In 2010 the Supreme Court held that, whilst pre-nuptial agreements are not binding in this country, the court should usually give effect to them, unless their terms are unfair. The effect of that ruling has been that many pre-nuptial agreements have since been upheld by our courts, and this has been reflected in the reported cases. However, the recent case Ipekçi v McConnell was an example of the court giving no weight to an agreement.
A look at this case must begin with the background of the parties.
The wife is the great-granddaughter of the founder of the Avon Products business empire. As Mr Justice Mostyn, who heard the case, explained, the vast amount of money generated by the business for the family means that, along with other relatives, the wife is the beneficiary of trusts in the USA with an overall value of at least $65 million. Now, as one might imagine, the trusts, and therefore the wife’s finances, were rather complicated. For the purpose of this post I will not go into those complications. Suffice to say that the wife is, by most measurements, comfortably well off.
The husband, in contrast, is the head concierge of the London Hilton Metropole hotel, earning about £35,000 gross. He has no net capital.
The parties met in New York in 2003, at which time the husband had no money beyond his earnings. The wife lived in London. They began cohabitation in January 2005. They agreed to marry, and a pre-nuptial agreement was suggested, and drafted by the wife’s lawyer. A lawyer was found to give the husband independent legal advice. Rather worryingly, this lawyer happened to be the solicitor who acted for the wife in her divorce from her first husband. The husband met the lawyer for the first time on the 3rd of November 2005, just three weeks before the marriage, which had been fixed to take place on the 26th of November.
The terms of the agreement were also slightly complicated. Again, I will not go into the details, but the effect of the agreement was that the husband would, in the circumstances that subsequently arose, not receive anything on divorce. Needless to say, the husband was advised that the agreement was slanted heavily in favour of the wife. Despite this, he signed it on the 11th of November.
The marriage eventually broke down, and the parties separated in November 2016. Divorce proceedings ensued, and the husband issued a financial remedies application. The application was heard by Mr Justice Mostyn in the High Court.
Mr Justice Mostyn had to decide, as a preliminary issue, what weight, if any, should be given to the pre-nuptial agreement. He had “no hesitation” in deciding that it would be wholly unfair to hold the husband to the agreement. His reasons for this included the following:
- The agreement specifically stated that it would be governed by New York law. However, there was a defect with the agreement under New York law, which meant that would carry little or no weight there.
- The husband could not be said to have had a full appreciation of the implications of the agreement, having had no legal advice at all about the impact of New York law. Further, Mr Justice Mostyn was unsurprisingly not satisfied that the solicitor who gave the advice was not compromised, by virtue of having acted previously for the wife in her first divorce. It was, he said, a clear situation of apparent bias.
- The agreement did not meet any needs of the husband.
Mr Justice Mostyn then went on to decide what the husband was entitled to. He awarded him a lump sum of £1,333,500, of which £375,000 was subject to a charge-back to the wife (or her estate), on the death of the husband.
The case is a reminder of just what the Supreme Court said in 2010: that the courts in this country are not bound by pre-nuptial agreements, and that if it is to be upheld any agreement must be freely entered into by each party, with a full appreciation of its implications, and be fair. And one of the elements of that fairness is that is that the agreement must address the needs of the parties.
You can read the full judgment here.
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Author: John Bolch