Untold riches

Katrin'ˆRadmacher and her former husband Nicolas Granatino should really have gone to mediation, but at least the Supreme Court in Radmacher v Granatino [2010] UKSC 42 has given us a greater understanding of the extent to which it believes prenups should be recognised. From now on, prenuptial and pre-civil partnership contracts (and also postnuptial or civil partnership agreements) entered into by those resident in this or any other jurisdiction will be upheld by our divorce courts in circumstances deemed 'fair'.

As the Supreme Court tell us, 'needs', 'compensation' and 'sharing' are likely to prove the three major debating grounds and potential obstacles to overcome in any such assessment of a word that notoriously means different things to different people.

For those couples that cannot climb out of the 'needs' arena, and that is likely to be the majority of the married or civil partnered population, the advice about whether to bother with such an arrangement before marriage will probably remain the same: a prenup is unlikely to be the determining factor in a court's deliberations, subject now to the added proviso that if by the time its terms fall to be considered by the court sufficient wealth has accrued to make 'needs' irrelevant it may just prevail.

That's not so dramatically different from the advice that clients in that financial bracket will have been receiving for years now, except that it seems to contemplate that wealth accrued during a marriage might somehow successfully be ring fenced.

Rising concern

Where the landscape has altered significantly is in the absence of factors previously thought to be prerequisites in any assessment of fairness for those wealthy enough to escape a needs-based analysis.

For them, we used to advise that for a prenup to be given effect on marriage breakdown certain criteria had to be met, including each party having given full disclosure of their financial circumstances, the taking of independent legal advice by each party and entering into the agreement at least 21 days before the marriage ceremony.

From various passages in the Supreme Court's judgment, all of these factors are no longer essential. While the 21-day point may have been considered by many practitioners to be dispensable, the absence of financial disclosure and legal advice as qualifying criteria must surely give rise to concern.

More disturbing yet is the change to the advice that was generally given regarding the advent of children to the marriage. Here, the advice probably followed the line that the birth of a child would be likely to render a prenuptial agreement irrelevant unless the agreement contemplated some form of fair, probably enhanced, provision.

Radmacher tells us that this precautionary advice must change. Potentially, it tells us the best course of action may be to ignore altogether the possibility of children, secure in the knowledge that if the couple become parents the agreement may still hold, subject to the opportunity for the poorer parent to apply for financial relief, effectively in his or her capacity as parent, rather than spouse or former spouse, as in Mr Granatino's treatment.

What we don't yet know is what all this will amount to, other than we do know that every case will have to be addressed on its facts and assessed for fairness largely at the time it may come to court, as opposed to the time when it was made.

Unintended consequences

What we may also see occurring is instances of another law, that of unintended consequences. If each case has to be assessed on its facts for fairness at the time the prenup comes to be relied upon, certainty is the loser; as agreements proliferate so must applications to the court.

For those applicants, frequently mothers, seeking to escape the constraints of a prenup, it seems possible to predict that many will be more likely to be intimidated by the very existence of a prenup. Those that are not may receive less by way of financial assistance than before, given the new emphasis on the difference between claims as a spouse, bound by a 'fair' agreement and as a parent.

The gender issue

Another issue to have resurfaced is that of gender. It is interesting that Lady Hale, the only woman on the panel hearing the case and the only judge also to have spent significant time in family courts, felt it necessary to draw attention to the gender imbalance in the constitution of the court in her partially divergent views.

Not overtly mentioned, but surely in the minds of many of us, must also be the question whether the outcome would have been different had the court been faced with a Mr Radmacher and a Ms Granatino?

Perhaps over time we will see a more comprehensive and satisfactory landscape when the Law Commission reports in 2012 on its deliberations in this field, those cutbacks announced on the same day as this judgment permitting.