A pre-nuptial agreement (PNA) will be taken into account when a couple divorces, as long as it has been freely entered into and it is fair to hold the parties to it. Recently, the Family Court was called upon to decide how the terms of a PNA affected the division of assets between a divorcing couple.
The couple had entered into the PNA shortly before marrying in 2010. They petitioned for divorce in September 2023. There was a dispute between them as to whether two properties purchased during the marriage, which were held in the husband's name, were matrimonial or non-matrimonial assets. The wife contended that a property purchased in 2013 had been purchased as a home where they would spend weekends and holidays, and ought to be considered a 'second matrimonial home'.
The Court noted that the two properties would plainly be considered matrimonial assets unless a term in the PNA exempting assets arising from the conversion of pre-marital assets from being shared equally was engaged. The husband claimed that the property purchases had been funded by an endowment mortgage policy he had taken out in 1986, and by cashing in one of his pensions: the properties therefore represented conversion of pre-marital assets. The wife argued that she had decorated and maintained the two properties, and that the husband had lived rent free in her London flat, as a result of which he did not have to commute to work and was able to rent out his own home. These savings had supported his ability to buy the properties.
The Court found that, giving the word 'conversion' in the PNA its ordinary meaning, an asset would be ringfenced and not subject to being shared equally if it could be traced back to a pre-marital source. Taking into account the circumstances in which the PNA was signed, the Court concluded that it had been freely entered into and the couple ought to be bound by its terms.
The Court considered that the argument that the property purchased in 2013 had been 'matrimonialised' by the couple spending time there was misconceived. To argue that such use brought it outside the protection of the PNA would be to ignore the PNA's purpose and scope. If that argument were correct, the husband would surely contend that the wife's London flat had similarly become a matrimonial asset. Having established that the funds used to purchase the properties were from the husband's pre-marital assets, the Court found the term in the PNA to be conclusive.