Wife not bound by “unfair” pre-nup says Court of Appeal

The ex-wife of racing driver Kenny Brack could be entitled to half his £11.4m fortune despite signing three pre-nups agreeing to receive just £500,000 if they broke up. On the face of it, the decision of the Court of Appeal does little to clarify the confusion around the enforceability of pre-nuptial agreements.

Mrs Brack applied to the High Court saying the pre-nups were unfair and that she should be entitled to a share of her husband's £11.4m fortune.

Anita and Kenny Brack started living together in 1994 and were married in 2000. During a romantic weekend near Niagara Falls in Canada shortly before their wedding, the couple signed a pre-nuptial agreement. The agreement provided that Mrs Brack would receive £500,000 if they divorced. Two subsequent pre-nups confirmed this agreement.

The couple, who have two children and live in Berkshire, separated in 2015. Mr Brack is a former winner of the Indy 500 who now works as chief test driver for McLaren.

Mrs Brack applied to the High Court saying the pre-nups were unfair and that she should be entitled to a share of her husband's £11.4m fortune.

Mr Justice Francis said that although the pre-nuptial agreements were unfair their terms had left him "in a straight-jacket". He said he was prohibited from awarding Mrs Brack a share of her ex-husband's wealth despite commenting that her ex-husband was "financially mean" and that she had made an equal contribution to the marriage.

Mrs Brack appealed the decision. As I have written in a previous blog about pre-nuptial agreements, the test of whether a pre- or post-nup should be upheld is set out the landmark case of Radmacher: "The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement."

The Court of Appeal found in favour of Mrs Brack. At the time of writing, the Court of Appeal has not published the full judgments and the information I have about the case is taken from newspaper reports.

The gist of the decision is that the court found the pre-nups to be unfair. Lady Justice King said: "Each of the parties have made equal, but different contributions to the marriage."

The Court of Appeal did not make a decision on the financial settlement but referred the matter back to the High Court. Lady Justice King encouraged the parties to reach a settlement out of court saying that they had already subjected themselves to more than three years of "punishing litigation at a huge financial and emotional cost". To date, their legal fees are said to be around the £1m mark.

It is hoped that the published judgment of the Court of Appeal will shed more light on the circumstances under which a pre-nuptial agreement will be deemed to be unfair. I will update this blog as and when more information is available.

In the meantime, a proposed change to the law that would make pre-nups binding regardless of their fairness is making its way through parliament. The Divorce (Financial Provision) Bill is currently at the committee stage – a line by line examination of the terms of the Bill. If this becomes law, the court would lose the ability to override pre- or post-nups and would only have power to make a financial order to the extent the agreement does not deal with an issue.

If you would like advice in relation to a pre- or post-nuptial agreement, or financial arrangements on divorce, please contact Mark Goldstein now at [email protected] or on 020 7616 5322.