Court Consideration of Divorce Claims in Which a Prenuptial Agreement Was Concluded - Case Study Example

When you have two people who are in love and contemplating marriage, perhaps the most unromantic idea envisioned is the prenuptial agreement. No couple wants to imagine that this agreement would someday be important, as no couple presumably goes into a marriage contemplating the end of it. However, the reality of the situation is that such a document is often warranted and even necessary to protect a party that has sizeable assets. Nevertheless, the typical English way of dealing with prenuptial agreements is to essentially nullify them. Judges are bound by the terms of the Matrimonial Causes Act of 1973, and this is how they typically treat married couples who come before them, prenuptial agreement or no. And, despite the supposedly “landmark case” that was handed down in Radmacher v. Granatino, 1 this will likely continue to be the case. English law regarding prenuptial agreements is based upon both policy considerations and the mandate that Parliament must change the law, the bench cannot.2 As it stands now, there is no statutory authority regarding prenuptial agreements, either favoring them or precluding them.3 Among the policy considerations taken into account by family law courts are that, if a spouse is left without any means of support, then a third party must support her, sometimes the state, and that a wife cannot “barter away” her right to spousal support.4 Another policy consideration is that such agreements “deprive the court of a jurisdiction it otherwise would have.”5 Perhaps the first case that dealt with prenuptial agreements directly was F v. F.6 In this case, the wife of a millionaire would have received, under the terms of the prenuptial agreement that she signed, the “equivalent of a pension of a German judge,”7 which was deemed ridiculous by Thorpe J, stating that prenuptial agreements should “in this jurisdiction they must be of very limited significance.”8 Nevertheless, despite this language, prenuptial agreements are taken into account in English family cases. Perhaps they are not followed to the letter, but they are a “material consideration” in making awards.9 Judges are bound by the statutory constraints of the Matrimonial Causes Act 1973, and the existence of a prenuptial agreement is one consideration that is taken into account among the other factors in this Act. The other considerations taken into account are a) the income of the parties; b) the financial needs of the parties; c) the standard of living previously enjoyed by the parties; d) the age of each party, and the duration of the marriage; e) any physical or mental disability suffered by either party; f) the contributions made, or will be made, to the welfare of the family; and g) the conduct of the parties.10 Judges have discretion to award property to either party using the above criteria, and the usage of a properly executed prenuptial agreement can be part of this discretion.11 However, the case of Radmacher v. Granatino12 has somehow been deemed to be a landmark case that has changed the long-standing English policy of not recognizing prenuptial agreements, per se. Radmacher concerned a husband and wife, neither of whom were native English. The wife, Katrin Radmacher, was a native of Germany.13 She was a very wealthy woman, with assets totally some f54.3 million, due to the industry of her father. Because she went into the marriage with substantial assets, these are considered non-matrimonial. 14 The husband was born in France. He, too, came from a family of means, as Radmacher testified that his family was worth some f20-30 million, and Granatino stating that his family was worth f6 million.15 However, the court did not take the husband’s family’s wealth into account, as he was not guaranteed an inheritance. For a variety of reasons, the lower court, in NG v. KR, did not follow the terms of the prenuptial agreement, yet acknowledged the existence of this document and stated that the agreement would affect the award.16 The appeals court reversed the lower-court decision, however.17 In so doing, it was critical of the lower courts stated intention to discount the award to account for the prenuptial agreement, yet appeared not to do this, stating that “thus despite the appearance of the ante-nuptial agreement as a factor, the overall impression is of a negligible resulting discount.”18 The appeals decision was based upon a variety of factors. One such factor considered by the appeals court was that the parties were international, and both Germany, the wife’s home country and France, the husband’s home country, recognized prenuptial agreements.19 The court also noted that the trend was for courts to give prenuptial agreements greater weight, and that a “carefully researched” Resolution 2005 report “urged that pre-marital agreements become legally binding and enforceable subject to a single overriding safeguard of significant injustice.”20 Furthermore, the court reviewed its own decision in F v . F,21 the case that dealt with the wife who would have received the equivalent of a judge’s retirement pension in a divorce from a “hugely rich” man, and stated that it would not be as dismissive if that case were to come before it now.22 The court also reviewed the policy considerations stated by the law commission, that the unenforceability of prenuptial agreements in England has a chilling effect on marriage, in that wealthy individuals might be hesitant to get married if their wealth could not be protected.23 After reviewing these policy considerations and other factors, the court based its opinion on the following foundations: “1) any provision that seeks to oust the jurisdiction of the court will always be void by severable; 2) any contract will be voidable if breaching proper safeguards or vitiated under general principals of the law of contract; 3) any contract would be subject to the review of the a judge exercising his duty under section 25 if asserted to be manifestly unfair to one of the contracting parties.” 24 Furthermore, the court stated that the rule voiding prenuptial contracts is “unrealistic,” reflecting outdated morals and negating the ability of adults to take financial control in a world where divorce is commonplace. Also, the court noted that most of Europe recognizes the agreements and England is in “danger of isolation” by not recognizing these agreements.25 It appears that the Radmacher court has endorsed wholesale prenuptial agreements, however, this isn’t necessarily the case. While the court’s language seems to approve of the proposition that these agreements should be upheld as a matter of law, a more careful reading of this case shows that the reason why the prenuptial agreement was upheld in this case turned on the facts. In fact, the Radmacher court stated as much: “in future cases broadly in line with the present case on the fact, the judge should give due weight to the martial property regime into which the parties freely entered....it is, in my judgment, a legitimate exercise of the very wide discretion that is conferred on the judges to achieve fairness between the parties to the ancillary relief proceedings.”26 This language is clear - prenuptial agreements might be upheld if the facts are similar to the facts in this case, and that prenuptial agreements are a part of the discretion that a judge uses in property divisions. For instance, the Radmacher case dealt with two individuals who were natives of countries where prenuptial agreements are upheld as a matter of law, and the agreement was actually made on German soil.27 The Radmacher court paid special attention to these facts, paying special attention to European law because of the heritage of the parties made the case have “all the hallmarks of internationally,”28 and that “in both France and Germany the execution of a contract providing for the property regime of the intended marriage is standard practice for the young engaged couple.”29 As this fact was pertinent in the Radmacher decision, perhaps future cases that involve prenuptial agreements executed on English soil by English natives would not have the same result. As such, the Radmacher case did not approve of prenuptial agreements wholesale, but, rather, stated that such agreements would be decided on a case-by-case basis. This is evident by the Justice Rix’ language, as he noted that the present rule regarding prenuptial agreements is driven by public policy trumping private autonomy, but that it was “difficult or even impossible to lay down even guidelines as to the circumstances in which the interest of private autonomy are to have weight.”30 He further stated that the issue of prenuptial agreements are better left to the legislator, but that the judiciary must attempt to make sense of the current rule under Section 25 of the Matrimonial Causes Act 1973. In my opinion, the Radmacher case is a bit much ado about nothing. The court stated that the ruling was fact-specific, and it also noted that courts have, all along, been able to use the existence of a prenuptial agreement as a part of its discretion to award property under the Matrimonial Causes Act 1973. While the Radmacher court did note that England probably needs to adopt a rule approving prenuptial agreements, similar to its European counterparts, it also noted that it was not up to the judiciary to make this act, but the legislator. So, it is difficult for me to understand how Radmacher substantially changed English law. That said, I agree with the Radmacher court, in that there are some instances where prenuptial agreements should be binding, and other cases where it would unjust to bind the parties. In cases such as Radmacher, it was perhaps proper to bind the parties, as the husband is well-established, well-educated, and a man of independent means. There was evidence, presented by the lower court, that he was a bit of a charming cad who liked to spend his wife’s money, favoring the “best restaurants, driving an up-market car and spending at will.”31 Perhaps the husband in this case is not the most sympathetic character, and it would be reasonable to hold him to an agreement that he made. On the other hand, there might be another set of facts where upholding a prenuptial agreement would be manifestly unjust. For instance, if the husband is a millionaire and the wife stayed home to raise the children, foregoing any chance of an independent income in the process, it would be patently unfair to leave her with nothing just because the prenuptial agreement provided for this outcome. In this case, judges in England are free to completely disregard the prenuptial agreement, and evaluate the case by the factors outlined in the Matrimonial Causes Act 1973, and this is how it should be. It is never good to mandate that a court follow a bright-line rule, leaving no room for discretion. While some might argue that such a bright-line rule would be useful, as it would bring clarity and consistency to decisions regarding these prenuptial agreements, it simply has too much potential for abuse, as power imbalances between parties would render these agreements unconscionable. In conclusion, it must be stated that courts have, for many years, taken prenuptial agreements into account when making rulings regarding property division. These courts have treated prenuptial agreements as but one factor to consider among the multitude of factors iterated in the Matrimonial Causes Act 1973. Radmacher did not really change this fact. Courts are still free to regard or disregard parties’ prenuptial agreement, according to how closely the agreements align with the criteria that courts already use in making these property divisions. This is the correct approach, as mandating courts to accept parties prenuptial agreements is bound to result in many injustices. But, if the facts are similar to Radmacher - both parties are well-educated and well-to-do, and the party who wants to void the prenuptial agreement comes off as a bit of a gold-digger - then it would be proper to uphold the agreement as written. It would really depend on the facts of the case. This is currently the rule regarding prenuptial agreements in England, and this is how it should be. BIBLIOGRAPHY Dowell, Katy. 1 July 2009. ‘Granatino Decision Sees English, Welsh Courts Flirt with Prenups’, The Lawyer, 1-2. Available at: www.thelawyer.com/granatino-decision-sees-english- welsh-courts-flirt-with-prenups F v. F, [1995] 2 FLR 45. Hyman v. Hyman [1929] AC 601. Lowe, Nigel. 11 October 2007. ‘Prenuptial Agreements: the English Position’(text of the address prepared for the ISFL Colloquium on Family Law, Toledo, Spain), pp. 1-11. Matrimonial Causes Act 1973. NG v. KR, [2008] EWHC 1532. Radmacher v. Granatino, [2009] EWCA Civ 649. Read More