The Law Commission has completed its report on matrimonial property, needs and agreements. The headline-grabbing conclusion is that pre-nuptial agreements should be binding in divorce cases.
It has traditionally been the case that English courts have ignored pre-nuptial agreements but this approach was significantly undermined by the Radmacher divorce hearing in 2010.
The Law Commission has set out to bring clarity to the divorce laws to help the general public better understand them and to ensure that the laws are applied more consistently across different areas of the country.
Making Pre-nups Binding with Qualifying Nuptial Agreements
The most significant finding in the report is that courts have been paying greater regard to pre-nuptial and post-nuptial agreements in recent years. Despite this English courts still have discretion over whether or not those agreements are followed. The Law Commission acknowledged that this was at odds with the wishes of couples who enter into such agreements to create a degree of financial certainty in the event of separation.
The Law Commission’s recommendation is that legislation is introduced to create ‘qualifying nuptial agreements’ which would be enforceable contracts not subject to court scrutiny. The qualifying aspect of the agreement would be in the form of requirements that would create appropriate safeguards while preventing the parties from contracting out of the ‘financial needs’ obligation.
Maintaining the Priority of Financial Needs
In making the recommendation that pre-nuptial agreements should be binding the Law Commission stated that this should be subject to the existing principles in relation to needs.
The basic principle regarding needs is that it is the responsibility of former spouses to meet each other’s financial needs and the needs of any children. The Law Commission does not believe that this is in need of statutory reform.
It does however recommend that the Family Justice Council which is made up of judges and lawyers issue guidance to clarify how the term ‘financial needs’ should be applied to reinforce best practice in court and aid consistency in different parts of the country. This should also help divorcees who are not legally represented in their understanding of their responsibilities and the objective of eventual independence.
The Law Commission has also recommended investigating whether the creation of a formula to assess needs would be useful. This might take the form of non-statutory guidance to be used as a basis for negotiation by divorcing couples.
The Law Commission’s report and recommendations should be welcomed. Any measures that bring a degree of certainty to the separation process should benefit both parties. For more information or advice please contact a member of the Family Law Department by telephone on 0207 611 4848.