It has only been a month since we last wrote about pre-nups and marital agreements, and we do usually like to try to vary our blog posts to keep them interesting. However there’s been quick progress since our last update, including a conflicting decision and the release of the Law Commission’s report into the whole area of marital agreements. So here we go again!
The new decision was reported widely in the press – the Telegraph’s tagline was “Law is gold-digger’s charter, bemoans wealthy divorcee” – and featured Victoria Luckwell (daughter of tycoon Mike Luckwell, the man behind Bob the Builder amongst other things) and her penniless husband Frankie Limata.
The couple met in 2005 and have three children. Unusually, there were also three marital agreements. Shortly before they married they drew up a pre-marital agreement in which Mr Limata agreed that he would not make any claim either during or after the marriage in relation to Ms Luckwell’s property, or to gifts made to her by her family. Later on when Ms Luckwell’s parents made financial gifts to her to assist with property purchases, there were two further agreements signed which also provided that Mr Limata would make no claim against the funds provided. It was clear that had the initial pre-nuptial agreement not been signed, the marriage would not have taken place and if the second and third supplemental agreements had not been made, the parents would not have made the further gifts to the wife. By making financial claims against his wife, the judge was aware that Mr Limata was acting in breach of what he had earlier agreed to.
Notwithstanding all of that, the judge awarded Mr Limata around £1.2m to buy a home and car and clear his debts. Although “very great weight indeed” should be given to the agreements, the judge proceeded to criticise their unfairness to Mr Limata in that they provided nothing for him no matter how long the marriage lasted or whatever his own needs were. At the time of the hearing, Ms Luckwell and the children were living in a home worth £6.7m in central London provided for her by her father and were supported by her parents, and Mr Limata had no home, no income, no borrowing capacity, and considerable debts.
The judge said that the financial needs of the parties were the only thing capable of having the effect that the agreements should not be applied rigorously and to the letter. Focussing on the children, he said that it would be a damaging situation for them if they lived with their mother in relative luxury, but saw their father in relative penury. This created a need for Mr Limata to have accommodation in which all three children could stay with him and which did not demean him too much relative to their mother.
The judge awarded Mr Limata £900,000, a sum sufficient to house him until the youngest child reaches 22. At that point his house must be sold with 45% of the proceeds being returned to Ms Luckwell, and the balance reinvested by him in a smaller home. It is clear that were it not for the agreements, the fund would have been larger and awarded outright. Additionally, Ms Luckwell was also ordered to pay around £300,000 to cover Mr Limata’s debts and to allow him to fund a car and furnish his property.
The case is interesting as it is based entirely on the needs of the husband, with specific reference to his role as a father and therefore the children’s needs. The funds are to be used only for housing; he does not get to spend ready cash, and they are time limited. So whilst in some ways this judgment seems like a backwards step in the judicial march to uphold marital agreements, the agreements in this case were still given great weight, and only the needs of one party were able to dislodge them. There are strong echoes here of the case of Radmacher v Granatino which reached the Supreme Court in 2010 and which is where the modern era of upholding marital agreements began.
Meanwhile, the Law Commission has published its long awaited report into Matrimonial Property Needs and Agreements. The report covers not just marital agreements, but also looks at the wider issues of needs and financial settlements. “Needs” are generally the defining features of any financial settlement, and the Law Commission has recommended that the Family Justice Council produce authoritative guidance explaining how judges approach needs and progress towards the ideal of former couples achieving financial independence.
In relation to marital agreements the Law Commission recommends the introduction of “qualifying nuptial agreements”. These QNAs would be binding so long as they deal appropriately with both partners’ financial needs and any financial responsibilities towards children, and provided there was financial disclosure and legal advice at the time of signing, 28 days before a wedding. It is in large part a formalisation of the courts’ current approach, but the recommendation of statutory force does have the capacity to bring about an increase in the use of agreements in a family context, and it would be much more difficult to challenge these agreements through the courts.
The Law Commission says that the door to the court should remain open in cases where circumstances change after the signing of the agreement that mean its provisions no longer meet a family’s needs. In those cases a court could make an order to ensure financial needs are met but would leave all other elements of the agreement in place. We’ll have to wait and see what the government’s response might be, but as always in matters of family law any progress depends on the will of the Executive, the application of political pressure from various directions, and the availability of parliamentary time.
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