News and Insights

Implications for marriage and divorce

In recent months there has been much publicity given to the idea of couples entering into a pre-nuptial agreement prior to their marriage. Much confusion, however, still surrounds these agreements together with their implications for marriage and divorce.

The following explanation will hopefully deal with a number of these confusing issues and answer a number of questions as to the relevance and enforceability of a pre-nuptial agreement in Jersey.

The law relating to pre-nups has been recently examined by the Supreme Court in England in a landmark ruling in the case of Radmacher v Granatino. In 1998, Ms Radmacher, following her engagement to Mr Granatino suggested that they should enter into a pre-nup. This was drawn up in Germany and the basic terms of the agreement were made clear to the husband even though a translation was not provided and he did not take independent legal advice before signing even though he was advised to do so. The couple got married, had 2 children and eventually came to live in London. They were divorced in England in 2007.

Before the High Court, the judge gave limited weight to the pre nuptial agreement and held that the agreement was ‘manifestly unfair’. The wife then appealed to the Court of Appeal. This court disagreed with the lower court that the agreement was tainted by the circumstances in which it was made as it held that the husband had well understood the agreement that he was entering into. The court stated that it was increasingly unrealistic to treat a pre nuptial agreement as void and of no effect. On divorce the agreement must be taken into account by the court and the court must be ready to give the agreement appropriate weight in reaching its decision with regard to finances. Of particular interest was that the housing fund awarded to Mr Granatino should be given in his role as a father rather than a husband. This meant that this fund would be returned to the wife when the younger child reached 22. The husband appealed to the Supreme Court.

At the end of 2010, the Supreme Court delivered its judgment. The majority of the court agreed but Lady Hale, the only woman and only family law specialist hearing the case, gave a short separate dissenting judgment. The court advanced the following proposition:

‘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’.

The court held that it should give respect to individual autonomy and that it would be ‘paternalistic and patronising to override [an] agreement simply on the basis that the court knows best’.

The Supreme Court dismissed the husband’s appeal.

Lady Hale in her dissenting judgment drew attention to the gender dimension that she felt could be present where the wealthier party to the marriage (usually the husband) insists on a pre-nuptial agreement. She said:

‘Greater recognition of pre-martial agreements arguably risks gender discrimination in practice as the weaker financial party is usually female’.

She also criticised the decision that financial provision made for Mr Granatino should come to an abrupt end when the youngest child grew up. She was concerned that the distinction between married and unmarried couples was being eroded by the judgment.

In the UK the whole issue of pre-nups has been referred to the Law Commission who are considering whether or not nuptial agreements should be given further strength through legislation.

Living in Jersey it is important to consider how the Royal Court might consider the decision of the Supreme Court. To-date the Royal Court has not been asked to adjudicate on the validity or otherwise of a pre-nup but it is likely that the principles enunciated by the Supreme Court would be followed.

It is essential if couples are considering a pre-nup that the following are present:

• There must be free will. There must not be any undue pressure from one party to the other and one party must not exploit their dominant position in the relationship;
• Sound legal advice is desirable along with full financial disclosure; and
• The agreement must be fair. An agreement cannot be allowed to prejudice the reasonable requirements of the children of the marriage, for example.

The legal landscape for pre-nups is still confused (although clearer that it was previously) and many questions will need to be considered in each individual case. However, pre-nups are becoming more popular not just with couples marrying for the second time but also with younger couples particularly where they wish to protect assets that they either have already or may inherit during the marriage. It is essential that full legal advice be taken from a specialist family lawyer before any agreement is signed.

Love unfortunately does not always last forever and the advice that is given now could have a lasting effect in the future if things go wrong.