Recent judgement strengthens pre- and post-nuptial agreements

A recent judgment could make it more difficult to challenge pre- and post-nuptial agreements in the event of divorce, strengthening the effectiveness of agreement cases in relation to financial matters.

What is an agreement case?

Agreement cases are those in which the financial division of assets between parties has been agreed to without requiring court proceedings, such as pre- and post-nuptial agreements.

Financial proceedings can be complex, lengthy and acrimonious. Additionally, the court has a wide range of discretionary powers that make it difficult to predict future outcomes.

To that end, it’s unsurprising that pre- and post-nuptial agreements have continued to grow in popularity as people wish to make their own decisions around financial matters should their marriage or civil partnership end.

A nuptial agreement is a type of contract that parties to a marriage or civil partnership can enter into. The agreement sets out what should happen to assets if the relationship ends.

A predicament of real need

Although these types of agreements are not legally binding per se, the court in the case of Radmacher v Granatino [2010] UKSC 42 stated that nuptial agreements are likely to be enforced if the agreement has been entered into freely and the parties have given full financial disclosure to one another, taken independent legal advice and entered into the agreement in full appreciation of its implications.

The court must be satisfied that it’s fair to hold the parties to the agreement, which is judged by whether or not the agreement leaves one party in a “predicament of real need”.

Since Radmacher v Granatino, there has been little guidance from the courts around the meaning of the phrase “predicament of real need” — until now.

Ensuring fair outcomes

The recent case of Cummins v Fawn [2023] EWCH 830 (fam) sought to further clarify the law relating to “a predicament of real need”.

In order to attempt to clarify matters, the court used an analogy of a bookshelf and used the analogy of a line of books on a shelf to represent the discretionary range of ‘need’.

The bookends may be far apart, with the right end representing a “comfortable, perhaps even luxurious lifestyle” and the left end representing a “spartan lifestyle catering for not much more than essentials”. The space between the two ends is the range of fair outcomes.

In the case of Cummins v Fawn, the court stated that an agreement must leave a party within the range of acceptable outcomes to be upheld as ‘fair’. If an agreement was unfair because it was at the left end of the bookshelf, “it should be augmented by no more than is necessary” to ensure fairness.

Harder to challenge nuptial agreements

The recent judgment in Cummins v Fawn may now make it harder for a party to successfully challenge a nuptial agreement in the event of divorce on the basis that it leaves them in a “predicament of real need”.

If an agreement is challenged and the judgment in Cummins v Fawn is followed, the court should adopt a broad approach to determine whether the agreement is fair.

Further, if the court deems the agreement to be unfair, it should also only adjust the agreement by no more than necessary to make it fair. Therefore, the aim is for any adjusted agreement is to be as close to the nuptial agreement as possible.

The judgement in Cummins v Fawn can therefore be seen as a positive by those who seek the certainty and reassurance that an agreement in writing should be upheld.

Talk to us

It’s critical to take early legal advice on any nuptial agreements.