Valid prenups will be upheld on divorce, recent case confirms

The case of MN v AN [2023] EWHC 613 (Fam) is the latest reminder of the court’s position that valid prenuptial agreements will be upheld if challenged on divorce.

Case background

In 2005, the parties entered into a prenuptial agreement. Prior to the marriage, the husband owned assets totalling £32.5 million in contrast to the wife’s assets of £62,000. After extensive negotiations the premarital agreement provided that:

• The wife would receive £500,000 for each complete year of the marriage to a maximum of £12.5 million on the 25^th anniversary of the marriage;
• The wife would receive 50% of the value of the family home on the 8^th anniversary of the agreement lor on the birth of children, or 50% of the net marital assets if greater;
• If there were children, maintenance would be paid at £60,000 per annum per child, plus school fees and medical expenses; and
• The agreement would fall away after 25 years.

The marriage broke down in 2019, after 14 years. The husband’s net assets by this point totalled £44m and the wife had £600,000 of assets to her name. The husband sought to rely on the terms of the prenuptial agreement, which at the time would give the wife a total of £11.75 million to meet her income and capital needs, whilst being able to remain in the parties’ London home until 2030.

The wife did not agree. She argued that the prenuptial agreement should not be upheld for three main reasons:

1. The agreement was executed agreed five years prior to the Supreme Court decision in Radmacher v Granatino [2010] UKSC 42 (which stated that the court should give effect to a nuptial agreement that is freely entered into with a full appreciation of its implications unless it would not be fair to do so);
2. The agreement was vitiated by undue pressure from her husband to sign the agreement at the time, stating he would not get married otherwise (she expanded on this stating that she was left traumatised after being called a ‘gold-digger’ and felt she had to acquiesce due to unbearable social stigma if the wedding had been called off); and
3. The agreement considering the judgment of Miller; McFarlane [2006] UKHL 24 the agreement was unfair and did not meet her needs.

She issued financial remedy proceedings and sought 40% of the overall net marital assets, or £18m. The husband issued a Notice to Show Cause why the terms of the prenuptial agreement should not be upheld.

Judgment

Mr Justice Moor upheld the prenuptial agreement, making the following interesting points of note:

• There was no substantial evidence of undue influence or vitiating factors that would suggest it should be ignored;
• The fact that the prenuptial agreement pre-dated Radmacher did not mean it should not be given full weight, as the Wife was advised by her lawyers to treat the agreement as binding;
• The threat of no marriage was not a vitiating factor by itself, as without marriage there would be no opportunity for financial remedies (relying on KA v MA [2018] EWHC 499 (Fam));
• Both parties were represented by top legal teams in drafting and negotiating the agreement; and
• Considering Brack v Brack[2018] EWCA Civ 2862, and the potential for awards to be curtailed, while absent a prenuptial agreement, the award might have been more generous, the agreement was not unfair and met W’s needs (he stated ‘there is absolutely no reason for her to retain a property worth £9.5 million, just because the children have lived there throughout their lives’).

Comment

The outcome of this case reinforces the position that courts should enforce fair prenuptial agreements that are not tainted by duress.

Where parties have instructed lawyers to prepare and advise on a prenuptial agreement, they must realise that, as Moor J says, this is a “significant step” and that provided that the prenuptial agreement is entered into freely by both parties and the circumstances cannot be regarded as unfair, it will ultimately be given its intended effect by the Court.

If you, a family member or contact are interested in entering into a prenuptial or postnuptial agreement, please contact Daniel Eames or Sarah Green to discuss further.