Macleod v Macleod [2008]
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Macleod v Macleod [2008] UKPC 64 involved a judgment by the Judicial Committee of the Privy Council in an appeal originating from the Isle of Man, clarifying that postnuptial agreements in the Isle of Man could not be varied by a court except for sufficient policy reasons. Despite being specifically related to Manx postnuptial agreements, the judgment carried authority in the United Kingdom.
The husband and wife, both US citizens, married in Florida, with the husband being significantly older and wealthier. After moving to the Isle of Man in 1995, they entered into an agreement before marriage, declaring their resources and agreeing that each would be entitled to what they contributed in case of separation. Additional provisions for allowances and lump payments were made. In 2002, they modified the original agreement, maintaining their intention to be bound by the 1995 agreement as amended.
During divorce proceedings in 2005, the wife sought to disregard the agreements, claiming 30% of the husband's wealth at the time of marriage and 50% of any increase during the marriage. The husband insisted on upholding the first agreement. The Deputy Deemster ruled in favour of the husband but granted the wife £2,525,000 for a home. Both parties appealed, and the Staff of Government Division rejected their appeals. The husband then appealed to the Judicial Committee of the Privy Council, focusing on whether the wife's housing needs should be met by a lump sum or a trust under the terms of the original agreement.
Baroness Hale reviewed the legal background, acknowledging the evolution from common law principles against separation agreements to recognising them as contracts similar to any other. She referred to Edgar v Edgar, which emphasised considering the circumstances surrounding the agreement's making. The Matrimonial Property and Proceedings Act 1970 and the Matrimonial Causes Act 1973 provided the court with the power of variation, and the equivalent Manx statute was the Matrimonial Proceedings Act 2003.
Baroness Hale distinguished postnuptial agreements from prenuptial agreements, stating that the former, being made after marriage, were no longer in exchange for one party's willingness to marry. She outlined criteria for the validity of postnuptial agreements, emphasising the parties' intent to be legally bound, absence of circumstances invalidating any contract, no substantial change in circumstances, and provision for dependent children. Baroness Hale stressed the assumption that parties to a properly negotiated agreement are capable of looking after themselves, while acknowledging the risk of unfair exploitation. She concluded that an agreement not aligning with what a court would have done is insufficient grounds for setting it aside.
The husband and wife, both US citizens, married in Florida, with the husband being significantly older and wealthier. After moving to the Isle of Man in 1995, they entered into an agreement before marriage, declaring their resources and agreeing that each would be entitled to what they contributed in case of separation. Additional provisions for allowances and lump payments were made. In 2002, they modified the original agreement, maintaining their intention to be bound by the 1995 agreement as amended.
During divorce proceedings in 2005, the wife sought to disregard the agreements, claiming 30% of the husband's wealth at the time of marriage and 50% of any increase during the marriage. The husband insisted on upholding the first agreement. The Deputy Deemster ruled in favour of the husband but granted the wife £2,525,000 for a home. Both parties appealed, and the Staff of Government Division rejected their appeals. The husband then appealed to the Judicial Committee of the Privy Council, focusing on whether the wife's housing needs should be met by a lump sum or a trust under the terms of the original agreement.
Baroness Hale reviewed the legal background, acknowledging the evolution from common law principles against separation agreements to recognising them as contracts similar to any other. She referred to Edgar v Edgar, which emphasised considering the circumstances surrounding the agreement's making. The Matrimonial Property and Proceedings Act 1970 and the Matrimonial Causes Act 1973 provided the court with the power of variation, and the equivalent Manx statute was the Matrimonial Proceedings Act 2003.
Baroness Hale distinguished postnuptial agreements from prenuptial agreements, stating that the former, being made after marriage, were no longer in exchange for one party's willingness to marry. She outlined criteria for the validity of postnuptial agreements, emphasising the parties' intent to be legally bound, absence of circumstances invalidating any contract, no substantial change in circumstances, and provision for dependent children. Baroness Hale stressed the assumption that parties to a properly negotiated agreement are capable of looking after themselves, while acknowledging the risk of unfair exploitation. She concluded that an agreement not aligning with what a court would have done is insufficient grounds for setting it aside.
