English Court OKs Post-Nups, Landmark Case

Congratulations to our victorious client, Rod MacLeod, to whom we rendered extensive advice from afar throughout his long-standing divorce case in the courts of the Isle of Man and then in the Judicial Committee of the Privy Council.

The case has resulted in a landmark decision today in favor of our client by the Privy Council, which ruled – for the first time – that post-nuptial agreements are enforceable under English law.

The Judicial Committee of the Privy Council is the court of final appeal for the overseas territories and Crown dependencies, and for some Commonwealth countries.

England’s Daily Mail summarized the facts as follows:

The ruling comes after a millionaire businessman appealed to the Judicial Committee of the Privy Council over a series of agreements before and during his marriage which set out his wife's share of a £13.8million-pound fortune.

Roderick MacLeod, 64, a U.S. businessman living in the Isle of Man, and his wife Marcia, 42, agreed a 'pre-nup' when they married in 1994 in Florida.

The agreement was amended twice during their ten-year marriage which produced five sons.

After their 2004 divorce Mr MacLeod offered his wife about £1million on the basis of their post-nuptial agreement, then he changed his offer to putting about £1.25million in a trust fund for their sons. An Isle of Man court ruled that Mrs MacLeod should receive the extra money in a lump sum.

But yesterday the Privy Council overturned that decision, ruling that there were no circumstances to justify changing the couple's post-nuptial agreement.

Courts currently take 'pre-nups' into account but they are not legally binding. However, as they become more popular, there is pressure for them to be given more force.

So where does this leave prenuptial agreements in England? They are “taken into account” and may be a significant factor in a divorce case to the extent that the English judge feels that it is proper to do so, depending on the circumstances of the case.It also means that if a prenuptial agreement is renegotiated and revised after the parties marry, it will likely be enforced.

With respect to post-nuptial agreements, Baroness Hale said that:

“We must assume that each party to a properly negotiated agreement is a grown up and able to look after him- or herself. At the same time we must be alive to the risk of unfair exploitation of superior strength. But the mere fact that the agreement is not what a court would have done cannot be enough to have it set aside.”

Respectfully, that same argument applies just as much to agreements made before marriage as it does to agreements made after marriage. Indeed, people may well have far more negotiating strength before entering the state of matrimony than after they have married and changed their circumstances. Nonetheless, even as the Court modified the law as to post-nuptial agreements, it left it to Parliament to make the appropriate changes to the law concerning prenuptial agreements.

So how should one advise betrothed international couples with an English connection who wish to know whether a prenuptial agreement is advisable and under whose laws it should be executed? The answer is that they are still in a somewhat murky legal environment as to which experienced and strategic international family law counsel should be consulted.