Till death us do part? Can a divorce settlement extend beyond one party’s death?
Setting aside a divorce settlement, sharing assets and prenuptial agreements
The Court has recently been concerned in deciphering a cocktail of arguments around setting aside a consent order, sharing of matrimonial and non-matrimonial assets and prenuptial agreements against a backdrop of several tragic events in the matter of WA v Executors of the Estate of HA & Ors [2015] EWHC (Fam).
The facts of WA v Executors of the Estate of HA & Ors [2015] EWHC
Parties were married in 1997 and had three children. WA was an heiress and a pre-nuptial agreement was entered into shortly before the marriage took place. It essentially sought to protect the wife’s inherited wealth, which provided for the large majority of assets during the marriage.
The parties separated in 2014. HA initially did not cope well and sought medical assistance with his mental health. Neither party cited the pre-nuptial agreement in financial remedy negotiations and WA agreed to pay to the husband a lump sum of £17.34 million in two tranches.
Sadly, 22 days after the order was made, HA committed suicide, leaving his entire estate to his three brothers alongside a handwritten letter which requested that they did not give any money back to WA.
WA relied upon the case of Barder in arguing that the fundamental basis of the lump sum order had been invalidated by his death just 22 days later and should therefore be set aside. The respondent’s position was that his death was not unforeseeable and in any event the lump sum was ordered on the principle of sharing and should not therefore be subject to Barder.
For the first time, WA relied upon the pre-nuptial agreement in arguing that ‘sharing’ had formed no part in negotiation or computation of the lump sum.
The Court’s approach
The Court considered the authorities submitted in three groups:
- The Barder group relating to set aside and in particular Richardson v Richardson [2011] EWCA Civ 79 which held that where an award is based on the concept of sharing, it should not be invalidated by the death of the recipient.
- The Miller/Macfarlane group in considering sharing versus needs and notably K v L [2011] EWCA Civ 550 which held that where the entirety of the parties assets stem from one parties’ inheritance, the correct approach would be to apply the needs principle.
- Radmacher as to the correct way to deal with pre-nuptial agreements.
The Court’s decision
The Court allowed the appeal having found that HA’s death was unforeseen and unforeseeable, that the lump sum had been entirely based upon the husband’s need and it therefore followed that the fundamental assumption of the award had been entirely invalidated by his death.
In considering the correct order that should be made, Mr Justice Moor held that a lump sum of £5million would be appropriate given the length of the marriage and noting HA’s contributions. He specifically considered HA’s intended bequests and the needs of his mother, who had previously been housed by HA and WA. The pre-nuptial agreement was dismissed on the basis that it had not been relied upon by either party in negotiation and, whilst agreed prior to Radmacher, did not survive the guidance set out in Lord Phillip’s judgment.
It remains clear that parties cannot pick and choose when they wish to be held to a pre-nuptial agreement and in applying Barder it is perhaps unsurprising that the Court upheld the wife’s application to set aside. It is however interesting to note that ‘needs’ can be extended beyond the recipient’s actual needs to encompass bequests made upon the death of recipient and the needs of extended family; it shall remain to be seen whether such an extension will be reserved for a limited number of fact specific matters, or whether the concept of needs has just been nudged open a little further.
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