Rosie Stewart considers the recent decision in Brack v Brack [2018] EWCA Civ 2862 in which the Court of Appeal held that a wife was entitled to claim a share of her husband’s £11m fortune despite signing three pre-nuptial agreements (PNAs) limiting the amount she would receive on divorce.

The husband and wife were both Swedish nationals who, as a consequence of the husband’s successful career as a racing driver, lived variously in the United States, Belgium and the United Kingdom. They were married from 2000 to 2014 and had two children together. At the time of the trial, the assets accumulated during the marriage were approximately £11m.

Prior to the parties’ marriage in December 2000 they entered into three separate PNAs in different locations around the world. The first and third agreements were effectively identical. The second agreement, entered into in Ohio, USA, was a more detailed agreement, which the wife signed despite clear legal advice at the time that the agreement was unfair to her.

First instance decision

The judge at first instance found that all three agreements were valid and that there were no factors that would undermine their effectiveness. He then went onto find that as the agreements failed to provide for the needs of the wife or the children they were not fair. However, the judge considered himself straitjacketed by case law with the effect that he only had the power to make a needs-based order.

The wife appealed, arguing that the judge had been wrong to restrict himself to meeting the wife’s needs only when making his award after finding that there was a valid, but unfair, agreement. (The wife also successfully appealed on another ground but that is not the focus of this article.)

Court of Appeal decision

The Court of Appeal agreed with the wife’s arguments and allowed her appeal. The court considered the effect of the PNAs and found that the judge at first instance had erred in concluding that, having determined there to be an effective PNA but which did not meet the wife’s needs, he was constrained to make an order limited to providing only for those needs. Lady Justice King noted that it was common ground between the parties that “the fact of a valid PNA does not necessarily (but may) lead inexorably to a solely needs based outcome”.

Lady Justice King’s leading judgment is very clear in its conclusion that whilst in most cases where a PNA has been entered into which excludes one party’s claim to share in the marital pot, it is likely to be fair that they receive a settlement limited to their needs. However, the judge went onto say: “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 PNA, the court remains under an obligation to take into account all the factors found in the relevant legislation, 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.”

The Court of Appeal, therefore, allowed the wife’s appeal and remitted it to the judge at first instance for further consideration. In concluding, Lady Justice King emphasised that she was “not advocating an award in excess of the wife’s needs” and anticipated the judge at first instance may well reach the same conclusion as before, that this is a needs case. The judge also encouraged the parties (who had by this stage been litigating for over three years) to seek a resolution of the case through either mediation or negotiation.

Conclusion

Partner, Richard Hogwood commented:

“The decision of the Court of Appeal in Brack v Brack serves as a useful reminder that no nuptial agreement can bind the English court and oust their discretionary powers. Even a valid pre-nuptial or post-nuptial agreement that meets each party’s needs cannot guarantee that the court will not extend beyond this and adopt a “sharing” approach. That said, some comfort should be taken from the Court of Appeal’s confirmation that it is “more likely than not” that the court will not do so.”