The well known case of Granatino v Radmacher  UKSC 42 established that 'the court should give effect to a nuptial agreement that is freely entered into by each party with the full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.' This article looks at how this principle has been applied by the English courts in recent cases.
Independent legal advice and disclosure are key factors the Court should consider, when deciding whether a party can be taken to have freely entered into a marital agreement with a full appreciation of its implications. Indeed, the provisional proposals of the Law Commission, in its consultation on marital property agreements, are that both parties should be required to take legal advice and the party seeking to enforce the agreement must have made full and frank disclosure of his/her financial situation. Unless these proposals result in a reform of the current law, they are amongst the many factors the Court must consider.
Granatino v Radmacher made clear that independent legal advice and full disclosure were not preconditions to fairness, which underlines the English Court's overall approach to the treatment of marital agreements. The issue of non-disclosure of assets was considered in the recent case of Kremen v Agrest  EWHC 45 (Fam), which concerned a post-nuptial agreement between a wealthy Russian financier and his wife. In this case, material non-disclosure (considered to be of many millions of pounds) by the husband, was highly influential in Mr Justice Mostyn's judgment as were the issues of lack of independent advice and the presence of duress. These findings resulted in it being determined that the wife did not enter into the agreement with a full appreciation of its implications. The result was that the wife received an award of £12.5m (of which £8.3m was constituted maintenance, her needs having been generously assessed) out of total assets in the region of between £20m–£30m.
In contrast, in Z v Z  EWHC 2878 (Fam), which concerned a French couple who entered into a French marriage contract (known as 'separation de biens') in accordance with French law, the agreement was upheld by the English Court in relation to the exclusion of the sharing principle to the assets. This was in spite of the lack of independent legal advice and full disclosure when
the marriage contract was executed. Mr Justice Moor commented that this would undoubtedly have been a case for equal division of assets, were it not for the agreement. Even though the wife would not have known the full details of her husband's assets, Mr Justice Moor held that it was enough that 'she knew that he was doing well... and making ever greater amounts of money.' The Court found that because of the existence of the agreement the sharing principle should not apply. However, it generously assessed the wife's needs in formulating the award.
In the case of V v V  EWHC 3230 (Fam), which concerned a pre-marital agreement between a Swedish wife and an Italian husband with assets of £1.3m in a short marriage, the Court found on appeal that although there had been the independent advice, the parties were sufficiently intelligent to be 'aware of its obvious purpose, notwithstanding that [they] did not have advice concerning it, or its effect'. The Judge held that there was no material non-disclosure as the wife was indifferent to the detailed value of the husband's assets. The Court recognised the importance of the principle of autonomy.
In both Z v Z and the further case, B v S  EWHC 265 (Fam), the agreements were European marital property agreements as opposed to a negotiated pre-nuptial agreements and this influenced the Courts' decision as to whether the parties appreciated the implications of entering into the agreement. In Z v Z the agreed evidence was that the majority of the parties' friends entered into separation of property agreements and this was 'in effect the norm for these families'. This played against the wife's evidence that she did not expect the agreement to be binding on her. However, in B v S, Mr Justice Mostyn held that it was important that the parties did not just have a general understanding of the effect of the agreement in the jurisdiction in which they made the agreement but also in a jurisdiction in which there was a system of discretionary equitable distribution.
While one might expect disclosure and independent advice to be pre-conditions to marital agreements being upheld, case law shows that since Granatino v Radmacher, the English Court continues to take these factors and the factual matrix into account in exercising its discretion when formulating a decision as to the weight to be attached to the agreement in order to achieve fairness. The absence or existence of key ingredients including legal advice could, ultimately, have a significant impact on the treatment of the agreement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.