AH v BH

Factual and Procedural Background

This financial remedies case concerns parties who were married for approximately five and a half years and have two young children. The assets at issue total around £50 million, predominantly held by the husband ("H"), while the wife ("W") has modest resources of about £291,000. The primary dispute involves the effect of a pre-marital agreement ("PMA") that limits W's financial claims against H, balanced against W's and the children’s financial needs.

The parties separated in September 2022. Litigation has followed a conventional course, including W’s Form A application and H’s Notice to Show Cause, with the substantive financial remedy hearing held in April 2024 before Mr Justice Peel. W does not challenge the validity of the PMA but contends it does not adequately meet her needs, while H relies on the PMA’s terms to restrict her claims.

The PMA was signed about 28 days before the marriage in 2018 and set out a regime limiting claims to joint property and excluding claims against separate property and business interests. It anticipated no periodical payments and included provisions for lump sum payments contingent on the length of marriage and the presence of children. The parties did not review the PMA after the birth of their children as contemplated by the agreement.

The family home ("FMH") was purchased by H in his sole name in 2018 for £2.79 million, funded entirely by him, with W contributing about £100,000 from the sale of her flat in her sole name in capital city A. The parties lived a comfortable lifestyle consistent with their wealth, including private education for the children and regular holidays.

H failed to disclose a significant property purchase in October 2023 until after it occurred, a breach of his disclosure obligations during the proceedings. The children currently live primarily with W at the FMH, with H having specified contact arrangements.

Legal Issues Presented

1. What weight should be accorded to the pre-marital agreement in the context of the parties’ financial remedy claims?
2. Whether the PMA adequately meets the financial needs of the wife and the children, justifying departure from its terms to achieve fairness under section 25 of the Matrimonial Causes Act 1973.
3. How to balance the protection of the husband’s substantial business interests against the wife’s and children’s needs.
4. What is the appropriate financial remedy, including housing and income provision, for the wife and children given the parties’ respective positions and the PMA?

Arguments of the Parties

Applicant's Arguments (W)

• The PMA does not reasonably or adequately meet W's financial needs, especially as primary carer of the children.
• W seeks transfer of the FMH to her, to be sold after the children complete tertiary education, with a 50% share of the proceeds.
• She requests a capitalised income fund of approximately £1.87 million over ten years, adjusted for earning capacity and offset by her own capital.
• She contends that her housing needs cannot be met by the PMA’s limited lump sum and that she requires a suitable home for herself and the children until adulthood.
• W argues that she has diminished earning capacity due to childcare responsibilities and health issues, justifying a capitalised maintenance award.

Respondent's Arguments (H)

• H relies on the PMA as a binding and fair agreement limiting W's claims to the specified lump sum and maintenance provisions.
• He offers W 40% of the FMH’s value (about £1.9 million) on a Schedule 1 basis, reverting to him after the children finish tertiary education.
• H proposes to pay the lump sum entitlement under the PMA (£818,025) and child maintenance as per the PMA terms.
• He contends that W can reasonably rehouse in a property costing about £1.9 million and that her income needs are overstated.
• H maintains that the PMA should be upheld to protect his substantial business interests and that W’s claims should be limited accordingly.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by acknowledging the binding nature of the PMA, which was entered into freely, with full disclosure and independent legal advice. The PMA clearly limited W's claims to a specified lump sum and excluded claims against H's business interests. However, the court emphasized that the PMA is one factor among many under section 25 of the Matrimonial Causes Act 1973, and that fairness requires a holistic assessment of the parties' circumstances, especially the needs of the children.

The court found that W's position had materially changed since the PMA was signed: she no longer has independent assets or significant earning capacity, and she is the primary carer of two young children. The PMA contemplated review upon birth of children, which did not occur, and the court considered this omission significant to fairness.

The husband’s substantial business interests, valued at approximately £38 million net, were protected by the PMA, and the court accepted that W had foregone a potential sharing claim worth several million pounds. Nevertheless, the court held that W’s reasonable needs and those of the children must be met beyond the strict terms of the PMA.

Regarding housing, the court found the FMH overlarge for W and the children but rejected H’s proposed rehousing budget of £1.9 million as insufficient and deficient in quality and location. The court determined a reasonable housing budget for W of £2.75 million, to be paid outright on sale of the FMH, with W receiving 56.7% of the sale proceeds and H the remainder.

On income needs, the court found W’s original budget overstated but accepted an annual total of £150,000 (including £110,000 for W and £40,000 for the children) as fair. This figure was capitalised over ten years, producing a lump sum of approximately £710,000 after offsetting W’s capital.

The court also ordered child maintenance and school fees to be paid by H, with a clear breakdown of amounts and indexing provisions.

The court emphasized the desirability of a clean break, rejecting ongoing periodical payments for income in favor of a capitalised lump sum. It acknowledged the significant disparity in wealth but found the award met W’s and the children’s needs adequately while respecting the PMA’s protective purpose for H’s business interests.

The court criticized H’s failure to disclose a property purchase during proceedings as a serious breach of duty, undermining trust.

Holding and Implications

H’s offer to limit W’s claims strictly to the PMA terms was rejected. The court departed from the PMA to the extent necessary to meet the reasonable needs of W and the children, reflecting their primary care responsibilities and diminished earning capacity.

The FMH is to be sold, with W receiving 56.7% of the net proceeds (approximately £2.75 million) plus an additional lump sum of £300,000 to cover stamp duty and refurbishment costs. W will also receive a capitalised maintenance lump sum of approximately £710,000 over ten years, and H must pay child maintenance and school fees as ordered.

W will exit the marriage with assets totaling about £4 million, approximately 8% of the total wealth, while H retains about £46.3 million, or 92%. The court found this division fair and just in the circumstances, balancing the PMA’s terms with the welfare of the children and W’s needs.

No new legal precedent was established, but the decision illustrates the court’s flexible and fact-sensitive approach to PMAs, emphasizing that such agreements do not automatically exclude fair provision for primary carers and children.

On costs, no order was made, reflecting the parties’ conduct and the offers made. Either party may apply for costs in light of the judgment but will face a high threshold.