The long awaited judgment in the Radmacher appeal has finally been delivered and provides much food for thought and material for further debate.
The bottom line is that the appeal against the decision of the Court of Appeal has been dismissed by a majority of the members of the Supreme Court (8 out of 9).
The essential (and unsuccessful) basis of the appeal had been an assertion that the Court of Appeal had, in the particular circumstances, attached weight (or too much weight) to the existence of a pre-nuptial agreement between the parties.
The essential point of principle now established of the judgment of seven members of the majority (to which Lord Mance added a separate judgment), is namely:
The court should give effect to a nuptial agreement that 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.
That principle sounds very much like a rebuttable presumption that nuptial agreements will be binding, and goes further than the previous approach which was to the effect that in all of the circumstances of a particular case the existence of a nuptial agreement may have a magnetic force and prove determinative.
The Supreme Court has certainly now said that a nuptial agreement cannot be allowed to prejudice the reasonable requirements of any children of the family, but could the otherwise unmet financial needs of one of the divorcing parties ever mean that "it would not be fair to hold the parties to their agreement"?
The Supreme Court has certainly now said that a nuptial agreement cannot be allowed to prejudice the reasonable requirements of any children of the family, but could the otherwise unmet financial needs of one of the divorcing parties ever mean that "it would not be fair to hold the parties to their agreement"?
It is also of note that the principle applies to all nuptial agreements, whether pre-nuptial, or post-nuptial, and the majority of the members of the court have rejected the distinctions drawn by the Privy Council in MacLeod in that regard.
Some limited and fairly bland guidance is given as to "the difficult question of the circumstances in which it will not be fair to hold the parties to their agreement", and it is said that "This will necessarily depend on the facts of the particular case, and it would not be desirable to lay down rules that would fetter the flexibility that the court requires to reach a fair result". However, it might be thought that the principle now laid down by their Lordships has already gone some way towards fettering the flexibility of the court.
It may be said inhibitions on flexibility are justified by the desirable aim of providing predictability, but even now there is no absolute predictability, because of the apparent flexibility of the "get out" considerations. Indeed, when discussing the problem of unforeseen and unforeseeable changes the majority decision indicates that such factors may in a given case make it unfair to hold the parties to their agreement, and that the longer the marriage has lasted, the more likely it is that this will be the case.
The justification given for the importance to be attached to nuptial agreements is that "there should be respect for personal autonomy", but that may be thought to be less than entirely convincing in the context of a non-commercial environment where it will be impossible to predict the future and where there may be real inequality of bargaining power (emotional and otherwise). One can foresee arguments in future cases on the basis that the agreement was not "freely entered into" and/or that one party did not have a "full appreciation" of the implications of the agreement. All of this seems to be acknowledged in the majority decision.
Of course it may be possible to counter such arguments to some extent by measures such as full advance disclosure of financial resources and independent legal advice (said to be "obviously desirable"), but it seems that it will not necessarily be unfair to hold parties to an agreement in the absence of such features – all will depend on the particular circumstances, such as whether non-disclosure was really "material", or whether the other party was "indifferent" to the detailed particulars, and whether each party was in fact fully aware of all the implications of the agreement.
All of the matters discussed in the judgment as factors that may support or undermine any given nuptial agreement make complete sense, but given the multitude of such features and the necessarily imprecise guidance given in relation to them, why, it might be asked, are any presumptions necessary?
Some limited and fairly bland guidance is given as to "the difficult question of the circumstances in which it will not be fair to hold the parties to their agreement", and it is said that "This will necessarily depend on the facts of the particular case, and it would not be desirable to lay down rules that would fetter the flexibility that the court requires to reach a fair result". However, it might be thought that the principle now laid down by their Lordships has already gone some way towards fettering the flexibility of the court.
It may be said inhibitions on flexibility are justified by the desirable aim of providing predictability, but even now there is no absolute predictability, because of the apparent flexibility of the "get out" considerations. Indeed, when discussing the problem of unforeseen and unforeseeable changes the majority decision indicates that such factors may in a given case make it unfair to hold the parties to their agreement, and that the longer the marriage has lasted, the more likely it is that this will be the case.
The justification given for the importance to be attached to nuptial agreements is that "there should be respect for personal autonomy", but that may be thought to be less than entirely convincing in the context of a non-commercial environment where it will be impossible to predict the future and where there may be real inequality of bargaining power (emotional and otherwise). One can foresee arguments in future cases on the basis that the agreement was not "freely entered into" and/or that one party did not have a "full appreciation" of the implications of the agreement. All of this seems to be acknowledged in the majority decision.
Of course it may be possible to counter such arguments to some extent by measures such as full advance disclosure of financial resources and independent legal advice (said to be "obviously desirable"), but it seems that it will not necessarily be unfair to hold parties to an agreement in the absence of such features – all will depend on the particular circumstances, such as whether non-disclosure was really "material", or whether the other party was "indifferent" to the detailed particulars, and whether each party was in fact fully aware of all the implications of the agreement.
All of the matters discussed in the judgment as factors that may support or undermine any given nuptial agreement make complete sense, but given the multitude of such features and the necessarily imprecise guidance given in relation to them, why, it might be asked, are any presumptions necessary?
Ultimately, a nuptial agreement will have importance in any financial dispute on divorce, but it cannot be guaranteed to provide the ultimate answer, or avoid litigation in any given case.
