Pre-nuptial v. postnuptial agreements, McLeod v. McLeod 2008

MacLeod v MacLeod [2008] UKPC 64

This was a Privy Councili decision handed down on 18 December 2008 which addressed the question of enforceability of pre-nuptial and post-nuptial agreements. The proceedings eventually led the husband appealing to the Privy Council and his appeal was allowed. It was held that the 2002 post-nup was valid, binding and enforceable.

Background

The couple were American and married in Florida in 1994. There was a considerable difference of wealth and age between them. Mr MacLeod had amassed huge wealth (an estimated £14 million) through business development and was 49. Mrs MacLeod had been studying for a degree in business administration and was 27.

They entered into a pre-nuptial agreement immediately prior to the wedding at which it was disclosed that the husband was worth $10.3 million. In 1995, they moved to the Isle of Man and had 5 children. The pre-nuptial agreement was varied, by consent, twice during the duration of the marriage, lastly in 2002, when the marriage was in trouble, but the agreements did not provide explicit support for the give children of the marriage.

The marriage broke down in 2003 and Mr McLeod issued divorce proceedings. Financial proceedings commenced in 2005. Mrs MacLeod applied for full financial provision arguing that the agreements should be disregarded whilst Mr MacLeod sought to enforce the post-nuptial agreement.

Decision of the Manx Court (first instance court in the Isle of Man)

The agreement was varied at first instance and the judge added a further sum to the wife though he did not specify that money should be spent on a house.

Decision of the Appeal Court

On appeal the court found that the agreement did not make suitable provision for the children and that the terms should be determined by the court. Mr MacLeod appealed to the Privy Council

Decision of the Privy Council1

In her judgment, Baroness Hale reviewed the law relating to agreements in marriage and the current trends in how they are being handled in the UK courts. She founds that the 2002 post-nuptial agreement was valid, binding and enforceable – on the basis that the post nuptial agreements are no longer contrary to public policy.

She also found that such agreements do remain subject to the courts’ powers of variation. She then considered whether the court should vary this agreement. She concluded that the judge at first instance could only alter the agreement to make proper provision for the children and his order had not done that. The matter was therefore remitted back to the High Court for an appropriate deed to be drafted.

However, the Privy Council stopped short of declaring that pre-nups should have the full force of the law behind them, claiming that this was a matter for Parliament.

Following this landmark decision, an agreement executed at any time after the marriage is binding, subject to the usual contractual principles such as fraud, mistake or duress and the powers of the court to vary such agreements.

1 The highest appeal court for British Overseas Territories