WW v HW

A freely entered nuptial agreement, made with appreciation of its implications, should generally be given significant weight unless it would be unfair to hold the parties to it in the circumstances existing at breakdown. The agreement may alter the assessment of fairness and needs, particularly where it protects non-matrimonial property. It does not, however, prevent the court assessing whether one party would be left in real need. Need is not invariably confined to avoiding destitution. Its level depends on all the circumstances, including the agreement, the parties’ resources, earning capacity, children’s needs and any obvious and gross conduct making it inequitable to disregard it. Conduct affecting the substantive financial position may influence the needs assessment, although litigation conduct ordinarily affects costs.

The parties married in 2002 and separated in 2012 after an approximately 11-year marriage. Before marriage they signed a pre-nuptial agreement under which neither would claim against the other on divorce, while claims concerning the children remained open. The wife’s assets were predominantly inherited and worth approximately £27m; the husband’s resources and earning capacity were substantially less.

The principal issue was the effect of the agreement on the husband’s needs-based claim under the Matrimonial Causes Act 1973. Related issues concerned ownership of the matrimonial home, liabilities arising from the treatment of a commission payment in the husband’s company, the effect of the husband’s conduct, the appropriate housing fund, and whether provision should reduce when the younger child reached 23.

1. Effect of the agreement. Applying Radmacher (formerly Granatino) v Granatino [2010] UKSC 42, the agreement was entered into freely, with adequate understanding and opportunity for advice, without duress, undue pressure, exploitation or other vitiating circumstance. Both parties intended it to be effective. It therefore deserved significant weight.
2. The agreement’s principal purpose was to protect the wife’s inherited, non-matrimonial property. That was a legitimate objective. The court retained responsibility for determining fair provision under the Matrimonial Causes Act 1973, but the agreement was capable of altering what fairness required, including the level of provision for need.
3. The agreement could not be treated as automatically decisive if it left the husband in real need. Need was not invariably limited to the minimum required to avoid destitution. Its assessment depended on all the circumstances, with the agreement operating as a substantial depressing factor. The children’s needs were separately provided for through maintenance and housing provision.
4. Conduct and resources. The husband’s dishonest accounting and attempts to shift responsibility for tax, interest and penalties were irresponsible, financially unfair and sufficiently obvious and gross to affect the substantive assessment of his needs. The court declined to add back sums actually spent on professional advice, but was entitled to avoid being overly protective of the husband when assessing the consequences of liabilities substantially created by his conduct.
5. The matrimonial home was held in the proportions of the parties’ financial contributions, namely 86% to the wife and 14% to the husband. Equal sharing was not required merely because it had been the matrimonial home.
6. The husband’s reasonable housing need was met by a fund of £1.7m, held on terms providing lifetime accommodation with reversion and a step-down. A further lump sum of £215,000 was ordered to meet his income needs. The provision was sufficient in the circumstances and the claim for an outright housing fund was rejected.