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11 Aug 2023 New insights regarding the interpretation of prenuptial agreements

Prospective spouses can regulate the property consequences of their marriage by having prenuptial agreements drawn up with a notary. However, the interpretation of prenuptial agreements is regularly the subject of litigation in divorce cases. In a recent judgment of the Court of Appeal of The Hague, the prenuptial agreements concluded between the parties were interpreted using the so-called "Haviltex measure"'.

Facts
The parties were married under a prenuptial agreement containing, in brief, a community of property to the exclusion of any other community of property and a periodic settlement clause. It is undisputed that during the marriage the parties did not implement the periodic settlement clause as included in the prenuptial agreement, which obliges the spouses to annually settle what remains of their income. Nor is it in dispute between the parties that there is a broad concept of income that also includes profits subject to corporate income tax.

The prenuptial agreement provides that in the event the marriage is dissolved by divorce, the value of the legal entity or entities in which the spouses have an (indirect) interest will be settled between the spouses. In this settlement, each will be entitled to half of the value. The parties note that when the marriage was entered into, the husband had an interest in a private limited company based in Amsterdam. Value means the distributable profits reserved in the company and what has been obtained by investing them with the understanding that financial contributions made by the relevant spouse from his assets to the legal entity are deducted from the amount to be set off. The financial contributions were set at one hundred thousand euros (EUR100,000) by the parties at the time of the marriage.

On appeal, the parties disagree on the interpretation of the term "value" in the prenuptial agreement.

The woman argues that the intention of the parties clearly follows from the prenuptial agreement, namely that the increase in the spouses' assets during the marriage would accrue to each of them for half, insofar as this increase was not the result of an acquisition under inheritance law or gift or of an increase in the value of goods brought by them to the marriage. This is a broad wording that includes the husband's assets in the form of participations and a fund. According to the wife, the court did not pay sufficient attention to the interrelationship of the provisions in the prenuptial agreement. A mere linguistic interpretation is not sufficient.

The husband disputes what the wife puts forward. He emphasised that it was an established fact that the shares in the private limited company had been introduced by him in marriage and that these shares had thus not been financed with surplus income. Set-off of the economic value under Article 1:141 (1) of the Civil Code is therefore out of the question.

Haviltex
For the interpretation of contracts, the so-called Haviltex judgment of the Supreme Court from 1981 is important. The main rule arising from this judgment is that when interpreting a contract, not only the literal text should be looked at, but also the intention of the parties and what they could reasonably expect from each other. Thus, not only the linguistic interpretation is decisive to determine what the parties agreed. The course of events at the conclusion of the agreement and the parties' mutual communications also play a role.

Judgment of the Court of Appeal
The court of appeal followed the husband's interpretation and, using the Haviltex standard, explains the meaning of the agreed prenuptial agreement:

"The court of appeal puts first and foremost that the interpretation of the prenuptial agreement concluded between the parties must take place using the Haviltex yardstick. This yardstick implies that even if in the interpretation of a contract great weight is attached to the linguistic meaning of the chosen wording, the other circumstances of the case may imply that a different (than linguistic) meaning must be attached to the provisions of the contract. After all, the decisive factor remains the meaning that the parties, in the given circumstances, could reasonably attribute to these provisions and what they could reasonably expect from each other in that respect. The manner in which they gave effect to the agreement is also relevant in this respect (see HR 5 April 2013, ECLI:NL:HR:2013:BY8101, NJ 2013/214 (Lundiform/Mexx)).

On the basis of the documents submitted and what was discussed at the appeal hearing, the court of appeal is of the opinion that the district court ruled and decided on the correct grounds as it did. The court of appeal adopts these grounds and, after its own consideration, makes them its own. No facts or circumstances have emerged on appeal that lead to a different decision. It is established that when the prenuptial agreement was concluded, the husband already held shares in the capital of the private limited company. This means that these shares were not acquired with excess income. (...) It appears that several discussions took place between the parties, whether or not in the presence of the notary. The prenuptial agreement was subsequently drawn up under the notary's guidance, with the parties also making their own adjustments to the draft deed, including the interpretation of the term 'value'. It follows that the parties deliberately considered the text of the prenuptial agreement. Given the aforementioned circumstances, the wife's interpretation of the parties' prenuptial agreement does not seem plausible to the court. After all, it would then have been obvious that the parties would have included things in that way in the prenuptial agreement."

Do you have questions or need advice on prenuptial agreements in cases of divorce? Then please feel free to contact one of our lawyers. We will be happy to assist you and keep you informed of further developments!

SPEE advocaten & mediation Maastricht

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