The much anticipated Supreme Court judgment in Radmacher v. Granatino [2010] UKSC 42 was handed down 20 November 2010. The court ruled in favour of Katrin Radmacher and said that "decisive weight" should be given to the prenuptial agreement that was signed by Katrin Radmacher and Nicholas Granatino in Germany. Some background to this case is provided in our article of 22 July 2009.
In review, Radmacher and Granatino were married in London in 1998. Their background was complex and international, Ms Radmacher (W) being a German national, and Mr Granatino (H) a national of France. They were each high earners, but it was W's family wealth that was the most significant. The prenuptial agreement was signed in Germany, and crucially, there was no disclosure of the extent of W's wealth.
Furthermore, H refused independent legal advice. Under the agreement, H waived his rights to W's wealth. It has been recognised that the agreement would have been binding in Germany and France. However, H brought a claim in the English Court for financial relief prompting the English Court to consider what weight should be given to the prenuptial agreement.
The case has been through the High Court and the Court of Appeal during the process of consideration. The most significant factors under consideration have included:
- The lack of procedural safeguards in place prior to entering the prenuptial, to include independent legal advice and disclosure.
- The fact of its enforceability in Germany and France.
- H's role as a father, which had not been considered in the prenuptial.
- Fairness.
- The extent to which the parties' needs were met.
The Judgment
The case moves England toward the enforceability of prenuptial agreements in the English courts, and brings England more in line with other areas of Europe where prenuptial agreements are already enforceable, such as Scotland, Germany and France.
The judgment did not set out a clear set of procedural safeguards, but Lord Philips observed that these should include looking at whether the parties had entered into the agreement voluntarily, without pressure, and were informed of its implications. Where there is any indication of any "material" lack of disclosure, information or advice, less weight will be given to the prenuptial agreement.
It is an important factor in this case that the prenuptial agreement would be enforceable under German law, where the agreement was signed, and signified that the parties intended the agreement to be binding on them at a time when the agreement would not have been enforceable in the English courts. It is possible that without this factor, the decision would have taken a different turn, putting greater emphasis on the lack of financial disclosure and legal advice received by H.
As is increasingly the trend in financial applications relating to divorce, emphasis was given to what was considered fair and reasonable, and what decision would best meet the needs of the parties and their children. Further, due consideration was given to the abilities of the parties to create their own wealth. Lord Phillips commented that H was "extremely able", and that fairness did not entitle him to a portion of W's family wealth, received from her family independently of the marriage. It was recognised that H had agreed to this by entering into the prenuptial agreement, and that it had been his own choice to abandon his career as a banker in London.
Case Significance
This case sets a precedent. Prenupital agreements should be given "decisive weight" by the Courts in exercising its discretion on the parties who enter into them. It does not mean that all prenuptial agreements will be binding in the UK, especially if they are deemed to be unfair at the time of divorce. The judges were very careful to describe the "weight" that they would attach to prenuptial agreements, and not to describe any "legally binding" effect that the prenuptial agreements may have. For couples who make a prenuptial agreement under English law, it is still likely to be decided on how fair the agreement is at the time of the divorce.
In this case, it is an extremely significant factor that the agreement would have been binding in the couples' respective home countries of France and Germany. Therefore, this case will be of interest to those couples who have an international life, which includes time living in London. Where they have a prenuptial agreement that would be enforceable in their home country, and they divorce in England, Radmacher provides that the agreement should be enforceable in the English courts.
Radmacher clarifies certain points on the enforceability of prenuptial agreements, but as dissenting Judge Lady Hale commented in her judgment, "the law of marital agreements is in a mess and ripe for systematic review and reform." The Law Commission is undertaking a review of the status and enforceability of such agreements. It is likely that Radmacher will be the beginning of the reform to recognise prenuptial agreements, and certainly not the end.
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