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31 May 2019

Pre-nuptial agreements: only valid when fair

3 mins

Pre and postnuptial agreements (‘nuptial agreements’) have been given increasing weight by the Family Court in England and Wales since the 2010 landmark Supreme Court judgment in Radmacher v Granatino [2010] UKSC 42. Their validity depends, however, on their fairness: a nuptial agreement will not be enforced in an English court if it leaves one spouse with no share in matrimonial assets, as a recent judgment of Mr Justice Mostyn in Ipekci v McConnell [2019] clearly demonstrates.

Before 2010, nuptial agreements were given very little weight by courts in this jurisdiction, on grounds of public policy. The Supreme Court changed the law in Radmacher v Granatino, but put set out clear guidelines that need to be in place for a nuptial agreement to be given weight by the court. First, nuptial agreements are subject to the so-called Hyman principle (Hyman v Hyman [1929] AC 601). This means that a nuptial agreement cannot oust the court’s jurisdiction to assess its fairness. If the court finds a nuptial agreement unfair, it should not follow it. A recent judgment of the High Court Family Division in Ipekci v McConnell, given by Mr Justice Mostyn, provides a helpful example of a nuptial agreement which didn’t pass the fairness test.

Morgan McConnell is an American heiress to the fortune of David McConnell, founder of the fifth-biggest beauty company in the world, Avon.  She met Anil Ipekci in 2003 when he was working as a concierge in a hotel in New York. Mr Ipekci was bankrupt, with no assets and only a modest income at that time. The parties formed a romantic relationship; they began cohabiting in London in January 2005 and married ten months later.

The parties entered into a prenuptial agreement which practically excluded the husband from any share in the couple’s matrimonial assets. Ms McConnell referred her soon-to-be husband to an English lawyer who represented her in previous divorce proceedings. She also insisted on including New York choice of law and jurisdiction clauses. The husband was advised that the agreement favoured his fiancée to the highest extent possible, yet he signed the agreement in any event.

The parties went on to have two children. In 2016, the marriage broke down and the parties separated. Divorce and financial remedies proceedings ensued in England. The wife sought to rely on the nuptial agreement, leaving the husband with no financial assistance. Mr Ipekci successfully challenged the validity of their agreement.

Mr Justice Mostyn observed that under New York law the agreement would not be enforceable under New York law. He doubted the independence of legal advice obtained by the husband from his wife’s former lawyer, who was not only conflicted but also not qualified to advise on New York law. Finally, Mostyn J noted that the prenuptial agreement could result in the father being so poor that the parties’ children may perceive him as ‘being in some way the poor relation’.

Mr Justice Mostyn decided to attribute no weight to the nuptial agreement and awarded the husband a lump sum of £1,333,500. He also ordered the wife to pay for the children’s school fees.

This article was written by Adam Krynicki, Paralegal.

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