The recent spate of high profile, big money divorce cases appears to be creating a ripple effect among those wishing to avoid a similar experience. In the wake of the widely publicized Miller case, which yielded the wife £5 million after a 3 year marriage, the column inches devoted to the Mills-McCartney divorce proceedings once again gave centre stage to the increasingly generous awards made to wives in the English divorce courts. As awards have risen, so the demand for pre-nuptial agreements has soared.
A pre-nuptial agreement is defined, at its simplest, as an agreement made by a couple before they marry concerning ownership of assets in the event of their divorce. Unromantic perhaps, but also arguably an increasingly realistic approach by those individuals seeking some measure of protection in a climate where many marriages unfortunately end in divorce.
Such agreements are not currently enforceable in Jersey in the same way as they are in other jurisdictions such as California. The Royal Court retains a discretion to order the ultimate financial settlement but adherence to certain criteria will increase the weight afforded to a pre-nup.
Firstly, independent legal advice must be obtained by both parties and full and frank financial disclosure must be made. This means all assets, liquid and illiquid, anywhere in the world. Pre-nups risk being set aside by the court if one party is found to have exerted pressure or undue influence on the other to sign the agreement and agree to wording or "trigger factors" which they do not fully understand. The overriding objective of the court is to ensure a fair settlement for both the parties and therefore any children of the marriage. The agreement should be executed no less than three months before the wedding date. A hastily executed agreement may have the hallmarks of hidden assets about it and the immediate run-up to the wedding is not the time to think clearly about such matters.
Pre-nuptial agreements require bespoke drafting in precise terms and will often contain a number of different asset separation scenarios depending on how far into the marriage the relationship breaks down. Should the agreement incorporate the anticipation of children of the marriage, for example? Have any unforeseen circumstances arisen that render the pre-nup invalid, such as one party exploiting their economically dominant position? It is the role of the parties' legal advisors to consider the agreement from all angles.
Financial proceedings ancillary to divorces are governed in Jersey by the Matrimonial Causes (Jersey) Law 1949 [as amended] which was based to a large degree on the legislation in England and Wales at the time of drafting. The exercise of the court's discretion as to the division of the assets between the parties is dictated by the application of the "section 25 factors" taken from section 25 of the English Act and incorporated into the Jersey system via case law. These factors include the length of the marriage, the age of the parties, the income, earning capacity and financial obligations, contributions and foreseeable inheritances of each spouse; in other words, their historic, present and foreseeable future financial circumstances.
Pre-nups are currently regarded a "circumstance of the case", which is the final "catch-all" section 25 factor. Hence the importance they are given remains for the trial judge to decide in the overall exercise of his discretion.
The Royal Court has not yet had the occasion to rule on such an issue but since Jersey law is based upon English law, predicting how such discretion will be exercised may be assisted by reference to English cases. In recent years a marked shift can be detected in the attitude of English judges towards pre-nuptial agreements. Always careful to protect their position of ultimate arbiter, they have nevertheless afforded such agreements increasing weight:
In the 1992 case of N –v- N 1992 FLR 745, the court indicated "that there were circumstances in which the terms of such agreements would be upheld...". By 2002, Connell J stated in M –v- M 2002 1 FLR 654 that "the court should look at any such agreement and decide in the particular circumstances what weight should, in justice, be attached...". In 2007 the Court of Appeal held in the case of Ella –v- Ella 2 FLR 35 that it was right to regard the pre-nup as a major factor.
The most recent case and perhaps the most highly publicised has been that of Susan and Stuart Crossley, who married in January 2006. Attempting to avoid the terms of their pre-nuptial agreement, she sought a share of her latest husband's fortune but was ruled against by Lord Justice Thorpe who opined "If ever there is to be a paradigm case in which the courts will look to the prenuptial agreement as not simply one of the peripheral factors of the case but a factor of magnetic importance it seems to me that this is such a case".
Recognised in much of Europe and the United States, it is clear that pre-nup agreements have in recent times gained greater legal stature closer to our shores. This positive evolution played out under the media spotlight can only provide increasing comfort to those wishing to lessen the emotional and financial cost of divorce proceedings.
This article first appeared in the Autumn 2008 issue of Appleby Jersey's Resolution newsletter.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.