Ancillary relief- agreements

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Pre-nup

Historically they were void as they seemed to encourage splitting up which was against public policy.

Radmacher v Granatino- Husband and wife were both non English nationals who signed a pre-nup. H did not seek advice before signing. The couple lived in London and had children before splitting up after 8 years. Pre-nup was instigated by W's family who were very rich. Basically said they wouldnt get anything from each other and made no mention of children. Husband wanted lump sum and periodical payments. SC said the old policy reasons against pre-nups were obsolete. May take into account pressures on parties, age and maturity, and if they had been married before to detract from importance. Another important factor is if the marriage would have gone ahead without it. 'Court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless the circumstances prevailing it would not be fair to hold the parties to their agreement.' Gave the following guidance-

  • a nuptial agreement cannot be allowed to prejudice the reasonable requirements of children.
  • The court should accord respect to the parties autonomy, and should not override the agreement simply on the assumption that the court knows best
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Pre-nup

  • There is nothing inherently unfair in an agreement which seeks to preserve non marital property for one party.
  • There is scope for what happens to the parties over time to make it unfair to hold them to an agreement. It is unlikely the parties will have intended that one party be left in real need.
  • It is in relation to sharing of assets beyond those addressing need that the court will be most likely to make an order in the terms of the nuptial agreement.

It was fair in this case for the husband to be held to the agreement. There was no error of principle. It is all based on fairness. Court still not obliged to give effect but will give it weight.

Factors effecting the weight it is given are- duress, undue influence, misrepresentation, pressure short of undue influence, full disclosure and advice, circumstances at the time of contracting and any foreign element.

The court has now had the opportunity to consider and apply the principles of the case and to consider whether the parties freely entered into the agreement with full appreciation of the effect and when it will be considered unfair to hold them to it.

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Pre-nup

  • Z v Z- French couple married for 14 years with 3 children. Entered into standard prenup in France. Parties assets totalled £15m and wife said should be shared equally. Husband said agreement which excluded equal sharing should be upheld. He did say the agreement did not exclude maintenance claims which should be made on her needs. They upheld the agreement as far as it excluded equal sharing principle and awarded the wife 40%. The SC had said that agreements that excluded equal sharing but accomodated for needs were not unfair.
  • V v V- parties entered into a prenup which allowed the husband to retain all property he acquired before marriage. The estimated value was £1m. Question was whether it was correct to attach limited weight to it since it made no express provision for what would happen on divorce or children. Despite the wife having no legal help it was found that both parties had intended the agreement to be effective and were aware of its obvious purpose. The mere fact the wife was in weaker bargaining position did not make it unfair. The agreement was an important factor.
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Pre-nup

An agreement which if implemented would leave one party in severe financial need might be considered by the court to be unfair.

  • Luckwell v Limata- prenup was overriden to meet husbands housing needs. Prior to the marriage they made an agreement whereby the husband promised to make no claim on the wife's property or family gifts. They both recieved legal advice. On divorce the husband applied for financial provision. The court accepted the agreements were highly relevant, having been entered into by a mature, free man with legal advice. There were no vitiating factors. However the husband was in a predicament of real need with no home, income and high debts. He required appropriate accomodation for his 3 children to visit. The court noted the importance, where achieveable, of both parents having at least adequate homes in which their children can stay. Court held current, and likely future need, outweighed the agreement. The weakness of it was that it provided nothing for the husband, despite the length of the marriage or why it broke down. Judge said would be damaging for the children to see mother living in luxury and father in poverty. Relatively modest financial award was given to satisfy his financial needs although this was smaller than it would be without an agreement.
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Pre-nup

  • GS v L- found that neither party had full appreciation of the implications of the agreement which had been made primarily to address the situation regarding the parties finances in the event of the husbands death. The effect of the agreement was unclear so little weight was attached to it.
  • Kremen v Agrest- no weight was attached to the agreement as there was no disclosure by the husband of the full extent of his wealth and the wife had no independent legal advice. She also had no knowledge of the rights under English law she was foregoing under the agreement. She did not freely enter, with full appreciation for the implications, it was the product of pressure from her husband. Her agreement was not informed. The signing of the agreement had been a charade and the judge was not convinced parties intended it to determine outcome on divorce. On a more general note, the judge said it would be unusual for the agreement to be given effect if the parties havent recieved legal advice.
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Separation agreements

A separation agreement is an agreement not embodied in a court order. Most agreements come from mediation, negotiation and agreement. They are preferable as they reduce legal costs. Subject to general contract principles, a separation agreement is enforceable.

Hyman v Hyman- no separation agreement can oust the jurisdiction of the court since the courts powers are designed to protect the public as well as the spouses.

S34(1) MCA says this as well. Such a term will not render the whole agreement void, just that term. s34-36 regulates agreements between spouses and either party can apply to the court under s35 to vary the terms. Cannot prevent application to the court. The agreement reached may be highly relevant to the courts deliberations.

Edgar v Edgar- leading case on the weight given to a separation agreement. Husband and wife executed a deed of separation in which the wife agreed not to apply for a lump sum or property transfer on divorce. Husband was very wealthy and wife's solicitors told her she could get a far better settlement in divorce proceedings. The wife was eager to divorce and was insistent on concluding matters between the parties. Nearly 3 years later they divorced and the wife sought a lump sum.

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Separation agreements

The CoA said the weight of the separation agreement must have regard to parties conduct. Important is the general provision that formal agreements, properly and fairly arrived at, should not be displaced unless there is a good and substantial grounds for concluding there would be injustice if held to the terms. There may well be other considerations. Where there is an agreement, prima facie evidence of material facts which show that justice requires the spouse be relieved from the effects of the agreement will be required. Since there was no pressure by the husband to force the wife to accept the terms and the wife had recieved legal advice that she refused to take, it had not been shown that justice required the court to relieve her of her agreement.

Thus where an agreement has been arrived at with the benefit of legal advice and no vitiating factors, a court will normally make financial provision and property adjustment on the same terms. The court may not stick to it if it departs massively from the criteria in s25. Further if there is unfair or improper pressure applied to one party to sign the agreement then it is unlikely to be upheld.

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Separation agreements

  • NA v MA- the court found that improper pressure had been exerted on the wife to sign a post nuptial agreement. After the husband discovered she cheated, he gave her an ultimatum that she sign or the marriage was over. The court held the wife's free will was overborne and the terms were unfair. Accordingly it was not factored into the exercise of discretion under s25.
  • X v Y- the fact that one party could achieve a better outcome in court is not a reason to allow them out of their agreement.
  • G v G- no legal advice and a lack of disclosure. Limited wife to just maintenance and enough to buy a home. Unusual case meant the judges discretion was enlarged.
  • T v T- applied to have agreement made into consent order. Intended to be and was acted upon. Duty of court excludes examining current means. Granted the husbands application and wife had to pay costs.
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Consent order

75% of all orders made in county court are made by consent. When this is done the agreed terms derive their authority from the court order, not the contract. The order may only contain terms that come within the courts powers. Consent orders have no contractual basis. On application for consent order, the court retains the power to examine the agreement and consider factors under s25. Though a judge is no mere rubber stamp, he is under no obligation to make inquiries or require evidence (s33A). The function of the court is a broad appraisal of the parties financial circumstances and only to probe more deeply when they are put on inquiry. If the judge had not been told facts which may have changed his decision when making a consent order, this cannot be a ground for impeachment.

  • Soulsbury v Soulsbury- parties can enter into any contract providing it does not prohibit party from seeking financial order.
  • Livesey v Jenkins- the parties have a duty to provide the court with all necessary information.

s33A MCA contains the powers of the court.

s34-34 MCA regulate agreements between the parties.

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Consent order

MCA s25- factors to be considered by the court when examining the terms of a consent order: low level of scruitiny.

Duty of the court to investigate-

  • Harris v Manahan- 'while the judge is no rubber stamp, he is no forensic ferret.'
  • Xydhias v Xydhias- that an agreement reached in such negotiations to compromise an ancillary relief application is not intended to give effect to an enforceable agreement and does not do so.

Where there are no ancillary relief proceedings pending before the court, a valid agreement will usually be binding.

Livesey v Jenkins- HoL said that full and frank disclosure is needed. Parties are under a duty to disclose all material facts. They include those under s25 because if the court does not have these they are not in a position to exercise their discretion. The parties reached an agreement where the husband agreed to transfer his half in the home to provide the wife and children with somewhere to live.

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Consent order

A week later the wife became engaged but she hadnt disclosed this to her husband or their solicitors. The agreement was embodied in a consent order, the wife remarried and the house was on the market within 2 months. HoL set aside the consent order, holding the wife's engagement was a material circumstance which was directly related to the agreement. She had been under a duty to disclose and the non disclosure invalidated the agreement. The circumstance has to be one that means the court would have made a substantially different order to the one they did.

Variation of a consent order- s35 MCA says parties can apply to the court to vary the terms of their agreement.

McLoed v McLoed- where one party tries to resile an agreement.The question is if they entered into the agreement freely. The court applied the law in Edgar v Edgar.

Parties may raise a challenge due to misrepresentation and duress, where agreement attempts to cast obligation on public purse eg to claim benefits.

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Consent order

A consent order may be set aside where there is fraud or mistake, or non disclosure.

Non disclosure-

  • Kingdon v Kingdon- need to ask if the disclosure was fundamental to the order and means it needs to be set aside.
  • Livesey v Jenkins- the test is that if the court was aware of the information that was not disclosed it would have made a substantially different order.
  • Sharland v Sharland- question before the court was whether it was appropriate for the court to refuse to set aside a consent order that was reached following one of the parties fraudulent non disclosure on the grounds that it wouldnt have made a substantially different order in the financial proceedings. The issue was the value of H's business shareholding. Gave the wife 30% of proceeds of sale when it happened. At the time of the order being made there was a deal in place that would have made them much more valuable. The deal was now no longer in prospect so first instance judge said it made no difference. SC allowed the wifes appeal which meant her application went back to the High Court. Hale said it was in everyones interests that matrimonial disputes should be settled by agreement. The duty...
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Consent order

to make full and frank disclosure always arises and goes to the heart of the parties consent. The court cannot make a valid consent order without the consent of the parties. Whether the SC is bound to set aside an order depends on vitating factor. This was a case of fraud, the husband had set out to decieve. Fraud unravels all and should set aside the order. The only exception to this is when the court is satisfied that at the time of the consent order, it woudl not have influenced a reasonable person to agree to it, or the court would not have made a substantially different order. The burden of proving this lies with the fraudster. Lady Hale concluded the husbands deception was highly material to the terms of the settlement. The judge would not have made the order he did, when he did, had the truth been known. Final question concerned the correct procedure to be followed by parties seeking to challenge a final order of the court. Hale made it clear the court retains jurisdiction over the marriage even when it is dissolved so it can make new applications or appeals. Misrepresentation or non disclosure does not mean the proceedings need to start from scratch, instead the court may be able to isolate the issues and deal with those.

Gobil v Gobil- the wife applied to set aside a consent order on the grounds of serious material non disclosure, fraud and misrepresentation. The husband had been convicted of £25m money laundering. He was sentenced to 10 years. Question was whether evidence from his criminal

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Consent order

proceedings, which exposed his fraudulent activity could be relied upon. HoL said that to say all of the wife's evidence was inadmissible was erroneous. While evidence from criminal proceedings obtained from sources outside the UK was clearly inadmissible, there was other evidence to prove it. Made clear the duty of full and frank disclosure was absolute. The order should be set aside on grounds of non disclosure, and the words used in the recital had no legal effect in a financial order on divorce proceedings. One party cannot exonerate the other from complying with their duty. Outside the case of fraud it is clear the court are reluctant to interfere. Clear that dishonest failure to disclose will not be tolerated.

Bad legal advice-

  • B v B-manifestly bad legal advice is a ground for setting aside a consent order.
  • Harris v Manahan- restricted to exceptional cases of the cruellest injustice. Despite having real sympathy for the wronged wife, the CoA reiterated that only the most exceptional case of the cruellest injustice would the public interest in the finality of the litigation be overridden and that the bad legal advice the wife had been given was no reason for setting the consent order aside.                   
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