Pump Court Chambers

Marital agreements: individual autonomy and fairness

Blog 1st February 2017

There have been many significant developments in this area of the law in recent years, with a number of reported decisions dealing with marital agreements having been reported over the last year.

I have had my fair share of cases involving marital agreements, most recently concerning a separation agreement which the parties had entered into some 25 years ago, and which had largely been implemented. The husband had sought to argue that some, if not all, of the terms of the agreement should not be upheld, inter alia, on the grounds of fraud (he alleged that he had not signed the agreement, despite the overwhelming evidence to the contrary) and material non-disclosure. The wife (for whom I had acted) contended otherwise. The Court in that case was entirely satisfied that the parties had freely entered into a concluded separation agreement. It held that the terms had largely been implemented, and that fairness dictated that the parties should be held to their agreement. Unsurprisingly, the husband was ordered to pay the wife’s costs.

The judicial approach to marital agreements has certainly evolved since it was first set on its course in Edgar v Edgar [1980] 1 WLR 1410. A helpful overview of the significant developments in this area have been helpfully identified by Baker J in AI v MT [2013] 2 FLR 371.

One of the main developments to have emerged from the case law is the identification and elaboration of the concept of the “magnetic factor”, which in a particular case can be of magnetic importance in influencing or determining the ultimate outcome: Crossley v Crossley [2008] 1 FLR 1467.

As stated by the Supreme Court in Radmacher v Granatino [2010] UKSC 42 (paragraph 75):

“the Court should give full effect to a nuptial agreement that is freely entered into by each with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”.

Further, in T v T [2013] EWHC B3 (Fam), concerning an application by a husband to show cause why a separation agreement reached between the parties in 1991 should not be made an order of the court, Parker J stated thus (at paragraphs 22 and 23):

“…the importance of a freely negotiated agreement is of relevance and often of determinative relevance…clearly when people make an agreement like this it is a very important factor in considering what is the just outcome of the proceedings…what they themselves felt to be fair at the time when they made the agreement and that is as good a guide to justice perhaps as anything”.

Underpinning these developments of course is the Court’s increasing emphasis on individual autonomy, as exemplified in Radmacher. As Lord Phillips stated in that case (paragraph 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.”

None of the above of course undermines the duty of the Court to make its own independent assessment of the s.25 criteria and fairness. However, the weight now given to individual autonomy has necessitated a change to the approach to be adopted when the courts exercise the discretion conferred by the Matrimonial Causes Act 1973 and the assessment of “fairness”.

As enunciated in Radmacher, fairness needs to be seen in the light of the actual and foreseeable circumstances at the time when the court comes to make its order. Those circumstances include any marital agreement made between the parties, the circumstances in which that agreement was made, and the events which have happened since then. According to the Supreme Court, the test to be applied to such an agreement should be this (paragraph 169):

"Did each party freely enter into an agreement, intending it to have legal effect and with a full appreciation of its implications? If so, in the circumstances as they now are, would it be fair to hold them to their agreement?"

Further, as Charles J stated in V v V (Prenuptial Agreement) [2012] 1 FLR 1315 (paragraph 36):

“The new respect to be given to individual autonomy means that the fact of an agreement can alter what is a fair result, and so found a different award to the one that would otherwise have been made.”

In other words, the existence of an agreement can, in certain circumstances, affect what was fair and operate as a depressing factor in the Court’s assessment of a party’s needs: see also WW v HW [2015[ EWHC 1844 (Fam).

The other main development to have emerged is the now well-established abbreviated process adopted by the courts to facilitate swift judicial approval of agreements freely entered into. Where one of the parties seek to resile from an agreement, the courts have sanctioned the use of the “notice to show cause” procedure, as adopted in Dean v Dean [1978] Fam 161 and Xydhias v Xydhias [1999] 1 FLR 683, and more recently in S v S (Ancillary Relief) [2009] 1 FLR 254.

In such a case, the court could, in exercise of its case management powers, limit the ambit of the issues to be considered. The court would be under no duty to examine in detail the parties’ current financial circumstances in deciding whether the agreement is now fair.

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