Picture of a person signing a contract

Not worth the paper it is written on… SC v TC and the risks of one sided nuptial agreements’

Whilst the Supreme Court decision in Radmacher v Granatino [2010] UKSC 42 held that weight should be given to a nuptial agreement it does not follow that such agreements will always be upheld by the court.

This was illustrated by the recent case of SC v TC [2022] EWFC 67, in which His HonourJudge Hess placed no weight on a post-nuptial agreement in financial remedy proceedings. He concluded that its terms were unfair due to the husband’s vulnerability at the time of signing and that the agreement would leave him in “a predicament of real need”.

Before examining the case, it is useful to briefly state the current law around the enforceability of nuptial agreements.

What makes a nuptial agreement legally enforceable?

The Radmacher decision states that the court will give weight to a nuptial agreement provided it is fair to do so, with ‘fair’ being the operative word. The Supreme Court referred to other landmark cases when deciding Radmacher, including McFarlane v McFarlane [2006] UKHL 24, in which it was established that fairness should be based on the principles of:

need compensation sharing

The Court will also apply a three-part fairness test concerning the nuptial agreement;

  1. that the agreement was freely entered into (i.e. there was no undue pressure),
  2. both parties understood the agreement (i.e. there was financial disclosure before the agreement was signed and both parties received or had the opportunity to receive independent legal advice), and
  3. it is reasonable to hold both parties to the agreement (i.e. it is fair and the prevailing circumstances).

What were the facts in the case of SC v TC

The couple married in 1994 and had one child. The husband (H), worked in investment banking but had stopped after being diagnosed with early-onset Parkinson’s disease. From around 2003, H began to experience the early effects of his illness. He was formally diagnosed in 2011 and by 2013, the marriage was unhappy and lacked sexual intimacy. H visited a sex worker and later told the wife (W). W asked for a divorce, however, H asked for another chance to make the marriage work. W agreed on the condition H enter into a post-nuptial agreement to ensure her financial security.

Although the terms of the nuptial agreement were significantly more generous than what the court would award, H signed the contract. H’s solicitor told him the division of the financial assets was 80/20 in favour of W and recorded that he had advised H that it would be financially imprudent to agree to these terms. H stated that given his prognosis it made no sense for him to fight for assets and he, therefore, would not contest these terms of the post-nuptial agreement.

The post-nuptial agreement was signed in 2014 and divorce proceedings began in 2020. H wanted the marital assets to be divided evenly. Unsurprisingly, W argued that the post-nuptial agreement terms must be adhered to when alighting upon a financial settlement.

Why did the court not uphold the post-nuptial agreement?

Although His Honour Judge Hess concluded there had been financial disclosure, legal advice and both parties

were, when signing, mature and intelligent, he was concerned that the post-nuptial agreement disregarded any needs arising from H’s Parkinson’s diagnosis, including housing needs and home care requirements. The agreement would leave H in a position of “a predicament of real need”, with W comfortably provided for, and this would be fundamentally unfair.

His Honour Judge Hess stated:

“In summary on this area of the case, I have reached the conclusion that it would be wrong for me to place weight on the Pre-Marital Agreement. Not only was it very much to the husband’s disadvantage in financial terms, I have reached the overall conclusion that, at the time that it was signed, he was a vulnerable person (in the ways described above) and the wife rather took advantage of that vulnerable situation to gain a substantial financial advantage.”

Concluding comments

This decision highlights that even if all of the formalities required have been adhered to, fairness will always be the court’s primary consideration. The court fulfils a vital role in protecting vulnerable parties in situations of this kind and prevents a contracting out of the fundamental principles of English family law. In many cases, it is difficult or impossible to predict the situation a couple may find themselves in at the time of divorce, be that children, illness or otherwise. However, rather unusually in this matter, the husband’s future was a lot clearer given the reasons that the agreement was entered into. Therefore, when entering into a pre or post nuptial agreement, parties and their advisors must ensure that the agreement being entered into is in fact worth the paper that it is written on. A keen assessment of the likelihood that a court will deem the terms unfair is therefore essential to achieving the desired outcome.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about pre and post-nuptial agreements, please phone +44 (0)20 3 983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.