Pre-nuptial deals gain validity as wife loses £1.6m claim

The legal validity of pre-nuptial agreements has received an important boost after a former model lost a £1.6m claim for compensation against her wealthy husband.

Setting out new tests for agreements between the super-rich, a High Court judge upheld a contract signed the day before the couple's wedding limiting the wife's claim to £120,000.

The court heard that Mr and Mrs K, from west London, married shortly after Mrs K, 28, became pregnant. Mr K, a chartered surveyor with assets estimated to be worth £100m only agreed to the marriage after the father of the bride put pressure on him not to have a child out of wedlock.

To induce the husband to marry his daughter, the father proposed a pre-nuptial agreement which restricted any financial claim upon the husband to £120,000 plus a further £600,000 in trust to provide a home for his former wife and son. The wife's family insisted on an £82,000 wedding for 400 guests while the husband wanted a quiet ceremony. Shortly afterwards, the couple spent £30,000 on a three-week Christmas holiday in the Caymans.

The marriage broke up after 14 months and the wife, who had her own assets worth £1m, claimed £1.6m compensation, plus £57,000 a year for herself.

Rodger Hayward Smith QC, a deputy High Court judge, rejected Mrs K's claim because she had freely entered into the agreed terms of the pre-nuptial contract. He said none of the husband's considerable wealth came from the wife and nor did she contribute in any way to its accretion.

Lawyers said the case, details of which have just been published, was important because the court laid down a set of tests for enforcing pre-marital agreements. Under laws in this country pre-nuptial contracts have no binding force on a court.

Judge Hayward Smith, ruled that where both parties are legally advised independently, where all the important facts were known and no duress was evident, the court should hold the couple to the terms of the pre-nuptial contract.

The wife, who became a successful model after leaving school without gaining any qualifications and has been living off a trust fund set up by her father, said she needed money to set up a beauty bar.

But the judge said the wife's claim for additional compensation was too high and more appropriate to a "fully entitled wife" after a long marriage.

Marcus Dearle, a partner in the family law department of the City firm Withers LLP, said K v K was the first case in which a judge had provided a useful check-list to assist lawyers to test the enforceability of pre-marital agreements.

"Pre-nuptial agreements remain a factor for the courts to take into account in determining the level of a financial settlement following marital breakdown," he said. "The courts retain the final say. I share the view of many legal commentators that pre-nuptial agreements are going to have a bigger part to play in short marriages compared with longer ones."

Pre-marital agreements have always come with a health warning in English family law. The courts have traditionally taken the view that agreements which make plans for what should happen if the marriage breaks down contravene public policy because they "undermine the concept of marriage as a life-long union".

However, with 157,000 divorces every year, many people regard a pre-marital agreement as sensible planning. To stand a chance of being enforced, it is vital that there is no duress, that each person fully discloses assets in advance, and that each takes independent legal advice to ensure they fully understand the implications of the agreement.