Since the Supreme Court’s ruling in the case of Radmacher v Granatino [2010] UKSC 42 there has been a presumption that a couple who have entered into a (pre or post) marital agreement will be held to its terms, provided that a number of safeguards are satisfied i.e. the agreement must be fair, the parties should have had independent legal advice at the time it was entered into, financial disclosure should have been exchanged and neither party should have been pressured into signing the agreement.
This landmark decision changed the way that pre and post marital agreements have been viewed by the court and an increased number of divorces now involve the implementation, or disentanglement, of these marital agreements. If such an agreement exists, and the parties’ later divorce, disputes will often arise about whether its terms should be adhered to in full, or, whether the intervention of the court is required to determine the validity or fairness of the agreement. For example, concerns about the circumstances in which the agreement was signed (duress or lack of financial disclosure) or that the implementation of the agreement after a long marriage would be insufficient to meet the financially weaker party’s needs, and those of any children.
If a marital agreement exists, there are some practical tips to consider:
When?
Take a look at when the agreement was signed, was it signed before Radmacher v Granatino or after? If it was signed before, the advice as to the approach of the courts in dealing with marital agreements will have been different to the advice given now i.e. the parties may have been advised that the agreement is merely a record of what has been agreed but is unlikely to be upheld. This goes to the very heart of whether the parties understood the implications of the agreement when they signed it and how they understood the court would deal with the agreement on divorce.
Sharing
How does the agreement address sharing? It is not always a case of focusing solely on needs. If for example, one party has their needs broadly met by the agreement but the effect of that is that they receive a very small proportion of the assets, thought should be given about whether sharing needs to be addressed – particularly in cases of a long marriage. Also consider whether the agreement seeks to exclude sharing claims against assets which would otherwise be considered matrimonial property.
Financial disclosure
The absence of detailed financial disclosure may not be fatal when seeking to implement a marital agreement on divorce. It is important to consider materiality and whether it mattered in that particular negotiation that disclosure did not take place (or was not complete). For example, did the financially weaker party already have a good understanding of the financially stronger party’s finances?
Timing
As per Radmacher v Granatino ideally the pre-marital agreement should be signed at least 28 days before the wedding. However, it is not always fatal if it’s signed closer to the wedding. It is important to consider whether there had been prior discussion or negotiations between the parties and their solicitors about the need for a pre-marital agreement. When did those discussions commence, had the party now seeking to resile from the agreement known about the agreement for some time and had they seen drafts of the agreement before the 28 day timeline started to run?
Duress
If the party seeking to resile from pre-marital agreement asserts that they were pressured into signing the agreement, review correspondence and attendance notes from the time that the agreement was signed. Make sure there is a clear understanding of the context in which the agreement was signed as this may help to undermine arguments of pressure or duress, particularly if these issues were never raised.
Was the marital agreement made and signed in a different country?
Agreements or contracts made under foreign law are usually signed with significantly less formality, without negotiation of the terms or financial disclosure. So, without the necessary safeguards in place, is it easier to persuade an English court that the agreement or contract should not be upheld?
The case of Versteegh v Versteegh [2018] EWCA Civ 1050 addressed this very issue and concluded that the mere fact that a party had signed a standard election in a foreign country without advice was not sufficient reason, on its own, to have that contract set aside. However this case cannot be taken as precedent that every contract made under foreign law will be upheld where the parties are divorcing in an English court as each case will be determined on its specific facts and there is no ‘one size fits all’ in the court’s approach to this complex and evolving area of law.
It is important to obtain the advice of a specialist family lawyer at an early stage about the implications of a marital agreement on divorce. Careful consideration will need to be given about how to approach the marital agreement, whether in trying to implement its terms or resile from it.
Written by Hannah Petherick and Sarah Marchant.