Granatino decision keeps prenups in limbo

The Granatino v Granatino decision, regarding the enforceability of pre-marital agreements (PMAs) this month (TheLawyer.com, 2 July) is no exception.

As lawyers know, but the ­popular press and the general public rarely appreciate, one Court of Appeal decision does not necessarily change the law.

For years English family professionals have been advising very wealthy clients who wish to protect their wealth upon marriage not to marry at all. When that advice is ignored, they have the unenviable task of explaining that the English divorce courts will not have their discretion ­fettered by PMAs and so there is no way of achieving certainty of outcome upon divorce. Worse still, as the divorce capital of the world, in the absence of reasons to depart from equality, that will be the starting point for division of capital wealth.

As the Court of Appeal made quite clear, Section 25 of the Matrimonial Causes Act 1973 remains intact in setting out the ­factors a court needs to take into account when deciding how to exercise discretion and divide a family’s finances upon divorce. These include needs and resources, length of marriage, standard of living, age of the parties and contributions, as well as all the circumstances of the case. It has been this last factor that has historically been used as the hook to bring the existence of a PMA into account.

So is there any good news to be gleaned from this decision? It would seem to be a ‘yes’ for overseas parties who entered into binding agreements in those jurisdictions. As long as both parties have received ­independent legal advice, disclosed their financial positions fully and are entering the agreement sufficiently far in advance of the wedding, it is now going to be an uphill struggle to persuade English courts that such agreements should not be upheld.

The bad news is that in the absence of there being any new legislation making PMAs binding, parties and professionals have no greater certainty of outcome this week than they did last week.

So where does that leave Mr and Mrs Average? Why should they have to rely on the discretion of a judge when their ­neighbours, Mr and Ms Cohabitant, be allowed to enter into binding agreements?

The judiciary feels it has gone as far as it can to reflect the need for a change in the law and is actively inviting a change in the statutory position in line with social change. The public policy argument against allowing PMAs now seems outdated. Sadly both the current and very probably the next government will have more pressing items on its legislative agenda.

Surely the Treasury can be persuaded of the cost savings if all parties across the social spectrum could make such ­agreements and free up court time for,
say, the pressing needs of children?

With greater incidence of marital ­breakdown (especially in second and ­subsequent marriages), and with a much wider multicultural and multinational ­community, the idea of self-ordering in the event of marital breakdown is no longer anathema to those contemplating marriage, nor those advising upon their demise.

As long ago as 2005, Resolution, ­representing more than 5,000 solicitors specialising in family law, recommended that PMAs should become legally binding subject to safeguards, and yet the Law Commission currently tasked with ­reviewing marital property agreements has until late 2012 to report and prepare a draft bill. This timetable urgently needs to be foreshortened.

While the Court of Appeal may have encouraged a trend for the wealthy, PMAs will not be made available to Mr and Mrs Average until they are made binding by statute.