The Times - UK (2020-10-15)

52 1GM Thursday October 15 2020 | the times

Law

5

Katrin Radmacher, a German heiress, outside the Supreme Court in 2010 after she won her battle to enforce a prenup

A decade on:

the case that

cast prenups

in a new light

Catherine Baksi looks back at a game-changing

ruling — and asks whether more clarity is needed

It is not often a judgment comes along

that flips family law on its head. But ten

years ago the case of the German paper

heiress and her French former husband

did just that.

The Supreme Court’s decision in

Radmacher v Granatino transformed

the way the English courts and the

public regarded prenuptial agreements.

Although routine in many European

jurisdictions, until this case, in England

and Wales such agreements were con-

sidered to be contrary to public policy.

The view was that they created unfair-

ness to the financially weaker party —

usually the wife — and even encour-

aged divorce.

The twist in this case was that it was

the former wife, Katrin Radmacher,

who was the wealthier party seeking to

rely on the agreement and her hus-

band, Nicolas Granatino, who asked

the court to depart from it.

The couple signed a prenup before

their marriage in 1998, in which they

agreed that if they split, her husband

would not make a claim on Rad-

macher’s wealth. While some view

prenups as unromantic, for Rad-

macher, it was proof that the pair were

marrying for love, not money.

The couple divorced in 2007 and the

following year the High Court awarded

Granatino £5.85 million. Radmacher

challenged the decision and the Court

of Appeal agreed that her fortune,

thought to be about £100 million,

should be protected by the terms of the

agreement. This reduced his lump sum

payment to about £1 million plus a £2.5

million fund to buy a house, which was

to be returned to Radmacher when

their youngest daughter turned 22.

Granatino fought this decision but

the Supreme Court rejected his appeal

eight to one, stating that so long as the

agreement was “fully entered into by

each party with a full appreciation of its

implications” it would be valid unless

“in the circumstances prevailing it

would not be fair to hold the parties to

their agreement”.

The dissenting judgment came from

Baroness Hale, at the time the only

woman to have sat on the Supreme

Court. She said: “The object of a [pre-

nuptial] agreement is to deny the eco-

nomically weaker spouse the provision

to which she — it is usually although by

no means invariably she — would oth-

erwise be entitled.”

Ayesha Vardag, Radmacher’s solici-

tor, insists that the former state of the

law, backed by Lady Hale, was “pater-

nalistic and patronising”. In addition,

she says that before the ruling, anyone

with money “was effectively writing

one’s partner a blank cheque to half or

even more of one’s assets”.

Radmacher caused a seismic shift in

the law, which had largely ignored

prenups, to a situation in which so long

as they were entered into by both

parties freely and with full appreciation

[but] they’re now seen as part of stan-

dard wealth planning, like a proper will

and good tax advice”.

The consensus among family law-

yers is that the greater independence

and control that prenups give to cou-

ples is positive — and they are no

longer the preserve of the super-rich.

Ordinary families are increasingly

using them, says Graeme Fraser, a

member of of the family lawyers’ group

Resolution, especially for couples mar-

rying later in life, those on their second

marriage or where grown-up children

have relied on the bank of Mum and

Dad or their grandparents to get on the

property ladder.

But the Radmacher ruling had

pitfalls for lawyers. It put divorce

specialists under increased pressure;

those drafting agreements now fear

that they would be sued for professional

negligence if the courts ruled the terms

were unfair.

Lucinda Holliday, a partner at Blaser

Mills Law, says that this may have con-

centrated minds and resulted in fairer

agreements. She points out that clauses

are usually built into the terms of

prenups to cater for changing circum-

stances, and especially to make provi-

sion for children.

Four years after the ruling, the Law

Commission, the independent body

that advises the government on reform

in England and Wales, suggested legis-

lation to codify the principles set out in

the judgment. The proposals remain in

limbo. Jane Keir, a partner at Kingsley

Napley, says that this is concerning

because cases are coming through the

courts with parties seeking to rely on

the terms of a prenuptial agreement to

cut short financial litigation on divorce,

and so clarity is important.

Others agree that the room for judi-

cial discretion still creates too much

uncertainty and acrimony. Vardag

would like legislation to enforce

prenups as contracts, so it is clear they

are the default standard for the distri-

bution of the couple’s assets. While she

insists that a proper application of the

law in Radmacher allows the courts to

enforce agreements consistently, she

says: “It would be good to carve this in

stone, rather than let judges take pot

shots whittling it away and bringing

prenups back under the vast and woolly

mantle of judicial discretion.”

of their consequences, they are regard-

ed as valid, unless they would leave a

party destitute.

Prenups, Vardag says, do not remove

the requirement to meet the parties’

needs from the available assets and

income if possible, but can reduce those

needs from the generously interpreted

level generally applied by the courts to

basic needs, and dispense with the

50:50 split.

“So the way is clear for parties to

agree in the best of times what will

happen in the worst of times, and to

marry on a basis they have both agreed

is fair,” she says.

Nicholas Bennett, a partner at Payne

Hicks Beach, says that in the past

decade there has been a “major cultural

shift” in the view of prenuptial agree-

ments by wealthy families.

Before Radmacher, he says, “they

were often seen as not quite cricket

‘Prenups are now seen

as part of standard

wealth planning’

BEN STANSALL/AFP/GETTY IMAGES

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T

he world is understandably

concerned with tackling

coronavirus, but we

should not neglect the

unparalleled, retrospective

cynicism of a Chinese communist

regime intent on rewriting history

through the judicial treatment of

Hongkongers.

Joshua Wong, a pro-democracy

leader, was arrested recently for

having attended a protest that was

legal at the time of its organisation.

How? In retrospect, of course.

The Hong Kong police force is

not being tardy. This retroactive

We must fight this shocking attack on Hong Kong rights

application of the law is in fact

precise and deliberate. It is a move

intended to wrong-foot the city’s

many thousands of protesters and

their supporters, to make them

question their safety.

This is just the latest development

in the city’s downward trajectory.

Overseen by China’s ruling

communist party, the Hong Kong

government has been steadily

eroding the human rights of its

citizens. Any final façade of

democracy crumbled in June with

the introduction of the national

security law, which has been widely

criticised over its blatantly

dictatorial nature.

The new laws are deliberately

vague, criminalising any act that

the authorities consider to be

seditious, secessionist, related to

terrorism or collaborating with

foreign powers.

They are also absurdly harsh and

wide-ranging; conviction could

mean life imprisonment, and

charges can be brought against any

individual, anywhere in the world,

including myself, here in

Westminster, for writing this article.

Protesters and prominent Beijing

critics have already been targeted

in several clampdowns.

The fairness of the judicial

process and respect for the rule of

law are cornerstones of a free and

democratic society, which we in the

UK take for granted. We assume

that the systems in place to uphold

peace and equality will protect us.

However, in Hong Kong this is no

longer the case. The justice system

is instead a tool with which

systematically to criminalise and

crush opposition.

Britain is committed — through

the Sino-British joint declaration —

to protecting the rights of

Hongkongers.

This is something that we must

do with force and urgency.

That is why I renew my call on

fellow parliamentarians to join in

asking the foreign secretary to

impose Magnitsky-style sanctions

on key figures in the Hong Kong

establishment, including Carrie

Lam, the territory’s chief executive.

The world must show the Chinese

communist regime and the Hong

Kong government that they cannot

attempt cynically to rewrite history,

abolish basic human rights and

use new laws to criminalise

Hongkongers retrospectively

without repercussions. The UK

must show those who face arrest

for standing up for their rights that

they are not forgotten. We stand by

Hongkongers.

Lord Shinkwin is a Conservative peer

and the vice-chairman of the all-party

parliamentary group on Hong Kong

Kevin Shinkwin

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