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The recent case of AH v BH [2024] EWFC 125 serves as a useful reminder that the court is willing to depart from the terms of a nuptial agreement in order to ensure needs are met.
Background
The parties had a short period of cohabitation and marriage, lasting around five and a half years. Prior to the marriage, the parties entered into a pre-nuptial agreement which sought to ringfence the assets in the husband’s sole name, notably his business interests. The wife was independently wealthy with a mortgage-free flat and employment. The parties signed the pre-nuptial agreement with full knowledge of its meaning and consequences, and with the benefit of legal advice. The wife understood that it would severely limit her financial remedies claims on divorce.
When the marriage broke down, the assets were significant with almost £50 million being in the husband’s sole name in contrast to the wife’s assets of £291,000. The family home was in the husband’s sole name, but the wife had made financial contributions towards its renovation from the sale proceeds of her flat.
The parties had two young children for whom the wife was the primary caregiver. Although the pre-nuptial agreement provided that it should be reviewed in the event of the birth of children, this review did not take place.
The wife did not dispute the validity of the pre-nuptial agreement, but she did claim that it should be departed from in order to meet her reasonable financial needs.
Judgment
Mr Justice Peel departed from the pre-nuptial agreement, deciding (amongst other things) that the family home should be sold with the wife receiving 56.7% of the proceeds (£2.75 million) to purchase her own property.
The following points of note were made during the judgment:
- The wife’s role as the primary caregiver for the children for the rest of the minority is a powerful counterweight to the pre-nuptial agreement. She has no alternative property of her own and it is unrealistic to expect her to return to a corporate career.
- The pre-nuptial agreement provided that it should be reviewed on the birth of children (but had not been). This indicated that the parties contemplated that it might not be a fair document upon children being born.
- It would be unfair to require the wife to move out of the property when the children finish secondary education. It runs the risk of the children seeing their mother in heavily reduced financial circumstances whilst their father is far wealthier.
- The wife may have been entitled to receive far more if the parties had not signed the pre-nuptial agreement. The decision strikes a balance between giving appropriate weight to the pre-nuptial agreement and meeting the wife’s financial needs.
Nuptial Agreements
Although nuptial agreements are not binding in England and Wales, the court tends to uphold them provided certain conditions are met and the effect is fair.
The Supreme Court in Radmacher v Granatino [2010] UKSC 42 provided that the court should give effect to a nuptial agreement if the following conditions are met:
- The nuptial agreement was freely entered into by each party with no pressure from the other party; and
- Both parties had a full appreciation of the implications of entering into the nuptial agreement.
Comment
The pre-nuptial agreement in this case complied with the conditions set out in Radmacher v Granatino. Nevertheless, Mr Justice Peel departed from its terms on the basis that it did not reflect the wife’s long-term responsibilities for the children and her lack of independent wealth in contrast to the husband.
The decision emphasises the importance of ensuring that a nuptial agreement provides for important life events such as the birth of children. Ensuring that needs can be met in these circumstances will increase the likelihood of the agreement being upheld by the court on divorce.
If you, a family member or contact are interested in entering into a prenuptial or postnuptial agreement, please contact Sarah Green to discuss further.
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