Are Pre-Nuptial Agreements Fair? Provision for Dependants is the Overriding Factor

The fairness or otherwise of pre-nuptial agreements continues to be a burning issue in English divorce cases. However, in a guideline decision, the Court of Appeal has made clear that their enforceability frequently depends on whether they make reasonable provision for dependants, particularly children.

The case concerned a couple who had each made an equal contribution to a 15-year marriage, him as breadwinner and her as homemaker. They had two children and, when they divorced, the marital assets were valued at about £11 million. Prior to the marriage, they had signed three pre-nuptial agreements, whereby the husband sought to protect his assets in the event of divorce.

After the wife launched proceedings in England, a judge could find nothing about the circumstances in which the agreements had been executed to render them invalid. However, he ruled that their effect was unfair, in that they failed to provide for the needs of either the wife or the children of the marriage.

The judge went on to find, however, that he was bound by a prorogation clause in one of the agreements and that jurisdiction in respect of maintenance obligations thereby resided exclusively in the courts of the couple’s homeland, Sweden. He ruled that he was thus prohibited from making orders under the Matrimonial Causes Act 1973, other than in relation to strict property rights, even in relation to the wife’s and children’s unmet needs.

The judge attempted to make good that shortfall by directing a sale of the couple’s matrimonial home in England, which had equity of £1.8 million of which the wife was entitled to half. The husband was ordered to provide a £2 million home for the wife and children, although the wife’s right to occupy that property would cease on the children leaving full-time education. The husband was also directed to pay child maintenance and a carer’s allowance of £95,000 a year, and to contribute £35,000 towards the wife’s purchase of a car.

In upholding the wife’s appeal against the judge’s ruling, the Court found that, even if the couple had intended to give the Swedish courts exclusive jurisdiction in relation to all matters arising from their marriage, the wording of the agreement had failed to achieve that. It contained no valid prorogation clause. In those circumstances the judge was wrong to find that his jurisdiction was so constrained and the matter was sent back to him for reconsideration of the wife’s entitlements.

The Court noted that the judge had found that, by signing the agreements, the wife had contracted out of any right to have the marital assets divided on the basis of the sharing principle, rather than her needs. However, in reconsidering the case, the judge would have power to make provision for the wife in excess of her needs if that was required to achieve fairness. The first consideration in the judge’s assessment would be the welfare of the children.