In our years of practising family law, clients have frequently asked us if having a prenup is beneficial; would it have made a difference in my divorce if I had one? We are able to answer this question emphatically “yes” thanks to the recent case of HD v. WB [2023] EWFC 2. This case provides us with additional judicial guidance on the applicability of a pre-nuptial agreement (“PNA”) in this jurisdiction and the weight that should be ascribed to it in any subsequent financial proceedings resulting from a divorce, if any. United Solicitors offer best family law solicitors manchester.
The husband and wife got married in 2014, and they also signed a PNA on the same day.
They divorced in December 2020 after financial disputes that led to a final hearing. The impact of the PNA was one of the main issues that needed to be resolved by the court. At the time of the proceedings, both parties were 46 years old and had three children under the age of 18. Nearly all of the wife’s realisable assets, which totaled more than £43 million, were in her name. All assets were held in separate names throughout the 19-year relationship between the parties, both before and after the marriage. Nothing important was kept in joint names.
The PNA’s provisions gave the husband a very meagre provision while keeping the property separate:
- a quarter of the net profit from the first joint residence that the husband and wife renovated;
- a sliding scale of support based on length of marriage (£112,000 after this 6 year marriage);
- repayment of a £250,000 loan made by the wife to the husband; and creation of a £500,000
- housing trust fund after ten years of marriage.
The husband argued that the PNA should not be enforced against him and should be completely disregarded.
He claimed that the PNA was unclear to him and that it did not satisfy his needs. The husband, according to his wife, voluntarily agreed to the PNA after fully understanding it. She also argued that the husband’s realisation of his minor business interests would fairly satisfy his needs.
In summarising the law on PNAs (as stated in Radmacher v. Granatino [2010] UKSC 42), Mr. Justice Peel found that the husband had every opportunity to seek legal counsel in the particular circumstances of this case, and he reiterated that the husband’s decision not to do so was not “fatal” to the relevance of the PNA. The Judge stated that the wife should not be adversely affected by the husband’s failure to request additional disclosure, despite the fact that the parties’ respective business interests were not valued in the disclosure to the agreement. The judge came to the conclusion that both parties freely entered into the PNA and fully understood its implications.
However,
The Court determined that the financial outcome for the husband made the PNA sufficiently unfair to justify a degree of deviance from the terms of the agreement based on his financial needs. The fact that the wife received £55 million gross from the sale of the family business two years after the PNA—shares that were, at the time of the PNA, tied up in illiquid shares—was significant to that decision. The financial environment “has changed significantly,” the court declared.
The husband received a lump sum payment of £1.9 million plus housing benefits (up to £2.5 million) that would pass to the wife upon H’s passing (and other trigger events). Due to his approach to the PNA, the husband was also penalised financially (£120k was deducted from his needs-based award), serving as a warning to litigants. Importantly, the court found that the agreement was a limiting factor and that he received significantly less than he would have had there been no agreement.
While the mere existence of a PNA will limit the provision that the court will make in the event of a divorce, the Court’s clear message is that for the terms of the PNA to be fully enforceable, they must address financial needs (housing and income). The best chance of an agreement being upheld in full and avoiding the expense, stress, and uncertainty of further litigation is to be a little more generous when negotiating a PNA and making sure financial needs are met. Visit United Solicitors, for best family law solicitors manchester.