Emma Eraso Doynova - University of Cambridge
Say Yes to the Prenup – But do it properly.
The law on prenuptial agreements presents a dichotomy between ‘autonomy and ‘dependence’, between the ‘independent woman’ and the ‘gold-digger’. Upon initiation of divorce proceedings, women are condemned to be one or the other, in the eyes of the media and the judiciary, silencing the broad spectrum of women in between. Following the withdrawal of legal aid, couples are prompted to reach their own financial settlements on divorce. This fuels the witch-hunt within the media, given that the current law on prenuptial agreements gives judges a high discretion in assessing the agreement’s fairness following Radmacher v Granatino, thus obscuring comprehensible guidelines in decision making. Consequently, public frustration and mistrust is expressed through blatant gender discrimination, vilifying women for ‘profiting’ from this system.
This essay contends that it is high time for legislation to be enacted introducing qualifying nuptial agreements, focussing on prenuptial agreements. The essay will, in the first part, unpack the notions of ‘autonomy’ and ‘dependence’ to show that the understanding of a ‘fair’ outcome varies tremendously within judicial opinion itself – thus making it difficult to find a consistent rationale in the application of prenuptial agreements. The essay will argue the introduction of legislation would both respect public opinion, as well as offer transparent guidelines by which parties can expect reliable outcomes upon divorce.
In the second part, the essay will adopt the Law Commission’s proposals for legislation, comparing the framework to the one in Germany, and to the English approach, pointing out the current system’s weaknesses. In doing so, it will underline a possible approach that would clearly communicate a ‘fair’ enforcement of prenuptial agreements whilst respecting both autonomy and dependence.
1.Autonomy, Dependence, and the public (mis-)understanding of prenuptial agreements and divorce settlements
The justification for prenuptial agreements in Radmacher v Granatino was based largely on the notion of private autonomy. In fact, Rix LJ found inherent ‘fairness’ in the respect for private autonomy, holding that overriding an agreement freely entered into by self-determined persons on the basis that ‘the court knows best’ would be ‘paternalistic and patronising’. In that sense, private autonomy entails respect for decisions made by independent and informed persons.
The problem with a strict adherence to the principle of private autonomy is that it purports an appearance of neutrality based on the notion that it is ‘fair’ to simply hold two parties to an agreement that they have consented to, regardless of its context. This sits uneasily with the fact that a long-standing partnership fosters dependence. ‘Dependence’ here is used to indicate economic disadvantages taken on for the furtherance of familiar welfare. Thompson (2019) highlights the fact that whilst more women are working full-time, the division of labour at home does not reflect this purported ‘egalitarian, gender-neutral’ culture. Many mothers remain working as the primary caretaker, oftentimes still being the one to sacrifice their career for the welfare of the family. To rely on the notion of autonomy alone could therefore lead to situations wherein one party, contrary to what might have been foreseen in the prenuptial agreement, takes on a greater domestic burden to the detriment of their career, but is nonetheless barred from financial compensation when the marriage fails. To disregard their sacrifice would be to devalue non-financial contributions, so Thompson (2018). This was emphasised by Lord Nicholls in White v White, who underlined the value of ‘sacrifices’ made for the welfare of the family. In other words, ‘fairness’ in the context of an interdependent family is found where the financial arrangements upon divorce value non-financial contributions as much as financial ones, to emphasise their equal value to society.
However, Baroness Deech (2009) asserts that the generous compensation of women following the White v White approach infantilises them, thus reinforcing the ‘housewife’ image. This, in her view, makes it impossible for these women to be taken seriously as ‘independent women’. An approach based exclusively on dependence might thus reinforce the notion that a woman is not capable of bargaining a fair outcome for herself, and that she is therefore not autonomous enough for the law to hold her to an agreement she freely entered into. However, this insistence on autonomy fails to recognise that the burden on women to prove their ‘independence’ reinforces gender inequality. Not only do many women suffer an economic disadvantage upon sacrificing their career, but they would also have to endure a disadvantageous settlement in order to prove their self-sufficiency and lose their ‘housewife’ image.
Both approaches are unsatisfactory, as they paint out autonomy and dependence to be mutually exclusive. More troubling is the fact that these differing views are held within the courts themselves. Given the high discretion granted in applying a prenuptial agreement, it becomes apparent that a transparent legislative approach must be introduced to render predictable, consistent, and ‘fair’ results based on a democratic and foreseeable assessment of autonomy and dependence by Parliament. This is crucial to bridge the gap between the courts’ decisions and their reception by the public. Public opinion on financial settlements on divorce and prenuptial agreements is fuelled by misinformation and confusion. Thompson (2019) highlights the widely misogynistic outlash pushed by the media coverage of the Mills v Mills case, which incited moral panic that the law encourages ‘gold-diggers’ and strictly denies husbands the possibility to protect their property. Whilst Mills v Mills was not a case concerning prenuptial agreements, the general conclusion to be drawn is that these misleading, and at times frankly incorrect, reports of the law originate from a fostering mistrust in the courts’ wide discretion. This is not at all surprising, given that the court currently decides rather arbitrarily what ‘fairness’ is or should be. This will be elaborated upon further in the second part of the essay.
On that note, research conducted by Barlow and Smithson (2012) had previously found that people nationally were in favour of couples being able to make binding prenuptial agreements, and these findings were (unsurprisingly) much more nuanced than tabloid reports were. Younger respondents proved particularly receptive, and prenuptial agreements were generally seen as a possibility by people in a variety of situations, not only restricted to ‘big money’ cases. With that said, many respondents also underlined the importance of flexibility to ensure ‘fairness’. So, in line with public consensus, there is a pressing need for democratically introduced legislation on prenuptial agreements. This legislation would clarify the interaction between respect for autonomy and dependence in reaching a ‘fair’ result, offering an enforceable agreement not subject to alteration by judges per se. This transparency would be a manifest step into discrediting misogynistic news reports, given the certainty of codified rules.
2.A legislative approach – understanding fairness
The second part of this essay will suggest an approach to legislation introducing ‘qualifying nuptial agreements’. The Law Commission proposed the enforcement of qualifying contracts, ‘not subject to the scrutiny of the courts’, which would enable couples to make contractual arrangements about the financial consequences of divorce or dissolution. Whilst some of the Law Commission’s proposals mirror the factors that the courts consider following Radmacher v Granatino, the current application of these factors proves inconsistent and at times ineffective. Therefore, it is necessary to determine current issues, so that these can be remedied when adopted into legislation.
Taking a step back, Parliament will have to answer the question of what makes an agreement ‘fair’. Three strands of fairness can be identified in Radmacher v Granatino: fairness in the circumstances of the agreement’s making, fairness in the content of the contract, and fairness in the circumstances which have come about. German law, according to Sanders (2010), follows a two-step approach in determining the validity of a prenuptial agreement. The court determines only whether an agreement was valid at the time of its conclusion, on the grounds of formal requirements. If, for instance, an inequality in bargaining power is found, the agreement can be voided under §138 (1) BGB (the civil code). The second step is to question whether the agreement can be enforced according to §242 BGB at the moment of divorce. This provision raises a substantial fairness analysis, and the court can consider whether the agreement produces an ‘unacceptable distribution of relationship-generated disadvantages’. In other words, German courts will consider fairness only as to the circumstances of the contract’s making and as to the circumstances which have come about, but not as to the content of the contract. This is a logical conclusion to the above analysis of autonomy and dependence. Assuming that all formal safeguards in the creation of the contract have been met, the courts must uphold the parties’ autonomy in freely reaching this agreement. It is only where the circumstances have changed, and where a situation of dependence has been created that was not accounted for within the original stipulation, that the court should have the power to intervene.
A similar approach should be taken in English law. As a first step, the law should uphold an agreement that meets the formal requirements proposed by the Law Commission, thus being procedurally fair. In the second step, an analysis of substantial fairness should be conducted purely on the basis that a party has taken on an unforeseen detriment for the welfare of the family, thus creating an unacceptable ‘relationship-generated disadvantage’.
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Procedural Fairness – Determining the validity of the agreement
The Law Commission has proposed that agreements will be qualifying nuptial agreements if they are contractually valid, made by deed and in signed writing, and are not made within the 28 days before the wedding or celebration of civil partnership. Additionally, both parties must have received legal advice at the time the agreement was formed and disclosed material information of their financial situation. The latter two requirements must be closely examined.
Independent legal advice
Whilst the courts, following Radmacher v Granatino, currently purport that the presence of legal advice will contribute in favour of giving great weight to the agreement, Anuar (2017) argues that they err in treating independent legal advice as superfluous in cases following Radmacher (and, granted, in Radmacher itself). This fundamentally undermines the notion of autonomy, which is justified on the presumption of an informed decision. One can hardly infer a free choice where it was made based on ignorance. More importantly, courts are dismissing a lack of legal advice on the basis that it would not have discouraged a party from signing a prenuptial agreement. What they really should be asking is whether independent legal advice would have affected a party’s decision to sign the particular prenuptial agreement (Anuar, 2017). In most cases, legal advice will not influence an individual’s decision to enter into an agreement. Rather, it is necessary to ensure an informed decision as to the scope of the bargained terms. This latent ambiguity is exacerbated by the fact that judges readily conclude an informed decision based on the parties’ alleged level of understanding. In V v V, the judge concluded that legal advice was superfluous because the couple were ‘intelligent people’, who were ‘aware of [the agreement’s] purpose’. This is an outrageous inference with no discernible basis, given that no level of education (outside of a degree in law) necessarily entails an understanding for the legal consequences of an unlegislated area of family law. To uphold procedural fairness and deem a prenuptial agreement legally binding, it will therefore be necessary to stringently require independent legal advice, as the most reliable evidence of an autonomously made decision is the fact that it was made with full appreciation of its consequences.
Material financial disclosure
There is no requirement for full and frank financial disclosure, but following Radmacher v Granatino, courts will give lesser weight to an agreement where there is material lack of disclosure. Anuar (2017) highlights that where there has not been full disclosure, an agreement was not really made with full awareness of the consequences, and that a party might have stipulated different terms if they had such knowledge. She draws an analogy to contract law, underlining that a lack of full financial disclosure might constitute misrepresentation, since one party did not have ‘complete and accurate information’. If the Law Commission proposals were implemented, requiring full disclosure might not be necessary, as cases of material lack of disclosure would be caught by the doctrine of misrepresentation, directly applying contract law. In fact, it might be in the interest of consistency to not strictly require full disclosure where a prenuptial agreement is legally binding, to avoid situations wherein a perfectly binding agreement is set aside on the ground that an immaterial fact was not disclosed. Rather, it might be more beneficial for the court to adopt Lady Hale’s dictum in Sharland v Sharland and distinguish between innocent and fraudulent misrepresentation. So, a prenuptial agreement might be upheld as procedurally fair where, if the lack of disclosure was not material, the misreprentation was also innocently made (Anuar, 2017). In any case, these distinctions will require clarification upon the introduction of legislation, as the distinction between material and immaterial lack of disclosure could potentially influence the application of the contract as a whole.
Contractual validity
Lastly, the implementation of contractual safeguards to prenuptial agreements is particularly advantageous in protecting parties who sign an agreement due to the coercive control of their partner. Zagha (2021) stresses the importance for judicial review where intimate partner violence is found prior to the execution of the agreement, underlining that such agreements should be void in their entirety. Contractual doctrines of duress, misrepresentation and undue influence in English law would ensure that the contract is void or voidable respectively, thus offering the same necessary retrospective protection. Equally, Zagha calls for mandatory mediation prior to entering a prenuptial agreement, arguing that a mediator is best suited to recognise intimate partner violence where it influences a party’s ability to negotiate for themselves. Whilst promotion of mediation prior to entering a prenuptial agreement is in any case a welcome idea, given that it prompts parties to critically engage with and communicate their expectations for their partnership, the requirement for legal advice should fulfil the same purpose Zagha aims to address, as discussed above.
An agreement that meets the procedural requirements would thus be fair at the time of its making, therefore legitimising its contractual application.
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Substantial Fairness – Finding a ‘relationship-generated disadvantage’
Parliament must also provide for a second step which ensures the substantial fairness of the agreement in the circumstances which have come about. In other words, this provision should explicitly give effect to the notion of dependence, acknowledging that whilst the parties’ autonomy has been respected, something about the resulting circumstances (not the content of the agreement itself) legitimises review.
The Law Commission and Radmacher v Granatino give effect to this by stipulating that parties cannot contract out of ‘financial needs’. However, such a provision would invite the court to evaluate the fairness of the content of the agreement itself, and thus undermine private autonomy. In such a case, the procedural safeguards should remedy any perceived unfairness in the first step instead. In Luckwell v Limata, for instance, the High Court disregarded part of the prenuptial agreement because it left the husband in a situation of need. Were the proposed legislation in place, the contract would have failed at the first stage because it was signed shortly before the wedding, which may have explained why, despite having obtained legal advice, the husband nonetheless signed the agreement. Instead, Parliament should seek to introduce an approach akin to the German one, wherein the Court analyses the resulting circumstances. If a party cannot meet their present or future needs because of the division of labour within the marriage, the other partner should be estopped from relying on the prenuptial agreement so far as this was not foreseen within the agreement (Sanders, 2010). To use the language of English courts, where one party takes on a detriment for the welfare of the family, the principles of needs, compensation and sharing as per Miller v Miller; McFarlane v McFarlane should apply. To illustrate the scope of this application, in Radmacher v Granatino, this provision would not have taken effect. Although the financial situations of the parties changed, Mr. Granatino did not take on the financial detriment for the welfare of the family, he chose to switch careers for his own benefit (Sanders, 2010). In contrast, where one spouse gives up their career to care for children, albeit the prenuptial agreement was concluded on the assumption that the couple would never become parents, then it would be sensible for the court to review the application in light of the developed circumstances.
3.Conclusion
In conclusion, the proposed legislative approach strikes a balance between autonomy and dependence, whilst restricting the court’s ability to influence the content of the agreement itself. The implementation of this legislation would render comprehensible and predictable results, which might encourage more couples to form such a contract. There is merit in arguing that transparency will ultimately restore the public’s trust in the court’s exercise of their power. To mirror the dictum in Radmacher v Granatino, the new law on divorce abolished fault-based divorce, respecting a couple’s autonomy to marry and to separate freely. It is time for this change to be accompanied by a fresh approach to the financial consequences of divorce, namely by introducing legislation on the enforcement of nuptial agreements.
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Bibliography
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