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The Implications of Radmacher
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Fiona Lazenby, family law solicitor and head of the family law department at East Midlands Law Firm Flint Bishop LLP analyses the impact of the long awaited Judgment on Pre-Nuptial Agreements, of Radmacher v. Granatino, delivered by The Supreme Court on 20 October 2010.
The Husband was a French National, and the Wife a German National, and they had signed a Pre-Nuptial Agreement in Germany three months before marrying. They had two children, and the marriage lasted eight years before they separated. The Wife and children went to live in Monaco whilst the Husband was based in Germany. The Pre-Nuptial Agreement provided that neither of them was to derive any interest in or benefit from the property of the other during the marriage, or its termination. It made no provision for what was to happen in the event of their having children.
The Pre-Nuptial Agreement had been the Wife’s requirement. She came from an extremely rich family. Some of the family wealth had already been transferred to her. Katrin Radmacher was said to be worth around £100million. Despite the Agreement, the Husband brought a claim for financial relief in the divorce proceedings. The initial Court hearing had given some consideration to the fact that there were children who were going to spend approximately a third of their time with their father. An award of over £5million was initially made. The First Appeal against the Judgment had overturned the award stating that the Agreement should be considered, and have an impact on the award to the Husband, reducing the award to £1million and a home fund of £2.5million, and this sum was to be returned to her when the children were independent. The Husband appealed to the Supreme Court, but in October this Court have dismissed his final route of appeal.
It is clear that the Supreme Court has clarified that there will be no different treatment to an Agreement signed before marriage, to an Agreement signed after marriage. It confirmed that the Court’s approach in divorce, and the rules and principles that the Court applies, will be the same.
The Court confirmed how they will evaluate the weight to be given to an Agreement. It is clear that both Husband and Wife must enter into the document freely, and be informed of its implications. There must be full material disclosure and information before the document is concluded, accompanied preferably by sound legal advice. The Court must be satisfied that the provisions of the Agreement are fair, and there are established guidelines within “fairness” of need, compensation and sharing. If an Agreement deals with those matters appropriately then there is no problem about giving effect to the agreement.
“The Court should give effect to a Pre-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”.
The question of fairness will depend upon the facts of the particular case and it is clear that the Court would not set down rules to fetter such flexibility, but it has given some guidance. Firstly, consideration must be given to the welfare of dependent children, and a Nuptial Agreement cannot be allowed to prejudice the reasonable requirements of any children of the family.
Secondly, that a Court should give respect to the decision of a couple as to the manner in which their financial affairs should be regulated, particularly where they have addressed existing circumstances and not merely the contingencies of an uncertain future. It would be paternalistic and patronising to override their agreement simply on the basis that the Court knows best.
Thirdly, it is recognised that frequently the motivation to make an Agreement may be the wish to make provision for existing property owned by one of them, or property that one is anticipating receiving from a third party. There may be good objective justification for it, such as the obligation towards existing family members. It is acknowledged that if the parties have something important to agree with one another, then it is much better, and more honest, for that agreement to be made at the outset, rather than left to become a source of disappointment or acrimony within the marriage.
Fourthly, where a Deed attempts to address the contingencies, unknown and possibly unforeseen, there is more scope for what happens to them over the years to make it unfair to hold them to their Agreement. In a situation where a Deed has provided for no recovery by each spouse from the other in the event of divorce, and the marriage (by length and contribution) should see the formation of a fortune which each spouse has played an equal role in their different ways in creating, but the fortune was in the hands, for the most part, of one spouse rather than the other, would it be right to give the same weight to their Agreement as in another perhaps very different example? The answer is likely to be no.
It is more likely to be the strands of need and compensation which might readily render it unfair to hold the parties to a Nuptial Agreement – the parties are unlikely to have intended that their Agreement should result, in the event of marriage breakdown, to one being left in a predicament of real need, whilst the other enjoys a sufficiency, or more. Similarly, if the devotion of one looking after the family and home has left the other free to accumulate wealth, it is likely to be unfair to hold the parties to an Agreement that entitles the latter to retain all that s/he has earned.
If then the Husband and Wife are able to meet his or her needs, then fairness may not well require a departure from their Agreement as to the regulation of their financial affairs, in the circumstances that have come to pass. In these circumstances, the Court will be most likely to make an order in the terms of the Nuptial Agreement in place of the order that it would otherwise have made.
The drafting of such Deeds requires specialist advice, along with advice to ensure that all requisite formalities are compliant. The Deed should be prepared and considered over a reasonable period of time before signature.
If you would like advice on this, or any other specific Family issue, please contact Fiona Lazenby, family law solicitor and head of family law on 01332 226174 or fiona.lazenby@flintbishop.co.uk
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