Radmacher v Granatino

According to the UK Office for National Statistics, more people are marrying and fewer divorcing than 10 years ago. Nonetheless the decision in Radmacher was eagerly awaited. The appeal reached the highest court in England, now known as the Supreme Court. It concerned the question of whether prenuptial contracts ought to be given decisive weight in the division of assets when parties divorce. Radmacher argued that their prenup should be, Granatino argued that it should not. Morven McMillan, from Mourant Ozannes explains more.

There is little doubt that this case was awarded the attention that it received, at least in part, due to the fact that Radmacher was reputed to be worth in the region of £100 million at the time of her divorce from Granatino. Before they married, Radmacher’s family offered to transfer a proportion of the family’s considerable wealth to her after her marriage but only on condition that the couple signed a prenup first.

Radmacher is German, Granatino French. The prenup was subject to German law and provided that neither party was to acquire any benefit from the property of the other during the marriage or upon divorce. Granatino, who was working as a banker at the time, was offered the opportunity to take legal advice on the agreement but declined to do so.

They married in London, were married for eight years and had two children. By the time they separated, Granatino had changed careers and embarked on research studies at Oxford. He was awarded £5.56 million in the High Court to provide him with an annual income of approximately £100,000 for life, a home in London where his children could visit him and a car. He was also to receive child maintenance while the children were in full-time education. Radmacher was to buy and make available a house in Germany in which he would be able to stay with his children while they were being educated there. Unfortunately for Granatino, the Court of Appeal set aside the High Court’s order for payment of the lump sum to him, upholding only that element of the award which related to his role as the children’s father.

The Supreme Court acknowledged that time had moved on since the days when it was contrary to public policy for a couple who were married or about to be married, to make an agreement which provided for the terms of their separation or divorce, just in case it encouraged the couple to do so. The courts would pay no heed to such agreements when it came to ordering the division of parties’ assets on divorce.

Those public policy objections no longer exist; conventions have changed and individuals often contract in advance of their marriage to agree how their assets will be divided upon divorce. The question for the Supreme Court was therefore how much weight to give the agreement entered into by Radmacher and Granatino.

The Supreme Court (with one dissenting judge) dismissed Granatino’s appeal, their views summed up as follows:

“The Court should give affect 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.”

The Supreme Court found that it would be natural to infer that parties entering into such agreements governed by English law would intend that effect would be given to them on their divorce, although a prenup would not prejudice the reasonable requirements of any children of the family. Arguably, this means that there is now a presumption that the court should give effect to a prenup, subject to certain conditions. For example, a material lack of disclosure by one party to the agreement or an absence of independent legal advice might detract from the weight which should otherwise be accorded to it by the court.

Lady Hale delivered a separate judgment. Despite agreeing with much of the majority judgment, she disagreed with outcome. She was concerned that the purpose of a prenup is to deny what she described as “the economically weaker spouse the provision to which she would otherwise be entitled”. She acknowledged that it would not always be a “she” but most often would be and concluded that this was an issue which “some may think ill-suited to decision by a court consisting of eight men and one woman”. She took the view that the guiding principle should be fairness between the parties and there should be no presumption in favour of holding the parties to a prenup. In Lady Hale’s view comprehensive reform of the law on pre- and postnuptial agreements should be considered.