Grant Cameron represents wife in successfully challenging enforceability of pre-nuptial agreement

In the case of ND V KD [2024] EWFC 188 (B), Grant Cameron, Partner in the family team at Trethowans, has represented the wife in a financial relief claim where he successfully challenged the enforceability of a pre-nuptial agreement between the parties. The case was argued with the assistance of Tara Lyons of Pump Court Chambers, who was instructed by Trethowans to act on behalf of the wife.

The husband, a 43-year-old property developer, and the wife, a 50-year-old consultant in the charity sector, had been married for 10 years and had an 8-year-old child who lived with both of them. The couple’s net assets amounted to £3.2 million.

A key issue in the case was the validity of the pre-nuptial agreement. A court should consider a pre-nuptial agreement valid in circumstances where:

• Both parties have had independent legal advice and therefore understand the terms they are agreeing to
• Both parties have provided full financial disclosure and both parties can have a full appreciation of the terms
• It has been signed in plenty of time of the date of marriage

In this case, both parties had received legal advice and had provided full financial disclosure prior to signing. However, the agreement was signed only three days before the wedding.

The pre-nuptial agreement stipulated several terms, including:

• Each party would retain their separate property, including any assets acquired from it during the marriage.
• Any jointly acquired property would be registered in both names, with a written declaration of their respective beneficial interests.
• In the event of a divorce, separate property would remain with the original owner, and joint property would be divided equally unless otherwise declared.
• Inheritances received during the marriage would belong solely to the recipient.

The agreement also mandated a review upon certain life events, such as the birth of a child or the 10th anniversary of the marriage. During the marriage, the husband conducted several property transactions that ultimately left the wife with only a 7% interest in the family home and a 50% interest in a few other properties. The pre-nuptial agreement was not reviewed and kept up to date during the 10-year period.

In evaluating the pre-nuptial agreement, Her Honour Judge Harris at the Central Family Court in London found that the wife had signed the agreement under undue pressure. Key circumstances around entering into the agreement included:

• The timing of the negotiations, which began just six weeks before the wedding, and the signing of the agreement three days before.
• The husband’s insistence that he would not marry her unless she signed the pre-nuptial agreement.
• The power imbalance between the parties with the husband a dominant figure.
• The wife’s testimony that she felt she had no choice but to agree.

Furthermore, the terms of the agreement were deemed unfair, failing to meet the wife’s (and later their child’s) needs:

• The agreement did not provide for equal sharing of assets, allowing the husband to exploit the terms through his property dealings.
• The pre-nuptial agreement did not include any provisions for the child.
• The agreement’s trigger events, which required a review of the pre-nuptial agreement, were ignored.
• The husband’s open offer of just £325,000 to the wife, with a stipulation that she repay it upon receiving any inheritance or gift, exemplified the agreement’s unfairness.

Whilst there is a general consensus that parties should be able to enter into nuptial agreements that will be upheld by the court, the court’s jurisdiction cannot be overruled. In making their decisions, the court must consider certain factors such as needs and the parties’ financial circumstances, and they must bear in mind that matrimonial assets should be shared equally unless there is a reason to depart from equality. The court has discretion and flexibility in how to approach distribution of assets and whilst any nuptial agreement should be considered, they are extremely unlikely to uphold the terms if they are unfair or minor children are not provided for.

This case serves as a significant example of how undue pressure can invalidate a pre-nuptial agreement, even when the party affected has taken legal advice and understands the terms of the agreement. Ultimately, the court awarded the wife £1.6 million of the assets.

The full judgment can be found here.