Pre-marital agreements are not binding under English law and, despite judicial and public pressure to act, successive governments have failed to address the matter. Notwithstanding this absence of legislation, the Courts have been trying to keep in step with the prevailing social climate and have adapted their application of the existing relevant legislation to take pre-marital agreements into account as "one of the circumstances of the case". This approach culminated, last year, in what was perhaps the high point of judicial recognition for such agreements. In Radmacher v Granatino the Supreme Court held that: "The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement."
Last week the court made a decision in the first known contested case following Radmacher. The case (Z v Z (No. 2) [2011] EWHC 2878) concerned a French couple who entered into a separation de biens marital property regime prior to the marriage. They subsequently moved to London and, following a jurisdiction battle, the divorce proceeded in England. There were 3 children of the marriage. The assets totalled c.£15m, of which only a small proportion was in the wife's name. It was common ground that if English law applied and the property regime were not given effect, the wife would have received 50% of the total assets.
The wife raised two arguments against being held to the marital property regime. The first argument was that the separation de biens should be ignored either (i) on the grounds that she was induced to enter into the agreement on misleading grounds or (ii) that the separation de biens arrangement had subsequently been varied by agreement in a letter (notwithstanding that the parties agreed that under French law a matrimonial property regime could only be varied by a notarised agreement). The second argument she raised was that her "needs" required her to have a 50% share in any event, irrespective of the validity of any agreement.
Ultimately, and in accordance with Radmacher, the court held the parties to the separation de biens and the husband was successful in his argument that the effect of this regime was to exclude the "sharing principle" which would otherwise have applied under English law. However the court still provided the wife with 40% of the total assets on the basis of the "needs" principle. The court also placed considerable weight on the principle of "fairness" as set out in the Radmacher test.
Thus, whilst each case will turn on its own facts to determine whether holding the parties to a specific agreement would be "fair" and whether it will meet needs, the courts are considerably strengthening the weight given to pre-marital agreements under English law, even in the absence of legislation. Having said that, both Radmacher and Z v Z (No.2) concerned foreign agreements and foreign nationals. It will be interesting to see if the Radmacher principle holds as strongly when applied to an English pre-marital agreement between two English nationals.
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.
