V v v (Ancillary Relief: Pre-Nuptial Agreement)
| Jurisdiction | England & Wales |
| Judgment Date | 2012 |
| Date | 2012 |
| Year | 2012 |
| Court | Family Division |
Divorce – Financial provision – Ancillary relief – Pre-nuptial agreement – Husband being Italian and wife Swedish – Parties cohabiting from 2002 and becoming engaged in 2003 – Parties’ first child being born in 2003 – Husband requesting pre-nuptial agreement to protect his wealth obtained through endeavours and inheritance – Wife having no objections and ‘marriage settlement’ being drawn up – Parties marrying in 2005 and subsequently having another child – Parties separating in 2008 – Husband taking lower paid job in Italy – Judge making ancillary relief award in favour of wife – Judge refusing to grant charge back on property to be purchased by wife with lump sum award – Whether judge erring in placing limited weight on marriage settlement – Matrimonial Causes Act 1973, s 25.
The husband, who was Italian, and the wife, who was Swedish, began to live together in 2002. When they became engaged in 2003, the wife was a university student and the husband an investment banker. There was no immediate pressure from either party to marry soon after their engagement. The wife gave birth in July 2003 and, in due course, felt that the time had come for the parties to marry. The husband agreed but made it clear that it was important to him that before they married they entered into a pre-nuptial agreement, as he had, prior to the commencement of their relationship, amassed a certain amount of wealth as a result of his endeavours and through inheritance. The wife had no objections and a ‘marriage settlement’ was entered into in June 2005. The parties married in August of that year, and their second child was born in June 2006. The wife stayed at home with, and so was the main day-to-day carer of, the children; there was no need for her to go out to work during the marriage and it was the parties’ choice that she would not do so. The parties separated in May 2008. The wife and children remained living at the former matrimonial home, a rented flat in London. The husband was made redundant in June 2009 and took up significantly lower paid employment at a bank in Milan in September. The wife sought ancillary relief following divorce. Excluding chattels and pension, the parties’ capital totalled £1,289,347, of which £1,155,413 was in the husband’s name and £133,934 in the wife’s. The husband also had a pension fund of £94,214. The income position was that the husband was earning £55,000 pa net and the wife was in receipt of benefits (tax credits and child benefit) of £6,849 pa. The case was argued on
the basis that the wife intended to remain in England with the children and that the husband would be living in Italy and travelling regularly to England to see the children. Although the husband’s level of income meant that renting a home for the children in the expensive area of West London in which the former matrimonial home was situated was no longer an affordable option, the judge concluded that it was fair and appropriate to assess the lump sum by reference to the purchase price of homes in that area. He ordered the husband to pay the wife a lump sum of £667,100 which, with the assets in her name less liabilities, gave her capital of £800,000. The lump sum was designed to enable the wife to buy a home close to the former matrimonial home. The husband was also ordered to pay global periodical payments of £30,000 prefaced by a recital recording that the wife’s household income should equal £40,000 before any income earned by her would impact on the quantum of her maintenance award. The spousal element was payable for joint lives until remarriage or further order of the court. In percentage terms, including pension, the wife received 58% and the husband 42%; excluding pension, the wife received 62% and the husband 38%. The judge considered that, since the resources were not sufficient to meet the budget which was appropriate for each of the parties, the fairest thing was for the present income to be shared equally. On appeal, the husband’s submission was that the judge had erred in law in not ordering that there should be a charge back in his favour over the home to be bought applying the lump sum (and thus effectively over the lump sum). The court’s focus therefore related to the division of the available capital assets and so the approach taken by the judge to sharing and contributions when exercising the statutory discretion pursuant to s 25 of the Matrimonial Causes Act 1973. The husband relied upon the decision of the Supreme Court in Radmacher (formerly Granatino) v Granatino[2010] 3 FCR 583.
Held – (1) The decision of the Supreme Court in Radmacher’s case necessitated a significant change to the approach to be adopted, on a proper application of the discretion conferred by the 1973 Act, to the impact of agreements between the parties in respect of their finances. At the heart of that change was the need to recognise the weight that should be given to autonomy, and thus to the choices made by the parties to a marriage. The new respect to be given to individual autonomy meant that the fact of an agreement could alter what was a fair result and so found a different award to the one that would otherwise have been made. Radmacher’s case effectively added another rationale or principled approach to the reasoning to be applied in the judgmental or balancing exercise demanded by the statutory test, namely that weight should be given to autonomy. Having said that, it was also very important to recognise and remember that it was the court and not any prior agreement between, or choices made by, the parties that would determine the award to be made under the 1973 Act. It followed that a nuptial agreement was only a factor in the exercise of the judicial discretion conferred by the 1973 Act, and the guidance given in Radmacher’s
case had to be read and applied in that context, but also in the context of the important and significant shift in the weight that the Supreme Court had made clear should be given to autonomy in determining what was overall a fair result judged by a proper application of the statutory discretion. From the starting point of the new respect and weight to be given to autonomy, Radmacher’s case made it clear that (i) in assessing the weight to be given to a nuptial agreement, there were (a) vitiating factors which would negate any effect the agreement might have, (b) other factors that would reduce the weight to be given to the agreement, and (c) factors that could enhance its weight in particular cases; and (ii) in cases where there were no vitiating or other factors that negated or reduced the weight and effect of a nuptial agreement, (a) it could not be allowed to prejudice the reasonable requirements of the children of the family, (b) the circumstances at the time of the breakdown of the marriage might mean that its application did not accord with the criterion of fairness because, for example, it would leave a spouse (and children) in a predicament of real need (eg in respect of their housing needs), (c) it was in relation to sharing that the impact of a nuptial agreement was most likely not only to suggest, but also to found, an award, if the parties were both in a position to meet their needs, and (d) a nuptial agreement was capable of affecting the overall balance of what was fair as one of the factors or rationales to be taken into account in the application of the statutory discretion. It was clear that a nuptial agreement and its effect on an award could not be looked at in isolation, and that its impact on the result suggested by one of the rationales (eg sharing) could have an impact on the overall result and thus, for example, the extent to which that suggested result should be changed to meet the requirements of the children or the needs of a spouse. In the instant case, the judge had erred in law in her approach to the assessment of the weight to be given to the marriage settlement and so in reaching her conclusion that it should only be given little weight in the s 25 exercise. The essential reason for that was that, in effect, the judge had adopted a pre-Radmacher approach to agreements reached between parties to a marriage relating to their assets; on a proper approach in law to the s 25 exercise, the marriage settlement, and so what it provided, was a factor that should be given weight to give proper respect to the autonomy of both parties who, on the findings of fact made by the judge, had entered into it honestly, freely and knowingly. By their agreement the parties had made a choice concerning the husband’s existing assets, and that agreement or choice formed one of the bases upon which the parties had agreed to conduct their married lives. By reference to its language and its purpose, what that agreement provided was that, if and when relevant, the husband’s pre-acquired property was to be ringfenced and not treated as marital property. Accordingly, (i) when assessing the sharing principle and the impact of contributions, the marriage settlement provided a good and powerful reason for departing from an equal division of the assets that were now available, and (ii) in the overall assessment of the award to be made, it was an important factor to be weighed in the balance and was capable of
founding an award that differed from the one that would have been made if it had not been entered into. In addition to the marriage settlement, other factors also provided ‘good reason’ to depart from equality in the application of the sharing principle and were relevant to the assessment of contributions, namely: (i) the husband had pre-acquired assets, and so an ‘unmatched contribution’ of around £1m, (ii) part, albeit a small part, of those assets had been acquired by way of inheritance, and (iii) the length of the marriage assessed by reference to the date that the parties had started living together was a reasonably short one. It followed that the approach and reasoning of the judge as to the...
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