The very recent case of S v H serves as a stark reminder that there are very strict parameters in which a Court in England and Wales will be willing to consider a pre-nuptial agreement valid and therefore capable of recognition within a financial settlement imposed by the court.
First a word on the terms used within this short article: ‘validity’ should be taken to mean legally acceptable. It is not used interchangeably with binding. Although the 2010 Supreme Court decision in Radmacher (formerly Granatino) v Granatino significantly changed the status of pre-marital agreements it did not make them automatically binding on parties. Rather, the court made it clear that in the right circumstances ‘the court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement’. Essentially, unless it would be unfair to hold a party to the agreement, they had entered into either because of the effect of the agreement or some procedural irregularity, the agreement would be allowed to stand. Courts can take into account all the circumstances of the case and a properly formed and fair pre-nuptial agreement can be a decisive factor.
Over time, a set of criteria have developed to make it clear what can be regarded as an agreement ‘freely entered into’ and with ‘a full appreciation of its implications’.
Establishing a ‘full appreciation’ of the effect and implications of an agreement is perhaps the easiest hurdle to overcome. Both parties should have had the benefit of legal advice, ideally having each of their independent lawyers sign the agreement to confirm they have given advice. Full and frank disclosure of the parties’ assets must also be given and to one another (and to their legal representatives to allow full advice to be provided).
Showing an agreement was ‘freely entered into’ can sometimes be slightly less straightforward. There ought, as with any legal arrangement, to be no duress or misrepresentation. Case law recognises that duress can be more subtle than outright threats of injury or harm to a person or their loved ones, and as such, there is requirement that a pre-nuptial agreement ought to be entered into at least 21 days prior to the marriage ceremony taking place in order for it to be regarded as valid. The thinking behind this is that production of an agreement in the few days leading up to a ceremony, perhaps accompanied by threats not to go through with the marriage without an agreement, would amount to duress. Arguably such pressure could be exerted far in advance of the marriage ceremony, but 21 days is regarded to be a sufficient safeguard. Note though, the 2014 Law Commission project Matrimonial Property, Needs and Agreements report recommended that 28 days would be more appropriate. It would seem sensible to conclude that so long as the agreement is not reached so far in advance of a ceremony that it becomes out of date (typically no more than one year), the more ‘breathing space’ between the two events, the better. Something to keep an eye on for any couples with pre-nuptial agreements whose weddings may have been postponed by the COVID-19 pandemic, especially in light of the financial effects it has had and will continue to have: a fair and reasonable agreement accompanied by full disclosure and thorough advice may ultimately be rendered ineffective by supervening events.
In S v H, a couple embarking on a second marriage for both had an agreement drawn up by a foreign notary some five days before their wedding. Neither took independent advice. After the breakdown of the marriage, Mrs S sought to rely on the pre-nuptial agreement. Mr H on the other hand, having gone bankrupt (though perhaps he would have challenged the agreement in any event), sought to avoid the agreement being upheld against him as it would severely limit the financial support he could receive from his former wife. The parties’ evidence was at odds as to the level of understanding of the document they were signing, Mr H giving evidence that he was taken by surprise by the visit to the notary’s office and being asked to record his assets.
The agreement was held to be invalid, with His Honour Judge Booth recording:
“In my judgment, there is no value in the prenuptial agreement. There was no formal process of disclosure, there was no advice given to either party, other than by the notary who prepared the document and at five days before the ceremony.”
The Judge goes on to make clear that the agreement would not meet the husband’s needs in any event. As such, the agreement fails on all three fronts the Supreme Court felt were required for a valid agreement to be upheld: the agreement was not freely entered into by each party (on the basis that the proximity to the ceremony created an element on pressure which could amount to duress), the parties did not each have a full appreciation of the implications (if the husband’s evidence is accepted, though HHJ Booth was not explicit in this regard) and in the circumstances prevailing it would be fair to hold the parties to their agreement (particularly in light Mr H’s bankruptcy he was unable to meet his own needs).
One interesting point to note is that the parties had been married for a little over a decade. In that time, they could potentially have ‘cured’ the defective pre-nuptial agreement by entering into a post-nuptial agreement. Our advice to clients is always to keep their pre-nuptial agreement under scrutiny, with regular reviews and, if necessary, re-drafting taking place at specific intervals or upon major events like the birth or adoption of a child, loss or giving up of work, and so on.
The case of S v H illustrates very clearly the need not only to follow the formalities when the agreement is formed in order to reach a valid agreement but also to keep that agreement valid throughout its life to ensure that it remains useful in the event of a marriage breakdown.