Cusworth J. A preliminary issue hearing where the substantive question was how the chattels fell to be characterised for the purposes of the prenuptial agreement (PNA), and consequently the respective entitlements of the parties in those items following their divorce.

Facts

W had significant wealth with most of her wealth being in business assets and the remainder liquid or in property, and she was a beneficiary of a family trust. H’s disclosure at the time of the parties’ PNA was that he had a net capital worth of £650,000. During the marriage, valuable chattels (used to furnish the family home) were acquired with funds drawn from joint accounts held by the parties. Money received into the joint accounts were due to very large transfers from the wife’s personal accounts.

The PNA defined Joint Property in the Preamble as property ‘where the legal title is held in both names’. Paragraph 2.9 of the Preamble stated that the parties intended to set up a joint bank account which would be regarded as Joint Property irrespective of either parties’ contributions made from time to time. The purpose of setting up the joint bank account was to cover all utility bills and general household expenses, and in the event of a divorce the account would be closed and the balance divided equally between them. The PNA provided for ‘Jointly Acquired Chattels’. Under para 22.4, chattels acquired jointly during the marriage would be divided between the parties in accordance with the financial contribution made by the parties respectively to the purchase or acquisition of the same.

H argued that by operation of para 2.9, all monies paid by W into the joint account had been rendered ‘Joint Property’, and so its subsequent use to acquire chattels meant that the financial contributions to their acquisition must be deemed to be equal and H was consequently entitled to share equally in their value by virtue of para 22.4. W’s position was that chattels purchased through the joint account did not fall under para 22.4 and become ‘Jointly Acquired Chattels’ because a party could purchase and solely own items using money emanating from a joint account (Re Bishop [1965] Ch 450). On this point, H correctly noted that a clear agreement or declaration between the parties could override any presumption to that effect, whether as a starting point or otherwise; [17]–[19]. In this case, H argued that the PNA expressly overrode and rebut any presumptions.

Decision

Cusworth J determined that the PNA set out the purpose of the joint account namely, the meeting of household bills and living expenses, for which contributions were to be deemed equal. However, when the account came to be used for other purposes, such as funding the acquisition of items which the parties had intended to be divided between them according to their actual financial contributions, the judge was satisfied that it could not have been the parties’ joint intention that the provisions relating to Jointly Acquired Property in para 22.4 would be effectively overridden by the provision regarding para 2.9. The fact that the money had been in the joint account would not necessarily be the only defining characteristic. Once the joint account was used for other purposes, such usage could be viewed as one of ‘administrative convenience’ and the parties’ prior agreement about the joint discharging of household bills would not apply to each and every transaction from the account. If the parties had intended otherwise, they could have acquired any chattels purchased with those funds in their joint names rendering them ‘joint property’. The fact that this was not done was significant.

The judge was satisfied that the intention of the PNA was that para 22.4 would relate to actual, as opposed to ‘deemed’ contributions. The judge determined that para 2.9 and para 22.4 were clearly both separate and opposite in their effect. Also, the use of the term ‘contributions’ or ‘financial contributions’ in both provisions was intended to connote actual rather than deemed contributions. On H’s case, this would involve deeming an actual financial contribution by him into para 22.4 by reason of the operation of para 2.9 when in fact he had made no such contribution. Finally, the provisions at para 22.4 were intended to address any unfairness arising if one party acquired chattels in their own name after the other had made an actual financial contribution to their acquisition. The provision was not intended to enable one party to claim a 50% share in an asset which is not held by them or jointly, and to the acquisition of which they made no actual contribution.