The wife was the granddaughter of the man who grew Avon into a hugely profitable international company and beneficiary of various family trusts to the tune of $65 million. The husband was concierge at a hotel, where they met, and bankrupt at the time.
The prenuptial agreement signed just 15 days before the wedding, set out that any dispute in relation to the marriage was to be determined in accordance with the laws of New York. The agreement restricted the husband’s claims to a very limited share of the available assets and then only if there were children and the marriage lasted over three years. He would get no ongoing maintenance or other compensation.
The parties had two children and were married for 12 years, living predominantly in the family home in Barnes. Eventually divorce and financial proceedings were brought before the English courts.
In a succinct judgment at the end of a four-day final hearing, Mostyn J said ‘I have no hesitation in deciding […] that it would be wholly unfair to hold the husband to the agreement that he signed’.
While he had legal advice prior to signing, the advice was given by an English lawyer who was not competent to advise on the enforceability of the agreement under New York law, and was also not wholly independent, having acted for the wife in her first divorce.
If upheld, the terms of the agreement would have left the husband with nothing from the marriage and the wife with everything.
In a case like this, the judge can look at upholding part of the agreement and discarding only the terms which are unfair. Here the judge simply tore the whole agreement up and started from scratch.
On a strictly needs basis the judge assessed that the husband should be awarded £1.3 million, on a clean break basis, some of which was subject to a charge back to the wife on his death, so the outright cost to the wife would be £958,500. One key consideration for the judge was that the children’s interests demanded that the husband should not be left in a position where they perceive him as the ‘poor relation.’ He also took into account the husband’s reliance on the wife’s resources during the marriage and his resulting lack of personal pension or savings.
What prevented the prenuptial agreement from being upheld was that it was not enforceable under New York law, and the husband had not been property advised in relation to it prior to signing, and its terms were not fair.
The judge reiterated the common law principle that a court wants to and ‘should’ uphold an agreement between two people which is freely entered into, but that it won’t do so when it would not be fair in the current circumstances.
In preparing a prenuptial agreement there are clear guidelines which should be adhered to in ensuring it is reliable and will stand up to challenge in court.
It is important that both parties get advice, in good time before the wedding, which is entirely independent and competent in all the relevant issues.
Of course, it is not possible to predict future circumstances, such as the fall in the property market, which had an impact in this case, but you can build into your prenuptial agreement sufficient reviews which will manage those changes and keep the agreement valid.