Tying the knot around pre-nuptials

District Judge Ivor Weintroub on how the courts currently view pre-nuptial agreements and what legal changes we may see in the future

Rod is rich and extremely keen on tennis.

His service has improved so much that he now wishes to get married to Beth, a regular playing partner, a local girl who is now three months pregnant by him.

Your client Rod's father, even richer, is concerned advantage might be taken.

He has heard about pre-nuptial agreements and seeks your advice.

In K v K (Ancillary Relief: Pre-nuptial Agreement) [2003] 1 FLR 120, Roger Hayward Smith QC, sitting as a High Court judge, considered such an agreement that Mr K sought to uphold, and Mrs K sought to ignore.

The couple separated after 14 months of marriage.

Mrs K, when married, was pregnant by Mr K.

Mrs K benefited from a trust fund of 1 million, but Mr K declared assets of 25 million.

The driving force behind the marriage was the wife's family, the husband wanting a long engagement, but the marriage proceeded on the conclusion of the agreement the day before the wedding.

The agreement provided that if the marriage dissolved within five years, the wife would receive a lump sum of 100,000 compounded by 10% per annum for each year the marriage continued, and the husband was to make reasonable financial provision for any children.

Mr Justice Wilson had said in S v S (Divorce: Staying Proceeding) [1977] 1 WLR 100: 'I am aware of a growing belief that in a despatch of a claim for ancillary relief in this jurisdiction, no significant weight will be afforded to a pre-nuptial agreement, whatever the circumstances.

I would like to sound a cautionary note in that respect...

there will come a case...

where the circumstances surrounding the pre-nuptial agreement and the provisions therein contained might, when viewed in the context of the other circumstances of the case, prove influential or even crucial.'

Mr Justice Connell in M v M (Pre-nuptial Agreement) [2002] 1 FLR 654, thought the agreement in that case significantly crucial, concluding it could be considered a circumstance of the case, or conduct that the court would find inequitable to disregard.

Mr Hayward Smith's conclusion in K v K was that it would be both.

He posed himself a number of questions in deciding whether the wife should be bound, or by which he should be influenced in his decision concerning the agreement, under section 25(1) and (2) of the Matrimonial Causes Act 1973 - page 131 B.

The questions he posed, and answers he reached, follow.

However, each case must turn on its own circumstances.

- Did the wife understand the agreement? Yes.

-Was she properly advised as to the terms? Yes.

- Did the husband put her under any pressure to sign it? No.

- Was there sufficient disclosure of assets? No.

- Did the wife press for values of assets? No.

- Was either party put under pressure to sign from others - for example, pressure from Mrs K's family to enter the agreement to secure marriage? Yes, but at the actual time of signature he concluded she was no longer under pressure to do so.

- Was the agreement willingly signed? Yes.

- Did the husband exploit a dominant financial position? No.

- Was the agreement entered into in the knowledge that there would be a child? Yes.

- Have any unforeseen circumstances arisen that would make it unjust to bind the parties? No.

- Is there sufficient clarity in the terms? Yes.

- Does the agreement preclude an order for periodical payments for the wife? No.

- Would injustice be done by holding the parties to terms? No.

He held the wife to the capital terms of the agreement.

Concerning periodical payments for the wife the court was not prepared to prevent the claim, as it was not excluded.

Even so the judge took the view that, if that were wrong - because the wife had to make the important and enormous contribution of bringing up the child - it would be unjust to exclude her claim even though the marriage was of short duration.

He also provided additional capital on reversionary trusts to Mr K to suitably house the child, his welfare being the court's first consideration, during the time the child would be living there, but only incidentally to house the wife.

The reasoning was that otherwise the fund would benefit the wife, and go beyond the agreed lump sum provision.

The court was not referred to N v N (Jurisdiction: Pre-nuptial Agreement) [1999] 2 FLR 745, where Mr Justice Wall held that it was contrary to public policy to seek to enforce a pre-nuptial agreement.

The agreement sought to oust the jurisdiction of the court, and entering into an agreement before marriage undermined the concept of marriage.

The case sought to uphold agreements providing for Orthodox Jewish couples, in the event of dissolution of their marriage, referring financial disputes to the Court of the Chief Rabbi in London for determination, thus also ensuring the wife would receive the benefit of a religious divorce (Get), without which she would not be able to enter into another religious marriage.

The particular difficulties highlighted by that case have now been relieved substantially by the Divorce (Religious Marriages) Act 2002, supported by the rule change contained in The Family Proceedings (Amendment) Rules 2003 SI No.

184, both of which have been in force since 24 February 2003.

The Law Society has published its proposals for reform of ancillary relief proceedings (May 2003).

Lord Justice Thorpe, in the foreword, welcomes its publication on behalf of the president's ancillary relief advisory group, saying it 'makes a significant and lasting contribution to public debate on an area of law reform that affects many families.'

The report recognises that 'if the law was changed to provide that pre-marital contracts should be binding on a court when looking at financial provision on divorce this could, in certain cases, lead to significant unfairness'.

It recommends that pre-marital contracts should continue to be one of the factors to be taken into account when looking at the financial provision between the parties.

The reservation is that such agreements have not, since 1995, been considered by the Court of Appeal.

District Judge Ivor Weintroub sits at Bournemouth County Court