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Radmacher v Granatino : A Legal Revolution
http://www.supremecourt.gov.uk/docs/UKSC_2009_0031_Judgment.pdf
By a majority of 8 to 1, in Radmacher ([2010] UKSC 42) the Supreme Court has taken a huge step towards recognising pre-nuptial agreements. i) From now on, the courts will give effect to a pre-nup that has been freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to do so; ii) The traditional rule that pre-nups are contrary to public policy has been disapproved, iii) Also disapproved is the distinction drawn by the Board of the Privy Council as recently as December 2008 in Macleod v Macleod [2008] UKPC 64; [2009] 1 FLR 641 that pre-nups were „very different‟ from agreements reached post-nuptially.
Equally, the Supreme Court‟s decision represents a spectacular success for Karin Radmacher. With a fortune estimated at £100m, her former husband will receive a little over £1m together with the use of a London house while their children are minors. Mr Granatino, who was originally awarded £5.6 million at the High Court ( NG v KR (Pre- Nuptial Contract ) [2008] EWHC 1532 (Fam), [2009] 1 FLR 1478, now faces an uncertain future with much (if not all) of his award of £1m going in legal fees.
In a powerful dissenting opinion, Lady Hale, the only member of the Supreme Court with a family law background, commented that the object of a pre-nup was invariably “…to deny the economically weaker spouse the provision to which she - it is usually although by no means invariably she - would otherwise be entitled”. Lady Hale commented that there was a “…gender dimension to the issue”, namely that the presumption in favour of pre-nups will be to the detriment of wives more often than husbands, observing that the court consisted of eight men (in the majority) and one woman (dissenting).
Main points arising from the majority opinion (Lord Philips, Lord Hope, Lord Rodger, Lord Walker, Lord Brown, Lord Collins, Lord Kerr)
i) It remains the case that a pre-nuptial agreement is not enforceable of itself. The parties still cannot enter into a binding contract that can preclude either side applying to the courts on divorce. The court remains the „…arbiter of the financial arrangements between the parties when it brings a marriage to an end‟ [3]. „…There can be no question of this Court altering the principle that it is the Court, and not any prior agreement between the parties, that will determine the appropriate ancillary relief when a marriage comes to an end, for that principle is embodied in the legislation‟ [7].
ii) The Supreme Court effectively over-ruled itself (albeit sitting as the Board of the Privy Council) in Macleod , that (a) pre-nups were contrary to public policy and (b) drawing the distinction with agreements reached after marriage („post-nups‟) which could be enforced or varied as separation agreements; “…we consider that the Board in MacLeod was wrong to hold that post-nuptial agreements were contracts but that ante-anptial agreements were not… It is a red herring. Regardless of whether one or both are contracts, the ancillary relief court should apply the same principles when considering ante-nuptial agreements as it applies to post-nuptial agreements” [63]
iii) As to the factors detracting from weight which would be accorded to the pre- nup: “…If an ante nuptial agreement…is to carry full weight, both the husband and wife must enter into it of their own free will without undue influence or pressure, and informed of its implications” [68]
iv) There was no need for „black and white rules‟ regarding enforceability (such as set out in 1998 White Paper Supporting Families ) but “there is no need for them, however, in the current state of the law… we consider that the Court of Appeal was correct in principle to ask whether there was any material lack of disclosure, information or advice”. Where a party is indifferent to detail of the other party‟s finances, no need to accord less
ix) As to future circumstances, where a pre-nup provides for no relief, long marriage and building up of fortune in one party‟s hands, it is likely the pre- nup not followed [80]
Lord Mance‟s opinion i) Lord Mance agreed with the Majority but expressed no view on the binding nature of a pre-nup [128], questions whether the difference in the proposed tests (in bold, above and below) will be significant in practice [129] but agrees with the Court of Appeal conclusion that “The provision of a home for the husband and for his needs as a father, carer and homemaker for the children will, in the circumstances, more than adequately provide him with the means to support his own needs. There is no case for making that home and financial support his to command for the whole of his life-time.” (Rix LJ at [81])
Lady Hale‟s minority opinion i) The „irreducible minimum‟: „Nowadays there is considerable freedom and flexibility within the marital package but there is an irreducible minimum. This includes a couple‟s mutual duty to support one another and their children‟ [132]
ii) The time is ripe for systematic review and reform, but this ought to be undertaken by Law Commission and Parliament: “…that is the democratic way of achieving comprehensive and principled reform‟ [135]
iii) As to the conflict between freedom of contract and the court‟s role in approving agreements:
“Some may regard freedom of contract as the prevailing principle in all circumstances; others may regard that as a 19th^ century concept which has since been severely modified” “Some may regard people who are about to marry as in all respects fully autonomous beings; others may wonder whether people who are typically (although not invariably) in love can be expected to make rational choices in the same way that businessmen can”
“Some may regard the recognition of these factual differences [imbalance of bargaining power] as patronising or paternalistic; others may regard them as sensible and realistic. Some may think that to accord a greater legal status to these agreements will produce greater certainty and lesser costs should the couple divorce; others may question whether this will in fact be achieved, save at the prince of inflexibility and injustice‟ [135]
iv) „the object of an ante-nuptial agreement is to deny the economically weaker spouse the provision to which she – it is usually although by no means invariably she – would otherwise be entitled „ [137]
v) The gender dimension: “In short, there is a gender dimension to the issue which some may think ill-suited to decision by a court consisting of eight men and one women” [137]
vi) Summary of Lady Hale‟s disagreements with the Majority at [138], including (a) The view that pre-nups are legally enforceable is („mercifully‟) obiter to this decision; (b) Following Macleod , that there is a distinction between pre- nuptial and post-nuptial agreements, (c) That the Majority views are (recalling the House of Lords‟ decision in White v White ) – an „impermissible gloss‟ on court‟s statutory duties
vii) However, Lady Hale concedes the test in Macleod (manifestly unjust) was too strict, no need for word „manifestly‟ [168], proposing “Did each party freely enter into an agreement, intending it to have legal effect and with a full appreciation of its implications? If so, in the circumstances as they now are, would it be fair to hold them to their agreement?” “That is very similar to the test proposed by the majority, but it seeks to avoid the „impermissible judicial gloss‟ of a presumption or starting point, while mitigating the rigours of the Macleod test in an appropriate case‟ [169]
viii) Summarising: “Marriage still counts for something in the law of this country and long may it continue to do so‟ [195]
