It has been a while since we brought you a blog about agreements made before or during marriage – prenups or postnups – and as there has been a recent decision about the enforceability of a post-nuptial agreement we thought it would be a good time to have another quick look at where the law presently stands in relation to marital agreements.
At CFLP we certainly see a lot of clients who are considering agreements, either pre-marriage or further down the line. The law has now progressed to the point where agreements will generally be valid and supported by the divorce courts as long as they fulfil certain criteria. Strictly speaking, the test for upholding an agreement is whether it was freely entered into by each party with a full appreciation of its implications. If it was, then unless it would be unfair to hold the parties to the terms, it will be upheld in court. That was the test set down by the Supreme Court in the landmark case of Radmacher v Granatino. Since then, there have been a few cases looking at issues of enforceability, which have fine-tuned the Supreme Court’s test.
As can be the case in the family courts, the two cases were seemingly slightly contradictory. In the first, the High Court upheld the terms of a prenuptial agreement after a short marriage. The judge said there must be something unfair about the agreement before the court would open a Pandora’s box of litigation to go against a marital agreement. In the second case the judge was very critical of the pre-and post-nuptial agreements signed by the couple as they provided nothing for the husband, no matter how long the marriage lasted or whatever his needs were. The judge said the financial needs of the parties were the only thing capable of dislodging the terms of a marital agreement, and the husband’s needs justified moving away from the terms of the agreement.
The case which has just been reported, Hopkins v Hopkins, is more in line with the first of the two earlier cases as the terms of the post-nuptial agreement were upheld by the court. Typically, it has been reported rather dramatically in the press as “wife only gets tenth of £2 million claim” etc, but if you want the full story you can read the judgment here.
The facts in this case are quite unusual. The couple had first met in the 1980s when they were both married to other people, and had commenced a relationship which produced their son. They both had, and have, two older children each from their respective first marriages. The wife divorced, married a second time and had a further child with her new husband, whilst the husband remained married to his first wife for many years. The couple got back in touch in 2000 and started living together in 2001. They eventually married in 2009, but it did not last. A post-nuptial agreement was signed in August 2011 which stated that in the event of divorce the wife would have two properties, a car and a pension share. The wife signed the agreement against the clear advice of her lawyers, who told her to wait until there had been full financial disclosure from the husband.
The fact that Mrs Hopkins had received legal advice, but chose to ignore it, was key to the court’s decision in this case that the agreement should be upheld.
When the couple separated and divorce proceedings got underway, only a few months after the agreement has been signed, Mrs Hopkins sought to resile from the agreement. She claimed that she was put under undue pressure and bullied into signing it by the husband. She also said it was unfair, because it would leave her in a position of real financial need. The wife asked the court for a sum of £2 million. The husband was said to be worth around £38 million.
The court gave the wife’s arguments against upholding the agreement fairly short shrift. The judge found that she had read and understood the copious legal advice she had received from two solicitors and a barrister, but nonetheless proceeded to sign the document against all advice. Despite the wife’s protestations that she was bullied into signing the agreement, the judge in fact found that she was rational, thoughtful, saddened by her situation, but certainly capable of independent thought. There was no evidence that her will was overborne. He found that she chose to reject the professional advice she received and that no improper pressure was applied by Mr Hopkins. She was therefore stuck with the terms of the agreement.
Nevertheless, the judge did consider the needs of both parties and found that the wife did have some actual needs not provided for by the post-nuptial agreement, albeit largely generated through the costs of litigating. The husband offered her the further sum of £200,000 and the judge considered this to be reasonable. That was what the wife received alongside that provided for in the agreement, rather than the £2 million she was seeking.
This case represents further confirmation that the family courts will uphold agreements when the parties understand them, they have had legal advice and the terms do not cause undue financial hardship. The Law Commission’s recommendations for measures giving greater clarity appear to have little chance of being implemented any time soon, but judges are doing their best to inject common sense and financial autonomy into this area in the absence of any statutory change in the law.
If you would like to talk to us about marital agreements, or any other area of family law, please get in touch to make an appointment with Gail, Sue, Adam, Simon or Tricia on 01223 443333.