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Court favours Pre Nuptial Agreement

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We have now heard that the Supreme Court has found in favour of Katrin Radmacher and held that the pre-nuptial contract entered into by her and her husband, Nicolas Granatino is enforceable. 

In July 2009, Mrs Radmacher won a Court of Appeal case to enforce the Pre-nuptial Agreement.  That agreement was entered into in an attempt to protect her own significant personal and family wealth from legal claims upon the breakdown of her marriage by her husband.  She was worth a reported £100 million and following the Court of Appeal decision, succeeded in reducing the settlement to her former husband from £5.5 million to £1 million plus £2.2 million loaned to purchase a property which would be returned when the couple’s children grew up.

Mr Granatino claimed that he did not have independent legal advice upon the agreement and set out arguments in relation to disclosure of Mrs Radmacher’s financial circumstances.

The Supreme Court dismissed his appeal and found that the Court of Appeal was correct to conclude that there was nothing that made it unfair to hold the husband to the agreement.  The Court found that the husband was extremely able and that his own needs would in large measure be indirectly met from the generous relief given to cater for the needs of his 2 daughters until the younger reached the age of 22. 

The husband’s decision to abandon his career in the city was not found to be motivated by the demands of his family but entirely a reflection of his own preference.  Fairness did not therefore entitle him to a portion of his wife’s wealth, received from her family independently of the marriage when he had agreed that he should not be so entitled when he married her. 

In reaching their conclusion, the Justices considered 3 issues that arose in relation to the Pre-nuptial Agreement in this case:

1.                 The circumstances in which the agreement was made.  It was held that the parties must enter into any Pre-nuptial Agreement voluntarily, without undue pressure and to be informed clearly of its implications.

2.                 If the foreign elements of the case enhanced the weight that should be accorded to a Pre-nuptial Agreement (i.e. if such agreement were enforceable in other countries) the fact that it was binding under German law was relevant to the question of whether the parties intended the agreement to be effective at a time when it would not have been recognised in the English Courts.

3.                  The Court considered whether circumstances prevailing at the time the Court made its Order would make it fair or just to depart from the agreement.  The Court found that a Pre-nuptial Agreement may make provisions that conflict with what a Court would otherwise consider to be fair.  The principle, however, to be applied is that a Court should give effect to a Nuptial Agreement that is freely entered into by each party with full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.

As a caveat, the Court considered that a Nuptial Agreement cannot be allowed to prejudice the reasonable requirements of any children of the family, however, respect should be given to individual autonomy and to the reasonable desire to make provision for existing property. 

This is indeed a landmark ruling and clarifies the Court’s position where parties wish to maintain control over their own financial destiny.  Particularly, where there are families of significant wealth, it is now clear that steps taken to draw up agreement as to what might happen to that family wealth in the event of the breakdown of a marriage are now much more likely to be upheld by the Court, provided that the parties have entered into it on their own free will, with independent legal advice (or the opportunity to take that advice) and that the interests of any dependent children are not prejudiced.

There is no doubt that there will be further details in relation to this case in the press.  We will continue to update you in the form of our blogs on the website.  If you have any specific questions please contact me on 0113 336 3349.

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