Mark Twain wrote: “You want to be very careful about lying; otherwise you are nearly sure to get caught.”  The recent case of Helliwell v Entwistle offers a serious health warning that if you are seeking to rely upon a pre-nuptial agreement following separation, a failure to honestly disclose the truth about your financial circumstances at the time of the agreement can have disastrous consequences.

Background of the Case

In the above case, the husband and the wife were both in their early 40s and commenced a relationship in 2016, before marrying in 2019. The parties separated in 2022 and divorce followed. The wife came from a very wealthy family whilst the husband’s background was much more modest. When the parties became engaged in late 2017, initial discussions were held over a pre-nuptial agreement and these accelerated shortly prior to the marriage with both parties instructing their own lawyers to advise them on such agreement.

Pre-nup

As is recommend practice for any pre-nuptial agreement, each party was directed to disclose details as to the extent of their wealth at the time the agreement was being entered into. In the case of the wife, she disclosed assets valued at just over £18.2m. By way of comparison, the husband’s assets were around £1m. The pre-nuptial agreement confirmed that upon permanent separation/divorce, each party would simply retain their own assets and there would be no financial adjustment in favour of the husband, notwithstanding the significant disparity in the parties’ financial circumstances.

As it turned out, the wife had been far from honest in respect of what she disclosed concerning the extent of her wealth. She had neglected to mention that she actually held further assets valued at over £47.8m, in addition to the assets of £18.2m disclosed by her within the agreement. In simple terms, she had only disclosed around 27% of her total assets valued at just over £66m. This was a significant omission/mistake on her part, bearing in mind that the agreement contained clear declarations that each party had given full and frank disclosure regarding the extent of their wealth.

The pre-nuptial agreement was fully prepared by the end of June 2019 but was only signed by the husband on 12 July 2019, this being the same date the parties were married. Following the parties’ separation and the commencement of divorce proceedings, the wife applied to the court to resolve financial matters. The husband’s lawyers raised that the pre-nuptial agreement should be disregarded because of the wife’s non-disclosure of significant wealth. The wife argued otherwise and considered that the husband was bound by the terms of the agreement.

The Court of Appeal

The Court of Appeal considered that the wife’s non-disclosure was fraudulent and her deceit was made worse by the fact that the agreement contained declarations on her part that she had been honest regarding the extent of her financial disclosure. The wife’s argument that her non-disclosure was immaterial was rejected given the gravity of her fraud and the prevailing circumstances behind the creation of the agreement. The Court of Appeal was also very critical of the fact that the husband only signed the agreement on the day of the parties’ marriage. In respect of the husband’s financial needs, the Court of Appeal considered that these would need to be reassessed fully with all relevant factors under the law being considered at a fresh hearing.

Compounding the blow for the wife, the husband asked the Court of Appeal to rule upon the issue of costs incurred by the parties. Given that he had been successful with his appeal, the husband sought the sum of almost £670,000 against the wife in respect of costs incurred in relation to the appeal and the original set of proceedings. The Court of Appeal considered that as the wife had been found to have committed fraud in respect of her non-disclosure, an order for costs against the wife on an indemnity basis was justified

Conclusions

The above is an extreme case of course. Several questions spring to mind. Had the wife been honest regarding her financial circumstances, would the husband have still entered into the agreement? Had the wife’s non-disclosure amounted to a lower figure of say £5m (rather than £47.8m), would the husband have elected not to pursue a case of seeking to set aside the agreement?  Ultimately, we will never know the answer to these questions. However, for any party who either has entered into a pre-nuptial agreement or is considering doing so, the moral of the case is quite clear – honesty is always the best policy.