, or those with family generated business interests created before marriage, or very wealthy women and heiresses.
´ The spouses seek to prevent partners from obtaining what the law might regard as a fair share of their assets on divorce, depending on whether the Court follows Baroness Hale or Lord Nicholls.
´ As Herring highlights, there are also some very unreasonable spouses: eg
´ Gray v Work the husband worth £155 million sought to have his wife’s share restricted to £71,000 payable over three years.
´ Because entrepreneurial wealth as a business and investment interest, could be regarded as non-matrimonial property, prenups, by their nature could be regarded as discriminatory against those who care for family and home.
´ Being unromantic, some spouses prefer not to enter / ask for a prenup which can also be problematic.
How do prenups influence the court
´ Default position was that prenups did not influence the courts’ jurisdiction or the courts’ application of the MCA 1973 provisions when making their decisions on (re)distribution of family money and assets.
´ Herring highlighted a view: ‘marriage contracts were contrary to public policy’ because ‘they require people to enter marriage whilst contemplating its breakdown’ therefore, leading to a view that might ‘weaken marriage’.
´ Hyman [1929] AC 601 – can’t oust court.
´ HL held: it is a matter of public policy that parties cannot by agreement oust jurisdiction of court. (That is to use the MCA)
´ Any covenant not to claim is void: that means a spouse cannot be forced to sign a doc saying they will not make a claim under the MCA, or, even if they do – it is void.
Are prenups good
´ Good idea because of high divorce rate? So, couples have thought about things beforehand and created areas of agreement, even if areas of disagreement remain.
´ But: s.34(1) MCA 1973 Validity of maintenance agreements
´ (1) If a maintenance agreement includes a provision purporting to restrict any right to apply to a court for an order containing financial arrangements, then—
´ (a) that provision shall be void; but
´ (b) any other financial arrangements contained in the agreement shall not thereby be rendered void or unenforceable and shall, unless they are void or unenforceable for any other reason (and subject to sections 35 and 36), be binding on the parties to the agreement.
What are cohabitation contracts
´ Are rare
´ Are enforceable
´ Sutton v Mischon de Reya [2003] EWHC 3166 (Ch)
´ Are not caught by the MCA 1973
´ Do not infringe the Court’s jurisdiction
´ Increasing in popularity
What are the key takeaways from Radmacher v Granatino 2010
´ Guidance was given on the following:
´ Children of the family. A pre-nup cannot be allowed to prejudice reasonable requirements of any children of family.
´ Autonomy. It would be paternalistic & patronising for court to override parties’ agreement simply on basis that court knows best.
´ Non-matrimonial property. The distinction between matrimonial & non-matrimonial property as identified in Miller and McFarlane would be particularly significant where parties have made an express agreement as to how such assets are to be dealt with in event of a divorce.
´ Future circumstances. The longer the marriage has lasted, the more likely it may be that it would be unfair to hold parties to an agreement which had been entered into when contemplating an unknown and unforeseen future.
´ Fairness – need, sharing & compensation.
´ If agreement leaves one party in real need, unlikely to be held to terms.
´ If need & compensation don’t arise – no departure from agreement.
List some important prenup cases
Z 2011/ V 2011/ AH v PH 2013/BN v MA 2013
What does Macleod 2008 tell us about post nups
´ 1) Pre-nups contrary to public policy – not valid or binding.
´ 2) Post-nups = very different.
´ 3) Question is weight to be given to it – any change in circumstances?
´ 4) 2002 agreement was valid and enforceable. Not sufficient change in circumstances.
´ H’s appeal allowed and trust substituted for lump sum.
What is the law commissions take on Pre nups
´ Matrimonial Property, Needs & Agreements Report pub. 27 Feb 2014
´ Qualifying Nuptial Agreements
´ Para 5.22 at page 78
´ ‘The researchers concluded from the results of phase one that, by a small majority, the public were in favour of couples being permitted to make binding pre-nuptial agreements but that they also had concerns about the ultimate fairness of such agreements.
´ These concerns were linked to the difficulty of making an agreement that can adapt to changes in circumstances and so remain fair even in the, perhaps distant, future, as well as a more general feeling that parties to long marriages, where there had been children, should not be free to leave one another without adequate sharing of resources.
´ Professor Barlow and Dr Smithson found that attitudes were shifting, although not radically, and that the public now see pre-nuptial agreements as “a possibility – for others, if not for themselves” and as being “likely to be considered in a wider range of situations, no longer restricted just to an elite band of people in ‘big money’ cases”.
