Prenuptial Agreements

Baroness Deech Excerpts

Thursday 27th February 2025 Lords Chamber

Moved by

[Baroness Deech]

That this House takes note of the law relating to prenuptial agreements.

[Baroness Deech (CB)]

My Lords, it may interest noble Lords to know that I am often taken to one side by elderly female Peers to beseech me to reform the law in this area. They are reluctant to marry, or remarry, long-term partners because of fearing the loss of assets should there be a subsequent break-up, a loss that would deprive the children of the first marriage of their expected inheritance. One might be surprised at the energy of the beating hearts under the ermine. One should not be, because the Office for National Statistics has shown that the number of so-called silver splitters—divorcees over 65—has increased by 75% in the last 20 years and lawyers are advising them to make prenuptial agreements, commonly known as “prenups”.

Those who have been through a divorce once do not want to experience the financial consequences a second time. Others decide not to remarry legally. Judging by the number of letters I get from members of the public when the possibility of reform is reported, they are well aware of, and intensely anxious about and upset by, financial provision law; that is, the law about splitting assets on divorce. I have never received a letter in support of the existing law on this topic.

A prenup is an agreement made between a couple, either before or during their marriage or civil partnership, which governs the way in which their assets are to be divided on divorce. Many foreign jurisdictions expect couples to enter such binding arrangements. They are not, however, legally binding in England and Wales, although the Supreme Court ruled in the case of Radmacher v Granatino that they should be upheld if fair and freely entered into. They are popular here with couples with inherited wealth, or wealth acquired before marriage; couples who have children from a previous relationship; foreign couples; same-sex couples; and young career people who have built up assets before they marry.

Various studies have tried to estimate the number of couples who do make prenups, albeit, as I said, with no guarantee that they will be respected by the courts. The estimates vary from 13% to 20%. Certainly, prenups have become more common in the last few years. They no longer feel unromantic, unusual or just for the rich. They do not predispose to divorce, which is an argument used in the past. Indeed, in countries where prenups are more common the divorce rate is lower than ours. Such agreements are more likely to provide less ongoing maintenance for a spouse, in keeping with the trend away from such support, but should—and usually do—provide for support for the children. All this applies equally to post-nups; that is, similar agreements entered into during an ongoing marriage. Couples believe these agreements to be binding, following the judgment in Radmacher v Granatino.

What is the problem that requires reform—and this debate? In summary, the Supreme Court judgment opened the door to challenges to those agreements by requiring them to be “fair”, a concept that lies in the eyes of the beholder judge. That has meant that excess judicial discretion has undermined their usefulness and led to constant challenges to the validity of agreements which the couple, having had legal advice at the outset, believed were valid, until advised that it might be worth attacking them when the break-up occurs and one of them wants a larger award than that provided for in the prenup.

There are many examples. A case called KA v MA, which concerned the effects of alleged duress, ended up with the wife getting £1.35 million to meet her housing costs on top of what she had already agreed, with £300,000 in legal costs. The rest of the fees had to come from that allocation to the wife, no doubt severely depleting it.

In another case, Ipekçi, the ex-husband had signed a prenup with his wife. She was the heir to the Avon cosmetics fortune. Nevertheless, he was still awarded £1.3 million for a house and an allowance for the rest of his life, in part because his legal advice was suspect. They met when he worked as a concierge at the Le Parker Meridien Hotel in New York. Later, he was employed at a well-known London hotel, at which I have stayed, but these things do not happen to me.

It is this doubt about enforceability that is wrecking the usefulness of prenups. The doubts centre on what is fair and what are the needs that some judges hold must nevertheless be met. The accumulation of cases leaves real doubts over the ability to predict the validity of any current prenups. Judges still insist on applying their own vision of what is fair and exercising the much-criticised set of factors in Section 25 of the Matrimonial Causes Act. Discretion, I am afraid, is what we know to be the source of the problems in financial provision law.

A problem in today’s divorce law is how to define the needs of the divorced spouse, usually from the wife’s perspective, and who should meet those needs. That is why that word needs clarification. Judges have given so many different interpretations that we do not have a workable standard, not even under the guidance of the Family Justice Council. Some judges are more parsimonious than others where there is a prenup, but they all agree on the need for housing where there are children, provided there are sufficient assets. What is fair, and whether that standard should be applied to a freely entered-into prenup, is another undermining issue.

So we come to reform. The Law Commission has done detailed and profound work in this field, as I shall describe and which I support. Nearly all the other organisations in the family law field have come out in favour of statutory enactment of the enforceability of prenups. It has even been suggested that we should follow the example of some civil code countries and expect engaged couples to see a lawyer and choose from a menu of financial models to govern their financial relationship during and after the marriage. Such discussions would be less intricate and cheaper than what people spend on an average wedding.

I have on several occasions taken a Bill through this House—the Divorce (Financial Provision) Bill—which would reform the whole of that law, not just prenups. In it, I suggested that prenups should be as binding as any other contract, provided that there was no duress, that the couple had legal advice before signing, and that there was full disclosure. But the Government have failed to act on this and have ignored the Law Commission’s recommendations to put prenups on a statutory basis. Think how much money and how much court time would be saved if the tens of thousands of prenups that are challenged now could be presumptively binding. Think how much money and court time could be saved if couples could avoid all the fees and general waiting times and aggravation of fighting in court over their assets on divorce if the law was reformed.

It is true that many couples settle before a court hearing, but they would have started proceedings, and that too is expenditure that could be avoided. Recent court statistics show that the court process can take from six to 12 months; that there were 44,563 financial provision applications in 2023; and that in 2024 they were up by 7%. Tens of thousands of cases might never have to come near court. Millions would be saved if the Government would reform the law.

In 2014, the Law Commission’s report on matrimonial property needs and agreements recommended that prenups should be put on a statutory footing and should be made by deed no less than 28 days before the marriage, after legal advice and with disclosure. In my view, it was unfortunate that there was a potentially destructive discretionary element in this proposal; namely, that the parties could not, by agreement, opt out of meeting financial needs, undefined.

Indeed, with advances in AI, it has been suggested by the pre-eminent family judge, Sir Nicholas Mostyn, that the time will soon be with us when AI can produce an agreement that would be bound to be upheld as valid, because AI would know what was meant by “needs”, and that would satisfy a judge. This country is lagging behind in achieving that cost-saving certainty. Scotland and New Zealand, for example, have legislated for binding prenups and have experienced no difficulties.

The Law Commission presented a draft Bill to enact its prenup recommendations, and it is oven-ready, as we say, needing only to be heated up to the right degree by this Government. Not only is the Bill ready but, in December 2024, the Law Commission reported again and recommended the statutory enactment of a prenup law. It has been 16 years since the fundamental decision in Radmacher and 10 years since the Law Commission prepared the ground for statutory reform. We are decades behind most other countries, wasting money and court time and upsetting couples’ legitimate expectations of certainty. If the Bill were enacted, it would persuade older couples to take the plunge; I envisage a queue of weddings taking place in St Mary Undercroft. It would bring us into line with Australia, Ontario, the French civil code, New Zealand and the Hague Convention on the Law applicable to Matrimonial Property Regimes. It would respect autonomy and the freedom of contract, but our Government have said no more than that they are considering the reform as part of a wider consideration of family law reform.

Governments have failed to take up reform because they are unable to address the issues of principle about who maintains whom, to what level and for how long, and the effect of social changes. The lawyers who act for the highest earners on divorce—with the honourable exception of the noble Baroness, Lady Shackleton—may well fear a loss of business, although I am sure that the wealthiest couples will always have complex arrangements that will require legal advice. At the other end of the scale, most couples do not get any legal aid for divorce, and are left without the knowledge and framework that they need at the most emotional time of their lives. A straightforward law on prenups would be of immense value to them.

Prenups are popular, harmless and protective. They offer an escape from the bad, unreformed financial provision law, and represent freedom of choice and contract. Why can we not legislate for them now? What has held it up is the ill-founded belief that all financial provision law must be reviewed and amended at the same time. That is simply not the case. Prenups are a free-standing area, and even if wholesale reform is delayed, enacting prenups would enable couples to avoid the uncertainty, expense and bitterness of the current law and any future law to come.

I mention future law because the Law Commission’s report of last December was only a “scoping” report. It put forward four models for reform, and, unfortunately, scoping gives the Government an excuse to do nothing. I wish that the Law Commission had been allowed to get on with a wholesale reform of financial provision law, which is now over 50 years old and costs the state and couples so much expense and aggravation. I hope that it will not be brushed under the carpet; it could take a long time to occur. The noble Baroness, Lady Shackleton, and I were promised a review of financial provision law within three years of the passing of the divorce Bill in 2020, and we dropped amendments to the Bill in reliance on that promise, which has not been fulfilled.

The current financial provision law—all of it, not just prenups—is so uncertain and unpredictable that it could well be said to be in breach of the rule of law. I urge the Government to get on with reforming it and to take up the challenge in the latest Law Commission report. In the meantime, will the Minister get on with putting prenups on a statutory basis? The Bill is ready and there is no reasonable opposition. We need to get on with this and not wait for the pot of gold at the end of the rainbow, which is wholesale reform of our antiquated financial provision law. I beg to move.

--- Later in debate ---

[Baroness Deech (CB)]

My Lords, as a mere academic lawyer, I am grateful to and impressed by all the real lawyers who brought their wisdom to bear in this debate. I say to the Government that their commendable concern for financial prudence ought to guide them in this respect: there is no doubt that couples and courts will be spared unnecessary expense if they go ahead and legislate.

I will pick up a number of points, and I hope noble Lords will forgive me if I do not address all of them, bearing in mind the time. I was moved to hear the right reverend Prelate talk about marriage, but it is not its financial elements and prenups that have degraded—as he might say—marriage to the level at which he and others have expressed concern. Marriage has been emptied of all its former aspirations by changes in the law. The recent change in divorce law, while welcomed by many, means that one can get a divorce without presenting any reasons and relatively quickly. That sort of change must do more to affect a couple’s entry or not into marriage than anything about the finances that may face them when that marriage comes to an end.

I wish, like the right reverend Prelate and others do, that divorce was not so common, but it is so we have to be realistic. The burden of many impoverished divorcees falls on the state anyway. No amount of contracts or provision for settling financial matters in the court takes us away from the fact that many couples have few assets and that their divorce means two sets of housing rather than one, an increased reliance on state benefits and that whatever is paid as maintenance is clawed back in universal credit. The presence or not of prenups will do little to affect that financial element.

I absolutely agree with all noble Lords who have expressed concern for children. Children cannot and should not be part of prenups or post-nups, because those are agreements between two adults. I do not think we have shown enough concern for children. I have read many judgments concerning wealthy couples, running to many dozens of pages, and on the last half-page is a throwaway comment about so much per month or week for the children and their school fees. That is it. There is no concern about how the huge amounts expended on legal fees detract from the children or general concern about how many fathers—it is usually fathers—are allowed to walk away from their responsibilities to their children without any recourse and without state child maintenance legislation having much effect at all. It is high time we took more concern for children’s financial situation in divorce.

I do not think that we should worry too much about the cost of making a prenup, as the noble Baroness, Lady Featherstone, spelled out, because those costs are but a pinprick compared to what people have to spend when they enter into an acrimonious divorce which needs to go to court. Nor should we be concerned about this convoluted argument that the Law Commission put forward that, if the overall law were to change, one would have to go back and alter the prenup law. After all, the law relating to money and divorce keeps on changing. Every time there is a Supreme Court judgment or a Court of Appeal judgment, things change profoundly and might require couples to revisit their prenup, so I do not think that is a firm argument. I urge the Government once again to go ahead and enact prenups because that will save money all round and it is a discrete issue, as most people have said. In fact, virtually everyone here this evening has said that prenups should be enacted statutorily.

As for cohabitation, if one changes the law relating to cohabiting couples now without reforming the law relating to financial provision, then cohabiting couples going to court will find themselves caught up in the same network of inefficient, uncertain financial provision as existing married couples do. There is no reason to delay statutory enactment of prenups law. The Minister—whichever Minister—will find in the Ministry of Justice files and files gathering dust. I have dealt with seven different Ministers over this issue over several decades and somewhere there is foot-dragging which is no longer justified. The Government want to save money, to help couples and to support children. Now is the time to do that, so I end by urging the Minister to go back to the ministry and tell them to get on with it.

Motion agreed.

Asylum Seekers: Legal Aid

Baroness Deech Excerpts

Thursday 23rd January 2025 Lords Chamber

[Lord Ponsonby of Shulbrede (Lab)]

I was not aware of the suggestion of a centralised legal aid representation facility. If that is still being actively considered, I will write and confirm that to the noble and learned Lord. Nevertheless, he makes a reasonable point about building up the resources to be able to process these cases effectively, efficiently, fairly and humanely.

One other factor is that Duncan Lewis, the well-renowned law firm, has written that it believes that the new rates, which are very likely to be agreed, will help it to do more work in this area.

[Baroness Deech (CB)]

My Lords, anyone who reads the newspapers can see the huge gulf between the Rolls-Royce justice system available to those with bottomless pockets and what is available to those who have no legal aid and no money. Justice is not done if it is not affordable. I have in mind family law, which has a claim as great as asylum seekers, where people are left at the most stressful moments in their lives with no legal aid. Will the Government commit to some evening out of legal aid across all cases so that every citizen can get the legal aid and advice that they need?

[Lord Ponsonby of Shulbrede (Lab)]

I am very sympathetic to the question and the point that the noble Baroness raises in it. As she may know, my personal background was as a magistrate in the family law space, and I saw many hundreds of litigants in person when dealing with those cases. It is true that they very often were not adequately able to put their case forward. We are looking at various initiatives in that space, such as mediation vouchers and possibly early legal advice, and different approaches, but the fundamental point the noble Baroness makes is fair.