Pre-Nuptial Agreements

By Martin Ridings, Partner in the Family Law Department

Pre-nuptial agreements are in the news again after another important Court of Appeal decision which provides more evidence that the Courts are increasingly taking such agreements into account when deciding how to divide the marital finances.

The case concerns Karen Radmacher, a German millionairess and her former husband, Nicolas Granatino, a French national, who had agreed in a pre-nuptial agreement not to make any financial claim against her should they divorce.

When the case first came to Court, Mr. Granatino was awarded £5.8 million of her estimated £100 million fortune. However, this has been overturned on appeal. Lord Justice Thorpe delivered the lead judgment, stating that it had become “increasingly unrealistic” for Courts to disregard pre-nuptial agreements.

It is quite a lengthy judgment, running to 47 pages in all. For those of you interested in reading the full judgment it is available at http://www.bailii.org/ew/cases/EWCA/Civ/2009/649.html

The Courts have come a long way in the last 15 years, as Lord Justice Thorpe himself accepts. In the 1995 case of F v F, he said of pre-nuptial agreements that “In this jurisdiction they must be of very limited significance”. This contrasts sharply with his comments in the Radmacher case.

The change in attitude has taken place without any new legislation being passed, although there have been calls for pre-nuptial agreements to be recognized in law for several years. Resolution, formerly the Solicitors Family Law Association, published a report in 2005 recommending legislative reform.

It is argued that there has been a general shift in attitude in society as a whole. What is wrong with 2 adults coming to an agreement as to what will happen should their marriage break down? Is it the place of the Courts to interfere with such agreements? Well, Mr. Granatino seems to think so as he is considering appealing to the House of Lords.

It is also significant that the agreement in this case was signed in Germany (where such contracts are already enforceable) and that both parties to the marriage came from countries where pre-nups have legal force.

Yet we are still left with uncertainty. Whist the Courts now place much more weight on pre-nuptial agreements, there is still no guarantee that they will be conclusive. In other words, signing up does not automatically provide protection because the Courts retain a discretion to impose their own settlement. Even in this case, the Mr. Granatino did not come out with nothing – his award was reduced to £1 million as a lump sum in place of maintenance and a fund of £2.5 million has also been set up for a house although this will be returned to Miss Radmacher once the youngest of the 2 children reaches the age of 22.

Confused? You are probably not alone. Further research is to start later this year with a report and draft legislation in 2012. With any luck we might then have some certainty. After all, is there any point entering into a pre-nuptial agreement if you have to go all the way to the House of Lords to find out whether it was worth all the effort?

What do you think?