High Court Analyses Post-Nuptial Agreement in Guideline Divorce Ruling

Pre- and post-nuptial agreements that do not fairly meet the reasonable needs of one divorcing party or the other are unlikely to be worth the paper they are written on. The High Court made that point in refusing to hold a wife to the disadvantageous terms of one such agreement.

The couple’s tempestuous marriage lasted about eight years and was characterised by periods of separation followed by attempts at reconciliation. During one such attempt, they signed a post-nuptial agreement (PNA) whereby the husband agreed, amongst other things, to pay the wife a £10,000 lump sum and to discharge the £83,000 mortgage on a property she owned. The agreement stated in terms that both sides had entered into it of their own free will and that neither would be entitled to make any further financial claims against the other.

After their divorce, however, the wife sought financial orders against the husband on the basis that she was entitled to seek an equal share of the marital assets, which totalled a little over £4 million. She asserted that the PNA was of no effect in that she had not in fact entered into it freely and it did not in any event meet her reasonable needs. He contended that the agreement was fair and that it should be treated as binding.

Ruling on the case, the Court rejected arguments that the husband’s conduct during the marriage could objectively be described as coercive or controlling. The wife had made the running when it came to drawing up the PNA and she had signed it despite reservations expressed by her then legal advisers. She had exited the marriage in a much better financial position than she had entered it.

In ruling that she was not bound by the terms of the PNA, however, the Court noted that she suffered from mental health difficulties and was clearly vulnerable. Although the pressure she was under was self-created, she had invested a huge amount emotionally in the relationship and was desperate for it to work. Her previous history of relationship break-ups had deprived her of the ability to make a rational and considered decision as to where her best interests lay. Overall, her judgment was impaired when she signed the PNA.

The Court concluded that the PNA did not in any event adequately meet her longer-term financial needs. She was approaching the end of her working life and the provision made for her by the PNA would not enable to her to live much above subsistence level. That provision was not reasonable following an eight-year marriage to a man who was a relatively prosperous professional.

In seeking an equal share of the marital assets, however, the Court found that the wife had set her sights far too high. The husband had reached retirement age and most of his assets pre-dated the marriage. He had also borne the majority of the very substantial legal costs of the divorce. In order to achieve a clean break, the Court ordered him to pay the wife a lump sum of £293,261. It also directed that she should have a 12.1 per cent share of his pension.