Now the dust has settled and the media noise has died down a bit it is time to take stock of the implications that arise from the English Supreme Court’s decision in the pre-nuptial agreement case of Radmacher v Granatino.
The facts of that case are reported elsewhere and are not material to these reflections. It must be pointed out that the reflections apply equally to pre-and post marriage and civil partnership agreements. For ease, and following the Supreme Court’s lead, they are referred to in this blog as “nuptial agreements”.
Lord Philips, giving the lead judgment, said:
“The court should give effect to a nuptial agreement that is
freely entered into by each party with a full appreciation of its
implications unless in the circumstances prevailing it would not
be fair to hold the parties to their agreement.”
So the elements that will point to a pre-nuptial agreement being binding are:
- That it was “freely entered into”
- That each party had a “full appreciation of its implications”
- That it is “fair” in the “circumstances prevailing.”
Where both parties have separate legal advisors then the chances are it will be quite straightforward to “tick” the first two elements of this test. We can foresee that for some there may be a temptation to argue that if they have been faced with a “sign this or the marriage/civil partnership won’t happen” ultimatum then the agreement will not tick the first box but we think that that argument will fail if there has been separate legal advice and the agreement has been signed well in advance of the ceremony.
It is the “fairness” box which may be harder to tick…or will it?
Lord Philips also said:
“The fact of the agreement is capable of altering what is fair.”
That is to say an outcome that may otherwise be unfair may not be simply because of the existence of the nuptial agreement.
“Where, however, these considerations do not apply and each party is in a position to meet his or her needs, fairness may well not require a departure from their agreement as to the regulation of their financial affairs in the circumstances that have come to pass”
In other words a nuptial agreement may not be unfair if needs can be met. It is clear that excluding “non matrimonial property” – that is, for example, property brought into the marriage or inherited during it – will not of itself be unfair.
In our view, what the judgment does is to seek to limit the circumstances when a party can claim that fairness requires the Court to vary the agreement. So when one has such an agreement fairness is actually a very different concept from the fairness envisaged in the House of Lords decision in 2000 in the case of White which introduced the concept of “the yardstick of equality” and the equal contributions of home maker and breadwinner. The Radmacher decision definitely elevates the status of the nuptial agreements without actually making them binding. However, the chances of them not being upheld by the courts have substantially diminished by their Lordships’ ruling.
It is worthy of comment that the dissenting judge, Baroness Hale, was not only the only woman on the Bench but also the only one who had practiced in the field of Family Law before becoming a judge. According to a survey conducted by YouGov the day after the judgement, 72% of the British public thought that nuptial agreements should be binding. To avoid the potential injustice of which Baroness Hale warned there will need to be very carefully drafted primary legislation and there will need to be widespread public information. Mr Granatino had every expectation when he entered into his pre-nuptial agreement that it would be binding because in Germany (where it was executed) and France (where he was from) such agreements are binding and commonplace. The same is not true in the UK.
If you think that any of the issues discussed in the blog may affect you then please contact firstname.lastname@example.org or telephone +44(0)20 7420 5000.