The much awaited Supreme Court judgment concerning the enforceability of pre-nuptial (or ante-nuptial agreements as they are referred to in the judgment) was delivered today. The 70 page judgment from Lord Phillips covered the question of whether the Court of Appeal erred in finding that the pre-nuptial agreement should be given decisive weight, when entered into freely by both parties, in an assessment under section 25 of the Matrimonial Causes Act 1973.
It was held that the Court of Appeal was correct to conclude that there were no factors which rendered it unfair to hold the husband to the agreement, by a majority of 8 to 1 with Lady Hale dissenting.
The facts were that the Husband and Wife were married in London in 1988. The husband is French and the Wife is German. They entered into a pre-nuptial contract before a Notary in Germany three months before the wedding at the instigation of the wife. Her family placing pressure upon her to ensure that further considerable wealth would be transferred to her upon the signing of the contract.
The contract was subject to German law and provided that neither party was to acquire benefit from the property of the other during the marriage or upon its termination. The contract was valid under German law. The Husband at the time was a banker, declined the opportunity to take independent legal advice, and signed the contract.
The parties separated in October 2006 after 8 years of marriage and produced two daughters. At this time the Husband had changed careers moving from banking to research studies at Oxford.
At the first hearing in the High Court Baron J awarded the husband £5.6million even though the pre-nuptial contract had stated that neither would seek maintenance from the other in the event of divorce. This sum was designed to provide him with an income of £110,000 for life and allow him to buy a property in London so the children could visit him.
The wife appealed to the Court of Appeal which allowed her appeal broadly on the basis that Baron J had not given sufficient weight to the existence of the pre-nuptial contract. The Court reduced the initial award to the husband to approximately £1million.
As stated the Supreme Court dismissed the Husband’s appeal. It identified three issues in the case to consider:
1. Were there circumstances attending to the making of the agreement which should detract from the weight given to it? The guidance given is that parties should be allowed to enter into agreements provided they enter them voluntarily, without undue pressure and be informed of its contents.
2. Did the foreign elements of the case enhance the weight which should be accorded to the agreement? In 1988 when signed under German law it was valid, this gave weight to the fact that the parties intended the agreement to be effective.
3. Did the circumstances prevailing at the time the court made its order make it fair or just to depart from the agreement? A pre-nuptial agreement may make provision which conflicts with what a court would otherwise consider fair, however the principle to be applied is that a court should give effect to an agreement if it is freely entered into by each party with a full appreciation of its implications unless it is not fair to hold the parties to the agreement.
Having considered these questions the Supreme Court concluded that there were no factors which rendered it unfair to hold the Husband to the agreement. The Husband was a capable man who would be able to live off the generous provision made to cater for the needs of his daughters until the youngest reached the age of 22. Fairness did not entitle him to a portion of his Wife’s wealth received from her family independent of the marriage, when he had agreed he should not be so entitled when he married her.
Lord Mance agreed with the conclusion of the majority but in common with Lady Hale who dissented expressed no view on the binding or other nature of a pre-nuptial agreement which did not arise for decision.
For further discussion about the case of Radmacher v Granatino please contact me either through discussion or privately at email@example.com