Ashley Murray
TIME FOR A LEGISLATIVE RADMACHER TYPE RESET TO THE JUDICIAL APPROACH TO PRE AND POST-NUPTIAL AGREEMENTS
1. Lord Philips in Radmacher v Granatino [2010] identified in the Majority decision (at para 75) that a validly completed agreement made between parties married or in contemplation of marriage was, when undertaking the s 25 (Matrimonial Causes Act 1973) ‘statutory exercise’ upon divorce distribution, ‘capable of altering what is fair’ and such an agreement is ’an important factor to be weighed in the balance’. Accordingly, within the same paragraph, His Lordship then set out the following now well-known approach to be applied to both pre and post nuptial agreements: –
‘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.”
2. At para 76, His Lordship, whilst being unwilling, lest a court’s discretion may thereby be limited upon the individual facts of any given case, to lay down rules as to when it may not be fair to hold parties to such an agreement, was however prepared to deliver ‘some guidance that we believe that it is safe to give directed to the situation where there are no tainting circumstances attending the conclusion of the agreement’.
3. His Lordship then gave five specific situations where a Court would be likely under the above approach to conclude either it was fair or unfair to hold the parties to such an agreement. Within that mix as outlined, His Lordship dealt with the impact of children (para 77), the autonomy of the parties (para 78), situations where there was non-matrimonial property (para 79), unforeseen circumstances arising (para 80) and the requirement to meet needs and compensation with the specific examples given of ‘one partner in a predicament of real need while the other has sufficiency of more’ or where one partner has looked after the home and family freeing the other to accumulate wealth which within an agreement is then retained by the latter (para 81).
4. At para 78 above, when dealing with autonomy, His Lordship stated:-
‘78. The reason why the court should give weight to a nuptial agreement is that there should be respect for individual autonomy. The court should accord respect to the decision of a married couple as to the manner in which their financial affairs should be regulated. It would be paternalistic and patronising to override their agreement simply on the basis that the court knows best. This is particularly true where the parties’ agreement addresses existing circumstances and not merely the contingencies of an uncertain future.’
5. Some 8 years later in Brack v Brack [2018] EWCA Civ 2862, it is suggested that King LJ, in delivering the unanimous decision of the Court of Appeal, broke ranks with what she acknowledged (para 102) had substantially been the interpretation by the courts of Radmacher to that time, namely that where there is a valid prenuptial agreement which does not meet the needs of one of the parties then the a court should interfere ‘with the agreement only to the extent necessary to ensure that those needs are satisfied’.
6. In doing so, on the one hand, Her Ladyship (at para 102) proceeded to further acknowledge that ‘in the ordinary course of events’ where the agreement was valid and
had effectively contracted one party out of a division of the assets based on sharing then ‘…a court is likely to regard fairness as demanding that she receives a settlement that is limited to that which provides for her needs’. But then, Her Ladyship’s assertion was that ‘whilst such an outcome may be considered to be more likely than not, that does not prescribe the outcome in every case’ – by reason of the fact that the Court still remains under a duty to consider the s 25(2) factors together ‘with all the circumstances’ of the case and the welfare of the children.
7. Her Ladyship thereby maintained that:-
‘….Such an approach may, albeit unusually, lead the court in its search for a fair outcome, to make an order which, contrary to the terms of an agreement, provides a settlement for the wife in excess of her needs. It should also be recognised that even in a case where the court considers a needs-based approach to be fair, the court will as in KA v MA, retain a degree of latitude when it comes to deciding on the level of generosity or frugality which should appropriately be brought to the assessment of those needs.’ (underlining the author’s emphasis).
8. The Court of Appeal in Brack at this juncture it is suggested intentionally undermined the importance of the parties’ autonomy as specifically addressed and emphasised by Lord Philips as above. It is further suggested that this has since led to a substantially more unpredictable outcome for parties in financial remedies proceedings where there exists a valid pre or post nuptial agreement where one party maintains that fairness related to the needs of the prevailing circumstances before the Court requires a different outcome.
9. Many financial remedies practitioners will over the last several years have noticed an increase in practice of cases involving such agreements within financial remedy claims and that it has become significantly more difficult to advise with any confidence on the likely willingness of the individual judge, once it is considered the agreement no longer caters for the prevailing needs of the weaker financial party, to simply adjust the agreement terms to make up the perceived needs deficit. Instead of the parties to pre and post nuptial agreements expecting a more conflict free resolution to which they signed up initially and thereby the saving of costs this wider approach following Brack is now arguably providing the opposite.
10. Indeed, where such nuptial agreements are involved, the recent repeated guidance on approach proffered by the national lead financial remedy judge, Peel J again lays particular emphasis on the exercise of the s25 discretion in the same terms identified by King LJ in Brack (see AH v BH [2024] EWFC 125 (para 42>) and HD v WB [2023] EWFC 2 (para 44>)). The justification being proffered is claimed to be Lord Philips’ reference in Radmacher to being unwilling ‘to lay down hard rules that would fetter the flexibility that the court requires to reach a fair result’ (see reference to Radmacher para 76 above).
11. It is suggested this is an awkward judicial avoidance at both lower court levels of what had been seen as the intended clear message for several years afterthe Supreme Court’s decision in 2010 of the importance of the parties’ autonomy within the s 25 exercise where the Court is considering a valid nuptial agreement. Indeed, when Lord Philips was addressing this specific area, as above, he sought to reflect in his analyses the limited type of needs or compensation which may still need to be recognised in such cases (again see para 81 above). In short, the current approach represents an unjustified rowing back of the principle and importance of autonomy laid down by the highest court in our jurisdiction.
12, It can be said that the recent plethora of financial remedy reported cases involving challenges to signed nuptial agreements appears on the contrary to reflect the healthy working of the original Radmacher guidance, including that relating to the autonomy of the parties, in that within the same are a number of examples of where the attempt to undermine the parties’ signed terms on the basis of prevailing needs has been rejected (see eg HHJ Vincent in HJB v WPB [2024] EWFC 187} ). Yet closer reading reveals challenges birthed out of facts, which immediately following Radmacher would arguably have received little legal advisor support to advance from the outset.
10. It remains to be seen if the pending Law Commission’s anticipated scoping report on ‘Financial remedies on divorce’ (https://lawcom.gov.uk/project/financial-remedies-on-divorce/) expected to be released shortly will specifically address any of these aspects. It appears, however, that until legislation is passed expressly recognising the importance of autonomy of the parties to agree the terms of any future division of their resources upon the breakdown of their marriage – the profession will increasingly struggle to reassure clients as to the eventual effectiveness of nuptial agreements.
Ashley Murray Chambers, Liverpool.
Ashley Murray is a co-author of ‘Cohabitation, Law Practice and Precedents’ (eighth edition) and, in particular, author of the 118 page Chapter on ‘Pre-Nuptial Agreements’.