There are many reasons why clients might wish to enter nuptial agreements – pre and post marriage. Generally speaking, the English courts will give effect to an agreement that is freely entered into by the parties so long as each fully appreciates the financial and other implications of the agreement.
There’s a caveat however. If one side wishes to set a nuptial agreement aside courts will look at the current circumstances and consider if it would be unfair to hold the parties to the agreement. If it would be, then courts will be reluctant to order strict enforcement.
The 2022 case of SC v TC which we discuss below is an example of a court refusing to attach any weight to a post nuptial agreement that, from all appearances, met many of the tests for nuptial agreements. It’s a reminder that such agreements will not always be automatically recognised by the courts.
SC v TC: What Does The Law Say About Post Nuptial Agreements?
In SC v TC Judge Hess provided a detailed explanation of the law on nuptial agreements. It can be briefly summarised as follows:
- When it comes to deciding what weight attached to agreements from a legal perspective there is no real difference between pre and post nuptial agreements.
- For an agreement to be fully enforceable each party should have had available all material relevant to his or her decision to enter the agreement.
- Each party should intend the agreement to govern the financial consequences of the marriage coming to an end.
- If the agreement is freely entered into and each party fully appreciates its importance then the courts will give full effect to the agreement unless it would be unfair in all the circumstances to hold the parties to their agreement.
- The very fact that there is an agreement in place can have the effect of altering what the court might otherwise have decided was ‘fair’.
- Almost inevitably there will be some element of pressure on both sides to enter a pre pr post nuptial agreement. But in the end each party is free to make the choice to enter the agreement or not. If undue pressure can’t be established the court is likely to uphold the agreement.
- A number of factors are recognised that can undermine the effect of a nuptial agreement. These include fraud, duress, misrepresentation and exploitation of the emotional state of one of the parties by the other.
- The court retains an overall section 25 discretion to reach a fair outcome in financial proceedings irrespective of whether there is a nuptial agreement in place or not.
What Happened In SC v TC?
The couple had been married in 1994. The husband was an investment banker.
From about 2003/2004 the husband began to experience the early effects of Parkinson’s Disease and his condition was eventually diagnosed in 2011. By 2013 the marriage had started to become strained and at some point the husband visited a sex worker. Feeling guilty he told the wife who asked for a divorce. Ultimately however she agreed not to separate if the husband entered a post nuptial agreement.
Both sides got legal advice and signed the agreement. The husband’s solicitor expressed deep concern about the terms of the agreement. It effectively gave the wife 80% of the marital assets in the event of a divorce, The husband refused to countenance the solicitor’s advice that the agreement should be renegotiated in a way that was fairer to him.
When the marriage did fail, and the divorce proceedings started, the husband sought a half share of the assets and asked the court to ignore the post nuptial agreement.
No Weight Attached To Post Nuptial Agreement
After a review of all the facts Judge Hess decided he could not attach any weight to the post nuptial agreement. In reaching his conclusion he admitted that he had been troubled by the circumstances in which the agreement came to be signed. Why, Judge Hess wondered, would somebody engaging in rational thought sign a document which was so manifestly to his disadvantage? The husband would have been entitled to assets of possibly £2,500,000 but signed a post nuptial agreement that gave him approximately £1,000,000.
The judgment in SC v TC illustrates how courts will look at the prevailing circumstances at the time reliance on a post nuptial agreement is sought. Even though the formalities for a valid agreement appeared to have been observed the judge nevertheless refused to attach any weight to the agreement because:
- It was very much to the husband’s disadvantage in financial terms.
- At the time that it was signed, the husband was a vulnerable person and the wife ‘rather took advantage of that vulnerable situation’ to gain a substantial financial advantage.
- Enforcement of the agreement could leave the husband in a predicament of real need.
This case demonstrates that even pre and post nuptial agreements that appear on the face of it to meet all the legal requirements for validity might nevertheless not be enforced if they do not meet the fundamental principle of fairness.
It will rarely be possible to predict what might be fair at that future point when the marriage breaks down and the agreement kicks in. However, an experienced family solicitor will always be able to provide considered advice on the appropriateness or otherwise of the terms of any proposed post nuptial agreement.