The status of prenuptial agreements (i.e. agreements entered into by couples before they marry, setting out what will happen to their money and property should the marriage break down) under English law has long been a subject of considerable discussion. Whereas in many countries they are enforceable, in this country that is not the case, as the court can order a different settlement. As we shall see, however, that is not to say that they are of no importance at all.
The issue of the status of prenuptial agreements fell to be considered by the Supreme Court in 2010, in the case Radmacher (formerly Granatino) v Granatino.
The facts in Radmacher were as follows. The husband is French and the wife is German. Prior to their marriage they signed a prenuptial agreement in Germany (where it was valid), which provided that in the event of dissolution of the marriage neither party was to make a monetary claim against the other in any financial remedy proceedings. The agreement had been entered into at the instigation of the wife, who wanted to protect the wealth that she had already received from her family, along with a further portion of her family’s wealth that she would only receive if she entered into the agreement.
The parties lived together for the majority of their marriage in London and have two children. They separated in 2006 and divorce proceedings were subsequently issued. The husband applied to the court for a financial settlement and the High Court awarded him £5.6 million.
The wife appealed and the Court of Appeal allowed her appeal, broadly on the grounds that the High Court had not given sufficient weight to the existence of the agreement, though still providing the husband with some housing and other funds to reflect the fact that he and the wife were sharing residence of the children. The husband appealed to the Supreme Court.
The Supreme Court dismissed the appeal, by a majority of eight to one, with only Lady Hale dissenting. The President, Lord Phillips, giving the substantive judgment of the majority (i.e. of himself and Lords Hope, Rodger, Walker, Brown, Collins and Kerr) set out the following proposition:
“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.”
Applying that proposition, or principle, to the facts of the case Lord Phillips found that there were no circumstances which made it unfair to hold the husband to the agreement. He was extremely able and, with the help of the funds for the children, was capable of meeting his needs. There was no reason why he should receive compensation from the wife and he should not be entitled to a share of the wife’s wealth that she had received from her family, as he had agreed when he married her that he should have no such entitlement. Accordingly, his appeal was dismissed.
The Law Commission has for some time been considering the issue of prenuptial agreements (and also agreements entered into after marriage, known as ‘post-nuptial agreements’). In February the Commission published a report recommending that legislation be enacted to introduce “qualifying nuptial agreements”. These would be enforceable contracts, not subject to the scrutiny of the courts, which would enable couples to make contractual arrangements about the financial consequences of divorce or civil partnership dissolution. The Ministry of Justice is currently considering the recommendation.
For the moment, though, Radmacher represents the current state of the law regarding prenuptial agreements.