Prenuptial agreements

Prenuptial agreements: Radmacher – 10 Years later

Following the decision in the landmark Supreme Court case of Radmacher -v- Granatino in October 2010 (“Radmacher”), an air of certainty pervaded the air in family law circles of the legal profession as to the enforceability of pre-nuptial agreements. Radmacher not only removed the public policy argument previously used to contend against upholding such agreements but it also created something of a formula in relation to the application of prenuptial agreements; in particular where they were either unfair at inception ( for example, where one party to the agreement entered into the agreement as a result of undue pressure being brought to bear upon them by the financially stronger party) or where the agreement was unfair at the time at which it came to be relied upon.

Lord Phillips’s speech in Radmacher elicits two significant principles. The first is that where there is a strong defensible nuptial agreement the potential for arguing for a share of the assets not provided for within the agreement is extremely small indeed. The second principle is that where there is a strong pre or post nuptial agreement then needs can and should be affected. Certainly, In Radmacher the Husband’s needs were cut down because of the fact of the nuptial agreement. He ended up with no capital and relatively limited income, in stark contrast to the financial position that the Wife found herself in.

Since Radmacher there have been numerous decisions that have recognised the principle enunciated by Lord Phillips that if the parties to a prospective marriage have something important to agree with one another then it is often much better and more honest for that agreement to be made at the outset before the marriage rather than for it to be left and thereafter become a source of disappointment or acrimony within the marriage. An example of such a case is the 2012 decision in Kremen -v- Agrest in which Mr Justice Mostyn said that whilst it is likely to be unfair to hold the parties to an agreement which leaves one spouse in a predicament of real need while the other enjoys a sufficiency or more, need may be interpreted as the minimum amount required to keep a spouse from destitution. In this case he gives an example of real need arising in circumstances where, for example, a claimant spouse had been incapacitated during the course of the marriage so that he or she was incapable of earning a living. The use of the word “destitution” suggests that a high bar would need to be overcome when arguing that there should be a diversion from the terms of a nuptial agreement.

Fairness is bound to be referable to the concept of need and needs in the Radmacher case took into account the Husband’s extensive qualifications and thus ability to earn a good income. The Court observed that the generous financial provision made for the parties’ two children provided, albeit indirectly, for the needs of the Husband and it was because of this and the fact of discharge by the Wife of the Husband’s debts of some £700,000 that the Court found that the needs of the husband were not a factor that rendered it unfair to hold him to the terms of the pre-nuptial agreement. In the 2014 case of Luckwell -v- Limata the Husband and the Wife had entered into a pre-nuptial agreement which provided for each of them to retain their separate property on divorce. This resulted in the Wife retaining her home valued at £6.75m whilst the Husband had no assets and a few debts. In this case Justice Holman held, amongst other things, that it is unlikely to be fair that one party is left “in a predicament of real need” whilst the other has a “sufficiency or more”. It was therefore held on the facts of this particular case that the Husband was in a predicament of real need and that this justified a departure from the terms of the prenuptial agreement. He rejected the argument that needs would trump the agreement holding instead that needs may outweigh the fact of an agreement in the overall circumstances of a particular case. The case of Luckwell is one of a line of cases that suggests an erosion of the principles enunciated in Radmacher. Indeed, as time has passed there is evidence that there has been a further erosion of the Radmacher principles. Current caselaw suggest that there is now the need for the party challenging the enforcement of a prenuptial agreement to show only “need” as opposed to “real need”.

In the case of MB -v- EB (2019) concern was voiced by Cohen J that the nuptial agreement in question did not sufficiently address the Husband’s needs even though the Wife had given him everything he had asked for. Similarly, in the case of Ipecki -v- McConnell [2019] Mostyn J echoed the sentiments of Cohen J in which he said that “If you have reasonable needs which you cannot meet from your own resources, then you are in a predicament. Those needs are real needs.”

It is fair to say that the “air of certainty” referred to in the opening paragraph has proven to be shorter lived than might have been hoped. Are people now reluctant to get married for fear that a contract regulating their finances upon dissolution of marriage freely entered into between them will be overturned should marital disharmony strike? Possibly so, and perhaps with good reason.

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