Radmacher (formerly Granatino) v Granatino
Jurisdiction | England & Wales |
Judge | LORD COLLINS,LORD KERR,LORD PHILLIPS,LADY HALE,LORD HOPE,LORD MANCE,LORD WALKER,LORD BROWN,LORD RODGER |
Judgment Date | 20 October 2010 |
Neutral Citation | [2010] UKSC 42 |
Date | 20 October 2010 |
Court | Supreme Court |
[2010] UKSC 42
Lord Phillips, President
Lord Hope, Deputy President
Lord Rodger
Lord Walker
Lady Hale
Lord Brown
Lord Mance
Lord Collins
Lord Kerr
Appellant
Nicholas Mostyn QC
Deepak Nagpal
(Instructed by Payne Hicks Beach)
Respondent
Richard Todd QC
Geoffrey Kingscote
Jonathan Harris
(Instructed by Vardags (formerly Ayesha Vardag Solicitors))
LORD PHILLIPS, LORD HOPE, LORD RODGER, LORD WALKER, LORD BROWN, LORD COLLINS AND LORD KERR
Introduction
When a court grants a decree of divorce, nullity of marriage or judicial separation it has the power to order ancillary relief. Ancillary relief governs the financial arrangements between the husband and the wife on the breakdown of their marriage. Sometimes the husband and wife have already made an agreement governing these matters. The agreement may have been made before the marriage ("an ante-nuptial agreement") or after the marriage ("a post-nuptial agreement"). Post-nuptial agreements may be made when the husband and wife are still together and intend to remain together, or when they are on the point of separating or have already separated. The latter type of post-nuptial agreement can be described as "a separation agreement". We shall use the generic description "nuptial agreements" to embrace both ante-nuptial and post-nuptial agreements.
A court when considering the grant of ancillary relief is not obliged to give effect to nuptial agreements – whether they are ante-nuptial or post-nuptial. The parties cannot, by agreement, oust the jurisdiction of the court. The court must, however, give appropriate weight to such an agreement. This appeal raises the question of the principles to be applied by the court when considering the weight that should be attached to an ante-nuptial agreement. The Privy Council recently considered this question in relation to a post-nuptial agreement in MacLeod v MacLeod [2008] UKPC 64, [2010] 1 AC 298 and it will be necessary to consider the implications of that decision.
The approach of English law to nuptial agreements differs significantly from the law of Scotland, and more significantly from the rest of Europe and most other jurisdictions. Most jurisdictions accord contractual status to such agreements and hold the parties to them, subject in some cases to specified safeguards or exceptions. Under English law it is the court that is the arbiter of the financial arrangements between the parties when it brings a marriage to an end. A prior agreement between husband and wife is only one of the matters to which the court will have regard. The uncertainty as to the weight that the court will attach to such agreements has led to calls for reform. The history of steps taken towards the reform of our law is set out in the judgment of Thorpe LJ at paras 16 to 23 of his judgment in this case in the Court of Appeal. For present purposes it suffices to note the following.
In 1998 the Home Office published a consultation document, "Supporting Families", which included the following statement in para 4.21:
"The Government is considering whether there would be advantage in allowing couples, either before or during their marriage, to make written agreements dealing with their financial affairs which would be legally binding on divorce."
In para 4.23 the Government proposed that any such agreement should be subject to six safeguards. It would not be legally binding:
"– where there is a child of the family, whether or not that child was alive or a child of the family at the time the agreement was made
– where under the general law of contract the agreement is unenforceable, including if the contract attempted to lay an obligation on a third party who had not agreed in advance
– where one or both of the couple did not receive independent legal advice before entering into the agreement
– where the court considers that the enforcement of the agreement would cause significant injustice (to one or both of the couple or a child of the marriage)
– where one or both of the couple have failed to give full disclosure of assets and property before the agreement was made
– where the agreement is made fewer than 21 days prior to the marriage (this would prevent a nuptial agreement being forced on people shortly before their wedding day, when they may not feel able to resist)."
There are many, including some members of the Family Bar and Bench, who would favour a reform along the lines proposed, but the Government has not taken its proposals further. The Law Commission is, however, currently considering this area of the law and is expected to report in 2012.
There can be no question of this Court altering the principle that it is the Court, and not any prior agreement between the parties, that will determine the appropriate ancillary relief when a marriage comes to an end, for that principle is embodied in the legislation. What the Court can do is to attempt to give some assistance in relation to the approach that a court considering ancillary relief should adopt towards an ante-nuptial agreement between the parties. Earlier this year Resolution, an organisation of over 5,700 family lawyers, published an updated paper on "Family Agreements", which proposes legislative reform to the law of ante-nuptial and post-nuptial agreements. This quotes statistics that show that about 45% of marriages are likely to end in divorce. It comments on the strain and expense that are involved in disputes about ancillary relief, which are increased by the uncertainty of the outcome.
In order to address the facts of this particular case it will be necessary, in due course, to set these out in a little detail. At this stage we propose to give a summary that will provide a context for the consideration of the relevant principles that will follow.
The appellant ("the husband") is a French national. The respondent ("the wife") is a German national. They signed the ante-nuptial agreement in Germany on 1 August 1998. The husband was then aged 27 and the wife 29. They were married in London on 28 November 1998. They had two children, Chiara, born on 4 September 1999 and Chloe, born on 25 May 2002. In October 2006, after 8 years of marriage, they separated.
The wife petitioned for divorce in the Principal Registry of the Family Division that same month. The husband cross-petitioned in November. They agreed to proceed undefended on cross decrees and were divorced in July 2007.
Meanwhile, the wife had applied for permission to take the girls to live in Germany. In September 2007, His Honour Judge Collins granted that application but made a shared residence order providing that the children should divide their time between their parents. Under his order, they were to spend just under one third of the time with their father and two thirds with their mother. The husband made an unsuccessful application for permission to appeal that order to the Court of Appeal. The wife took the children to live in Germany in February 2008. However, in November 2008 (after the judgment of Baron J in the ancillary relief proceedings), she applied to the German court for permission to take them to live in Monaco. The husband resisted this, but permission was granted in May 2009 and that is where they now live.
The ante-nuptial agreement was drawn up in Germany by a notary. It contained a choice of law clause that provided that the effects of their marriage, including the laws of matrimonial property and succession, were to be subject to the law of the Federal Republic of Germany. The main part of the agreement provided first for separation of property. In clause 3 it was declared that the statutory matrimonial regime was to be excluded, and that each party was to manage his or her assets entirely independently. By clause 4 the parties excluded the equalisation of pension rights. By clause 5 they waived claims for maintenance after the marriage was terminated. Clause 6 contained a waiver of the statutory right to a portion of the estate of the first one of them to die. The effect of the agreement was that neither party was to derive any interest in or benefit from the property of the other during the marriage or on its termination. It made no provision for what was to happen in the event of their having children.
The parties entered into this ante-nuptial agreement at the instigation of the wife. She came from an extremely rich family. Some of the family wealth had already been transferred to her, so that she enjoyed substantial unearned income. She expected to receive a further portion of the family wealth if, but only if, she entered into the ante-nuptial agreement to protect this. Her father insisted upon this. She herself was anxious that the husband should show, by entering into the agreement, that he was marrying her for love and not for her money.
The husband was working for JP Morgan & Co and, at the time of the antenuptial agreement, was earning about £120,000 a year and had excellent prospects. These were realised inasmuch as he earned about $475,000 dollars in 2001 and about $320,000 in 2002. He then became disenchanted with banking and embarked on research studies at Oxford with the object of obtaining a D Phil in biotechnology.
Despite the terms of the ante-nuptial agreement the husband brought a claim for ancillary relief, seeking an order against the wife both for periodical payments and for a lump sum. The hearing of his claim began before Baron J on 23 June 2008 and she handed down her judgment on 28 July 2008: [2008] EWHC 1532 (Fam) [2009] 1 FCR 35. The issue that lay at the heart of the proceedings was the weight that should be given to the ante-nuptial agreement. Baron J held that the circumstances surrounding...
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