Upon the breakdown of their marriage the parties approached their financial advisor, and mutual friend, to assist them in dividing their joint assets without the need to incur legal costs. They each freely contributed to the creation of, and agreed to, a schedule of division whereby the wife was to receive the former marital home and a number of rental properties with the husband to receive the remaining rental properties together with two companies through which he operated as a carpenter and property developer, and which the parties believed to hold no monetary value at that time. After the deduction of mortgages the wife received properties with a value of circa £1.82m and the husband £1.14m. Over a period of years, although they remained married, the parties implemented their agreement and transferred the properties into the appropriate party’s sole name eventually each entering into a new relationship. Seven years after their separation the wife petitioned for divorce. Placing great weight on the final words of the documents sent to each party by their friend enclosing the agreed schedule of division, namely “still open for further discussion amongst the parties pending final agreement”, the wife submitted that there had been no binding final agreement between them and sought a further £5m from the husband whose companies had since expanded and who had also completed other profitable property development projects with his new partner, such that his income and capital position were now significantly higher than hers. She further complained that the husband had “cheated” her with regards to the value of the companies and that erroneous valuations had been used for some of the properties. The husband resisted the claim for any further financial provision.
On the wife’s claim—
Held, claim allowed in part. Either party could have initiated “further discussion” in relation to the post-nuptial agreement and, if either had done so, there would not have been any “final agreement” at that point. However, there had come a point when, by the absence of further discussion and by the implementation of the agreement, it had become final. It was not necessary to identify that point in time save to recognise that it was long before the commencement of divorce proceedings and the wife’s claim for financial remedy. Had there been no earlier agreement, and the parties’ respective financial positions were as presented now, then the wife would have been entitled to substantial further capital. However, given the existence of the agreement, that agreement and the circumstances surrounding it remained a very significant or weighty factor in the overall discretionary exercise. The relevant authorities made clear that the absence of sound, or any, legal advice did not necessarily vitiate the agreement and neither did the presence of sound legal advice necessarily render it impregnable, each case being fact specific. In the present case it was relevant that the agreement had been freely entered into by both parties, who were of full and mature age, full capacity and of similar and good intelligence, with neither in a dominant position and neither exploiting their position to gain an unfair or unreasonable advantage over the other. In all respects bar one the agreement was fair to both parties and, even from the vantage point of eight year’s hindsight remained fair to both, it now being far too late for the wife to trawl over the earlier valuations of the properties, particularly where she had been familiar with most of them and able to address any concerns at the time. However, different considerations applied to the treatment within the agreement of the companies and the assets within them, given that the wife had had no active involvement in them for several years, could not have been reasonably expected to have had any informed personal knowledge of the value of the jointly owned companies, and had accepted. trusted and relied on the husband’s honest belief that the companies were merely an alter ego of himself and, in his personal opinion, worth nothing. Acknowledging that the husband had been genuinely mistaken and that the parties had lacked “adequate knowledge” or a “full appreciation of [the agreement’s] implication” it was fair, in all the circumstances, to conclude that the companies had had a value of at least £1.5m at the time of separation of which the wife ought to have received a half share. It followed that the agreement reached, despite any advice received, had been unwittingly very unfair to the wife in the treatment of the company assets. Although the rest of the agreement was to stand, it was possible and appropriate to remedy the unfairness with a further cash payment to the wife now. Accordingly, applying the cross-check of fairness, making a deduction in value to represent the volatility and risk-laden nature of the company assets, but then applying an increase for the eight-year delay in payment, the husband was to pay the wife a further lump sum of £600,000 forthwith (paras 43–45, 86–87, 91, 92, 98, 99–103, 106, 115, 116, 117–119, 120).
Ann Hussey QC and Henrietta Boyle (instructed by Goodwins Family Law Solicitors, Harrow) for the wife.
Alexis Campbell QC and Daniel Mutton (instructed by OGR Stock Denton LLP) for the husband.