Pre-nuptial agreements- the importance of getting it right

Divorce & Matrimonial Finance

01 February 2023

The recent case of HD v WB [2023] EWFC 2 explores the issue of pre-nuptial agreements and what weight should be attributed to them when also considering parties’ needs.

Both husband and wife were aged forty-six and had initially began their relationship in 1996. Whilst the relationship had ended after a few years, they again resumed the relationship around 2000/2001. The parties became engaged in 2003 and eventually married in 2014. The parties shared three minor children whose care was shared between the parties.

The court was tasked with considering the pre-nuptial agreement dated 26 July 2014 (the date of the parties’ wedding) and what weight, if any, was to be given to it. The assets in the case, held almost exclusively in the wife’s name exceeded £43million.

In this particular case, the husband argued that he had not understood the pre-nuptial agreement and in any event, it did not meet his needs. In contrast, the wife argued that the agreement should be upheld as it was entered into willingly, had been understood by the husband and would fairly meet his needs upon realisation of his business interests.

Within the judgment of HD v WB, Peel J summarised the law on pre-nuptial agreements and reiterated how they should be taken in to account. The starting point of course being the case of Radmacher v Granation [2010] UKSC 42 from which the following propositions can be drawn:

i. There is no material distinction between an ante-nuptial agreement and a post-nuptial agreement (para 57).

ii. If an ante-nuptial agreement, or post-nuptial agreement, is to carry full weight, what is important is that each party should have all the information that is material to his or her decision, and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end (para 69).

iii. It is to be assumed that each party to a properly negotiated agreement is a grown up and able to look after himself or herself (para 51).

iv. The reason why the court should give weight to a nuptial agreement is that there should be respect for individual autonomy. The court should accord respect to the decision of a married couple as to the manner in which their financial affairs should be regulated. It would be paternalistic and patronising to override their agreement simply on the basis that the court knows best. This is particularly true where the parties’ agreement addresses existing circumstances and not merely the contingencies of an uncertain future (para 78).

v. The first question will be whether any of the standard vitiating factors, duress, fraud or misrepresentation, is present. Even if the agreement does not have contractual force, those factors will negate any effect the agreement might otherwise have. But unconscionable conduct such as undue pressure (falling short of duress) will also be likely to eliminate the weight to be attached to the agreement, and other unworthy conduct, such as exploitation of a dominate position to secure an unfair advantage, would reduce or eliminate it (para 71). The court may take into account a party’s emotional state, and what pressures he or she was under to agree. But that again cannot be considered in isolation from what would have happened had he or she not been under those pressures (para 72).

vi. 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 (para 75).

vii. Of the three strands identified in White v White and Miller v Miller, it is the first two, needs and compensation, which can most readily render it unfair to hold the parties to an ant-nuptial agreement. The parties are unlikely to have intended that their ante-nuptial agreement should result, in the event of the marriage breaking up, in one partner being left in a predicament of real need, while the other enjoys a sufficiency or more and such a result is likely to render it unfair to hold the parties to their agreement. Equally if the devotion of one partner to looking after the family and the home has left the other free to accumulate wealth, it is likely to be unfair to hold the parties to an agreement that entitles the latter to retain all that he or she has earned (para 81)

viii. Where, however, these considerations do not apply and each party is in a position to meet his or her needs, fairness may well not require a departure from their agreement as to the regulation of their financial affairs in the circumstances that have come to pass. This, it is in relation to the third strand, sharing, that the court will be most likely to make an order in the terms of the nuptial agreement in place of the order that would otherwise have been made (para 82).

ix. It is the court that determines the result after applying the Act (para 83).

Peel J made clear that in the current circumstances, the husband had clearly been advised he should seek legal advice and he was aware of the importance in doing so. It was held the husband had every opportunity to obtain advice and he in fact represented to the wife that he had done so. Peel J reaffirmed that a lack of legal advice was not “fatal” such that no weight could be attributed to the pre-nuptial agreement.

Furthermore, the financial disclosure that had been provided at the time of the agreement was in broad terms accurate and neither party sought further disclosure from the other. The Judge found that the wife should not be prejudiced by the husband’s failure to pursue further line of enquiry.

Peel J concluded that there were no vitiating factors and the agreement was freely entered in to by each of the parties. However, the Court further found that it retains the obligation to look at all the circumstances and upon doing so in this particular case, there were circumstances which render the agreement sufficiently unfair to justify a degree of court intervention. The reasons were set out in full (para 98) which most notably included the agreement not addressing the husband’s needs fairly.

On a needs basis, the husband was granted an award of £1.9million including housing provision on a reversionary basis. Of note, notwithstanding the judgment given, the husband was then penalised in costs due to his approach to the pre-nuptial agreement.

This case again highlights the propositions the Court will consider when assessing the validity of a pre-nuptial agreement and the implications for parties should they get it wrong. In this instance, whilst the Court did intervene with regards to the award made, the husband was penalised in costs by virtue of his position in asking the Court to entirely disregard the pre-nuptial agreement.

For help, advice or if you wish to instruct a member of Chambers, please contact our Clerking team