The Family Court has reaffirmed the importance of following the Family Procedure Rules in financial proceedings in a case where one party repeatedly failed to do so.

In handing down his judgment in WC v HC (Financial Remedies Agreement) [2022] EWFC 22, Mr Justice Peel posed the question: “Why is it fair for one party to follow the rules but the other party to ignore them?” Matthew Humphries and Harriet Kerchiss, who acted for the husband in this case, review the decision.

Background

The parties met in 2001, started living together in 2002/2003 and married in 2004. The marriage ended in 2019, with the wife’s divorce petition following in January 2020, making it a marriage of 16/17 years. There are two children of the marriage, now aged 16 and 13.

Before the marriage, the parties entered into and fully executed a pre-marital agreement. The wife argued that she signed this agreement as a result of undue pressure.

The family lived predominantly in London, although the husband spent increasing amounts of time at his property in Switzerland, where he worked managing the wider family wealth. In 2010, the family moved to live in Switzerland full time.

By 2017, the parties had agreed that the children should return with the wife to attend school in England. At the husband’s initiation, a post-nuptial agreement was negotiated prior to the move, the terms of which were approved by the wife’s legal team in correspondence. However, despite an agreement having been reached and the necessary arrangements having been made for the parties to sign, the wife declined to do so (though her solicitors signed an appended certificate confirming she had).

The wife contended at trial that a final agreement could not have been reached as she had not signed it and she had been placed under undue pressure in any event in respect of the post-nuptial agreement, and its terms should be disregarded.

By the time of trial, the family’s assets totalled £12.47m, almost all of which originated from gifts and inheritances received by the husband. In income terms, the family’s lifestyle was largely funded by the husband’s wealthy father, albeit the court considered that his gifts were, at least in part, a tax efficient way of rewarding the husband for his management of the family wealth.

The gifts from the husband’s father stopped abruptly following the wife’s petition. The husband was also sidelined by his father from his role managing the family wealth. Also, before the parties’ separation, the husband’s father had transferred assets worth about €23m into a trust of which he was the principal beneficiary and the husband one of several discretionary beneficiaries. These assets were transferred out of the trust in February 2020.

The husband made an open offer to settle the wife’s claims in July 2020. By the time of trial, that offer was worth around £7.15m, although at the time it was made, it was worth significantly more (prior to what Mr Justice Peel described as “the corrosive effect of costs”).

In contrast, the wife failed to quantify her capital needs in her Form E and did not make an open offer until July 2021, over a year after the husband. That offer, and all of those that followed (each totalling about £10m), vastly exceeded the court’s ultimate determination.

Judgment

The court held that the wife’s needs-based award should be £7.45m net or approximately 60% of the total assets. This award comprised a London housing fund of £4m, capitalised maintenance of £3.319m and £131,000 for “unforeseen contingencies”.

The court found that the wife had not been placed under undue pressure in respect of the pre-marital agreement or the post-nuptial agreement. The judge determined that an agreement as to the terms of the post-nuptial agreement was “undoubtedly reached”.

Mr Justice Peel rejected the wife’s submission that an agreement could not have been reached given that privileged negotiations continued between solicitors about the terms of the post-nuptial agreement, stating: “Far from undermining the agreement, in my view the fact that some form of without prejudice discussion took place after the agreement was reached demonstrates vividly that agreement had in fact been reached; otherwise, why attempt to renegotiate it?”

The judge found that in the absence of the wife’s signature, there could be no presumption the terms of the post-nuptial agreement (per Radmacher v Granatino) should be given effect unless, in all the circumstances, that would be unfair to her. However, he was entitled to take the agreement into account, and he considered the terms to be relevant, albeit not determinative.

In his judgment, Mr Justice Peel was critical of the wife’s circumvention of the Family Procedure Rules, court guidance on case management and a court order. In his judgment, he asked the question: “Why is it fair for one party to follow the rules, but the other party to ignore them?” In particular:

  • To ensure her s25 Matrimonial Causes Act 1973 statement fell within the 20-page limit, the wife used a small font and spacing (in direct contradiction of Practice Direction 27A) with the result that her statement was 33% longer than the husband’s. The judge described this as “completely unacceptable, and [the wife’s] legal team should not have permitted it to happen”. He noted that it is simply not fair or acceptable for a complying party to be left with the feeling that the non-compliant party has potentially gained an advantage through breaching the rules.
  • The court deprecated an attempt by the wife to adduce 102 pages of fresh evidence less than a week before trial without notice to the husband.
  • Mr Justice Peel was extremely critical of the wife’s s25 statement, which “crossed the line and descended into a number of personal, and prejudicial matters, directed at H which, in my view, were irrelevant to the matters at hand”. This contravened the High Court Statement of Efficient Conduct of Financial Remedy Proceedings, which prohibits the inclusion of argument and rhetoric in statements.

Conclusions

Mr Justice Peel’s judgment serves as a helpful reminder of the law concerning nuptial agreements. It also clarifies that where terms are agreed, but a nuptial agreement remains unsigned, it will be relevant and informative but not presumptively dispositive in a Radmacher sense.

The court has also given a clear warning that the court’s rules and guidance must be complied with. In particular, Mr Justice Peel (who it is worth noting will shortly begin a four-year term as National Lead Judge of the Financial Remedies Court) has made it extremely clear that financial proceedings are simply not a forum for mud-slinging, saying of the wife’s statement: “Parties, and their legal advisers, may be under the impression that to describe the other party in pejorative terms, and seek to paint an unfavourable picture, will assist their case. It is high time that parties and their lawyers disabuse themselves of this erroneous notion.”

Matthew Humphries comments: “In addition to this case representing an excellent and well-deserved outcome for our client, it also delivers a long-overdue reminder to all litigants and their representatives that they must comply with court rules and guidance.”