Giving hope to all concierges who date cosmetics heiresses,* The Times tells us that ‘Concierge who wed Avon heiress wins £1.3 million despite pre-nup deal’.
Ipekçi v McConnell is a case between – yes, you’ve guessed it – a hotel concierge, Anil Ipekçi, and Morgan McConnell, the great-granddaughter of the founder of Avon. They married in 2005 but are divorcing in England, where they live. The financial consequences of their divorce came before Mr Justice Mostyn in the High Court in March. You can read the judgment on BAILII here.
There were several issues in the case:
First, what assets were available to the wife. She had a number of sources of income. Key among these was something called the Neil McConnell 1964 Trust for Morgan A McConnell. There was conflicting evidence over whether she was absolutely entitled to the money in that fund. Mostyn held that she was: ‘I am … satisfied on the balance of probabilities that the trustees would make those funds available to the wife for the purposes of satisfying a judgment against her. This is not an exercise in “judiciously encouraging” anybody. It is a judgment based on a finding of the future fact.’
In addition to the assets in the various trusts, the wife had a property in Barnes (the former matrimonial home) worth just over £1 million. The husband’s assets were a share in his mother’s house in Turkey worth just under £50,000, which was more than offset by the legal fees he owed: just over £100,000.
The prenuptial agreement
The parties entered into a prenuptial agreement on 11 November 2005, prior to their marriage on 26th of November. A primary issue in the case, therefore, was what effect this prenuptial agreement should have on the husband’s claims.
Mostyn looks at the principle from the Supreme Court case Radmacher v Granatino that
‘the court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement’.
Radmacher provided guidance on what factors the court can look at when deciding whether a prenuptial agreement was ‘freely entered into’ and whether it would be fair to hold the parties to the agreement. In this Ipekçi case , there were several reasons why the agreement fell foul of the guidelines in Radmacher.
- The agreement was expressed to be governed by New York law but did not comply with the requirements of New York law. Mostyn J thought 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’.
- The husband had no legal advice about New York law. The person who advised him was an English lawyer and someone who had acted previously for the wife in her first divorce, which Mostyn thought was ‘a clear situation of apparent bias’. He had therefore not received independent legal advice enabling him to understand the implications of the agreement.
- The agreement did not meet any of the husband’s ‘real needs’. (Radmacher had said, does it leave one of the parties in ‘a predicament of real need while the other enjoys a sufficiency or more?’) It provided for the husband to receive half of any increase in the values of three properties that the parties had. These properties have been sold and the money put into the family home in Barnes. Unfortunately that home had not increased in value so under the agreement the husband was to get nothing at all.
- The agreement was first seen on 3 November and signed on 11 November and the parties were married 15 days later. Although Mostyn notes this, he doesn’t explicitly talk about the potential issue with this which is that the husband may have felt under pressure to enter into the agreement for fear of the wedding being called off.
Given these factors, Mostyn decides to ignore the prenuptial agreement. The Times article does not explain this, leading one below-the-line commentator to note that the outcome was ‘unreasonable given they had a prenuptial agreement’. (The truth ‘doesn’t make for such dramatic storytelling’ says another commentator in response to the explanation by someone who has actually read the judgment.)
Despite ignoring the prenup, Mostyn doesn’t give the husband an equal share of the assets but instead gives the husband what he ‘needs’ to live on. This is because all of the assets started off ‘non-matrimonial’, i.e., they came from the wife’s family money and were a contribution by her that was unmatched by the husband’s contribution. It would therefore not be fair in this case to give him an equal share.
Radmacher tells us that a prenuptial agreement must meet the parties’ ‘real needs’ but doesn’t explain what that means. In Kremen v Agrest Mostyn J had interpreted it as ‘that minimum amount required to keep a spouse from destitution’. However, this assumes a valid prenuptial agreement. Where the agreement is fatally flawed, as in this case and in Kremen itself, the courts will be more generous and look at the standard of living during the marriage among other things.
Mr Ipekçi earned £35,000 but the court thought that he needed £50,000 to live on, because
- the parties had lived together for 12 years, and during that time they had a reasonably high standard of living,
- as a result of the way that they had organised their married life the husband had made no financial provision for himself in terms of savings or pension
- the children should be able to stay with the husband comfortably in a reasonable home and not perceive him as the poor relation; any less than £50,000 would create ‘an unhappy and divisive disparity between the standard of living of the two parents’.
- the wife would support the children most of the time, including paying their school fees.
The judge rolled up the difference between £50,000 and his actual earnings into a lump sum. To this he added some money to buy a house and the costs relating to setting up that new house, and he gave him money to pay his legal fees. He then deducted the value of the husband’s share in his mother’s Turkish property. That gave the husband £1.3 million in total but on his death £375,000 of that will go back to the wife.
*Not really, it is fact-specific.
Image Courtesy of Jason Kuffer at Flickr with thanks