Practitioners and the public deserve clarity on prenups

The year 2008 seems a long time ago. Remember the Beijing Olympics, the start of the financial crisis and Portsmouth winning the FA Cup?

What you probably won’t remember though was that it was the year in which the Law Commission was initially charged with the job of reporting on whether pre-nuptial agreements should become legally binding.

It sounded like a sensible idea; to let the experts carefully collect the evidence, canvass opinion and report in a reasoned manner on whether we should jump on the prenup bandwagon.

But the Law Commission thought about it, and then decided that they couldn’t really get started until the Supreme Court had made their decision in the case of Radmacher v Granatino.

As we all know, the Supreme Court held in 2010 that the parties should be kept to the terms of an agreement, unless it would be unfair to do so. But they didn’t spell out exactly what ‘fair’ meant.

Moving forward

So back to the Law Commission, who took another three years before agreeing with the clear guidance given by the court in Radmacher and proposing that ‘qualifying nuptial agreements’ should become legally binding. But subject to certain safeguards and only if the needs of both parties and any children are met.

And did the Commission define ‘needs’? Sadly not, which means that we are really not much further forward. While the report includes a draft Bill, there is no guarantee that this will make it onto the statute books, especially as there is only 14 months to go before the next general election. Family law reform has never been a vote winner, but the government are keen to cut down costs and minimise the need for family cases to litigate.

While lawyers are essential to the preparation of pre-nuptial agreements, if the agreements are then binding on a later divorce, the theory is that there should be no subsequent litigation.

However, this assumes that there is a consensus in each case as to what exactly is meant by the needs of the parties and all the safeguards have been followed.

So, in the absence of anything new from the Law Commission report and without holding our breath for new legislation, we can only go back to the judgment in Radmacher as guidance for our clients.

The newspaper headlines produced by the Law Commission report (‘DIY Divorce Revolution!’) actually seemed to be generated mostly by the second aspect of the report. This was added in 2012 to the original brief and the Commission was asked to examine the extent to which one party should be required to meet the other’s needs after their relationship has ended and how non-matrimonial property should be treated on a divorce or dissolution.

The Law Commission wants the law relating to the division of finances on divorce to be opened up and made accessible to the public. The report states “transparency in the law is a necessity, not a luxury” and that there should be guidance for the parties involved and for the courts, to ensure consistency.

This makes sense. Many people, despite the multitude of websites devoted to explaining the intricacies of family law, do not understand that there is no such thing as a common law wife, how the law is likely to apply to them, or how to start calculating a suitable settlement.

Family law should not be a mystery understood only by the members of the legal profession and incomprehensible to everyone else and a move towards greater certainty and more consistent application of the law between different courts is to be welcomed.

Calculation tool

Yet the Commission did not feel able to then go on and set out how the law should be made accessible or what guidance the judiciary should follow. Instead, the Commission recommended that the Family Justice Council be given that job instead. Why could the Commission itself not have taken this matter further forward?

The report hopes that the Council can undertake research as to whether we could have a calculation tool, which would produce at least a financial range into which a court order might fall, if not a precise solution. Couples could then go online, input their details and see how much they should be paying in maintenance, for instance.

This has caused some shudders in the legal profession, but of course we have had a formula for child maintenance for many years now. The difference though is while perhaps the child maintenance has been rigidly calculated, the court has still retained discretion as to the quantum of spousal maintenance and the
capital split and has used this fairness, as far as possible, to arrive at an appropriate overall split for each family.

To move to a set formula for all aspects of financial remedy cases would be a drastic move indeed and the potential for injustice is obvious. Working out what would be a fair split for each family isn’t as easy as just pressing a few computer buttons.

Every case is different and the current system, while clearly it does have its faults, does recognise this. The courts strive to reach a fair solution in every case, allowing for each family’s particular needs, set up and finances.

Specialist family lawyers give expert advice, precisely tailored to each family. They can recognise the signs of undue pressure being placed on their client and help to ensure that their client isn’t bullied into reaching an agreement that does not provide appropriately for them or their children.

They can help untangle complicated financial arrangements, guide a client with no previous financial knowledge into working out what they will need in the future and can provide a buffer between parties who perhaps simply can’t communicate directly any more. SJ