Some Further Thoughts on Pre-Nuptial Agreements

Divorce & Matrimonial Finance

28 November 2019

Further to my previous article on pre-nuptial agreements, I have recently had cause to consider the overlap between the various possible vitiating factors, particularly undue influence and legal advice.

Following on from Lord Phillip’s consideration in Radmacher of the vitiating or weight reducing factors of duress, fraud, misrepresentation, undue pressure and unworthy conduct such as an exploitation of a dominant position to secure an unfair advantage, to what extent can those factors combine with each other and with other factors that might diminish a Radmacher “appreciation of the implications” of the agreement, so that a case that might be weak on one point is nonetheless strong overall?

The classic statement on undue influence is that of Lord Nichols in RBS v Etridge (No.2) [2001] 2 FLR 1364, UKHL 44, at paras 6-10 in which His Lordship divided the concept into two categories of unacceptable conduct, firstly, overt acts of improper pressure or coercion and secondly, that which arises from a relationship where one party has acquired a measure of influence over another, saying:

“In cases of this latter nature the influence one person has over another provides scope for misuse without any specific overt acts of persuasion. The relationship between two individuals may be such that, without more, one of them is disposed to agree a course of action proposed by the other. Typically this occurs when one person places trust in another to look after his affairs and interests, and the latter betrays this trust by preferring his own interests.” [para 9].

This category must surely have particularly application to the situation where the dominant party in a relationship is pushing the other towards a PNA.

So returning to a Radmacher “appreciation of the implications”: of course undue influence may well in itself prevent an appreciation of implications but, it must also be right that misrepresentation and lack of independent legal advice may do so too, especially when the two are combined and equally of course the absence of legal advice may well be part of the undue pressure and/or add to any misrepresentation.

It must follow that it is essential to consider all of these factors together, not in isolation and, the link between lack of legal advice and undue influence may be particularly important because, as noted previously, in Radmacher Lord Phillips [69] did not say that independent legal advice was essential, only that it is “obviously desirable, for this will ensure that a party understands the implications of the agreement.”

Thus in Veersteegh v Veersteegh [2018] 2 FLR 1417, EWCA Civ 1050, the wife’s failure to take independent legal advice was not relevant as she “knew ‘full well’ the effect of the agreement with a clear finding of fact that “throughout the marriage the wife has known and understood the impact of the PMA” – although nonetheless King LJ repeated that legal advice is part of the question whether “a party did or did not have a full appreciation of the implications of the PMA” adding that “doubtless in some cases its presence or absence will be critical” [59].

But, in Kremen v Agrest [2012] 2 FLR 214, EWHC 45 (Fam), Mostyn J held that “W did not freely enter into the agreement with a full appreciation of its implications. It was the product of pressure from H and there was a material absence of independent legal advice and disclosure”. Thus it was the combination of undue pressure and lack of advice that vitiated the agreement. Further in pointing out, as His Lordship did, that a spouse would have to have a high degree of sophistication to have a full appreciation of what legal rights they are signing away Mostyn J drew attention to an often unstated point about Radmacher itself, that Mr Granatino could not avail himself of the lack of legal advice as a vitiating factor because he chose not to take the opportunity that he had of independent legal advice because he, as a successful banker and post graduate student at Oxford, had fully understood it’s effect.

There must therefore also be another factor here, the sophistication and ability to understand of the party being asked to enter into the PNA and, that is further illustrated by an aspect of Ipekci v Mc Connell [2019] EWFC 19, not mentioned in the previous article: W was the extremely wealthy heiress to the Avon Cosmetics empire with lawyers aplenty to command whereas, H was a hotel concierge with no assets. The PNA was drawn up by wife’s private client lawyer and said to be subject to New York law but H was sent, 23 days before the wedding, for independent legal advice to the English solicitor who had acted for W in her first divorce – who did at least advise H that the agreement was slanted heavily in favour of W. Mostyn J had “no hesitation” in deciding that “it would be wholly unfair to hold the husband to the agreement that he had signed” and gave as one of the reasons:

“Further, it is plain to me that the husband cannot be said to have had a full appreciation of the implications of the agreement when he had no legal advice at all about the impact of New York law. Further still, I am 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, so it seems to me, a clear situation of apparent bias.”

One suspects that this husband did not have Granatino sophistication and, although he did have legal advice that was certainly correct in terms of the PNA being slanted in W’s favour, there are yet another two factors that appear here: the solicitor was not altogether best qualified and he was not free from apparent bias. That is, surprisingly, a not unique situation; in fact the case that led me down the path for this article was one in which the wife sent the husband to her long time conveyancing solicitor – we await the reserved judgment.

What is clear is that the best case for avoiding a pre-nuptial agreement is going to be one that brings together as many of the different factors of pressure and lack of appreciation as possible particularly to avoid the Radmacher argument that lack of legal advice alone is not enough.


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