Edgar v Edgar

A spouse cannot, by a covenant in a separation agreement, exclude the court’s jurisdiction to award financial relief on divorce. The agreement remains a highly material circumstance when the court exercises its statutory discretion.

A formal agreement, freely and fairly negotiated with competent legal advice, should ordinarily be upheld. It should be displaced only where good and substantial grounds show that holding a party to it would be unjust. Relevant matters include undue pressure, unfair exploitation of a dominant position, inadequate knowledge or advice, and a material unforeseen change of circumstances. Mere inequality of wealth or bargaining power is insufficient without unfair use of that advantage.

The husband appealed against Eastham J’s order in financial-relief proceedings following the parties’ divorce. The judge had awarded the wife a lump sum of £670,000 and discharged the parties’ separation deed.

The deed gave the wife a home, income and other provision, but included her covenant not to seek further capital or property provision after a divorce. The wife nevertheless sought a substantial lump sum. She relied principally on the husband’s greater wealth and her fears concerning the children when the agreement was made.

The central issue was the weight to be given, under the Matrimonial Causes Act 1973, to a freely negotiated covenant not to claim further capital provision.

1. Appeal allowed. Ormrod LJ delivered the leading judgment. Oliver LJ agreed fully. The court held that the wife had not established grounds to be relieved from her covenant, and dismissed her applications under sections 23 and 24 of the Matrimonial Causes Act 1973.
2. Following Hyman v Hyman (1929) AC 601, the covenant could not deprive the court of jurisdiction. It was nevertheless a most relevant consideration when the court exercised its statutory discretion.
3. In applying section 25, the court must consider all the circumstances and the parties’ conduct. A formal agreement, properly and fairly made with competent legal advice, should not be displaced unless good and substantial grounds show that injustice would otherwise result. The party seeking further provision must produce prima facie evidence of material facts showing that justice requires relief from the agreement.
4. The relevant inquiry was not whether the husband had greater bargaining power. It was whether he had unfairly exploited that position to induce the wife to act to her disadvantage. Undue pressure, exploitation, inadequate knowledge or advice, and a material unforeseen change of circumstances may be relevant. The list is not exhaustive.
5. On the evidence, the wife knowingly rejected legal advice and freely accepted the covenant while seeking an arrangement that enabled her to leave with the children. There was no evidence that the husband had applied unfair pressure, exploited his wealth or position, or made the covenant a condition of the arrangements. There was also no significant subsequent change of circumstances. Her ability to have obtained a better settlement through litigation did not make the agreement unjust.
6. The question of appropriate periodical payments for the wife and children was remitted for determination in default of agreement. There was no order as to costs.

• Court of Appeal (Civil Division): The husband’s appeal was allowed in [1980] EWCA Civ 2. The lump-sum order was displaced, the wife’s applications under sections 23 and 24 of the Matrimonial Causes Act 1973 were dismissed, and periodical payments were remitted for determination.
• Family Division: Eastham J, on 27 March 1980, awarded the wife a lump sum of £670,000, dismissed other financial claims on payment, and discharged the separation deed.