The “Avon case” of  Ipekçi v McConnell

The divorce of Anil Ipekçi and Morgan McConnell hit the headlines because Morgan McConnell is the great granddaughter of the founder of the Avon Company. The case also helps answer the question ‘’are prenuptial agreements binding in the UK?’’  The case is of interest to Manchester divorce solicitors because of the judge’s analysis of the status of the prenuptial agreements and divorce and trusts.

 

The Avon case

Anil Ipekçi made a financial claim against his wife, Morgan McConnell .They had been married for about 12 years and at the time of their separation had 2 children together. Mr Ipekçi had few assets but his wife was the beneficiary of several family trusts.

What makes the case of interest to Manchester divorce solicitors is that the judge had to decide:

  • Whether the family trust money could be given to the husband as the wife was the beneficiary of the trust; and  
  • The status of the New York prenuptial agreement.

 

The judge decided that the trust money was available to the wife and that the prenuptial agreement was ineffective. The judge made a financial award to the husband of about £1.3 million.

Some question whether the Avon case means that prenuptial agreements in the UK are not worth doing, after all 1.3 million is a lot to pay out when the wife thought she was protected by a prenuptial agreement.

 

Are UK prenuptial agreements binding?

Prenuptial agreements are not legally binding in the UK but they can carry significant weight when a judge is deciding how to sort out a financial claim. The judge can follow the terms of the prenuptial agreement when making the financial court order or can significantly reduce the size of the financial court order that he/she would have otherwise made because of the existence of the prenuptial agreement.  

 

The Avon facts

What went wrong with the Avon prenuptial agreement? The important facts are that just before the marriage, the husband and wife signed a prenuptial agreement in New York to protect the wife’s family trusts. Twelve years after the marriage, the wife remained a beneficiary of substantial family trusts and the husband had few assets.

The judge decided the wife could access the capital from one of the family trusts with a reported value of $4.45 million. The judge said the trustees would make the funds available to the wife to satisfy a financial court order made in favour of the husband.

 

The Avon pre-nuptial agreement

The divorce of Anil Ipekçi and Morgan McConnell was an international divorce, involving a prenuptial agreement signed in New York and governed by New York state law. The prenuptial agreement said divorce and financial proceedings should be decided using New York law, even if the proceedings took place in another country.

If the London divorce court had followed the prenuptial agreement, it would have limited the husband’s claim to the increase in the value of three of the wife’s properties. As it was not possible to identify an increase in property value, if the New York pre-nuptial agreement had been upheld, the husband would have received nothing after twelve years of marriage.

 

The Avon prenuptial agreement and the law

The judge decided the Avon prenuptial agreement was ineffective because:

  • The husband did not fully understand the implications of signing the pre-nuptial agreement. Although the husband took legal advice, the advice came from an English solicitor on a New York prenuptial agreement and the solicitor had acted for the wife in her first divorce; and
  • The prenuptial agreement did not have a certificate stating that it conformed to New York law. This was important as an expert told the judge that without this certificate, under New York law, the prenuptial agreement would carry minimal weight; and
  • If the pre-nuptial agreement was upheld the husband would be in financial need. The leading UK case on prenuptial agreements (Radmacher v Granatino) says that despite the importance of holding spouses to their prenuptial agreements, the agreement should not leave one spouse in financial need. Therefore, the judge attributed no weight to the Avon prenuptial agreement.

 

The Avon financial order

The judge made a financial court order providing the husband with just over £1.3 million because:

  • The husband had no savings or pension; and
  • The couple had two children and the husband needed to provide a comfortable home for the children; and
  • The relatively high standard of living during the marriage.

However, as the 1.3 million was coming from the wife’s trust assets the judge decided that half of the sum given to the husband to buy a house (£700,000) must be returned to the wife on the husband’s death through a charge-back. Part of the balance of the £1.3 million was to provide a spousal maintenance fund to provide the husband with an income of £15,000 a year, to supplement his earnings.

 

The lessons from the Avon Case

The Avon case emphasises that prenuptial agreements can be upheld by the court or significantly reduce the size of a financial award provided that:

  • Both husband and wife get proper independent legal advice;
  • International aspects of prenuptial agreements are considered;
  • Agreements are reviewed during the marriage to make sure they still meet need.

 

For information about prenuptial agreements or for advice and representation in financial court proceedings please call Evolve Family Law on +44 (0) 1477 464020 or contact Robin Charrot by email at [email protected]

Appointments are available at Evolve Family Law offices in Manchester and Cheshire.