Prior to 2010, pre-nuptial agreements were not recognised as being enforceable under UK law, and there weren’t clear rules on the weight that should be attached to such agreements in financial remedy proceedings. Radmacher (Formerly Granatino) v Granatino [2010] UKSC 42, [2010] 2 FLR 1900 was a seminal case in the UK which concerned the principles to be applied when a court, in considering the financial arrangements after a divorce, has to determine what weight should be accorded to marital agreements made before the marriage. As King LJ stated in Versteegh v Versteegh [2018] EWCA Civ 1050, [2018] 2 FLR 1417:

‘Radmacher represented a “sea change” in the UK court’s approach to pre-marital agreements whereby, not only are pre-marital agreements no longer contrary to public policy, but where a party has a full appreciation of its implications, the court should now give effect to such an agreement, unless it would be unfair to do so.’

It is now inferred that parties who enter into pre-nuptial or post-nuptial agreements (‘nuptial agreements’) to which English law is likely to be applied, intend that effect should be given to the agreement and terms therein. Radmacher provided guidance on how nuptial agreements should be dealt with by courts in future cases.

Over a decade on, Radmacher remains a landmark case and the courts have continued to apply the guidance in cases involving nuptial agreements. This article explores where we are now by looking at recent cases involving nuptial agreements and to consider how the courts are finding the balance between freewill and fairness. The article begins by recapping the guidance derived from the Supreme Court in Radmacher. Second, it considers the relationship between nuptial agreements and the court’s aim to achieve fairness when considering the s 25 factors. Third, it discusses three recent cases that have involved nuptial agreements. The relevant factual background salient to the case is described, and the parties’ positions regarding the circumstances and weight to be attached to the agreement. The decision is explained to show how Radmacher has been applied, and to underscore the impact of the nuptial agreement on the award made by the court. The article concludes by reflecting on some of the practical implications of the decisions.

The Radmacher guidance on nuptial agreements

The Supreme Court decision in Radmacher changed the way nuptial agreements are dealt with by the English courts in financial remedy proceedings. In giving the majority opinion, Lord Phillips confirmed the proposition advanced in MacLeod v MacLeod [2008] UKPC 64, [2009] 1 FLR 641 which is to be applied in cases of both pre-nuptial and post-nuptial agreements. He stated that:

[t]he court should give effect to a nuptial agreement which 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.’1

This can be considered as the fairness test and reflects the current law on nuptial agreements. Though nuptial agreements are valid, the presence of any of the standard vitiating factors of duress, fraud or misrepresentation will negate any effect the agreement might otherwise have, as well as ‘unconscionable conduct such as undue pressure (falling short of duress) which will likely eliminate the weight to be attached to the agreement’2.

The test was summarised in Kremen v Agrest (Financial Remedy: Non-Disclosure: Postnuptial Agreement) [2012] EWHC 45 (Fam), [2012] 2 FLR 414.3 In determining whether the parties had freely entered into an agreement with a full appreciation of its implications, the question is whether in that case, there was a material lack of disclosure, information, or advice. There is no black and white rule for full disclosure or independent legal advice. However, it is important that each party has all the necessary information that is material to their decision that the agreement is to govern the financial consequences following the breakdown of their marriage. It is often the case that one party seeks to challenge the nuptial agreement on the basis that in the circumstances prevailing at the time it would be unfair to hold them to the terms of the agreement.

Guidance on the circumstances in which it will be unfair to hold the parties to their nuptial agreement were provided in Radmacher. Generally, the unfairness will depend on the facts of the particular case. Nuptial agreements cannot be allowed to prejudice the reasonable requirements of any children of the family.4 The decision of a married couple as to the manner in which their financial affairs should be regulated should be respected.5 As Lord Phillips said at para [88], ‘It would be paternalistic and patronising to override their agreement simply on the basis that the court knows best’, particularly where the agreement addresses existing circumstances such as protecting property acquired or owned prior to the marriage. Post-Radmacher the courts have given respect and a clear ‘nod’ to the principle of personal autonomy when considering fairness. In BN v MA (maintenance pending suit: prenuptial agreement) [2013] EWHC 4250 (Fam) Mostyn J emphasised the importance of the principle of personal autonomy when the court is asked to consider nuptial agreements. At para [28], Mostyn J stated:

‘The principle of autonomy is, in my view, extremely relevant. In many cases . . . the parties entering into the agreement are sophisticated, highly intelligent and have the benefit of the best legal advice that money can buy. When in those circumstances they have thrashed out an agreement, which they have both then freely signed, in my view, heavy respect should be accorded to that decision. The question of autonomy is particularly relevant where the agreement seeks to protect premarital property. This is clear from paragraph 79 of Granantino v Radmacher, and in this case that is exactly what the agreement was intended to achieve.’

In addition, it is likely to be unfair to hold the parties to an agreement where it leaves a former spouse in a predicament of ‘real need’, while the other enjoys a sufficiency or more (Radmacher, per para [81]). In Ipekci v McConnell [2019] EWFC 19, [2019] 2 FLR 667, Mostyn J provided a succinct analysis of the phrase at para [27(iv)]:

‘I do not take the language used by the Supreme Court, namely “predicament of real need” as signifying that needs when assessed in circumstances where there is a valid prenuptial agreement in play should be markedly less than needs assessed in ordinary circumstances. If you have reasonable needs which you cannot meet from your own resources, then you are in a predicament. Those needs are real needs.’

It is also likely to be unfair where the agreement leaves in the hands of one spouse rather than the other the most part of a fortune which each spouse has played an equal role in their different ways in creating. For example, where one partner has devoted their time to care for the family and the home, and the other has been free to accumulate wealth, it is likely to be unfair to hold the parties to an agreement that entitles the latter to all that they have earned. However, where each party can meet their needs, fairness may not require a departure from the nuptial agreement (KA v MA (Prenuptial Agreement: Needs) [2018] EWHC 499 (Fam), [2018] 2 FLR 1285, at para [67]).

Nuptial agreements and s 25 of the Matrimonial Causes Act 1973

Parties cannot, by agreement, oust the jurisdiction of the court. Per Holman J in Luckwell v Limata [2014] EWHC 502 (Fam), [2014] 2 FLR 168 at para [130], it is the court, and not the parties, that decides the ultimate question of what provision is to be made. It follows that in every case there must be an analysis of the s 25 factors to a greater or lesser degree, depending on the facts of the case (S v S (Ancillary Relief) [2008] EWHC 2038 (Fam), [2009] 1 FLR 254). Consideration of the agreement, including the appropriate weight to be attached, will be considered as part of ‘all the circumstances of the case’ within the meaning of s 25(1). The weight to be attached may be anything from slight to decisive in appropriate cases, and the weight may be enhanced or reduced by a variety of factors.6 For example, in Ipekci, no weight was attributed to the prenuptial agreement, inter alia, as it did not meet any of the husband’s needs, he had no legal advice at all about the implications of the agreement and therefore could not have had a full appreciation of it, and the agreement suffered a fatal defect under New York law which would have afforded no weight to it.

The overarching aim remains to achieve fairness in accordance with s 25 as explained by the House of Lords in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24, [2006] 1 FLR 1186 in light of the three strands, which are needs, sharing and compensation (see also Luckwell v Limata (above)). However, the courts discretion is not limited to making a needs-based award alone. This was highlighted in Brack v Brack [2018] EWCA Civ 2862, [2019] 2 FLR 234 which concerned an appeal by the wife against a decision by the judge to make a needs-based award only where he felt ‘straight-jacketed’ by the existence of a valid prenuptial agreement, as well as issues surrounding a prorogation clause in the agreement which sought to give Swedish courts exclusive jurisdiction for pursuing maintenance. In Brack, the Court of Appeal concluded that the judge ‘fell into error in concluding that, having found there to be an effective prenuptial agreement which did not meet the wife’s needs, he was thereafter constrained to make an order limited to providing for those needs’. Per King LJ at para [103]:

‘In my judgment, in the ordinary course of events, where there is a valid prenuptial agreement, the terms of which amount to the wife having contracted out of a division of the assets based on sharing, 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 whilst such an outcome may be considered to be more likely than not, that does not prescribe the outcome in every case. Even where there is an effective prenuptial agreement, the court remains under an obligation to take into account all the factors found in s 25(2) MCA 1973, together with a proper consideration of all the circumstances, the first consideration being the welfare of any children. 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.’

The way in which the courts have continued to apply Radmacher and find the balance between fairness and freewill in cases involving nuptial agreements is considered in below in a few recent cases.

Post-Radmacher cases

WC v HC

WC v HC (Financial Remedies Agreements) (Rev 1) [2022] EWFC 22, [2022] 2 FLR 1110 involved a family that lived an affluent life between the UK and Switzerland largely assisted by the husband’s family wealth. In determining the appropriate financial award, Peel J considered the weight to be attached to a pre-nuptial agreement and a post-nuptial agreement. Almost all the total assets of £12.47m originated from gifts and inheritances from the husband’s family or were owned by him prior to the marriage. Peel J was not required to strictly delineate between the matrimonial and non-matrimonial assets as both parties approached the case principally by reference to needs. The parties entered and fully executed the pre-nuptial agreement at the behest of the husband’s father. Had the agreement not been signed the marriage would not have taken place. The pre-nuptial agreement had been overtaken by events. The post-nuptial agreement provided the wife with approximately 56% (£7.1m) of the total assets plus child maintenance.

The wife decided not to sign the post-nuptial agreement, but her solicitor signed a certificate confirming that the wife had received independent legal advice on the agreement and that the terms were approved. Both agreements recorded the parties’ clear intention to exclude the husband’s dynastic assets, including inheritance which might be in excess of €100m. In proceedings, the wife argued that the post-nuptial agreement should be disregarded as she was placed under undue pressure. Further or alternatively, the agreement should be ignored as she did not sign it. The husband offered the wife £7.15m (57%) which was broadly consistent with the post-nuptial agreement. The wife initially sought £10m and then increased this to £10.6m in her last open proposal, which included a Duxbury fund of £3.4 m (circa £155,000 pa).

The judge found that whilst both parties were under pressure from the husband’s father to enter the pre-nuptial agreement, such pressure did not amount to ‘undue pressure’ and there was no reason to ignore the agreement. Peel J’s comments reaffirm the Radmacher principle that absent undue pressure, nuptial agreements will not be discarded. At para [31] Peel J stated:

‘In almost every Pre or Post Marital Agreement one or other, or both, parties are under a degree of pressure, and emotions may run high. The collision of the excitement engendered by prospective marriage, and the hard realities of negotiating for the breakdown of a such a marriage, can be acutely different for parties. Tension and disagreement may ensue. If, as here, one side of the family is applying pressure, the difficulties are accentuated. But in the end, each party has to make a choice and unless undue pressure can be demonstrated, the court will ordinarily uphold the agreement. In my judgment, W cannot so demonstrate here.’

In considering the post-nuptial agreement, Peel J stated that a more ‘powerful argument’ was that the wife had not signed the agreement. This was particularly the case as the agreement specified that ‘this Agreement shall come into force on the date upon which the last of [H] and [W] signed the Agreement’. An agreement will normally take effect once signed by both parties, but there may be circumstances in which parties would be bound by an unsigned agreement (BN v MA [2013] EWHC 4250 (Fam)). Some of the circumstances include agreements reached in correspondence without the requirement for signatures, or where parties consider themselves bound by the agreements and act accordingly without providing signatures. Having considered this, at para [40] Peel J held:

‘I am satisfied that it is not a formally arrived at agreement in the Radmacher sense, whereby the presumption is that it should be given effect to unless in the circumstances it would not be fair to hold W to its terms. In other words, I decline to find that it binds W unless she can demonstrate it operates unfairly.’

Nonetheless, the fact of the agreement could not simply be ignored or discarded as both parties reached an agreement with legal advice and full disclosure, and therefore the agreement could be taken into account as part of all the circumstances of the case as required under s 25. The agreement consequently carried some weight. In the final analysis, the wife’s income and capital needs required an award of 60% of the total assets (£7.45m). Whilst the agreements were not determinative of the outcome, the fact of both agreements was relevant as per Radmacher as the eventual award received by the wife was only slightly adjusted to meet her needs, which fell well short of her claims by some £3m.

A costs order in the sum of £150,000 was also made against the wife for various reasons, including her litigation conduct and failing on her case that her needs included a second home in Switzerland, which was the main difference between the parties’ needs cases (WC v HC [2022] EWFC 40). This highlights the importance of parties adopting a sensible approach to court proceedings or they may face costs consequences, as did the wife in Traharne v Limb which is discussed below.

Traharne v Limb [2022] EWFC 27

In this case, the weight to be applied to a post-nuptial agreement was considered in circumstances where the wife alleged that she was subjected to coercive and controlling behaviour perpetrated by the husband, which meant that she was unable to freely enter into the agreement. The terms of the post-nuptial agreement provided for the husband to discharge the mortgages on the wife’s two properties. The wife was advised by her solicitors not to agree to the post-nuptial agreement without full disclosure, and that in any event it would not be in her interests to do so, particularly if the marriage were to endure for many years. Following separation, the court was concerned with an application by the husband for the wife to show cause why she should receive an award more than the terms of the post-nuptial agreement. At the time of trial, the total assets were a little over £4m although they had been severely depleted by legal costs in excess of £650,000.

The wife’s case was that the post-nuptial agreement had been vitiated by the husband’s coercive and controlling behaviour towards her, but in any event the agreement did not meet her needs and her sharing claim was equal to or greater than her needs claim. The husband denied the wife’s allegations and argued that in any event, it did not matter if those allegations were true as there was no causal connection between the allegations and the wife’s state of mind when she entered the agreement. He also argued that the terms of the agreement met the wife’s needs, there was no sharing claims and any needs award would be modest. The husband’s open offer was to pay the wife £305,685, and the wife sought a lump sum of £1.5m and pension sharing order of 14.3% of the husband’s pension.

It was found that the wife was under pressure at the time she entered into the agreement, however, such pressure was self-created. Sir Jonathan Cohen held that coercive and controlling behaviour plainly fell within the Edgar criteria which could vitiate a nuptial agreement, but this was not borne out on the facts of this case. The agreement did not meet the wife’s long-term income needs, and there appeared to be an acceptance of this by the husband at the time of the agreement. In the circumstances, the exploration of the wife’s allegations was unnecessary given the costs spent on running a conduct case.

In testing the fairness of the agreement, the court was satisfied that the parties were unlikely to have intended that one partner would be left in a predicament of real need, applying Radmacher, and that, if this was the result, it would likely to be unfair to hold them to the agreement. The wife’s sharing claim was deemed unsustainable as nearly all the assets were either pre-owned by the husband or were acquired from pre-marital funds. The wife’s needs (excluding her costs liability) were assessed as requiring the husband to pay £378,545 to include an income fund made up of £293,261 capital plus a 12.1% share of the benefits in the husband’s pension accrued during the marriage. The wife’s cost expenditure of £403,150 was criticised as ‘woefully excessive’ considering the assets. In light of the wife’s misconceived conduct argument, unarguable sharing claim and failure to respond constructively to the husband’s realistic open offer, the wife was left with a costs liability of circa £80,000.

SC v TC [2022] EWFC 67

In this financial remedies case, HHJ Hess was concerned with a post-nuptial agreement whereby the husband, in the face of a foreshortened life expectancy caused by Parkinson’s disease, voluntarily relinquished his clear entitlement both to sharing and a needs-based award. During the marriage, the husband visited a sex worker and later confessed this to his wife. The wife agreed to remain in the marriage if the husband entered into a post-nuptial agreement, which would give her 80% of the assets of approximately £5.8m, irrespective of their ages or medical conditions at the date of the marriage breakdown. The husband’s solicitors strongly advised him at the outset not to enter into the agreement as it was unfair, but he insisted, stating that ‘given my Parkinson’s it makes no sense for me to have any assets in the long term’, and that he would rely on state support to meet his future care needs. The marriage broke down and the wife issued a notice to show cause why the husband should not be held to the terms of the agreement. The wife’s case was that the agreement was determinative. The husband argued that the agreement carried no weight, and whilst he needed more than 50% of the assets to meet his housing and future needs, a fair outcome was equal division. By this time, the husband lacked litigation capacity and was represented by a litigation friend.

The fairness of the agreement was tested in light of the husband’s needs. The court found that the agreement had some features which placed it firmly into the category to which the court should attach weight, as there was financial disclosure, legal advice, and highly intelligent parties who knew what they were doing. Nonetheless, HHJ Hess determined that the agreement was very much to his disadvantage in financial terms, and at the time the agreement was signed the husband was a vulnerable person and the wife ‘rather took advantage of that vulnerable situation to gain a substantial financial advantage’ not ‘in “formal legal terms”, [but] rather considering all the circumstances as they affect each of two human beings in complex relationship of marriage’.

In searching for fairness, consideration was also given to how the husband’s wish to have no money to meet his needs arising out of his medical condition should be approached, and whether this was any different from a person (such as Mr Granatino) who gives away the possibility of sharing in pre-marital assets to secure the commencement of a marriage. Per para [32 (ii)] the judge rejected ‘as unfair any suggestion that the agreement’s invitation to ignore medical condition should be treated as overriding the requirement for the court to make an assessment of need’. In line with Radmacher, upholding the agreement would leave the husband in a predicament of real need, conceivably with inadequate housing and/or running the risk of him having no choice but to go into a care home. Although he anticipated this when signing the agreement, this was undermined by the question marks over his decision-making ability at that time. The husband’s needs were assessed at £1.85m to rehouse plus a further c£1.6m to fund his care costs. To meet those needs, he would require more than 50% of the total net assets, but the court agreed with his concession that he could manage on an equal split.

Concluding remarks

The following points can be drawn from the above cases. First, nuptial agreements are but one factor to be considered by the courts when exercising its own discretion in financial remedy proceedings. Thus, whilst parties should assume that the court will give effect to their agreements, none of the agreements were found to be determinative of the outcome in the three cases discussed above. Second, no nuptial agreement is watertight. In each of the cases the parties instructed leading matrimonial finance firms to assist in the preparation and negotiations of their nuptial agreements. The cases state that there was full disclosure on both sides, the parties received sound legal advice, and they had a full understanding of the implications of the agreement that was being signed (save for WC v HC whereby the wife did not sign the agreement).

Third, in the above cases the party that sought to go behind the agreement obtained a better outcome due to needs, even though the court has a wide discretion. They also show that the question of fairness will be determined at the time the agreement is to take effect, by which time parties’ circumstances and needs may have changed. It follows that parties and their lawyers should consider reviewing agreements and ensuring they are still appropriate in light of the parties existing circumstances, and what their long-term needs are likely to be. Indeed, what the parties consider meet their needs and is fair at the time the agreement is signed may not be appropriate or achieve fairness at the time that the parties seek to rely on it. Legal practitioners should do the best they can to ensure that the terms of any agreement are such that they will stand the greatest chance of being upheld.

Finally, parties and lawyers should be aware of the financial consequences of setting their sights too high or running a case that is misconceived or simply unarguable. In Traharne, the wife’s legal fees were significantly greater than the husband’s in running a conduct argument, which took two days and added nothing to the overall outcome. The judge stated that it would have been sensible for the wife to argue that holding her to the terms of the agreement would be unfair as it failed to meet her long-term needs, a view which the court also shared. Thus, it highlights the importance of sensibly reflecting on what arguments to run at trial.