Prenuptial Agreement – A Story without an Ending (as yet)
06 July 2010
Matthew Aves looks at a recent high profile case involving prenuptial agreements and questions what the future may hold.
Historically, as a basic principle prenuptial agreements were said not to be binding on English Courts. Until relatively recently the best that could be hoped for on the signing of such an agreement was that upon divorce a Court would find it “persuasive”.
The rules changed in the summer of last year when Appeal Court Judges ruled that the assets of Katrin Radmacher, a paper industry heiress said to be worth £100 million should be protected from Nicholas Granatino, her French ex-husband.
Four months prior to their marriage, the couple had entered into a prenuptial agreement in Germany.
They subsequently separated in 2006 at which point Ms Radmacher assumed (wrongly) that the English divorce court would uphold the prenuptial agreement which she and her husband had entered into. It was almost undoubtedly the case that the prenuptial agreement would have been upheld in either German (where the agreement was entered into) or France.
The agreement recited that other than in respect of financial provision for their two children, neither of them would make any financial claims against the other for themselves on divorce.
Mr. Granatino initially asked the Court for £10 million as a divorce settlement. He was awarded approximately £5.6 million.
On Appeal by Ms Radmacher, the Court of Appeal overturned this and Mr. Granatino’s settlement was cut to around £1 million as a lump sum in lieu of ongoing maintenance. The Court awarded £2.5 million so as to enable him to purchase a property to live in, which will ultimately be sold and the funds returned to his former wife when their youngest child (currently six) comes of age.
“So – they are worth doing?”
The legal position in England remains that prenuptial agreements are not enforceable. Any change in law would have to come from Parliament and there is little doubt that the new coalition Government has more pressing issues to deal with. The Law Commission is currently reviewing the status of pre and post nuptial agreements and their findings, expected next year, may well result in new legislation.
As recited above, English Courts have previously held that prenuptial agreements were persuasive when considering matters on divorce. It was always felt by Family Lawyers that certain circumstances would undoubtedly override the persuasiveness of the agreement. For instance, if there had been a failure to disclose all material financial facts by one party, a lack of legal advice or indeed if circumstances had changed significantly since the signing of the agreement (for instance, the birth of children) then the Court would be persuaded away from the prenuptial agreement.
These circumstances existed in the Radmacher/Granatino case, indeed the agreement was signed without the husband knowing the full extent of his wife’s assets and without having obtained independent legal advice. Nonetheless, the Court of Appeal upheld the decision. Some commentators query whether this is a sexist decision and , whether the Court’s approach would have been reversed had it been Mr. Granatino that was the wealthy party and Ms Radmacher seeking to depart from a prenuptial agreement. It has to be remembered that London is now seen as the divorce capital of the world for those wives with wealthy spouses.
Mr. Granatino has appealed the decision of the Court of Appeal to the House of Lords. The hearing has taken place and the decision of that Appeal is currently awaited. The decision announcement has unfortunately been delayed until after the Judicial summer recess (October).
As such, pending the outcome of the Law Commission’s deliberations and the decision of the House of Lords on Radmacher and Granatino we are currently in somewhat of a no man’s land in relation to prenuptial agreements. What we can say is that it is almost undoubtedly the case that Mr Granatino would have been much better off on divorce if there had not been a pre-nuptial agreement so from the perspective of his wife her worst case scenario is that the agreement is partially successful. Better than nothing.
Watch this space………
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