Sharing or only Needs?

Despite the judgement of Baron J Radmacher v Granatino [2010] UKSC 42 at para 84 that

It is the court that determines the result after applying the Act. The court grants the award and formulates the order with the parties’ agreement being but one factor in the process and, perhaps, in the right cases, it being the most compelling factor.

The majority concluded

…a court should give effect to a nuptial agreement freely entered into by each party with full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement Para 75

An agreement that is but one factor the court will take into account is very different from an agreement the court will give effect to unless significant reasons are presented that show that the agreement should not be given effect.

However, the majority’s view would seem to create a legal presumption that a pre nuptial agreement, if fair, should be enforced? But that does not sit comfortably with Section 25 (1) MCA 1973 which provides that it shall be the duty of the court in deciding whether to exercise its powers, and if so in what manner, to have regard to all the circumstances of the case, first consideration given to the welfare while a minor of any child of the family.

And S 25(2) as regards the exercise of its powers the court shall in particular have regard to the following matters (a) – (f).

Since the Radmacher decision , and as noted by Lady Justice King at para 102 Brack v Brack [2018] EWCA Civ 2862 :

“It is undoubtedly the case that since the Supreme Court’s decision in Radmacher, and up to and including Roberts J judgement in KA v MA in March of this year (2018), the courts at first instance have resolved cases where there is a valid prenuptial agreement which does not meet the needs of the wife by interfering with the agreement only to the extent necessary to ensure that those needs are satisfied..” [my emphasis] which suggests a further self- imposed limitation on the discretionary exercise has arisen even in the face of unfair agreements.

The Brack case centred on a series of three pre nuptial agreements.

In first instance Francis J found that the 3 pre nuptial agreement were valid and that there were no vitiating factors; however, he found the pre nuptial agreements to be unfair and not sufficient to meet the needs of the wife and the children. In fact the judge found the agreement would “work unacceptable unfairness” and put the wife and the children in a “predicament of real need”.

However, due to a finding that there was a valid prorogation clause which restricted his jurisdiction to residual jurisdiction to determined “the rights of parties in property” only he found he was left with only limited jurisdiction within the financial remedies application that is to say deal with the parties strict property rights, by which the Wife was limited to her one half share of the matrimonial home and in those circumstances the judge was driven to make orders under Schedule 1 of the Children Act 1989 as the only way to make provision for the children. Further, the judge “felt himself to be in a straightjacket and that on the authorities, he was driven inexorably to conclude that he only had power to make a needs based order”.

The Brack appeal raised two issues

  1. Whether, on the facts of this case there was a valid maintenance prorogation clause in the agreements depriving the English courts of jurisdiction to provide directly for the needs of the wife in financial remedy proceedings, and
  2. Whether as a matter of general principle, where there is no MPC and a court has found there to be a prenuptial agreement with no vitiating factors which , however, fails adequately to provide for the needs of the wife and any children, is the court limited to making only such orders as will meet the wife’s needs.

On the first ground, the Court of Appeal found that there was no valid MPC. However, before remitting the matter back to a judge at first instance for a discretionary determination on the basis that absent the MPC this was a conventional financial remedy case where most if not all the assets have been accrued during the course of the marriage, the CA was asked to determined on the issue of the finding that having found the pre nuptial agreement was unfair the judge erred in directing himself that he was thereafter limited to making only such order as would satisfy the wife’s needs.

Per Lady Justice King“ In my judgement the judge did fall into error in going so far as to conclude that the effect of Z v Z (No 2) [2011] EWHC 2878 and Luckwell v Limata [2014] EWHC 502,meant that the wife had inevitable “lost” her sharing claim by reason of the prenuptial agreement”.

Even where there is an effective prenuptial agreement, the court remains under an obligation to take into account all the factors found in s25(2) MCA 1973, together with proper consideration of all the circumstances the first consideration being the welfare of any children.

Conclusion

Although the Appeal Court in Brack went on the underline the fact that whilst a court must in each case consider all the s25 factors, there is nothing which prevents a wife (or husband) from contracting out of sharing and, in such a case where there are no vitiating factors, the court may well in the exercise of its discretion interfere with the terms of the prenuptial agreement only to the extent necessary to provide for the needs of the wife and any children, Brack is a reminder that despite the existence of a valid pre nuptial agreement with no vitiating features, the judge is still in a position to exercise his or her broad discretion, to make such order as he/she deems to be fair in all the circumstances and must in each case consider all the s25 factors.

In respect to the effect on the courts search for a fair outcome the existence of a valid prenuptial agreement with no vitiating factors does not necessarily lead to a needs based outcome. Rather the existence is one of the factors to be balanced in the round.

The Brack decision serves yet again as a reminder, whatever the facts of the case, it is important to always go back to basics for the source of the courts’ jurisdiction, which in this case was the Matrimonial Causes Act, which can only be changed by Parliament.