A Key UK Divorce Law Ruling

Devina Hay

Schillings

21 October 2010

The eagerly awaited result of the Radmacher v Granatino case was handed down (on 20 October) by the Supreme Court, the UK's final court of appeal. It is a landmark decision in favour of Ms Radmacher, holding that "Courts should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications". This ruling has given considerable force to the importance of pre-nuptial agreements and greatly supports the right that couples have, ahead of marriage, to divide their assets in the event that the marriage breaks down and ends in divorce.

The ruling by the Supreme Court is significant since not only is it the first time that the highest court in the land has considered pre-nuptial agreements, but the judgment marks a much anticipated step towards pre-nuptial agreements becoming fully decisive. Seven of the nine Supreme Court judges reaffirmed a key principle of English law, that it is the Courts in this country, and not any prior agreement between the married couple, that will determine the appropriate financial relief when a marriage ends. It is plain that no agreement between the married couple can override the jurisdiction of the Court, and this is not a new development. However, the majority judgment also said that the Court must give appropriate weight to a pre-nuptial agreement. It follows that the appropriate weight to be given will vary upon the merits of each and every case.

In determining how to measure the weight to be given to a pre-nuptial agreement, the judges today effectively set down an “unless” test: the pre-nuptial agreement will be given full effect “unless” it would be unfair to do so. The Supreme Court gave guidance that the following factors should be considered in influencing the weight given to a pre-nuptial agreement:

Parties must enter into the agreement of their own free will, without undue influence or pressure;
Whether it was the intention of both sides that the agreement should be effective;
Whether the marriage would have gone ahead without signing the pre-nuptial agreement;
Whether the agreement would operate unfairly taking into account the circumstances at the time that the marriage breaks down;
Whether the pre-nuptial agreement caters for the principle considerations of need, compensation and sharing in a manner that the Court might foster in the absence of such an agreement;
Whether there was any substantial lack of financial disclosure.

Unsurprisingly, the ruling held that a pre-nuptial agreement cannot prejudice the reasonable requirements of any children of the family.

We expect to see a rise in the demand for and use of pre-nuptial agreements as a consequence of this judgment since a great many people will see marital contracts as a worthwhile precaution, which may remove protracted litigation further down the line in the event that the marriage breaks down. At a time when big money divorces are a huge source of interest to the media, pre-nuptial agreements will also arm parties involved with a powerful tool to guard their privacy and prevent either party from spilling the beans about what went on during the marriage.

We also expect that this significant ruling will encourage more married couples to re-affirm or vary the provisions of any pre-nuptial agreement they may have signed prior to marriage some years ago, by entering into post-nuptial agreements, thereby consolidating its terms.

It is without question that the judgment handed down by the Supreme Court today is of enormous importance. Ironically, while it was Katrin Radmacher who may have heralded change by taking this case to the Supreme Court, it will no doubt be wives who will more likely be disadvantaged by pre-nuptial agreements and the significance they now carry. It remains for the Law Commission to publish a Consultation Paper in 2011, with recommendations and no doubt a draft Bill before any legislation is made in relation to marital contracts, which will likely follow.