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Supreme Court upholds Court of Appeal decision in Radmacher

Majority hold that pre-nuptial agreement is binding on the husband

In Radmacher (formerly Granatino) v Granatino [2010] UKSC 42 the Supreme Court has decided by a majority (Lady Hale dissenting) that the Court of Appeal was correct to hold the husband to the pre-nuptial agreement made by the parties.

The appellant and respondent were married in London in 1998. The husband is French and the wife German. They entered into an pre-nuptial agreement before a notary in Germany at the instigation of the wife, to whom a further portion of her family's considerable wealth would be transferred if an agreement was signed. The agreement was subject to German law and provided that neither party was to acquire any benefit from the property of the other during the marriage or on its termination. The husband, who at the time worked as a banker, declined the opportunity to take independent advice on the agreement. The parties separated in October 2006 after 8 years of marriage. They have two daughters.

In the High Court Baron J had awarded the husband £5.5m even though the pre-nuptial agreement had stated that neither party would seek maintenance from the other in the event of divorce. The wife appealed to the Court of Appeal.

Giving the lead judgment, Thorpe LJ allowed the wife's appeal broadly on the grounds that Baron J had not given sufficient weight to the existence of the pre-nuptial agreement in her initial award. He said:

"In future cases broadly in line with the present case on the facts, the judge should give due weight to the marital property regime into which the parties freely entered. This is not to apply foreign law, nor is it to give effect to a contract foreign to English tradition. It is, in my judgment, a legitimate exercise of the very wide discretion that is conferred on the judges to achieve fairness between the parties to the ancillary relief proceedings."

The Supreme Court (by a majority of 8 to 1) has dismissed the appeal. The substantive judgment is given by Lord Phillips (President), with an additional judgment from Lord Mance. Lady Hale gives a dissenting judgment.

The majority determined 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. He is extremely able and his own needs will in large measure be indirectly met from the generous relief given to cater for the needs of his two daughters until the younger reaches the age of 22. There is no compensation factor as the husband's decision to abandon his career in the city was not motivated by the demands of his family but reflected his own preference. Fairness did not entitle him to a portion of his wife's wealth, received from her family independently of the marriage, when he had agreed he should not be so entitled when he married her.

In the view of Lady Hale there remain important policy considerations justifying a different approach for agreements made before and after a marriage.

Responding to the Supreme Court's judgment in Radmacher vs Granatino, Resolution's Andrew Greensmith said:

"Today's judgment is a major step forward. We know that financial uncertainty is one of the most stressful elements of any divorce, and a pre-nuptial agreement can be a useful tool for couples wishing to reduce this uncertainty.

"However, until today the enforceability of pre-nups has been very uncertain because they were seen as contrary to public policy and an attempt to override divorce laws. That principle has been swept away by today's judgment, which paves the way for these agreements to become more mainstream and less the preserve of the rich and famous."

Andrew Greensmith continued:

"With second marriages on the rise, people marrying later, and many couples entering marriage with money and property already to their name, it is likely that there will be more and more demand for pre-nuptial agreements. This much-needed judgment clarifies their status and is a victory for fairness and common sense".

You can read the judgment and Supreme Court summary here

To read the initial thoughts of James Turner QC on the judgment, click here.