Pre-nuptial agreement signed on the day before the wedding is accepted by the Court of Appeal

We commented on the case of Mr and Mrs Versteegh in February of this year regarding the ex-wife awarded £90 million in a divorce settlement who was fighting for more in an appeal against the judgement.

On 10th May the Court of Appeal handed down its judgement, dismissing the appeal by Mrs Versteegh. The appeal focussed upon a number of issues including non-matrimonial assets, the sharing principle and the valuation of certain business interests. A point of interest however are the comments from Lord Justice Lewison who focussed on the treatment and consequences of a pre-marital agreement, more commonly known as a pre-nuptial agreement.

Historically pre-nuptial agreements have been unenforceable in family law, not least because the perception was that they were contrary to public policy. In the ground-breaking 2011 case of Radmacher v Granatino (Radmacher) [2011] 1 AC 534 however, it was decided that pre-nuptial agreements were no longer contrary to public policy and Lord Philips in that case said:

“If parties who have made such an agreement, whether antenuptial or post-nuptial, then decide to live apart, we can see no reason why they should not be entitled to enforce their agreement.”

Since Radmacher there has been a sea change in the family courts. Provided that pre (and indeed post) nuptial agreements are drafted correctly and family lawyers follow a certain protocol it appears to be the case now that the agreements, whilst still not automatically binding, will be followed by the court.

In the Versteegh case Lord Justice Lewison helpfully summarised the position regarding pre-nuptial agreements. His words are worth repeating verbatim:

“The key points in Granatino v Radmacher seem to me to be these:

i) Whether a PMA (Pre-Marital Agreement) is contractually binding or not is irrelevant. The court should apply the same principles whether or not a binding contract has been made

ii) There is no need for black and white rules about the process leading up to the making of a PMA. What matters is whether each party has all the information material to his or her decision, and that each should intend that the agreement should govern the financial consequences of the marriage coming to an end

iii) Factors which would vitiate a contract will negate any effect that the PMA might otherwise have had. But factors falling short of those which would vitiate a contract may reduce, rather than eliminate, the weight to be given to the PMA

iv) If the terms of the PMA are unfair from the start this will reduce (not eliminate) the weight to be given to it.

v) If the parties to the PMA are nationals of a state in which PMAs are common and binding, that will increase the weight to be given to the PMA.

vi) In principle, if parties have made a PMA there is no reason why they should not be entitled to enforce it.

vii) Thus, the court should give effect to a PMA 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.

viii) Typically, it would not be fair to hold the parties to their agreement if it would prejudice the reasonable requirements of any children of the family; or if holding them to the agreement would leave one spouse in a “predicament of real need”.

ix) But in relation to the sharing principle the court is likely to make an order reflecting the terms of the PMA.

A final point to note in relation to the Versteegh case is that Mrs Versteegh’s pre-nuptial agreement was signed on the day before the marriage. Mrs Versteegh claimed that she did not have legal advice before signing it and had not read the document before the wedding. Her evidence was however not believed by the original trial judge and it was found that she knew and understood the impact of the pre-nuptial agreement.

Contrary to previous conceptions, this shows us that a pre-nuptial agreement does not necessarily need to be signed a long period of time before the wedding. It does though need to have sufficient time to be drafted, considered, financial disclosure exchanged and both parties having the benefit of legal advice. Provided that sufficient time is taken to do these things then the likelihood is that the pre-nuptial agreement will be followed by the court.

Andrew Smith

Andrew Smith
Associate Solicitor
Family Law Team
AJSmith@LawBlacks.com
0113 3222807
@AndyLawBlacks

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