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Over the years of family law practice, a question we frequently hear from clients is whether a prenup is worthwhile; is there any point in having one, would it have made a difference to my divorce? The recent case of HD v WB [2023] EWFC 2 allows us to answer this question with a resounding “yes”. This case gives us further judicial guidance on the relevance of a pre-nuptial agreement (“PNA”) in this jurisdiction and the weight, if any, that should be given to it in any subsequent financial proceedings on divorce.
The husband and wife married in 2014 and signed a PNA dated the same date as their wedding. They separated in December 2020 and there were financial proceedings which resulted in a final hearing. One of the principle issues to be decided by the court was the impact of the PNA. Both parties were 46 years old at the time of the proceedings and had three minor children. The realisable assets were almost entirely in the wife’s name and exceeded £43 million. Throughout the parties' 19 year relationship, both before and after the marriage, all assets were held in separate names. Nothing of any significance was held in joint names.
The terms of the PNA kept property separate, and gave the husband very modest provision:
- A 25% share of net profit on the first matrimonial home that had been renovated (and project managed by the husband);
- Provision on a sliding scale depending on the length of the marriage (£112,000 after this 6 year marriage);
- Repayment of a loan from the wife to the husband (£250,000); and
- After 10 years of marriage a £500,000 housing trust fund.
The husband argued that he should not be held to the agreement and that it should be completely disregarded, saying that he had not understood or had legal advice concerning the PNA and that it did not meet his needs. The wife contended that he had understood the PNA and that he willingly entered into it. She also argued that his needs could be fairly met by the husband realising his minority business interests.
Summarising the law on PNA’s (as outlined in Radmacher v Granatino [2010] UKSC 42), Mr Justice Peel found that, in the specific circumstances of this case, the husband had every opportunity to obtain legal advice and he reaffirmed that the husband’s decision not to obtain legal advice was not “fatal” to the relevance of the PNA. Although the parties’ respective business interests were not valued in the disclosure to the agreement, the Judge commented that the wife should not be prejudiced by the husband’s failure to ask for further disclosure. The Judge concluded that the PNA was freely entered into by both parties with a full appreciation of its meaning and consequences.
However, on the basis of the husband’s financial needs, the Court concluded that the financial outcome for him rendered the PNA sufficiently unfair to justify a degree of departure from the terms of the agreement. Important to that decision was the fact that the wife received £55m gross from the sale of the family business 2 years after the PNA, shares that were, at the time of the PNA, tied up in illiquid shares. The court said that “the financial landscape has changed significantly”.
The husband was awarded £1.9 million by way of lump sum plus housing provision (up to £2.5m) which would revert to the wife upon H’s death (and other trigger events). In a warning to litigants, the husband was also penalised in costs due to his approach to the PNA (£120k was taken off his needs-based award). Crucially, he received significantly less that he would have done had there been no agreement, with the court saying that the existence of the agreement was a limiting factor.
The clear message from the Court is that, whilst the mere existence of a PNA will limit the provision to be made by the court in the event of divorce, for the terms of the PNA to be completely binding it must cover financial needs (housing and income). Being a little more generous when negotiating a PNA, and ensuring financial needs are met, will give the best possible chance of an agreement being upheld in full and avoiding the cost, stress and uncertainty of future litigation.
FURTHER INFORMATION
If you would like advice on the potential for a pre or post-nuptial agreement in your circumstances, please contact Claire Wood, Sameera Abdulrehman or a member of our family and divorce team.
ABOUT THE AUTHORs
Claire Wood returned to Kingsley Napley as Legal Counsel in 2022, having previously worked at the firm from 2008- 2018. Claire is a family lawyer with over 15 years’ experience of advising clients on divorce or separation, financial settlement, prenuptial agreements and the arrangements for children.
Sameera Abdulrehman is a trainee solicitor in the family and divorce team. Sameera is currently in her third trainee seat, having completed her second seat with the Criminal litigation team and her first seat in the Immigration team, where she assisted with preparing applications for a wide range of UK immigration matters including corporate and private client immigration applications, and assisted with asylum claims and human rights applications and appeals.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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