The Supreme Court upheld the validity of pre-nuptial agreements on 20th October 2010. They ruled that divorcing couples in England and Wales could rely on signed contracts to determine how their wealth should be divided. There is mixed emotion about this ruling. On the one hand some welcomed the decision whilst others feared a “rich man’s charter” which would protect wealth after a marriage breaks down.
The case in question involved a wealthy German heiress, Katrin Radmacher and her former husband, Mr Nicolas Granatino. He had pursued an appeal when he had his divorce settlement reduced from over £5m to £1m.
The couple met in a night club in London. She worked in a clothes shop with her sister and he was a banker with JP Morgan and earned a handsome 6 figure salary. They married in London in 1998 after signing a pre-nuptial agreement in Germany. However, when they separated in 2006 he had given up his job to follow an academic career.
By the time the case reached the High Court the Judge was told that he had virtually no assets whilst she had an interest in a paper industry worth £54m in liquid assets and £52m in capital assets giving her an annual income of £2m.
The senior counsel for Mr Granatino told the Supreme Court that the Court of Appeal ruling was not only unfair but impermissible as because it amounted to a court ruling on pre-nuptial agreements which are not recognised in English law.
The Supreme Court, by a majority of eight to one, said that following their ruling “it will be natural to infer that parties entering into agreements will intend that effect be given to them”. However, Lord Phillips went on to say that the courts would still have a discretion to waive any pre-nuptial or post-nuptial agreement, especially when it was unfair to any child of the marriage.
Is this a case which will see a wife’s victory benefit rich husbands? It remains to be seen. Lady Hale in her dissenting judgment said the facts of the case obscured the fundamental fact that the object of a pre-nuptial agreement is to deny the economically weaker spouse, usually the wife, a share of the assets to which she would otherwise be entitled.
A pre-nuptial agreement is not recognised by the court in NI but it is only a matter of time before the question comes before our own High Court. The Law Commission is due to report in 2012 on whether a change in the law should be made to ensure pre-nuptial agreements are fully enforceable.