Supreme Court’s decision in Radmacher v Granatino
In the Supreme Court judgment in the long awaited case of Radmacher v Granatino on pre-nuptial agreements, Lady Hale (in her dissenting judgment) has described the law relating to marital agreements as “a mess and ripe for systematic review and reform.”
The Supreme Court found in favour of German heiress Karen Radmacher in upholding the earlier decision of the Court of Appeal by a majority of 8:1on the basis that there were no factors which rendered it unfair to hold the husband to the agreement. The husband was described by the court as “extremely able”.
The Supreme Court has not specifically confirmed the enforceability of pre-nuptials or other marital agreements – the decision was based upon the circumstances of the parties – but this decision may be viewed as giving greater “weight” to such agreements where large sums of money are involved and both parties have at least a degree of financial independence. As stated by Lord Philips in his leading judgment “In the right case an ante-nuptial agreement can have decisive or compelling weight.”
A significant difference in Radmacher from most families is that both parties were wealthy at the time of marriage – the wife an heiress and the husband a high earning banker. The Law Commission is currently reviewing the enforceability of marital agreements generally.
In the legal profession views on pre-nuptials fall largely into two camps. Those who support a change in the law champion issues of certainty and consistency with other countries where pre-nuptials are already enforceable (including the home countries of the parties in Radmacher v Granatino, Germany and France). In the other camp are those who express concern that it will generally be the financially wealthier party who seeks a pre-nuptial and that the other party may be placed under emotional pressure to enter into an agreement that may not be in their interests.
The reality of relationships is that they are far from businesslike and that factors which the court would take into account under the current discretionary system, such as children’s needs and changes to a career path due to child care responsibilities, may not be sufficiently provided for in a pre-nuptial agreement. The Law Commission recommendations in due course are expected to include recommendations regarding independent legal advice for both parties and full financial disclosure prior to a pre-nuptial agreement.
Geraldine Morris is a solicitor and Family expert at LexisNexis.