Brack v Brack

This is an appeal from an order made by Mr Justice Francis, on 22 December 2016, in financial remedy proceedings.

The case centred on a series of three prenuptial agreements made between Dominica Brack (the wife), and Per Cenny Brack (the husband) in 2000. The judge found that, although there were no vitiating factors which would militate against the agreements being effective, the terms of the agreements were unfair in that they failed to provide for the needs of either the wife or the children of the marriage.

The judge also held that the prenuptial agreements contained a prorogation clause, the effect of which was to give exclusive jurisdiction in respect of the parties’ maintenance obligations to the courts of Sweden (maintenance obligation includes all “needs” including housing). The judge held, however, that he retained residual jurisdiction to determine the “rights of the parties in property”.

The judge went on to hold that, as “needs” had been prorogated to Sweden by virtue of the maintenance prorogation clause (“the MPC”), he was prohibited from making orders under the Matrimonial Causes Act 1973, other than in relation to strict property rights, even in relation to the unmet needs.

The judge accordingly attempted to make up the shortfall in the wife’s needs by way of:

An order for sale of the jointly owned matrimonial home pursuant to section 17 Married Women’s Property Act 1882.

Orders under Schedule 1 Children Act 1989 whereby (a) the husband was to provide a property, up to the value of £2m, as a home for the children until they cease full time education, whereupon the wife’s right to occupy the property would cease; (b) £35,000 towards the cost of a car for the wife; (c) child maintenance and a carer’s allowance of £95,000pa.

The appeal raises two issues:

On the facts of this case, was there a valid MPC in the agreements, or any of them, depriving the English courts of jurisdiction to provide directly for the needs of the wife in financial remedy proceedings?

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?

The husband and wife are Swedish by birth and nationality. They were married on 29 December 2000, having lived together for 6 years. The marriage broke down in 2014.

During the course of the marriage, the family lived variously in the United States, Belgium, and most recently, in the United Kingdom.

The husband was a racing driver. He achieved considerable success on the United States IndyCar circuit before a serious crash in October 2003 effectively brought his racing career to an end. Since his accident, the husband’s principal source of income has been from the active management of his substantial asset portfolio.

Following the birth of the children, the wife was the homemaker. Other than her half share in the former matrimonial home, the wife has no assets in her own name and has debt, some of which is owed to the husband consequent on his having lent her £95,000 towards her legal costs (and upon which he charges interest at 5% per annum). That £95,000 has proved to be but a drop in the ocean. In the 4 years since their separation, the parties have spent in excess of £1m in legal fees in relation to the financial remedy proceedings, with further significant costs being incurred in relation to the arrangements for the children. By the time of trial, the wife was in debt to the tune of £350,000.

Each of the parties have made equal, but different, contributions to the marriage. At the time of trial, the assets accumulated during the duration of the relationship, amounted to a little under £11m; £1.8m of which represents the net equity in the former matrimonial home.

Having set out the background, which is relatively conventional in terms of the parties’ respective contributions, the judge said:

The two “significant issues” to which the judge referred were:

The impact of the three prenuptial agreements; and

Whether there was an effective MPC for the purpose of Article 4 of Council Regulation (EC) No 4/2009 of 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations (the Maintenance Regulation). The effect of an Article 4 MPC, if valid, would be that all issues in relation to maintenance were within the exclusive jurisdiction of the Swedish courts.

In order to determine the issues, it was necessary:

In respect of the prenuptial agreements, for the judge:

to hear evidence and to make findings of fact in relation to the agreements and, in particular, to determine whether any of the standard vitiating factors of duress, fraud or misrepresentation were present, or whether there was pressure or exploitation of a dominant position by the husband which would serve to negate the effect of any agreement (Radmacher v Granatino [2010] UKSC 42, [2011] 1 AC 534 (Radmacher) [71]). In the present case, the wife alleged that the husband had obtained her signature on each of the agreements by misrepresentation;

In the event that no vitiating factors were present, to decide whether the agreements were “fair” and to what extent the court should give effect to the agreements in question.

In respect of the purported MPC, the judge had to decide whether there was, on the facts of the case, a prorogation clause valid under European law. This issue was and remains, a matter of construction and required no specific findings of fact.

Each of the documents was signed and dated by both the husband and wife.

At the time of the signing of the Niagara agreement and prior to the marriage, the husband and wife were living in the United States, where the husband was pursuing his racing career. On 11 December 2000 (18 days before the marriage), the second in time of the three agreements (“the Ohio agreement”) was entered into by the parties. This document was a far more lengthy and detailed document than either the Niagara or Gothenburg agreements, and was wide-ranging in its prenuptial terms covering, by way of example; pensions, taxes and medical expenses, as well as (at Clause 12) the issues that would arise upon “Termination Of The Marriage”. The wife received clear, legal advice that she should not sign the agreement on the ground that it was unfair, but, notwithstanding that advice, decided that she wished to do so.

Clause 12 of the Ohio agreement dealt with, inter alia, how the matrimonial home should be divided, and made financial provision for the children. Significantly for the purposes of this appeal, within Clause 12 is found the following provision:

A number of recitals precede the main body of the Ohio agreement, and a number of general provisions are found at the end of the document at Clause 19. These recitals and provisions together provide the context for the prenuptial agreement. So far as are relevant for the purposes of this appeal, the following recitals are of importance:

Having heard both parties give evidence, the judge found the husband to be “cold”. The approach of the husband towards both the wife and the prenuptial agreements (with the consequent financial “knock-on” effect upon their children) was, the judge said, “both mean-spirited and mean”. Notwithstanding this however, the judge found the husband to be honest and truthful, and preferred his recollection of the circumstances surrounding the signing of the agreements to that of the wife. Where the judge had doubts as to whom to believe, he found those doubts to be resolved in favour of the husband. Having made this critical finding of credibility, the judge went on:

In respect of the consequences of the prenuptial agreement, if implemented with complete rigour, the judge said:

The judge, having made findings favourable to the husband as to the validity of the prenuptial agreements, moved on to tackle the issue of the prorogation clause. Until such time as the judge had determined whether there was, or was not, a valid MPC, he was unable to decide whether the English courts’ jurisdiction in the financial remedies case was in any way constrained and, if so, to what extent.

In his judgment, the judge set out the critical terms recited above from the Niagara and Gothenburg agreements before going on to set out the relevant recitals from the Ohio agreement. The judge dealt with the matter briefly over two paragraphs, making no reference to either Clause 19 (identifying Sweden as having jurisdiction) or to Clause 12 (the clause whereby the wife waived any rights to maintenance for herself). The judge identified that the validity of a prorogation clause required consideration of Article 4 of the Maintenance Regulation which provides (so far as is relevant):

The judge went on to analyse the validity of the prorogation agreement as follows:

On my reading of the latter part of [44], it would appear that the judge had formed the view that the Swedish agreements in themselves contained a valid prorogation clause, both as to property and maintenance. The judge concluded by holding that the effect of the prorogation clause was that Article 4 was engaged, and that accordingly, the court’s jurisdiction to make orders for maintenance was excluded. The judge was “clear” that, as a consequence, the court’s jurisdiction was now confined to dealing with “rights in property arising out of a matrimonial relationship”.

The reference by the judge to “rights in property arising out of a matrimonial relationship” (whilst not set out by him in the judgment) is a reference to Article 1, an Article most recently found in Council Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels recast); but which can be traced back, in identical terms, through Council Regulation (EC) No.44/2001 of 22 December 2000 on jurisdiction and recognition and enforcement of judgments in civil and commercial matters (Brussels 1) and in its original form in the Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters 1968 (the 1968 Brussels Convention). It was the 1968 Brussels Convention that was the applicable convention at the date the agreements between these parties were signed; Brussels 1 not having come into effect until 1 March 2002.

Article 1 provides that in respect of jurisdiction, recognition and enforcement:

It follows that England retains its domestic law jurisdiction in relation to “rights in property arising out of a matrimonial relationship” (Article 1), regardless of the terms of any of the three agreements, and that only maintenance (needs) can be prorogated (Article 4).

At trial and on appeal in the Respondent’s notice, Mr Pointer QC, on behalf of the husband, submitted that the judge was wrong in law, having concluded the MPC to be valid, to conclude that he was thereafter entitled in an English divorce to make, or consider making, an award based on the so-called sharing principle because:

It follows Mr Pointer submitted that, where the court is limited to making orders for rights in property arising out of a matrimonial relationship, in English law that permits the court only to make declaratory orders of existing property rights.

The judge rejected Mr Pointer’s submission, holding that the wife was making (subject to the prenuptial agreement) a claim for a fair share of the assets of the marriage and that those assets were “rights in property arising out of a matrimonial relationship”. That conclusion cannot be faulted in the light of the judgment of Lord Justice Thorpe in Moore v Moore [2007] EWCA Civ 361 at [71].

The judge rightly concluded that an effective MPC would deny him jurisdiction to make an award by reference to the needs of the wife (per the decision of the ECJ in Van den Boogaard v Laumen [1997] 2 FLR 399 at [21] – [23]), but that he retained residual jurisdiction over “rights in property arising out of a matrimonial relationship” which rights, he held, included jurisdiction in respect of the wife’s “sharing” claim and the parties’ “strict property rights” saying:

The judge, having made findings on the evidence and considered the law in respect of the MPC, had the following elements in play as he came to determine what orders were open to him to make:

There was a valid MPC which governed the jurisdiction in respect of the husband’s maintenance obligations.

There was a prenuptial agreement in respect of which there were no vitiating features which (on the face of it) would serve to undermine its effectiveness.

Giving effect to the agreement in full would, however, “work unacceptable unfairness” and put the wife and children in a “predicament of real need”.

The judge retained jurisdiction in respect of the “rights in property arising out of a matrimonial relationship”. Those rights, he held, excluded needs (consequent upon the MPC) but included any “sharing” claim made on behalf of the wife.

The judge decided that absent an MPC, where assets were available, the needs of the wife should be met by “invading the husband’s separate property” [60]. The judge did not make a finding by reference to the terms of any of the agreements that the wife’s claims to sharing had, on the facts of the case, been “negated”, but rather went on to hold that he was constrained to approach the present case solely on a “needs” basis, as a result of the decisions in Z v Z [2011] EWHC 2878 and Luckwell v Limata ( Luckwell) [2014] EWHC 502; [2014] 2 FLR 168, two prenuptial agreement cases where there were no vitiating factors, and where the courts had excluded sharing and made orders limited only to meeting the reasonable needs of the wife.

The judge, therefore, believed that so far as the prenuptial agreements were concerned, upon a proper application of the authorities to his findings of fact, he was deprived of the ability to make any order which went beyond provision for the needs of the wife, notwithstanding his earlier view as to the extent of the wife’s rights in property arising out of a matrimonial relationship (set out at paragraph 33 above). Once the MPC, which the judge had found to be within the agreements, was factored in, the judge concluded that he was unable to make even a needs-based order. The judge therefore considered that he was left with only limited jurisdiction within the financial remedies application, that is to say to deal with the parties’ strict property rights, by which the wife was limited to her half share in the former matrimonial home. In those circumstances, the judge was driven to make orders under Schedule I of the Children Act 1989 as the only way to provide for the children of the family.

By ground 1, the wife submits that the judge made a fundamental error of law as to the effect of the prenuptial agreements. It is submitted that the judge took the “legally incorrect” view that, where a prenuptial agreement is found to be unfair, he was thereafter precluded from making an award in favour of the wife (save one based upon her needs). The essential ground is expanded by Mr Chamberlayne in this way:

Ground 2 of the appeal goes to the validity, or otherwise, of the MPC. It is said that the judge wrongly concluded that there was a valid MPC preventing him from making any award in the wife’s favour based upon her financial needs.

This court took the view on appeal, as had the judge at first instance, that logically the first question to be answered is that posed by Ground 2, that is to say, whether there is, or is not, a valid MPC. Absent the MPC, the case reverts to being a conventional financial remedy case where most if not all of the assets have been accrued during the course of the marriage, but where there is a prenuptial agreement in respect of which the judge has made specific findings of fact. Such a discretionary determination is a task to be undertaken by a judge at first instance and not by this court. On this basis, Mr Chamberlyne QC, on behalf of the appellant wife and Mr Pointer QC, on behalf of the respondent husband, were each invited to make their submissions in respect of the MPC before any consideration was given to the effect of the prenuptial agreement and Ground 1.

It is common ground (confirmed by agreed expert evidence), that under Swedish law, neither the Niagara nor the Gothenburg agreements are in fact enforceable in Sweden, either in respect of the prenuptial agreement element, or the prorogation agreements contained in them. This is because prorogation clauses concerning matrimonial property (as opposed to maintenance) entered into prior to a matrimonial dispute are not enforceable under Swedish law. Further, in relation to the separation of property agreement, Swedish law requires that to be valid it must be entered into in contemplation of or after the start of divorce proceedings. These agreements were signed before the marriage.

There is some dispute between the parties as to exactly what Mr Pointer’s position was at first instance, but it matters not, as it is accepted by Mr Pointer that neither the Niagara agreement, nor the Gothenburg agreements contain MPCs (enforceable or otherwise). All they contain are unenforceable prenuptial and prorogation clauses in relation to property.

It follows that if, at [44] (see paragraph 26 above), the judge, in referring to the fact that the Swedish agreement should “take precedence over the American agreement” (the Ohio agreement), was making a finding that the Swedish agreements contain valid MPCs, in addition to the property prorogation clauses, he was in error.

Both parties now agree that if there is a valid MPC, it can be found only in the Ohio agreement. The court, as a matter of construction, must therefore consider:

Whether the requirements in Article 4 itself are satisfied; and

If so, does the relevant clause, purporting to be an MPC in the Ohio agreement fall foul of the provision in the agreement itself that specifies that, in the event of any “inconsistency, ambiguity or conflict” between the Swedish agreement and the Ohio agreement, the Swedish agreement will take precedence? If that is

We have been asked to determine the appeal on the basis that Article 4 of the Maintenance Regulation applies, notwithstanding that the agreements were made many years before the Maintenance Regulation came into force.

The Maintenance Regulation contains transitional provisions at Article 75 which provide:

These proceedings were instituted after the Maintenance Regulation came into force on 18 December 2008. It seems likely, however, that were a court considering the matter under the 1968 Brussels Convention, it would conclude that nothing in the three agreements would have been capable of being a valid prorogation clause under Article 17 of the 1968 Brussels Convention (the relevant Article under that Convention). Both parties were domiciled in Sweden and chose Sweden, their country of domicile, as their choice of jurisdiction; as such, the potential dispute was a domestic matter with no international element capable of involving the Article 17 jurisdiction (see the Jenard Report Section 6: Article 17).

There has however been a ruling in the ECJ in Sanicentral ECLI: EU:C: 1979: 242, para 7 which says that:

I am satisfied that for these purposes in relation to prorogation clauses conferring jurisdiction in a matrimonial dispute, the same principle must apply. In those circumstances, the agreements are to be interpreted on the basis that the relevant regulation is the Maintenance Regulation, notwithstanding that a prorogation clause agreed between these Swedish parties, choosing Sweden as their choice of jurisdiction, would have been void at the date it (or they) were made in 2000.

Turning then to Article 4; as there is no MPC in either the Gothenburg or the Niagara agreements, in order to satisfy Article 4(1), the court must be satisfied that the Ohio agreement demonstrates an agreement, at the time it was made, for maintenance to be prorogated to the jurisdiction of the Swedish courts.

The parties satisfy the status criteria in Article 4, each of them being Swedish nationals (4(1)(b)). Further, the agreement as a whole is in writing (4(2)). The question is therefore whether, for the purposes of Article 4(1), it can be said that, the Ohio Agreement drafted in 2000, contains a valid MPC. In other words did the parties agree that “the following court or courts of a (named) Member State shall have jurisdiction to settle any disputes in matters relating to a maintenance obligation which have arisen or may arise between them”?

In Estasis Salotti di Colzani v Rüwa [1976] ECR. 1831; [1976] 12 WLUK 98; [1977] 1 CMLR 345, (Estasis) the court considered the application of Article 17 of the 1968 Brussels Convention (the earlier Article which allowed a prorogation clause by agreement). The judgment of the European Court held that:

This is a reference to the fact that, in permitting the parties to choose a jurisdiction, Article 17 (as is Article 4) is providing an exception to the general rules, whereby jurisdiction is governed by domicile (Article 2), or (prior to the Maintenance Regulation) the place where the maintenance creditor is domiciled, under the special jurisdiction in Article 5.

Estasis was itself a case where the requirement for the agreement to be in writing was held not to have been satisfied. The court said:

Estasis emphasised that the purpose of the formal requirement is to ensure that consensus between the parties was in fact established. In Deutsche Bank AG & Ors v Asia Pacific Broadband Wireless Communications & Anr [2008] EWCA Civ 1091, Lord Justice Longmore considered an exclusive jurisdiction clause, (in that case, Article

Lord Justice Longmore had in mind the Estasis case [15] and said that the court had to determine whether the clause conferring jurisdiction was in fact the subject of consensus “which must be clearly and precisely demonstrated” given that the very purpose of the Article’s formal requirements was to ensure that the consensus was in fact established. He said at [30]:

Joint Stock Company “Aeroflot- Russian Airlines” v Berezovsky & Ors [2013] EWCA Civ 784 was another case where the issue of jurisdiction was before the court. Lord Justice Aikens referred to both the Deutsche Bank case and to Estasis and considered the ratio of Deutsche Bank as set out at [43] above to be binding on the Court of Appeal. It follows, therefore, that the ratio of Deutsche Bank is equally binding in this case and, providing always that the formal requirements are established, that will be sufficient to ensure that consensus is established for the purposes of enabling the case to be determined. It follows that if there is a clause capable of amounting to a MPC in the Ohio agreement, consensus has been established by the fact that the agreement is in writing.

Prorogation clauses are very straightforward and require no complex drafting. That is why, in part, compliance with the requirement that the agreement is in writing is enough to satisfy the need for consensus between the parties. All that a MPC in this case would require would be a clause saying: “The parties agree that the Courts of Sweden shall have jurisdiction to settle any disputes in matters relating to a maintenance obligation which has arisen or may arise between them.”

The question then to be considered by this court is whether, absent an unequivocal and clear maintenance prorogation clause, there is anything in the Ohio agreement which amounts to a valid MPC in the light of the Estasis case as confirmed by the Court of Appeal in Deutsche Bank.

The part of the Ohio agreement which Mr Pointer relies upon as amounting to a maintenance prorogation clause (which I set out again for ease of reference) is the following part of Clause 19:

It was argued forcefully by Mr Pointer that, whilst there is no reference to maintenance in Clause 19, Clause 12 includes maintenance as an integral part of the agreement to which the choice of jurisdiction clause will, therefore, apply.

Mr Chamberlayne submits that, although the agreement is in writing (with the signature of each of the parties at the end of the document) there is nothing within the part of Clause 19 set out above which relates to maintenance; it is not open, Mr Chamberlayne submits, to the husband to “piggy-back” a term of the prenuptial agreement in relation to maintenance onto Clause 19 which relates solely to jurisdiction in order to make good the deficit.

Clause 12 is headed “Termination of the Marriage” and goes on to say that: “The parties recognise that it is in their best interests to set forth their agreement as to their respective rights in the event of a termination of their marriage….”

As part of that agreement, each party “irrevocably waived” their rights to maintenance in whatever form. Whilst Clause 19 specifically provides for any question of “rights” under the agreement to be determined and construed under the laws of Sweden, there is no specific choice of jurisdiction clause in respect of maintenance.

In Deutsche Bank, the clause in question was unequivocal and said: “The English Courts have exclusive jurisdiction to settle any dispute in connection with any Finance Document”. As a consequence, the fact of the agreement was sufficient to establish consensus. In my judgment there is a strong argument that where, as in Estasis, the clause which is said to be the subject of the agreement is, itself, incomplete or unclear, the requirements of Article 4 will not be satisfied, notwithstanding that the agreement is in writing and signed by the parties.

It should be remembered that under EU law only maintenance can be prorogated, all other aspects of matrimonial finance being excluded from the regulation and subject therefore to domestic law, pursuant to Article 1. In the present case, the clause relied upon makes no reference at all to maintenance, but rather leaves the reader to work through the prenuptial terms and, having done so, include maintenance, the only matter capable of prorogation, into the jurisdiction clause by inference.

In Estasis, a prorogation clause found within the Terms and Conditions on the back of the agreement was not adequate to satisfy the requirements of Article 4 without specific reference to the clause within the agreement itself. Having considered the submissions of both parties, I have concluded that the same must be equally true where the meaning of the clause relied upon is itself unclear, particularly where, as here, the critical wording must be read across from a part of the document, dealing specifically with rights and not jurisdiction. In my judgment, the requirements in Article 4 are not satisfied, notwithstanding that the agreement is in writing.

I have concluded that there is nothing within the Ohio agreement which is capable of being a valid MPC. If, however, I am wrong about that, the terms of the Ohio agreement

The court was presented with extracts from the Oxford English Dictionary as to the meaning of the word “inconsistent”. Mr Pointer submits that the Ohio agreement is not inconsistent with the Swedish agreement as the Swedish agreement does not provide a prorogation clause in relation to maintenance. The Ohio agreement therefore, he submits, represents an extension of the Swedish agreement, which agreement is subject to Swedish jurisdiction.

For my part, I could see the attraction of such an agreement but for two matters; one significant, and one which I regard as fatal to Mr Pointer’s arguments.

First, the Ohio agreement that was signed by both the parties, specifically incorporates the Swedish agreement. The Swedish agreement, it is now accepted, does not contain a maintenance prorogation clause. Whilst presenting Mr Pointer with difficulties, this would not necessarily be fatal given his “extension” argument. What is fatal, in my judgment, is that, pursuant to the Ohio agreement, the Gothenburg agreement was signed some 15 days later, on 26 December 2000 and the Gothenburg agreement is drafted in the same, limited, terms as the Niagara agreement. In other words, the Gothenburg agreement:

Had been anticipated under the terms of the Ohio agreement to be “remade” at a date after the signing of the Ohio agreement; ii) Was specifically incorporated into the Ohio agreement; iii) Was, under the terms of the Ohio agreement to take precedence; and

It follows that even if it could be said for the purposes of Article 4, that, within the Ohio agreement, the combination of the references to Swedish jurisdiction, together with oblique references to the prenuptial provisions in relation to maintenance, was capable of amounting to a valid MPC (which I doubt), such a clause is, in my judgment, inconsistent and / or in conflict with the subsequent Gothenburg agreement drafted and signed some days later, an agreement clearly identified as taking precedence over the Ohio agreement.

It may well be that the parties had intended, in 2000, to give Sweden jurisdiction in relation to all matters arising out of their marriage, but, if that was the case, they singularly failed to do so. They did not, as a matter of English, European or Swedish law, achieve their goal. The agreements failed even to achieve an effective choice of jurisdiction clause in respect of property alone in the Niagara and Gothenburg agreements, those agreements having been drafted prior to a dispute arising.

In my judgment the parties failed to confer jurisdiction as to maintenance by the terms of the Ohio agreement. There is, therefore, no MPC, and it follows that there is not, as in Sanicentral, a clause which, whilst void at the date when the agreement was made under the 1968 Brussels Convention, must now, pursuant to Article 75 of the Maintenance Regulation, be considered to be valid.

As I have said, a choice of jurisdiction clause is simple to draft in clear and unambiguous terms, and the necessary consensus will have been established once committed to an agreement in writing. Failure to express a choice of jurisdiction in unambiguous terms can result, as here, in international jurisdictional disarray leading to delay and lengthy, complex litigation at extortionate cost.

I am therefore satisfied that there is no valid MPC in this case which constrained the judge’s jurisdiction and prevented him from considering and making orders in respect of the wife’s needs.

Having heard argument in relation to the validity of the MPC, the court told the parties of our conclusion that there is no valid MPC which would result in the Swedish courts alone having jurisdiction to determine issues in relation to the maintenance (needs) of the wife. It was then submitted by Mr Chamberlayne that, prior to the matter being remitted to the judge in order for him to carry out the conventional exercise referred to above, the court must nevertheless consider Ground 1 and the wife’s appeal against the judge’s approach to the prenuptial agreement. Whilst a respondent’s notice was filed on behalf of the husband seeking to uphold the judge’s order in this respect on other grounds, the arguments within it largely fell away during the hearing. It became apparent, however, that there was a dispute about the basis upon which the matter is to return to the judge.

The area of disagreement between the parties has narrowed considerably. It is neither necessary nor helpful to analyse each side’s respective starting point, whether at first instance or in this court. Suffice it to say that it is now common ground that in financial remedy proceedings, where a judge has found there to be no vitiating features in relation to a prenuptial agreement, he is entitled, when applying the section 25 factors in his search for a fair outcome, to take into account needs, compensation and sharing. In other words, the fact of a valid prenuptial agreement does not necessarily (but may) lead inexorably to a solely needs-based outcome.

The residual issue between the parties, therefore, relates to what limitations, if any, on the facts of the case and against the backdrop of the judge’s findings, should the judge impose upon himself in his fresh consideration of the wife’s claim for financial remedies.

Consideration of this issue has involved a microscopic analysis by Counsel of three paragraphs of the judgment, as follows:

This is the approach which was taken by Moor J in Z v Z [2011] EWHC 2878 (Fam) where the court upheld a French separation de biens insofar as it excluded sharing but the court went on to meet the wife”s reasonable needs. A similar approach was adopted by Holman J in Luckwell v Limata in 2014.

The effect of the above is, however, very serious indeed for the wife, when I return to the consequences of the prorogation agreement, for it means that I am now to approach the case on a needs basis. ”

Mr Chamberlayne QC, on behalf of the wife, submits that this amounts to a pure error of law. The judge, he submits, concluded that in law he was constrained to consider only a needs-based settlement. Notwithstanding his clear concern as to the outcome, the judge (submits Mr Chamberlayne) felt himself to be driven to conclude that, having found there to be a valid prenuptial agreement, he was now limited to a needs-based outcome and that, as he put it at paragraph [68], the wife had “lost her sharing claim” by reason of the prenuptial agreement.

Mr Pointer, on behalf of the husband, says whilst as a matter of law, “sharing” remained open to the judge on a proper reading of the paragraphs quoted above, the judge had not made an error of law but rather he had exercised his discretion in deciding to limit the wife’s claim (absent a valid MPC) to needs alone.

It is helpful in this regard to look at the approach of various courts in respect of this issue, which inevitably starts with the judgments of the Supreme Court in Radmacher. The starting-point must be with the well-known principle expressed by Lord Phillips in his judgment at [75]:

Lord Phillips went on, under the heading of “autonomy”, to say:

Of particular relevance to the issues before this court, Lord Philipps reverted to the three strands of needs compensation and sharing:

This theme was picked up by Baroness Hale in her judgment. Baroness Hale described situations where couples have contracted out of sharing but not out of compensation and support [177]. She went on to say:

In Versteegh v Versteegh [2018] EWCA Civ 1050, Lewison LJ set out what he regarded as the key points in Radmacher. In so far as is relevant to the issues now before the court he said:

Typically, it would not be fair to hold the parties to their agreement if it would prejudice the reasonable requirements of any children of the family [77]; or if holding them to the agreement would leave one spouse in a "predicament of real need": [81]

But in relation to the sharing principle the court is likely to make an order reflecting the terms of the PMA: [82], [177] – [178]

For my part, in my judgment in Versteegh at [82], I emphasised that an effective prenuptial agreement is an example of a case where, upon a proper consideration of all the circumstances of the case (per section 25 (1) MCA1973]), a court can conclude that the assets should be divided unequally, and that such an outcome would represent, as it was put by Lady Hale, a “modification of the sharing principle” [178].

The court has been taken to the judgments in the two cases referred to by the judge in his judgment, namely; Z v Z (No 2) (Financial Remedy): Marriage Contract) [2011] EWHC 2878, [2012] 1FLR 1100 (Z v Z); and Luckwell v Limata [2014] EWHC 502, [2014] 2 FLR 168 (Luckwell). In Z v Z, although there were some inherited assets on either side, the majority of the assets had been accrued by the husband during the course of the marriage, the judge, as has Mr Justice Francis in the present case, carefully considered all the circumstances leading up to the agreement which was in the form of a French separation de biens. Having done so, the judge rejected all the arguments raised to say that it would not be fair for him to uphold the agreement in so far as it excluded sharing, and went on to make a needs-based order. The judge observed that it might have been “very different” if the agreement had also purported to exclude maintenance claims in the widest sense [64].

In Luckwell [2014] 2FLR168, the husband had no assets and the principal asset was the former matrimonial home which had been given to the wife by her father. Holman J took the view that the agreements in that case were highly relevant, having been entered into after legal advice with no vitiating factors. The husband was, however, on any view in a “predicament of real need”, and Holman J took the view that in the absence of the agreements it was inconceivable that any court would not have made a substantial award to the husband [143]. Notwithstanding that conclusion, the judge afforded “as much weight as possible to the fact and contents of the agreements”, and whilst he ordered the wife to provide a sum for the husband to purchase a property for his occupation, he nevertheless made an order that the property be sold when the youngest child became 22, and that upon sale 45% of the net proceeds of the sale were ordered to be repaid to the wife. Sharing was thereby wholly excluded.

More recently, Roberts J had cause to consider a prenuptial agreement in KA v MA (Prenuptial Agreement:Needs) [2018] EWHC 499. This was a case where, as here, it was held that the wife had freely entered into the prenuptial agreement. It was accepted by Counsel for the wife that in those circumstances the computation of the wife’s award should be driven by her generously interpreted assessed needs rather than any application of the sharing principle [52]

The central issue in KA v MA was the assessment of those needs and, far from there being any suggestion that sharing should form any part of her provision, the question was as to the extent (if at all) the assessment of those needs should be constrained by the existence of the prenuptial agreement together with the future welfare of the child of the marriage [79].

Roberts J rightly reminded herself that, notwithstanding the existence of the prenuptial agreement, she had to have regard to all the factors set out in s25(2) MCA 1973 with the first consideration being the welfare of the child [90].

She concluded:

In this case, Francis J, having found none of the vitiating factors to be present, rightly concluded that the Supreme Court in Radmacher had left the court with a wide residual discretion as to the definition of what is fair in any given case [55] and rejected what he believed to be Mr Chamberlayne’s submission that a “very unfair prenuptial agreement” should be “ripped up”.

It might be thought that, up until this stage, the judge’s view is entirely uncontroversial. It is at the next stage of his analysis that Mr Chamberlayne submits that the judge fell into error by concluding that the effect of the prenuptial agreement, following the approach taken by Moor J in Z v Z and Holman J in Luckwell, was to restrict him to making an order limited to one to meet the wife’s needs [62].

Mr Chamberlayne submits that the judge was wrong to conclude:

That the wife had “lost her sharing claim by reason of the prenuptial agreement”; and that, therefore,

Having found the prenuptial agreement to be unfair, the judge erred in directing himself that he was thereafter limited to making only such order as would satisfy her needs;

In the judgment, it is clear that the judge took the view that, having found there to be an effective prenuptial agreement, he could only (to use the judge’s own, phrase) “invade the husband’s assets” to the extent necessary to provide for the wife’s needs, and that payment of additional funds (by way of the sharing principle) was not open to him. The judge decided this notwithstanding his finding that Radmacher left him with a wide discretion as to what is fair in any given case. Having found himself unable to make an award providing for the wife’s needs as a consequence of what he had held to be a valid MPC, the judge was left with no other option within the financial remedies proceedings other than to make declarations in relation to the parties’ strict property rights.

In summary, therefore, the route followed by the judge in relation to the prenuptial agreements was that:

He found there to be no vitiating features which would preclude the implementation of the agreement;

He was aware from Radmacher that parties to such agreement are able to “contract out” of sharing;

In Z v Z and Luckwell, where the agreements had been held to be valid, the courts had made only needs-based orders.

He concluded said that [62] “the effect of the above is… that I am now to approach the case on a needs basis”.

In my judgment, this analysis cannot properly be characterised as an exercise of discretion by the judge on the facts of the case; rather it is clear from the totality of the judgment that he felt himself to be in a straitjacket and that on the authorities, he was driven inexorably to conclude that he only had power to make a needs-based order.

In my judgment, the judge did fall into error in going so far as to conclude that the effect of Z v Z and Luckwell meant that the wife had inevitably “lost” her sharing claim by reason of the prenuptial agreement.

It is undoubtedly the case that since the Supreme Court’s decision in Radmacher, and up to and including Roberts J’s judgment 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. In doing so, the courts have honoured the sentiment in Radmacher [75] by respecting the autonomy of the parties and by giving effect to the nuptial agreement which has been freely entered into to the extent that it is fair to do so.

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 s25(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.

It follows that the appeal must also be allowed in relation to Ground 1, given that, in my judgment, the judge was in error in regarding himself as being precluded, consequent upon the prenuptial agreements, from making an order in favour of the wife that was not based on her needs.

I should emphasise that in allowing the appeal, the court is not advocating an award in excess of the wife’s needs, nor is it saying that having considered the case, and taken into account all the circumstances of the case, the judge will not reach the same conclusion as he did before, namely that this is a “needs case”. All this court is doing is remitting the case to the judge, now absent a valid MPC, in such a way as to leave him in a position to exercise his broad discretion, to make such order as he deems to be fair in all the circumstances

It follows that:

The court is satisfied that there is no valid MPC in this case prorogating any assessment of the wife’s maintenance/needs to the Swedish Courts, and that accordingly the appeal on Ground 2 succeeds.

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.

Whilst the 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.

Accordingly, the appeal on Ground 1 also succeeds.

If my Lords agree, the appeal is allowed and the matter is remitted to the judge for further consideration of the wife’s claim for financial remedy against the background of the facts as found by the judge.

I would simply add this, the parties have subjected themselves and each other to punishing litigation for over 3 years and at huge financial and emotional cost. The court would encourage the parties, whether through mediation or negotiation with the assistance of their legal teams, to now seek a resolution to the case without the need for further litigation.

I agree

I also agree