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Boodle Hatfield Succeeds in Overturning Wife’s Unfair Pre-nuptial Agreement

Summary

In the High Court Judgment recently reported under the name of KA v MA [2018] EWHC 499 (Fam), we successfully argued on behalf of our high net worth wife client that she should not be held to the terms of a pre-nuptial agreement, whose terms were manifestly unfair, in the context of her divorce and financial remedy proceedings. She has now been awarded a substantial seven-figure sum, which goes far beyond the provision made for her in the pre-nuptial agreement in respect of both her capital and her income award.

The pre-nuptial agreement was signed on 11 November 2008, some two years before the Supreme Court's landmark decision in Radmacher v Granatino, which, it was argued on behalf of the wife, heralded a “seismic shift” in the law in relation to such agreements.

Background

We were first instructed by the wife in June 2016, after she had instructed another firm of solicitors, who advised her that the maximum award she could expect to receive, were she to issue financial remedy proceedings, was that set out in the pre-nuptial agreement.  We took the opposite view and went on to make this case successfully at the five-day final hearing, which took place before Mrs Justice Roberts in January 2018.  Martin Pointer QC and Nichola Gray of 1 Hare Court were instructed to appear on behalf of our client. 

The parties met in 2000 and married in 2008. By that time they had one four-year-old child together and they were living together in the husband’s pre-owned 20-acre property in Berkshire. The husband was a director and majority shareholder in a group of travel companies and had been for some years before the parties met. In 2008 he valued his share of the business in the region of £30m. The wife had given up her career to look after their son. The pre-nuptial agreement was signed just 21 days before the wedding. 

The husband’s case from the outset was that the wife should be bound by the terms of the pre-nuptial agreement and he made an early unsuccessful attempt at blocking the wife's application from going any further. The wife’s case was that the pre-nuptial agreement was defective in a number of ways, including (1) that it was unfair and failed to meet her reasonable needs in the context of the parties’ standard of living during the marriage, (2) that the husband had failed to give adequate disclosure of his financial circumstances prior to the parties entering into the agreement and (3) that she had felt under enormous pressure to sign the agreement. The pressure felt by the wife was evidenced in great detail by the correspondence and attendance notes kept by the solicitors who acted for her in relation to the agreement, to which she waived privilege in these proceedings (as did the husband subsequently in respect of his own solicitors’ file).

Judgment

Roberts J found that the terms of the pre-nuptial agreement were blatantly unfair and therefore should not be upheld (nevertheless noting that its existence precluded her from starting with a "clean sheet").

The husband conceded during the course of the proceedings that, as a family, they had a budget of £1m a year, of which up to £250,000 could be spent on holidays. The expert accountant who was jointly appointed to report as to the liquidity of and maintainable income from the husband’s business interests concluded that it was likely the husband would continue to be able to draw £1.5m net from the business each year. The primary former matrimonial home was given an agreed value of just over £3.5m.

Meanwhile the pre-nuptial agreement provided for monthly maintenance of just £2,000 for the wife, which was equivalent to the personal spending allowance she would receive from the husband throughout the marriage. Pursuant to the agreement the wife could expect to receive a lump sum to re-house of £600,000. The agreement contained a provision that, were the husband’s wealth (as summarised in the schedule to the agreement) to reduce by the time of a potential divorce, the wife’s award should reduce proportionately. There was no limit to how far the award could be reduced in this way and there was no converse provision that the wife’s award would increase in line with any increase in the husband’s wealth.

Roberts J therefore felt able to override the terms of the pre-nuptial agreement in awarding our client a seven-figure lump sum to re-house and capitalised maintenance of £100,000 a year (reducing to £75,000 when the parties’ son turns 21). This award was deemed to equate to a generous interpretation of our client’s reasonable needs, to take into account the pre-marital nature of much of the husband’s wealth and the existence (if not the content) of the pre-nuptial agreement.

 Read more about pre and post-nuptial agreements here. 

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240 Blackfriars Road
London
SE1 8NW
DX 53 Chancery Lane

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

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