A Return to Radmacher

1 January 2013

In Radmacher v Granatino(1) the Supreme Court supposedly gave weight to pre-nuptial agreements but what the Supreme Court actually held back in late 2010 was:

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.”

Of particular interest is the caveat contained in the second half of the statement, the inclusion of the possibility of the court taking into account “fairness” when considering the outcome of the case. This corridor of uncertainty when dealing with pre-nuptial agreements was exactly what the decision in Radmacher was intended to resolve, but it seems the courts could not bring themselves to do away with the concept completely.

The exact approach that the courts would take to the outcome in Radmacher was never going to be known until the court was next presented with the opportunity to delve into the issue. However, a wait of over a year was to follow the decision before the first contested case arrived for consideration. The courts have now given their decision in the case of Z v Z and the outcome can hardly be considered surprising.

The facts of Z v Z (2) are as follows. The case concerned a French couple who had entered into a Separation de Beins – a French pre-nupitial agreement – prior to the marriage. The marriage produced 3 young children and assets totalling £15 million. However, only a small proportion of the total assets were in the sole name of the wife, and she had surrendered any rights in all other property when she signed the Separation de Beins. Divorce proceedings began in England.

The wife raised two challenges against being held to the Separation de Beins. Firstly, she contended that the agreement should be ignored on certain grounds. If English law applied and the Separation de Bein was not given effect, then the wife would have received 50% of the total assets in accordance with the “sharing” principle (per White v White). Secondly, she argued that her “needs” required her to have a 50% share in any event, whether or not she was held to the agreement.

The judge rejected the first submission from the wife and upheld the agreement, giving it weight in accordance with Radmacher. This therefore marked a departure from the “sharing” principle. However, he then made provision for the wife’s needs. It was held that the wife should still be entitled to 40% of the total assets on the basis of the “needs” principle. The judge considered, and placed emphasis, on the principle of “fairness” contained in Radmacher (as set out above).

So what has Radmacher v Granatino actually achieved? It clearly has not given pre-martial agreements binding force in English law. This is not surprising giving past reluctance to acknowledge such agreements. The caveat of fairness in the judgement has provided the courts with the wriggle room to decide for themselves what is a “fair” award in the circumstances. Some argue that it has strengthened the position of such agreements, as the mere existence of a pre-nuptial contract now shifts the balance away from the “sharing” principle towards the agreement of the parties. However, ultimately the outcome of each case will continue to turn on their own facts, and as seen in Z v Z (No. 2) the court will only give weight to a pre-nuptial agreement to the extent that it believes it is fair to do so. It is not the intention of this article to suggest that fairness for all parties is wrong, but it was hoped that Radmacher would provide some clarity and decisiveness to the uncertainty surrounding pre-nuptial agreements. Clearly it has failed to do so, leaving the exact nature of their legality somewhat still undetermined.

If you would like advice on pre-nuptial agreements, or any other aspect of family law please contact the Family Law Team at Gepp & Sons on 01245 228106 or paynes@gepp.co.uk for a FREE INITIAL CONSULTATION.

The above is not legal advice; it is intended to provide information of general interest about current legal issues.

1 Radmacher v Granatino [2010] UKSC 42
2 Z v Z [2011] EWHC 2878
3 White v White [2001] 1 AC 596