Imagine signing a legal agreement on your wedding day that says: “If we split, we walk away with what we came in with—no claims, no drama.” That’s what’s known as a “drop-hands” agreement. It’s a type of pre-nuptial agreement where both parties agree not to make any financial claims against each other if the marriage ends.
Sounds simple, right? But what if one person hides most of their wealth before signing?
That’s exactly what happened in this case, and it’s a cautionary tale for anyone considering a pre-nup—especially when millions are at stake.
What is a drop-hands agreement?
A drop-hands agreement is a kind of pre-nup where both parties agree to “drop hands” and walk away with their own assets if they divorce. It’s meant to avoid long, expensive Court battles. But, for it to work, both sides need to be honest—especially about their financial circumstances, and any outcome to a drop-hands agreement is likely to have to be considered “fair” within the broad discretion of the family Court if that agreement is ever challenged.
The story behind the case
- The couple married in 2019 after 2 years of cohabitation.
- The wife came from a wealthy family, with personal assets of £60–70 million.
- The husband, a qualified accountant, had around £850,000 in capital assets and, although he had previously earned a salary of £120,000, was unemployed.
- On the day of their wedding in the Seychelles, they signed a pre-nup saying they’d each keep what they brought into the marriage.
- The agreement said both had made “full and frank” disclosure of their finances.
But the wife had only disclosed £18 million, leaving out £47.8 million in business and property assets. She said she left them out for “privacy” and “tax reasons,” and because she didn’t think they were really hers. But legally, they were.
What the High Court decided
At first, the High Court (Francis J) upheld the agreement. The Judge said:
- The husband knew she was wealthy.
- He had taken legal advice (even though his solicitor refused to sign off on the agreement).
- The omission of assets didn’t matter enough to throw out the agreement.
The husband was awarded £400,000—enough to cover two years of rent and some income, saying it would have been “wrong” under the terms of the agreement to make provision for the husband to purchase a house. The husband appealed.
What the Court of Appeal said
The Court of Appeal disagreed with the High Court and overturned the decision. Here’s why:
1. The wife’s non-disclosure was deliberate and fraudulent. She knew the assets were hers and chose not to disclose them irrespective of any tax reasons for doing so.
2. The agreement said both parties had made full disclosure. That was a factual promise, not just a polite phrase. An email from the wife, which the husband copied and pasted to his solicitors, stated that there was no need for financial disclosure, contradicting the pre-nup’s own terms and showing that the wife was actively trying to avoid transparency, despite the agreement requiring it.
3. The pre-nup was signed on the parties’ wedding day, raising concerns about pressure and a lack of time for proper legal advice. As a result of the time pressures and the lack of full and frank financial disclosure, whilst the husband had sought some legal advice, his solicitors had refused to sign the certificate to confirm he had been advised as they were entitled to do.
The Court said the agreement was vitiated—a legal term meaning it was undermined by fraud. It couldn’t be relied on. They remitted the case to the High Court for a fresh assessment of the husband’s financial needs, which will include his housing needs.
How Courts decide if a pre-nup counts
The law comes from this case, and it uses a two-step test:
Step 1: Was the agreement entered into freely?
- No pressure or duress and in good time (usually 28 days) before the marriage.
- No lies – full and frank financial disclosure. No misrepresentation or omissions.
- Proper legal advice.
Step 2: Is it fair to hold the parties to it?
- Does it meet both parties’ needs?
- Is anyone left in a bad financial position?
In the above Court of Appeal case, the agreement failed at Step 1—because of fraudulent non-disclosure.
What this means for you
If you’re thinking about a pre-nup—or already have one—this case shows how important it is to:
- Be honest about your finances.
- Ensure you both have time to get comprehensive legal advice.
- Avoid signing on the wedding day.
- Make sure the agreement is fair and realistic and meets both of your needs.
- Ensure that any pre or post-nuptial agreement is regularly reviewed and updated to ensure the Court is likely to continue to attach weight to it for the entirety of your marriage.
Comment
Pre-nups can be a smart way to protect your assets, especially in high-net-worth relationships. But they only work if both sides play fair and the agreement is entered into properly. As the case shows, hiding money or rushing the process can backfire.
How can we help?
Emma Davies is a Partner in our Family Law team, which is ranked in Tier One in the independently researched publication, The Legal 500.
Emma specialises in divorce and financial settlements, which involve complex issues and substantial assets. She also advises on pre- and post-nuptial agreements, cohabitation agreements and separation agreements, along with private law Children Act disputes. Emma is a qualified collaborative law and Resolution Together practitioner.
If you need further advice on the subjects discussed above, please contact us and we will be happy to discuss your circumstances in more detail and give you more information about the services that our family law solicitors can provide, along with details of our hourly rates and fixed fee services.
For more information or advice, please call Emma or another member of our team in Derby, Leicester or Nottingham on 0800 024 1976 or contact us via our online form.
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