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  Solicitors Bude Cornwall   Article - Pre-Nuptials or Post-Nuptials? - 12 Jan 2009 Holsworthy Solicitors


A week may be a long time in politics; a year can be a short time in the law.
   
 
Mr and Mrs Crossly married in January 2006, 2 months after entering into a pre-nuptial agreement which provided that neither would make a claim against the other in the event of a divorce, and they would each leave the marriage with what they had brought to it.  Both were extremely well off to the tune of millions of pounds.
 
After a short marriage the parties separated and Mrs Crossly issued proceedings seeking more money.  She claimed the pre-nuptial agreement was invalid and claimed that Mr Crossly had not disclosed all of his assets when they entered into the agreement.   
 
On 19th December 2007 the Court of Appeal stated that a judge had a discretionary power in ancillary relief proceedings (the proceedings dealing the financial matters out of a divorce) to require a party to show good cause why a prenuptial agreement should not take precedence when the parties separated. 
 
This was not tested further through the Courts as shortly afterwards Mrs Crossly withdrew her claim but the general consensus of legal opinion was that this was a  judicial nod towards the use of pre-nuptial agreements.
 
However, just under 12 months later, on 17th December 2008, the issue of the pre-nuptial agreement was considered further, this time by the Privy Council in relation to the marriage of Mr and Mrs MacLeod. 
 
Prior to their marriage in 1994 Mr and Mrs MacLeod entered into a pre-nuptial agreement which included provision that each would retain what they brought into the marriage, they would split jointly owned properties and Mrs MacLeod would receive a lump sum payment. 
 
After several years of marriage they entered into another agreement which confirmed the pre-nuptial agreement but with some further additions.  A shorter time later, they separated.
Mrs MacLeod alleged that she had not had appropriate legal advice and Mr MacLeod had not disclosed all of his assets.  The judge did not accept this but did order that she should have a larger lump sum.  Mr MacLeod appealed this but lost.  The parties were American, living on the Isle of Man and after his defeat in the Isle of Man Court of Appeal, Mr MacLeod appealed the matter further to the Privy Council, the highest appeal Court for UK overseas territories (the Isle of Man being an overseas territory!).  Privy Council decisions are binding on England and Wales. 

12 months after the Crossly case which tended to support the use of pre-nuptial agreements, did the MacLeod Judgement go the opposite way?  Did the Privy Council hold that a pre-nuptial agreement is not binding on the parties? The Privy Council were not prepared to declare that pre-nuptial agreements were legally valid. They said that was an issue for Parliament via legislation. 

On the face of it, this would seem a strange decision.  If prior to a marriage, Mr X and Miss Y enter willingly and with full knowledge into an agreement which they intend will bind them if they separate, is there any reason why that should not be binding and a Court should not uphold this contract?       

The legal situation is that a Divorce Court Financial Order takes its authority from the Court decision not from any prior agreement between the parties.  The Privy Council acknowledged that “in the right case” an agreement between the parties which is only one of the factors in the process can be “the most compelling factor”.  The Privy Council felt that MacLeod was an example of “the right case”. 
 
As a result of the Privy Council decision, what needs to be done?  Anyone who entered into a pre-nuptial agreement thinking that the situation at separation would automatically be enforced may need to think again.  Should pre-nuptial agreements be re-drafted into post-nuptial agreements? 

If so each party would need to have independent legal advice, full disclosure of assets would have to be made and each party would have to enter into the agreement freely and without duress.  Married couples generally might wish to enter into an agreement to determine how their finances will be resolved should they separate in the future, rather than leaving it until after separation when emotions are raw.  I expect many will not go to the expense of instructing two separate lawyers and potential arguments in drawing up an agreement unless the marriage is already having difficulties.

If you wish to make a post-nuptial agreement or wish to re-affirm your pre-nuptial agreement into a post-nuptial agreement or need advice on any matrimonial, children or family matters, contact Paul Finn or Martin Curnow on 01288 356 256 or email curnowm@finnlaw.co.uk   Both Paul and Martin have extensive experience in Family Law, Litigation and Contracts and children cases so will be able to assist whatever your requirements.

Martin Curnow
Head of Litigation, Paul Finn Solicitors
Tel: 01288 356 256
Email: CurnowM@FinnLaw.co.uk
 
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