The long-awaited decision of the Supreme Court in Radmacher (formerly Granatino) v Granatino [2010] UKSC 42 is a significant step in the recognition of pre- and post-nuptial agreements. The starting point is that parties should be held to properly drawn up agreements unless certain circumstances arise.

Ever since the government’s green paper Supporting Families in 1998, which set out recommendations regarding pre-nuptial agreements, the courts’ attitude towards pre-nuptial agreements has changed. This culminated in the decision in Crossley v Crossley [2007] EWCA Siv 1491, in which it was held that the pre-nuptial agreement was a factor of ‘magnetic importance’.

In MacLeod v MacLeod [2008] UKPC 64, the Privy Council held that there was an ‘enormous difference in principle and practice’ between post- and pre-nuptial agreements. It expressed the view that pre-nuptial agreements were a matter for parliament, as guided by the Law Commission, but held that post-nuptial agreements could be treated as maintenance agreements and were therefore binding upon the parties, subject to the power of the court to vary such agreements under sections 34-36 of the Matrimonial Causes Act 1973.

The Law Commission’s review is ongoing. It had been expected that its consultation paper would be published to coincide with the Supreme Court’s decision in Radmacher. In the Daily Telegraph on 11 July, Professor Elizabeth Cooke, the law commissioner in charge of the research, was quoted as saying ‘one option will be to recognise the pre-nup and the post-nup’. It is, however, now understood that the Law Commission’s consultation paper will not be published until early next year.

In the meantime, the essence of the majority decision of the Supreme Court in Radmacher can be summarised by the following quote: ‘The court should give effect 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.’

In considering the status of the agreement, the Supreme Court asked itself three questions:The court considered circumstances in which it would not be fair to hold the parties to an agreement, but specifically stated that it would not be desirable to lay down rules which would fetter the flexibility of the court. Guidance was however provided on the following:

  • Children of the family. A pre-nuptial agreement cannot be allowed to prejudice the reasonable requirements of any children of the family.
  • Autonomy. It would be paternalistic and patronising for the court to override the parties’ agreement simply on the basis that the court knows best.
  • Non-matrimonial property. The distinction between matrimonial and non-matrimonial property as identified in Miller and McFarlane would be particularly significant where the parties have made an express agreement as to how such assets are to be dealt with in the event of a divorce.
  • Future circumstances. The longer the marriage has lasted, the more likely it may be that it would be unfair to hold the parties to an agreement which had been entered into when contemplating an unknown and unforeseen future.
It is now well established that the three strands of fairness are needs, compensation and sharing. If an agreement leaves one party in a predicament of real need, then it is likely to mean that it would be unfair to hold the parties to that agreement. By contrast, where issues of need or compensation do not arise, fairness may not require a departure from the terms of the agreement.

  • Were there circumstances attending the making of the agreement that detracts from the weight that should be accorded to it? It stated that black and white rules were only required if nuptial agreements are otherwise to be binding. Under the current state of law, such black and white rules are not required. Both parties must enter into the agreement of their own freewill and without any undue influence, and must be informed of its implications. It is no longer possible to infer that the parties did not consider that the agreement would be effective simply because they had been advised that agreements were not binding under English Law. Furthermore, if a party is fully aware of the implications of the agreement, but indifferent to detailed particulars of the other party’s assets, then there is no need to accord reduced weight to the agreement.
  • Were there circumstances attending the making of the agreement that enhanced the weight that should be accorded to it; the foreign element? Previously, enhanced weight had been given to pre-nuptial agreements where there had been a foreign element and where such agreements were binding in those jurisdictions. That distinction no longer applies, as in any event it is to be inferred that the parties intended that their agreement was to take effect.
  • Did the circumstances prevailing when the court’s order is made make it fair or just to depart from the ­agreement?

The Supreme Court also held that the Privy Council in MacLeod had been wrong to draw a distinction between post- and pre-nuptial agreements. MacLeod was overturned and therefore pre- and post-nuptial agreements are to be viewed in the same vein. By contrast, the Supreme Court did make the obiter comment that separation agreements could be viewed as maintenance agreements under sections 34-36 of the Matrimonial Causes Act 1973 and were therefore binding, subject to the court’s power to vary such agreements.

A further point made by the Supreme Court was in respect of the contractual status of pre- or post-nuptial agreements. The court stated that this issue was a red herring, although it said ‘if parties who have made such an agreement, whether ante- or post-nuptial, then decide to live apart, we can see no reason why they should not be entitled to enforce their agreement’. The court went on to say that such a right would, however, be nugatory if one party objects to the terms and is therefore entitled to pursue an application for ancillary relief, and run an argument that they should not be held to the terms of the agreement.

Particular note should be taken of the dissenting judgment of Baroness Hale, the most experienced family lawyer who was sitting in the Supreme Court. She also formed part of the Privy Council which gave the earlier decision in MacLeod. Baroness Hale disagreed with the obiter comment that nuptial agreements are legally enforceable contracts, and also that there were no relevant differences between pre- and post-nuptial agreements. Furthermore, she felt that the test applied by the majority and as set out above was an ‘impermissible gloss’ upon the court’s statutory duties under section 25.

It is anticipated that, following the decision in Radmacher, the onus will be placed upon a party to argue why they should not be held to a properly drawn up pre- or post-nuptial agreement; however, the status of individual agreements will depend upon the circumstances of each case.