When considering the financial claims of parties on a divorce the Court in this legal jurisdiction would traditionally consider a large variety of issues, some more relevant than others. Usually the needs of the parties take priority. The Court was not prepared to have its hands tied by a contract that the parties entered into before the marriage when considering an appropriate settlement. If circumstances change, although unforeseen developments or additions such as children being born to the marriage, then being restricted to enforce an earlier contract without having regard to the current circumstances was considered unsatisfactory.
Many years therefore prenuptial agreements were simply one of a number of factors the Court would have regard to. As they could not be guaranteed to be legally binding, only a very small percentage of marriages commenced with prenuptial agreements.
Recent developments in case law have however suggested that the Courts attitude to prenuptial agreements may well be changing. In a case in which the parties entered into a prenuptial agreement in Germany where prenuptial agreements are enforceable, the Court of Appeal in this jurisdiction was prepared to be heavily influenced by that prenuptial agreement. The ruling represents a giant step forward for the status of prenuptial agreements. In that case Lord Justice Thorpe took the view that, subject to proper safeguards, a carefully prepared prenuptial contract should be available as an alternative to the “stress, anxieties and expense” of litigation on divorce and that it would be “increasingly unrealistic” for Courts to disregard prenupts. It was stated that the freedom to agree a contract was fundamental and “at the heart of all modern commercial and legal systems”.
Given the need for the Court to prioritise the needs of the parties, it may be that the Court might only be prepared to enforce prenupts in large money cases where the needs of the parties are met.
It is likely that to persuade a Court to accept a prenuptial agreement the parties will have to show that, at the time of entering into it, there was a full and frank exchange of disclosure of all relevant financial circumstances. This in itself may lead to significant arguments and the need for investigations into the true value of assets such as business interests, trusts and pensions.
Whilst it is too early to say that prenuptial agreements are now binding, there can be no doubt that the Courts willingness to accept them, in limited circumstances, is increasing. It is too early to suggest that the judicial system of England and Wales has gone all “Hollywood” but in respect of prenuptial agreements it has certainly taken a few steps in that direction.
If you would like to discuss the merits of prenuptial agreements, and whether they could be an option for you, contact Peter Dadswell on 01332 225 354, or by email - peter.dadswell@smithpartnership.co.uk.
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Is English Law going all “Hollywood”?
