Granatino decision sees English, Welsh courts flirt with prenups
6 July 2009 | By Katy Dowell
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The Judiciary last week handed the Law Commission the task of developing laws that could make prenuptial agreements lawfully binding documents in the English and Welsh courts.
The judgment handed down in Granatino v Granatino, which was described by one family lawyer as “monumental”, will not only change the way family lawyers advise their clients, but will also force the Law Commission to examine the issue after the judiciary made it clear that it would consider the enforceability of prenuptial agreements on a case-by-case basis.
German heiress Katrin Radmacher (formerly Granatino) went to the Court of Appeal to fight a High Court ruling that found she should pay more than £5.8m to her ex-husband, despite him agreeing in a pre-nuptial contract not to make a claim on her fortune should they divorce. The prenup had been signed in Germany where, had the matter reached court, the husband would not have been entitled to any payout.
In London, however, the courts have opted to take each case on its own merit, adding weight to the enforceability of the prenuptial agreement.
According to TLT Solicitors family head Alison Hawes, the appeal judgment in favour of Radmacher is one of the most important handed down this year.
“What it’s saying is that it’s not up to the court to change the law. We’ll do what we want because that is the law - only under an English regime would you have an unenforceable law that can be upheld on a case-by-case basis,” she says.
Handing down a judgment in McLeod v McLeod (2008), Baroness Hale of Richmond said: “In the board’s view the difficult issue of the validity and effect
of antenuptial agreements is more appropriate to legislative rather than judicial development.”
It is this ruling that Lord Justice Thorpe, sitting as presiding judge in the Granatino appeal, referred back to when handing down his judgment: ”Wholesale reform is for Parliament and not the judges, particularly now the Law Commission is at work.”
He adds: “Due respect for adult autonomy suggests that, subject to proper safeguards, a carefully fashioned contract should be available as an alternative to the stress, anxieties and expense of a submission to the width of the judicial discretion.”
Further weight was given to Thorpe LJ’s views by his fellow appeal judges Lord Justice Rix and Lord Justice Wilson.
Mishcon de Reya family partner David Lister says: “This is the Court of Appeal with three judges all giving full judgments as to why the agreement should be upheld — with some safeguards.”
The Law Commission is trying to bring together a draft bill on the current marriage laws and is examining whether prenuptial agreements should be binding in England and Wales, as they are across Europe and in South Africa. The bill, however, will not be ready until at least 2012.
Charles Russell family partner Sarah Anticoni comments: “It’s not a vote winner and there’s no appetite for change. Parties around the world don’t understand why there’s such antipathy towards prenuptials in London. Family legislation always lags behind social change.”
While lawyers and judges alike await legislative change, the instructions keep coming - as do enquiries about prenups. Anticoni says a decade ago there would be one or two requests a year for such an agreement, whereas now it is at least one or two a week.
In response lawyers will be changing the way they advise. “It will refine the way I advise clients,” says a cautious Hawes. “[Prenups] are extremely persuasive and worth having in the UK.”
Anticoni says the changes will have the biggest impact on foreign nationals who come to London looking for a good deal on their divorce. She will be advising them to bring a prenup to London’s courts.
“A good-quality prenup is better,” says Lister. “I know what it’s like when the shit hits the fan; when there’s still a feeling of romance it’s easier to negotiate.”