Is the tide turning on nuptial agreements?

The High Court case of MN v AN [2023] EWHC 613 (Fam) is the latest decision confirming the strength of nuptial agreements in England and Wales, particularly where parties have received specialist legal advice at the time the prenuptial agreement (PNA) was drafted.

The court was concerned with a financial remedies application involving a prenuptial agreement entered into in 2005, before Radmacher. At the time of entering into the agreement, the husband's assets were £32.5m and the wife's £62,000. The parties were advised by top-tier specialist family solicitors, and following negotiations, an agreement was drawn.

The agreement provided that the husband would pay the wife £500,000 for each year of marriage, capped at £12.5m and after 8 years or the birth of children, she would also receive half the value of their London property. Alternatively, she would receive a 50 per cent increase in the value of the husband's assets during the marriage, if greater, but capped at 42 per cent of the husband's wealth. Under the agreement, the husband would also pay child maintenance, school fees, and medical expenses. The agreement would cease to have effect after 25 years.

Upon giving the wife notice of his intention to divorce, the husband sought to rely on the terms of the PNA, which would have given the wife £7m for each completed year of marriage, plus £4.75m for housing. The wife sought a division far greater than what she would have been entitled to under the PNA. The husband, therefore, applied for the wife to show cause why she should not be held to the terms of the PNA. The wife's case was that the husband had behaved in a coercive and controlling manner towards her, a similar point raised by the wife in Traharne v Limb [2022] EWFC 27. The wife argued that the husband insisted upon the PNA and made it clear that there would be no wedding unless she signed the agreement. She also argued that the PNA was not fair, did not meet her reasonable needs, and was signed before the Supreme Court decision in Radmacher.

‘Coercive control’

Moor J determined that there was no evidence to support the wife's claim of coercive control. Although the wife did not argue on the basis of conduct, she attempted to include conduct as a factor to be considered within 'all the circumstances' under Section 25 of the Matrimonial Causes Act 1973. However, this was not allowed, and it is important for practitioners to keep this in mind when opposing an application to challenge the terms of a prenuptial agreement (PNA). The wife was found to be under pressure but not unduly pressured, which would have invalidated the agreement. Following the principles established in Radmacher and subsequent cases, Moor J concluded that the PNA fell within the range of reasonable arrangements. Under the agreement, the wife would have received half of the marital assets' increase in value if it exceeded other provisions, so the principle of sharing was not disregarded.

The fact that the marriage would not have taken place without the PNA alone did not constitute a vitiating factor. A similar conclusion was reached in KA v MA (Prenuptial Agreement: Needs) [2018] EWHC 499 (Fam), where it was important to the husband for the wife to enter into an agreement safeguarding his pre-marital wealth, while still fulfilling his obligations to meet her financial needs in the event of divorce. In that case, Mostyn J did not consider the absence of a marriage without a signed prenuptial agreement as duress or exploitation of a dominant position. This is indeed the case, as parties often enter into nuptial agreements to protect substantial pre-marital assets. For instance, in WC v HC [2022] EWFC 22, the husband had inherited wealth of £12.47m from his family or owned by him prior to the marriage, and an agreement was made to protect these assets.

Importantly, the fact that the agreement was made before the Radmacher decision did not diminish its significance. The wife was advised to regard the agreement as binding and understood that the PNA would be applicable even if the law changed. Therefore, lawyers can still confidently advise clients who have pre-Radmacher PNAs that the parties would be held to the terms of the agreement, provided it was freely entered into with a full understanding of its implications, unless it would be unfair to do so. There was complete disclosure and legal guidance from top-tier solicitors. As a result, no other factors diminished the weight of the PNA. After considering the Brack v Brack [2018] EWCA Civ 2862 case, the judge concluded that although a more generous award might have been made without the PNA, the agreement was not unfair and adequately met the wife's needs. Therefore, the wife was bound by the PNA and received a total sum of £11.75m, including a lump sum of £4.5m and a Duxbury fund of £7m. She was given six months to vacate the family home, and the husband was ordered to settle her litigation loan of £576,903.

Implications of the decision

The award received by the wife serves as a reminder that if both parties to a PNA meet their needs, fairness may not necessitate deviating from the terms of the agreement. The wife enjoyed an exceptionally lavish standard of living during the marriage, including luxury holidays. However, it was not necessary for her expenditure to continue at that level, and she had the option to downsize later in life.

Furthermore, parties should carefully consider their decisions before entering into agreements, as they are highly likely to be bound by them. Many individuals choose to enter PNAs precisely to establish certainty in the event of a divorce. As stated by Moor J at [87]: “litigants must realise that it is a significant step to instruct top lawyers to prepare a pre-nuptial agreement prior to the marriage. It is highly likely they will be held to these agreements in the absence of something pretty fundamental that vitiates the agreement. These agreements are intended to give certainty. Those signing them need to know that the law in this country will provide that certainty. Litigants cannot expect to be released from the terms that they signed up to just because they don’t now like what they have agreed.”

These words should be considered by parties who seek to challenge PNAs, especially to avoid costly litigation. Although costs were not discussed in MN v AN, parties and lawyers should be mindful of the financial consequences of setting unrealistic expectations or pursuing a case that lacks merit. In addition to promoting certainty, the ruling reinforces the importance of respecting personal autonomy when assessing fairness.

In BN v MA (maintenance pending suit: prenuptial agreement) [2013] EWHC 4250 (Fam), Mostyn J emphasized the relevance of the principle of autonomy, highlighting that parties who enter into these agreements are "sophisticated, highly intelligent, and have the benefit of the best legal advice that money can buy." Therefore, once an agreement has been freely signed by the parties, significant weight should be given to that arrangement, especially if it seeks to protect premarital assets.

Based on the decision in MN v AN, it appears that the trend of upholding nuptial agreements remains unchanged. The objective remains to achieve fairness, which entails meeting the parties' needs while respecting their voluntary decision to enter into agreements that govern the financial implications of a relationship breakdown.

Stephanie Coker is a barrister at 5 St Andrew’s ill. She practises exclusively in family law and has a busy financial remedies practice dealing with applications under the Matrimonial Causes Act 1973 and Schedule 1 of the Children Act 1989.

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