Pre-nuptial agreements given green light by Court of Appeal

The Court of Appeal handed down judgment last week in the case of Radmacher v Granatino [2009] which could now see English courts forced to recognise the binding powers of pre-nuptial agreements on spouses' divorce or the dissolution of civil partnerships.  In this case, Lord Justices Thorpe, Wilson and Rix ruled that the assets of Katrin Radmacher, a German paper industry heiress, should be protected from her French ex-husband, Nicolas Granatino because of the pre-nuptial contract they had signed before they married.  Mr Granatino is now appealing to the House of Lords.   

Reform of the law

Unlike most of the other European Union countries, pre-nuptial agreements are not (yet) enshrined in English statute.  However, there has been a growing tendency following the big money case of White v White in 2000 (in which the court pronounced that a 50:50 split should be the starting point on divorce) for the courts to take the terms of a pre-nuptial agreement into account as "one of the circumstances of the case" or as "conduct which it would inequitable to disregard" (e.g. M v M (Prenuptial Agreement) [2002] , K v K (Ancillary Relief: Prenuptial Agreement) [2003], G v G (Financial Provision: Separation Agreement) [2004] and Crossley v Crossley [2008]).

This has culminated in the Law Commission calling for a review of the law relating to pre and post nuptial agreements in June 2008.  They have set a timetable for this review, commencing in September 2009 with a consultation on the status and enforceability of agreements made between spouses or civil partners (or those contemplating marriage or civil partnership) concerning their property and finances, followed by a report and draft Bill expected in late 2012.

It seems that Lord Justice Thorpe, in his leading judgment in Radmacher v Granatino [2009], hopes for judges to bridge the gap between case law and statute in the interim, stating that:

"pending the report of the Law Commission, in future cases broadly in line with the present case on the facts, the judge should give due weight to the marital property regime into which the parties freely entered.  This is not to apply foreign law, nor is it to give effect to a contract foreign to English tradition.  It is, in my judgment, a legitimate exercise of the very wide discretion that is conferred on the judges to achieve fairness between the parties to the ancillary relief proceedings".

Should I consider entering into a pre-nuptial agreement?

The demand for pre-nuptial agreements is certainly on the rise, with the growing view being that it is better to have one than not.  Where pre-nuptial agreements are most useful is in the cases of short marriages, especially where there are no children.  They can also be worthwhile if you have been divorced before and want to take all possible steps to protect your assets from any further split on divorce, particularly if you have children from a previous marriage, as in the recent case of Crossley v Crossley [2008].   It may be that your parents have helped with your finances and do not wish to see their money be given to your spouse on divorce, as in the case of Karen Radmacher in Radmacher v Granatino [2009] or that you have inherited a substantial sum of money which you think would be unfair to put into the pot of assets to be split on divorce. 

Whatever your reasons for wanting to enter into a pre-nuptial agreement, it is essential that you take legal advice if you wish to reduce the likelihood of the Court interfering with them.