CA-2024-000509 - [2025] EWCA Civ 1055

Radmacher made clear that, as a general proposition, disclosure of assets by each party is not a legal requirement in order for there to be a binding pre-nuptial agreement. It is important to appreciate that Radmacher was a case in which Lord Phillips referred to the husband as being “indifferent to detailed particulars of the other party’s assets”, and that no disclosure or representations of any description had been made as to the wife’s assets.

It must however follow from Lord Phillips’s first stage of the analysis, that if the parties to a pre-nuptial agreement agree that disclosure should be provided, and there is then either deliberate non-disclosure, or deliberate misrepresentation as to a party’s assets, the court must consider whether that vitiates or negates the agreement.

In Cummings v Fawn [2023] EWHC 830 (Fam); [2024] 1 FLR 117 (“Cummings”) Mostyn J considered non-disclosure in the context of a Xydhias agreement. Mostyn J observed at para. [9] that the only difference between “a prenuptial, postnuptial, separation or “Xydhias” type of agreement is the closeness in time of the agreement to the hearing that determines whether it should be upheld”. I agree with his view that the starting point should be the same whatever the type of the agreement.

In that case permission had been granted to appeal on a number of grounds, one of which was that the court had erred in its approach to the husband’s non-disclosure of an inheritance worth at least £4m net by concluding that it was ‘non operative’. The husband signed Forms D81 on two occasions with a statement of truth saying that he had made full disclosure of all the relevant facts. There was no mention of the inheritance with the consequence that Mostyn J observed at para. [59] that “The forms were not merely misleading: they were untrue.”

Mostyn J went on at para. [65] to discuss his earlier judgment in Cathcart v Owens [2021] EWFC 86; [2021] All ER (D) (Nov) (“Cathcart”) where he had said that deliberate non-disclosure is a “species or subset of fraud”. He explained that fraud and non-disclosure are separately identified as grounds for set aside under FPR PD 9A para 13.5 because there are some rare cases where material non-disclosure is inadvertent and therefore not fraudulent.

Mostyn J then dealt at para. [67] with the first stage identified by Lord Phillips in Radmacher (above), namely should non-disclosure result in the agreement being vitiated or set aside? He did so by reference to the Supreme Court decision in Sharland v Sharland [2015] UKSC 60; [2016] AC 871 (“Sharland”), a case where a husband had been dishonest as to the timing, and therefore the value, of his sale of his company. Mostyn J referred to the judgment of Baroness Hale at paras. [32]-[33] as follows:

“32.

There is no need for us to decide in this case whether the greater flexibility which the court now has in cases of innocent or negligent misrepresentation in contract should also apply to innocent or negligent misrepresentation or non-disclosure in consent orders whether in civil or in family cases. It is clear from Dietz and Livesey that the misrepresentation or non-disclosure must be material to the decision that the court made at the time. But this is a case of fraud. It would be extraordinary if the victim of a fraudulent misrepresentation, which had led her to compromise her claim to financial remedies in a matrimonial case, were in a worse position than the victim of a fraudulent misrepresentation in an ordinary contract case, including a contract to settle a civil claim. As was held in Smith v Kay (1859) VII HLC 749, a party who has practised deception with a view to a particular end, which has been attained by it, cannot be allowed to deny its materiality. Furthermore, the court is in no position to protect the victim from the deception, or to conduct its statutory duties properly, because the court too has been deceived. In my view, Briggs LJ was correct in the first of the three reasons he gave for setting aside the order.

33.

The only exception is where the court is satisfied that, at the time when it made the consent order, the fraud would not have influenced a reasonable person to agree to it, nor, had it known then what it knows now, would the court have made a significantly different order, whether or not the parties had agreed to it. But in my view, the burden of satisfying the court of that must lie with the perpetrator of the fraud. It was wrong in this case to place on the victim the burden of showing that it would have made a difference."

Mostyn J emphasised at para. [73] that the principles in Sharland should be applied rigorously where fraudulent non-disclosure is proved. He concluded as follows:

“[75] Therefore, where the court is dealing with an application to set aside a consent order, (or, as here, an application that a draft consent order should be rejected) on the ground of fraudulent non-disclosure, the court should not entertain any argument that the victim of the non-disclosure could, with due diligence, have discovered the material facts, and should apply stringently the principle that the consent order, and the underlying agreement, must be set aside unless the non-discloser can show by clear and cogent evidence that a reasonable person in the position of the victim of the deception would, if she had full knowledge of the facts, have reached the same agreement.”

I agree that a similarly stringent approach must be taken in a case of fraudulent non-disclosure in a prenuptial agreement.

Moreover, Baroness Hale’ reference to a reasonable person, should not be taken as imposing upon a victim of deceit a duty of due diligence. That this is case was made clear by the Supreme Court in in Takhar v Gracefield Developments Ltd and Others [2019] UKSC 13; [2020] AC 450; [2019] 2 WLR 984 at [63], where Lord Sumption observed,

“… the basis on which the law unmakes transactions … which have been procured by fraud is that a reasonable person is entitled to assume honesty in those with whom he deals. He is not expected to conduct himself or his affairs on the footing that other persons are dishonest unless he knows that they are. That is why it is not a defence to an action in deceit to say that the victim of the deceit was foolish or negligent to allow himself to be taken in: Central Railway Company of Venezuela v Kisch (1867) LR 2 HL 99, 120 (Lord Chelmsford); Redgrave v Hurd(1881) 20 Ch D 1, 13-17 (Jessell MR). It follows that unless on the earlier occasion the claimant deliberately decided not to investigate a suspected fraud or rely on a known one, it cannot be said that he “should” have raised it.”

In my judgment, these principles apply to a pre-nuptial agreement where a party has been guilty of fraudulent non-disclosure or fraudulent misrepresentation. If the misrepresentation was intended to cause the representee to enter into the agreement, the representor will have the burden of rebutting a strong evidential presumption that the misrepresentation played a material part in the decision of the innocent party to enter into the agreement: rebutting that presumption will require clear and cogent evidence.”