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Radmacher v Granatino: Preliminary Thoughts on the Decision of the Supreme Court

James Turner QC of 1 King’s Bench Walk provides his initial thoughts on the Supreme Court’s decision in Radmacher v Granatino.

James Turner QC, 1 King's Bench Walk   

The long awaited judgment in the Radmacher appeal has finally been delivered and its massive content (195 paragraphs) provides much food for thought and material for further debate.  The Supreme Court's press office has produced a helpful summary which prefaces the judgment on the Family Law Week website, but clearly, a full and proper analysis will require more time for reflection.  The initial reactions below are, inevitably, based on a selective and fairly superficial consideration of the judgment.  A more considered assessment will follow next week.

The bottom line is that the appeal against the decision of the Court of Appeal has been dismissed by a majority of the members of the Supreme Court (8 out of 9).  The interesting point in relation to the fact that the decision was not entirely unanimous is that the dissenter was Baroness Hale, the member of the court with the most direct "hands on" experience of family law cases in England and Wales.

The essential (and unsuccessful) basis of the appeal had been an assertion that the Court of Appeal had, in the particular circumstances, attached weight (or too much weight) to the existence of a pre-nuptial agreement between the parties.

Of course, contrary to the expectations of the popular press, it was never going to be possible for the court to rule that pre-nuptial agreements should, as a matter of law, always be binding.  However, the decision of the majority of the members of the court, bearing in mind the confines of the existing legislation, seems to go a very long way down that path. 

The essential point of principle now established is to be found in paragraph [75] of the judgment of seven members of the majority (to which Lord Mance added a separate judgment), namely:

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.

That principle sounds very much like a rebuttable presumption that nuptial agreements will be binding, and goes further than the previous approach which was to the effect that in all of the circumstances of a particular case the existence of a nuptial agreement may have a magnetic force and prove determinative. 

An approach that involves a presumption would seem to run counter to the conclusion of the House of Lords in White v. White [2000] UKHL 54 that there should be no presumptions in the application of section 25 of the Matrimonial Causes Act 1973, and also (incidentally) might be thought to undermine the criticism often made of the approach in cases concerning leave to remove children from the jurisdiction, which criticisms are to the effect that the approach mandated in such cases in truth involves a presumption, rather than an application of the words of section 1 of the Children Act 1989 without any presumption or judicial gloss.

If it was thought in White v. White that there is good reason to avoid presumptions in the application of section 25, why does such reasoning not hold good in relation to nuptial agreements which, after all, are not even specifically mentioned in section 25, but are implicitly brought in by that section as one of the circumstances of a case, or as an example of "conduct" that it would be inequitable to disregard?  Why is it that no other common feature of a case gives rise to any presumption?  Why for example, is there no presumption in relation to "inherited wealth", irrespective of whether or not it features in a nuptial agreement (as to which see para. 79)? 

In the application of the rationale for redistribution of resources explained in Miller v. Miller; McFarlane v. McFarlane, the courts will usually avoid invading inherited wealth to any greater extent than necessary, but that will not provide any protection where, for example, financial needs of one party can only be met out of the inherited wealth of the other party – often, some sort of balance will have to be struck between competing considerations, but that does not seem to be the approach where a nuptial agreement is involved.  The Supreme Court has certainly now said that a nuptial agreement cannot be allowed to prejudice the reasonable requirements of any children of the family (para. [77]), but could the otherwise unmet financial needs of one of the divorcing parties ever mean that "it would not be fair to hold the parties to their agreement"?  A rather open-ended answer is to be found in paragraph [82] – see also paragraph [79].

It must also be borne well in mind that not all nuptial agreements will deal simply with pre-marital wealth, and the uncertainty of the future provides particular scope for problems where nuptial agreements are concerned. 

It is also of note that the principle set out in paragraph [75] applies to all nuptial agreements, whether pre-nuptial, or post-nuptial, and the majority of the members of the court have rejected the distinctions drawn by the Privy Council in MacLeod in that regard (see also para. [66]).

Some limited and fairly bland guidance is given as to "the difficult question of the circumstances in which it will not be fair to hold the parties to their agreement", and it is said that "This will necessarily depend on the facts of the particular case, and it would not be desirable to lay down rules that would fetter the flexibility that the court requires to reach a fair result" (para. 76).  However, it might be thought that the principle now laid down by their Lordships has already gone some way towards fettering the flexibility of the court. 

It may be said inhibitions on flexibility are justified by the desirable aim of providing predictability, but even now there is no absolute predictability, because of the apparent flexibility of the "get out" considerations, and it may be thought by some that absolute flexibility is desirable if true fairness is to be achieved in an area of life where things may turn out very differently from what may be envisaged by any crystal ball gazing that takes place at a time when a nuptial agreement is entered into.  Indeed, when discussing the problem of unforeseen and unforeseeable  changes the majority decision indicates that such factors may in a given case make it unfair to hold the parties to their agreement, and that the longer the marriage has lasted, the more likely it is that this will be the case (para. 80).  This seems to be an invitation to litigate.

The justification given for the importance to be attached to nuptial agreements is that "there should be respect for personal autonomy" (para. 78), but that may be thought to be less than entirely convincing in the context of a non-commercial environment where it will be impossible to predict the future and where there may be real inequality of bargaining power (emotional and otherwise).  One can foresee arguments in future cases on the basis that the agreement was not "freely entered into" and/or that one party did not have a "full appreciation" of the implications of the agreement.  All of this seems to be acknowledged in paragraphs [68] to [73] of the majority decision.

Of course it may be possible to counter such arguments to some extent by measures such as full advance disclosure of financial resources and independent legal advice (said to be "obviously desirable"), but it seems that it will not necessarily be unfair to hold parties to an agreement in the absence of such features – all will depend on the particular circumstances, such as whether non-disclosure was really "material", or whether the other party was "indifferent" to the detailed particulars, and whether each party was in fact fully aware of all the implications of the agreement (para. [69]).

All of the matters discussed in the judgment as factors that may support or undermine any given nuptial agreement make complete sense, but given the multitude of such features and the necessarily imprecise guidance given in relation to them, why, it might be asked, are any presumptions necessary?  What is really wrong with a general assessment by the court of what is a fair outcome in all of the various circumstances of an individual case, and are any presumptions not really an unwarranted gloss on the applicable statute as Baroness Hale appears to think?

A nuptial agreement is certainly unromantic; it will have importance in any financial dispute on divorce, but it cannot be guaranteed to provide the ultimate answer, or avoid litigation in any given case.