Pre-nup or not to pre-nup?

Danny Glasner assess how the courts are slowly recognising financial agreements prior to marriage

Historically it has always been the court's approach, and therefore the view of matrimonial lawyers, that pre-nuptial agreements have only limited application when deciding how to divide property following the breakdown of a marriage.

Accordingly, whenever a breakdown of a marriage involved a PNA, the court would carry out a full financial inquiry of both parties' respective assets and come to a conclusion with limited regard (if any) to the provisions of the PNA.

One of the overriding reasons for the court's attitude has been its unwillingness to have its jurisdiction constrained or ousted by any agreement that may have been made before marriage. There may also have been a moral aspect to this, with the court taking a dim view of both parties contemplating separation before even getting married.

More recently, certain basic guidelines were laid down as essential pre-conditions if a PNA was to have any chance of being given serious consideration, let alone enforced in the event of divorce. These pre-conditioned included:

1. That each spouse was separately represented and had the benefit of competent legal advice.

2. That there was full and frank disclosure of the parties' respective financial assets. That the agreement was concluded at least 21 days before the date of the celebration of the marriage.

4. That there was no evidence of undue influence or coercion or any other form of emotional blackmail.

The court still retains an absolute and overriding discretion as to how it will deal with the assets of the husband and wife following the break-up of the marriage, but it has become increasingly apparent that they are now prepared to give greater consideration to a PNA.

Marriage and Divorce

A recent case involving a Mrs Susan Mary Crossley and her husband Mr Stuart James Crossley, which came before the Court of Appeal in December 2007, provides a new and refreshing insight into how PNA's may be viewed in the future.

The wife was 50 years of age and her husband 62. Both had substantial independent fortunes, which was a significant factor. They were engaged for three months after meeting. The husband had been married before and had also been in a long-term relationship.

He had four children from his previous associations. She had been married three times before and had three children. They both signed a pre-nup.

The critical part of the PNA was the clause that effectively said both parties should walk away from the marriage with whatever they brought into it.

They separated after about 14 months. The wife petitioned for divorce and issued an application for financial relief. This triggered a date for the exchange of financial statements.

On advice, Stuart Crossley's solicitors issued an application against the wife in which he sought an Order from the Court that the wife should show why her claim for financial relief should not be dealt with in strict accordance with the terms of the PNA. Remember, one of the pre-conditions to a PNA having any chance of succeeding is that there is a full and frank financial disclosure. In this particular case, the wife alleged that her husband had not made full disclosure of his fortune upon which the agreement had been negotiated.

The Judgement

The judge at the trial gave certain directions which effectively required the wife to show why the PNA was not a 'knock out blow' to her claim for more than it provided.

She appealed against the judge's decision and the matter came before the Court of Appeal. It would appear from the judgement that pre-nuptial agreements are growing in importance and recognition.`

It is reasonably clear from this decision that while PNA's will not automatically bind a court and that the overriding discretion of the judges is retained, it is becoming increasingly apparent that pre-nuptial agreements are now a significantly more important consideration than they were a few years ago.