Following on from the landmark decision in Radmacher v Granatino  UKSC 42, the English courts again considered in AH v PH  EWHC 3873 (Fam) the weight that should be given to a nuptial agreement when exercising its discretion under Section 25 of the Matrimonial Causes Act 1973 and the essential ingredients of such an agreement if it is to be binding on the parties.
The three-part test to be applied when determining the weight of a nuptial agreement, as devised by the Supreme Court in Radmacher, is:
"the Court should give effect to a nuptial agreement that is:
- freely entered into by each party
- with a full appreciation of its implications
- unless in the circumstances prevailing it would not be fair to hold the parties to their agreement."
The parties were a Scandinavian couple ("H" and "W"), in their early thirties. W had moved to London on H's invitation, giving up her work to do so. Prior to their marriage, when W was pregnant with their first child, H and W entered into a Scandinavian marriage settlement intended to protect H's extensive inherited, settled wealth. It was common within H's family to enter into such an agreement and W received independent legal advice from a practitioner in her country of origin. The marriage lasted for four years before W issued divorce proceedings in the English courts.
Mr Justice Moor, in applying Radmacher, found that the marriage settlement was not contractually binding between the parties. This was because W did not have a full appreciation of the implications of the settlement, particularly on any claims that she might have in divorce proceedings outside of Scandinavia.
Moor J noted that the marriage settlement, in comparison to that in Radmacher, was a very basic document that did not contain any of the following clauses:
- a clause saying that it was in full and final settlement of all W's claims;
- a severability clause;
- a clause granting the Scandinavian Courts exclusive jurisdiction;
- a clause dealing with W's maintenance; and
- reference to the potential relevance of foreign law, or the need for advice in that regard.
However, Moor J was satisfied that after Radmacher the law remained that, even if non-binding, the very existence of the agreement would, in an appropriate case, be relevant. Here, the fact that the parties intended the marriage settlement to protect H's inherited wealth was one of the circumstances of the case.
Therefore, H's inherited capital was only to be used so far as to ensure that W had adequate housing and maintenance. Moor J stated that he would have come to the same conclusion in any case by reason of the short length of the marriage, the age of the parties and the origin of H's wealth.
Plainly any successful pre- or post- nuptial agreement should be drafted to ensure that it covers the above points. In particular, this judgment makes clear that if parties wish their agreement to be upheld by the English courts, they must intend it to apply wherever they might be divorced, and have a clause within the agreement to evidence this. Practitioners, in the role of independent legal advisor, must ensure that they appraise their client of all the implications of the agreement if there is a realistic prospect that the parties' marriage may end in divorce in another jurisdiction.
Of further interest, Moor J clarified here that in any case that does not involve the principle of sharing marital assets and is, instead, one based primarily on the needs of one party, it is sensible, proportionate and cost effective for the other party to run the so-called 'Millionaire's defence' - this allows for the party to disclose only a broad outline of his or her overall wealth, so long as he or she concedes that they have the ability to meet any reasonable order the court might make.
Law Commission recommendations
This case was decided prior to the publication at the end of February 2014 of the Law Commission's report on Matrimonial Property, Needs and Agreements. The report recommended legislating to introduce "qualifying nuptial agreements" (QNAs) which would be enforceable contracts, not subject to the scrutiny of the courts.
For such agreements to be QNAs, certain procedural safeguards would have to be met which, among other things, would include the need for disclosure of material information about the other party's financial situation and legal advice for both parties at the time the agreement was signed. It would also not be possible for one spouse to use a QNA to contract out of providing for the "financial needs" of the other or of any children.
Such legislation would not have been directly relevant in the circumstances of AH v PH, which related to a Scandinavian agreement on which the parties did not receive English legal advice. Nevertheless, until legislation is passed to introduce QNAs into the law of England and Wales, cases such as this will continue to be important in determining the circumstances and extent to which matrimonial agreements signed in this jurisdiction and others will be enforced by the courts.