By Gill Rivers, Collyer Bristow, London


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The enforceability, or otherwise, of a post-nuptial agreement was one of the central issues in NA v MA [2006] EWHA 2900 (Fam). This nine-day case was heard before Mrs Justice Baron in November 2006. It was described by the counsel of the wife and husband, respectively, as 'brutal litigation' and 'the most demanding case' in which he had ever been involved. The costs stood at £1.2 million.



The passionate and all-consuming way in which the young couple began their relationship was mirrored by the bitterness of the litigation that ensued on its breakdown. During the trial, serious allegations were made against the wife`s solicitors, which, although described as a 'diversionary tactic' by the wife`s counsel, nevertheless necessitated investigation by the court. The wife`s cross-examination was on the basis that a strategy had been devised between her and her solicitors to set up circumstances that would give them the best possibility of success in an allegation of undue influence by the husband.



A substantial amount of evidence was considered and the judge found that none of the solicitors involved had engaged in any strategy or plan that was tantamount to wrongdoing.



The wife's application before the court was for full ancillary relief claims. The parties married on 20 June 1998, having lived together for six years beforehand. There were two children, born in 2000 and 2002. The wife was 35 at the date of the trial and the husband 31. The wife filed (but did not serve) her petition on 12 May 2005. The husband filed his proceedings, based on his wife`s adultery, on 27 May 2005, and the divorce was obtained on his petition.



Their individual backgrounds, although quite different, had led them to a common belief in the vulnerability of relationships. This in turn led to a pact between them never to commit adultery, which was a hugely relevant and sensitive matter. It should have been of little surprise to the wife that, on discovery by her husband of her infidelity with his friend, it gave rise to a description of him in the evidence as 'a wounded animal'. The husband`s disbelief at what he considered to be an act of ultimate treachery led to the drafting and signing of a post-nuptial agreement seeking to regulate the financial matters and contact issues in the event their attempts at reconciliation of the marriage failed.



The wife wanted to save her marriage and preserve family life. The judge found, however, that she was subjected to 'intolerable pressure at a time when the whole structure of her family life had disintegrated, even though this was as a result of her own actions. She felt guilty and I have no doubt that her guilt was used against her on a regular basis.'



The husband regularly told the wife that she had to take a 'leap of faith' and sign the deal to save the marriage. This concerned the judge as she considered it to be 'illogical phraseology' and the context in which the husband said it did not convey the true meaning of the phrase.



On the husband`s case, his assets totalled £21.5 million. The wife did not accept this figure, putting his wealth at about £46.5 million. In her findings, the judge took the view that the husband was worth about £40 million, of which roughly half was held in assets in the Lebanon and Syria, £7 million was liquid capital and a further £4.8 million was easily realisable in the short term from the sale of wine stock - which gives another gloss to the idea of liquidity.



The wife`s open position, at trial, was a requirement for: a housing fund of a little more than £6 million; £6.75 million as capitalised income provision based on a multiplicand of £450,000 and a multiplier of 15 years; a £176,000 lump sum to cover debts which, in part had accrued, she claimed, because of inadequate interim maintenance; periodical payments for the children at the rate of £60,000 per year each (index-linked); and school bills, and private health care cover and costs.



The husband`s case was based on his assertion that the wife should be kept to the terms of the post-nuptial agreement, which limited her to £3 million in respect of her housing needs; an income provision of £240,000 per year (index-linked) for herself during joint lives or until remarriage; and £60,000 per year (index-linked) for each of the children plus school bills.



Mrs Justice Baron outlined the current legal position in relation to contracts between spouses, noting that the trend towards pre-nuptial contracts and the greater likelihood that their terms will find judicial favour on the dissolution of a marriage. It remains the case, however, that until legislative change, the current authority makes it clear that the agreements are not binding per se but can be persuasive.



Consideration was also given by the judge to paragraph 1417C of Edgar v Edgar [1980] 1 WLR 1410, which weighed in the balance the proposition that 'formal agreements properly and fairly arrived at with competent legal advice should not be displaced unless there are good and substantial grounds for concluding that an injustice will be done'. It said 'the conduct of both parties', 'undue pressure by one side, exploitation of a dominant position to secure an unreasonable advantage, inadequate knowledge, possibly bad legal advice, [and] an important change of circumstances, unforeseen or overlooked at the time of making the agreement,' are all relevant to the question of justice between the parties.



Also considered were Mr Justice Munby`s summary of propositions he considered to be relevant to the issue of enforceability of spousal contracts, page 536 in X v X (Y & Z Intervening) [2002] 1 FLR 508.



As to whether, on the wife`s case, she had been subjected to 'undue pressure', the husband asserted the relevant test was to be found in the civil case of RBS v Etridge (No 2) [2001] 2 FLR 1364. Mrs Justice Baron considered that the pure application of the law required some modification to embrace the special relationship between spouses. Nevertheless, she was clear that, 'to overturn the agreement, I have to be satisfied that this wife`s will was overborne by her husband exercising undue pressure or influence over her.' She went on to say: 'I am also clear that if I do not overturn the agreement per se, I still have to consider whether it is fair and should be approved so as to become a court order.'



On an application of the law to the facts, the judge held, in paragraph 128, that 'for the avoidance of doubt, I find that this post-nuptial agreement was offered on a "take it or leave it" basis at the time of, and in the throes of, emotional meltdown and was stipulated to be the only way in which to save this marriage'. She continued: 'He used his dominant position, both emotional and financial (in the sense that he knew she had no financial independence), to ensure that she felt she had no alternative but to sign.'



Mrs Justice Baron determined that the husband`s behaviour amounted to undue pressure and influence, and she would not implement the terms of the agreement. She made a capital award of £9.2 million, and set the children`s interim maintenance at £60,000 a year each plus school fees.



Judicial attention was also drawn to the lessons to be learned from the conduct of this case. The judge levied criticism in its preparation, describing it as 'shambolic', and called for more effective case management. She also indicated that the wife`s legal advisers should properly have been changed once a challenge to the validity of an agreement drafted by them has been raised. Allegations should only be raised after diligent and 'fearless' investigations had been carried out. Finally, she thought it extremely helpful if more co-operation and communication took place between counsel when outside court.



The matter will be returned to Mrs Justice Baron on the issue of costs. These will be determined under the old costs regime because the application for financial relief was made before the implementation of paragraph 1(1) of the Family Proceedings (Amendment) Rules 2006, which came into force on 3 April 2006.



On an application of the facts in this case, it is clear that the decision reached was one Lord Denning would have been proud of as an endorsement of the rights of the party in a weaker bargaining position than the other. It will be recalled that Lord Denning advanced the proposition that statutory protection should be afforded to individuals in such cases. Interestingly, of course, in the days of Anthony Trollope, marriage settlements were commonplace and enforceable. Perhaps we are seeing a resurgence in this area.



The judge in this case, having been entirely satisfied that duress was a significant feature leading to the signing of the agreement, was not inclined to bind the wife to the terms of the post-nuptial contract. What the case also advances, however, is the clear message that the family courts will now look to see to what extent they can uphold an agreement reached between the parties. Only legislative reform can make pre-nuptial and post-nuptial agreements binding, but surely the prospect of that happening is now only a matter of when, and not if.