Landmark Pre-Nuptial Agreement RulingThe Radmacher v Granatino decision
On Wednesday 20 October 2010, the Supreme Court of England and Wales ("the Supreme Court") handed down judgment in the case of Radmacher v Granatino. The hearing of this appeal by the Court of Appeal had taken place in March 2010 concerning the case of German heiress Katrin Radmacher.
Ms Radmacher has an inherited fortune estimated at some £100 million. She sought to rely upon the terms of a Pre-Nuptial Agreement ("the Agreement"), signed prior to her marriage to French national Nicholas Granatino, within the financial proceedings following their divorce in the English Courts.
The case has received much publicity as the decision sheds light on the validity of such agreements under English law. Although such agreements are binding in both France and Germany, they have not been persuasive in the English Courts.
The Agreement stated that Mr Granatino would make no claim against Ms Radmacher's fortune in any future divorce proceedings between them. Their Agreement was drawn up by a German notary appointed by Ms Radmacher and was signed before him. Mr Granatino appealed to the Supreme Court after the Court of Appeal reduced his original divorce settlement from more than £5million to £1million.
The Court of Appeal's view was that "decisive weight" should be given to the Agreement signed by the parties. By a majority of 8 to 1, the Supreme Court upheld the decision of the Court of Appeal. The dissenting voice was that of Lady Hale, the only family judge involved with the hearing of the appeal.
The Supreme Court's view was that effect should be given to such Agreements which are freely entered into and where doing so would not be unfair. Note that the Supreme Court did not say that such Agreements are now legally binding, only Parliament could make such a change in the law through legislation.
The Court stated that such Agreements cannot oust the Court's jurisdiction but "The Court must, however, give appropriate ("decisive") weight to such an agreement.". Whether a Court will give "decisive weight" to such an Agreement will be considered on a case by case basis and with regard to all circumstances of the case, but any such Agreement would need to comply with the six safeguards (see below) recommended in the 1998 Home Office Consultation Document called "Supporting Families".
A report from the Law Commission, which is currently considering this area of law, is expected in 2012. It is submitted that Pre-Nuptial Agreements should now be seen as a consideration when contemplating either marriage or a civil partnership, and this is particularly the case where there is a disparity between the two parties in terms of the assets being brought into the marriage or civil partnership.
"The Six Safeguards"
1. Where there is a child of the family, whether or not that child was alive or a child of the family at the time the agreement was made.
2. Where under the general law of contract the agreement is unenforceable, including if the contract attempted to lay an obligation on a third party who had not agreed in advance.
3. Where one or both of the couple did not receive independent legal advice before entering into the agreement (although, interestingly, Mr Granatino did not, although he was invited to do so).
4. Where the court considers that the enforcement of the agreement would cause significant injustice (to one or both of the couple or a child of the marriage).
5. Where one or both of the couple have failed to give full disclosure of assets and property before the agreement was made.
6. Where the agreement is made fewer than 21 days prior to the marriage (this would prevent a nuptial agreement being forced on people shortly before their wedding day, when they may not feel able to resist).
PCM Solicitors services include the drafting of agreements for couples planning to marry or enter into a civil partnership, and advising on the legal status of existing agreements in light of recent precedents.
For initial free advice please contact Caroline Ford by email or phone 020 3096 7500.
Please read also our Brief Guide to Pre-Nuptial Agreements