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‘No weight given’ to pre-nuptial agreement in divorce of cosmetics heiress

Mostyn J awards husband £1.3 million

In Ipekçi v McConnell [2019] EWFC 19, Mr Justice Mostyn decided to ignore a pre-nuptial agreement between the parties in making a financial remedies award in favour of the husband.

The case involved Morgan McConnell (the wife), the great-granddaughter of the founder of Avon Products, and Anil Ipekci (the husband), whom she met when he worked as a concierge at Le Parker Meridien in New York.

The parties met in 2003 and began cohabitation in January 2005. They agreed to marry.

A pre-nuptial agreement was drafted by the wife's private client lawyer. A lawyer was found to give the husband independent legal advice. This lawyer was the solicitor who acted for the wife in her divorce from her first husband. The husband met this lawyer for the first time on 3 November 2005. By then the marriage had been fixed to take place on 26 November 2005. The lawyer took the husband through the draft agreement. In the words of Mr Justice Mostyn,

"The husband must have been very surprised by what it contained. First and foremost, it provided that the agreement was deemed to have been made under the laws of the State of New York and that its validity and effect and construction should be determined in accordance with those laws regardless of where either party resided or was domiciled at the time of death or divorce or separation. Second, it provided that the parties wished any proceedings relating to the marriage to be determined in accordance with the laws of the State of New York and that they submitted to the exclusive jurisdiction of the courts of that State."

The substantive provision to be made to the husband, in the events which have occurred (i.e. the marriage lasting for more three years, and there being two children born to them), was that any increase in the value of three properties in the name of the wife sited in respectively Barnes, Hanwell and New York would be divided equally between the parties on divorce. Further, the husband would not be entitled to claim any alimony or any other money from the wife. In the agreement those three properties were attributed with a value of $1.6 million or, at today's exchange rate, £1.24 million. In the hearing it was not possible definitively to establish what happened to the proceeds of the three named properties, but it was assumed that they were rolled over into the existing family home in Barnes. This has a net value of £1.074 million. Accordingly, there has been no increase in value for the parties to share, and under the agreement the husband would receive nothing at all.

The husband was advised that the agreement was slanted heavily in favour of the wife. Nonetheless, he signed it on 11 November 2005 and the parties were duly married 15 days later.

The judge had no hesitation in deciding on the facts of the case that it would be wholly unfair to hold the husband to the agreement that he signed for the following reasons:

i) The parties specifically contracted that the agreement will be governed by New York law. The evidence of the single joint expert is that the agreement suffers from a fatal defect under New York law. This is because the agreement was not accompanied by a duly authenticated certificate that it conformed with the local law in its attestation. The opinion of the single joint expert was crystal clear. This defect would mean that the agreement would, in New York, have "minimal weight, if any". She cited a case on comparable facts where the New York Appeal Court held that the document would carry "no legal force save for the minor impact of its historical voice".

ii) It seemed to Mostyn J that it would be wholly unjust to attribute weight to this agreement when under the law that the parties elected it would be afforded no weight.

iii) Further, the husband could not be said to have had a full appreciation of the implications of the agreement when he had no legal advice at all about the impact of New York law. Further still, Mostyn J was not satisfied that the solicitor who gave the advice was not compromised by virtue of having acted previously for the wife in her first divorce. It was, in the view of the judge, a clear situation of apparent bias.

iv) The agreement did not meet any needs of the husband.

v) In the circumstances of the case Mostyn J attributed therefore no weight to the pre-nuptial agreement.

Since all of the assets in the case either were or had their origin in non-matrimonial property, the claim was decided solely by reference to the principle of needs.

Mostyn J said:

"The following are relevant considerations in determining the reasonable needs of the husband:

i) This was a 12-year cohabitative relationship.

ii) As a result of the way that the parties organised their married life the husband has made no provision for himself from his earnings either by way of savings or pension.

iii) The standard of living, whilst not by any means a determinative factor, is relevant and was in this case reasonably high.

iv) It is in the interests of the two children of the marriage that their father has a reasonable home in which they can stay with him comfortably and that they do not perceive him as being in some way the poor relation.

v) The husband will not be making any contribution to the maintenance of the children or to their school fees – they will be supported entirely by the wife save in respect of those incidental expenses met by the husband during the time that the children spend with him.

vi) In respect of the sum allowed for the husband's housing it is not necessary for all of it to be provided to him outright. There was agreement at the Bar that it would be reasonable for half of the housing sum awarded to be charged back in favour of the wife (or her estate) on the death of the husband."

He awarded the husband a lump sum of £1,333,500 of which £375,000 was subject to a charge-back.

Alex Carruthers, Partner at Hughes Fowler Carruthers, commenting on the case, said:

"This is a further example that the English court is not bound to make an order in the same terms as a pre-nuptial agreement. They provide a good defence to financial claims but in certain circumstances, a court will make orders that are different to them."

Jo Carr-West, Partner in the Family Department of Hunters Law LLP, agreed, noting:

"It is vital that an agreement addresses both parties' needs and is realistic about this from the outset. Regularly reviewing pre-nuptial agreements, particularly those made some time ago, can help to make sure that their terms are still current and can help to avoid costly litigation about whether or not people should be held to the terms of an historic agreement."

For the judgment, click here.

5/4/19