The true costs of a Pre-nup: Enforceability and costs when challenging prenuptial agreements

The case of HD v WB [2023] EWFC 2 was recently heard before Mr Justice Peel and is interesting for several reasons. The differing levels of wealth held by each party, the long cohabitation before marriage and; the furiously disputed terms of a prenuptial agreement signed nearly a decade into the relationship all make this case particularly intriguing.

Both parties are 46 and WB (Wife) is British while HD (Husband) is from Northern Europe. WB and HD first met in 1996 when she moved to his home country to train with both parties having a keen interest in their sport of choice. The parties lived together until 1999 when they broke up before eventually resuming their relationship in 2000/2001.

HD was then offered a job by WD’s mother. He remained in this employment until 2017 and earned a modest wage. HD proposed to WB in 2003 but they waited over 10 years to marry.

Financial support from WD’s wealthy parents allowed HD and WB to pursue a shared sporting career and in 2006, WB bought CD House for £3.5m and in addition, she purchased 150 acres of land for £590,000.

The money for the property was provided by a loan of £4m from WD’s family trust and on moving in England, the family lived in a cottage on the grounds of CD house. Total renovation costs for the property amounted to around £7.7m and when renovations were completed, the parties moved into the house and used it as the matrimonial home.

In late 2012 early 2013, the parties decided to marry the following year. In July 2014, just before the parties married, HD was asked to sign a prenuptial agreement.  The parties separated in December 2020

The total assets held by the WB in a family trust exceeded £43 million and yet the total amount awarded to the HD was minimal compared to the assets held by WB. An open offer was made by WB to HD on 28 January 2022. WB offered HD a total sum of £362,500 – this is the sum which she says he would have been entitled to under their prenuptial agreement. This figure represented £112,000 which is HD’s entitlement under the agreement and £250,000 in relation to a loan repayment from HD to WB.

HD’s open offer of May 2022 sought £8m, advanced on a needs basis, which represented a housing fund of £2m-£3m and an income fund of £5m-£6m.

The Judge ultimately awarded the following to HD:

2. i) The right to occupy for life a property up to £2.5m which will then revert to W, subject to a possible prior termination of the arrangement if H receives substantial sums from the sale of his business interest; and
3. ii) £50,000 furnishing/refurbishment costs;

iii) £200,000 business capital start up costs;

1. iv) £349,000 for H’s debts;
2. v) The disputed vehicle at £100,000;
3. vi) £1.2m capitalised maintenance.

That is a total of about £1.9m (4% of the liquid wealth), plus a housing fund subject to W’s reversionary interest.

The matrimonial home worth in excess of £13 million was retained by the wife.

The basis of the award was a decision by the Judge to enforce the terms of a prenuptial agreement signed by the parties prior to their marriage in July 2012. HD fiercely disputed the premise that the agreement was properly entered into and sought to convince the Judge to disregard the terms of the agreement.

The outcome of this Judgment goes someway in clarifying the position in respect of prenuptial agreements that are properly entered into. HD sought to argue that he did not fully understand the agreement or the impact it would have on any claim he could make under the Matrimonial Causes Act 1971. Ultimately, the Judgment is clear, prenuptial agreements are enforceable, and Judges will attempt to honour contracts between spouses that are properly entered into.

In this case, evidence was submitted to the Court to suggest that HD had been able to review and amend the prenuptial agreement on at least three occasions prior to executing the same. Likewise, the Court heard evidence suggesting that HD had the benefit of legal advice prior to accepting the terms of the agreement.

The freedom to contract is a long held ideal within common law jurisdictions and while there has been a clear departure from notions of equality advanced over a number of precedents set in matrimonial finance cases, the Judge sought to avoid interfering with the terms of a contract both parties willingly entered into without duress.

Another particularly interesting feature of this case is how the Judge decided to treat applications for costs made at the conclusion of proceedings. HD sought the sum of £417,000 which reflected the costs incurred since his open offer of May 2022. WD sought 20% of her costs, i.e about £170,000.

WB argued that legal costs had been accrued in preparing for a number of hearings where the sole issue to be determined was the validity and enforceability of the agreement. WB sought a reimbursement of the costs she incurred in challenging HD’s submissions regarding the validity of the prenuptial agreement. The Judge ultimately decided to award WB 20% of her costs albeit, with a 30% discount in light of the fact that many of the hearings in the case dealt with the HD’s failed submissions challenging the validity of the prenuptial agreement. The discount was applied as the Judge considered his award on the basis of needs and it was not fair for HD to use what he would otherwise need to live in order to pay WB’s costs.

Full case: https://www.bailii.org/ew/cases/EWFC/HCJ/2023/2.html

If you need help with a case such as this, please contact Mavis on 020 8885 7986 for an appointment with a member of the family team.