£100m victory for heiress clears the way for pre-nups

The Daily Telegraph
21 October 2010
by Stephen Foster

MAKE no mistake, this was a bold and radical judgment by the Supreme Court. In the opening paragraph of the press release setting out the reasons for its judgment, the Supreme Court makes it clear it has swept away the long-standing rule that pre-nuptial agreements were contrary to public policy. With today's decision, the pre-nup comes of age.

The crux of the judgement is that now parties will be held to the terms of a pre-nuptial agreement, even if they've entered into a bad bargain, unless there has been a change of circumstance since the agreement was entered into that means it would be unfair.

Supporters of pre-nuptial agreements will say that the court is simply recognising social trends and the move towards greater harmony with Europe, but critics will point out that the Supreme Court has set up a new recipe for unfairness.

There is a widening gap between the approach of an equal division of the fruits of marriage that the court employs on divorce and the very harsh threshold a partner has to overcome if there is a pre-nuptial agreement in place: unless he/she can show that the provision made in the pre-nup is unfair, the court will not interfere with it.

Since 2000, pre-nuptial agreements have been steadily gaining momentum. Whereas previously only the very wealthy tended to engage lawyers to draw up pre-nuptial agreements, they will now become commonplace. A trickle will become a torrent.

We have certain sympathy with the Bishop of Blackburn's view that negotiating pre-nuptial agreements prior to marriage is hardly the spirit with which to enter into a union. But these are secular times we live in and, as 40 per cent of marriages end in divorce, is it not prudent for parties to try to agree how assets will be divided when the almost inevitable occurs?

Surely it's up to the individual to decide and the bishop will no doubt be pleased that today's decision may, paradoxically, lead to more couples getting married.

There will no doubt be significant criticism of the Supreme Court in effectively making law, thus usurping the role of the Law Commission (which is due to report in 2010) and Parliament in one fell swoop. But, given the legislative programme that this government will need to drive through, on balance it is better to have clarity even though it is by the back door.

London has had a reputation as the divorce capital of the world, with large pay-outs for ex-wives such as the £48million awarded to Beverley Charman in 2006 after 28 years of marriage to the insurance magnate John Charman.

Mr Charman no doubt regrets not having agreed a pre-nup with his wife because he certainly would have got away with giving the £20million he offered.