The Supreme Court has sent a clear message in its majority decision in Radmacher v Granatino that the judiciary supports law reform in the area of nuptial agreements (both pre nuptial and post nuptial). Even Lady Hale, dissenting from the majority view, stated that ‘the law of marital agreements is in a mess. It is ripe for systematic review and reform'.
However, many legal practitioners have recently completed a questionnaire circulated by the Law Commission seeking views as to other areas of family law which are in need of reform. For family solicitors and their clients, one major cause for concern is the uncertain nature of too many areas of matrimonial law; greater clarity on issues such as the definition of ‘matrimonial property' available for distribution on divorce would be welcome; as would clear guidance as to the extent of the court's statutory duty to interpret each party's needs on divorce; and the effect of pre marriage and post divorce cohabitation on financial awards.
Some cases will always need to be litigated, irrespective of any pre-nuptial or post-nuptial agreement and notwithstanding the proposals to make mediation compulsory in family cases, which can only be a good thing for the majority of separating couples. However, as Baroness Deech said in her speech to the House of Lords earlier this week, the law in England needs to be modernised given the different way in which families live and organise themselves now; a lot has changed in the 40 years since the last major family law reforms were made. Allowing couples to agree between themselves, before or after they marry or enter a civil partnership, how to organise their finances in the event of divorce, could significantly reduce the number of costly and stressful court cases, which are destructive for the whole family and which dissipate family assets unnecessarily. Even deciding upon the treatment of one aspect, such as the division of inherited and pre-acquired assets in advance could avoid months of litigation and save weeks of court time.
Some disagreed with Baroness Deech, arguing that Parliament has a wider duty to support the primacy of marriage, rather than to legislate for its dilution. However, Baroness Deech responded by pointing out that in many countries in Europe, where the divorce rates are much lower than they are in England, systems of community of property and nuptial agreements are commonplace and upheld.
So how will courts now approach cases where there is a pre-nuptial agreement post Radmacher? The oldest rule, which is that pre nuptial agreements are contrary to public policy, has been abolished. As the majority of Supreme Court judges in Radmacher proposed "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". In terms of defining ‘fairness', the Supreme Court has suggested that if the parties' needs are met and financial sacrifices have been compensated for in the agreement (for example by homemakers who have given up careers to look after the children of the family), then fairness may not require a departure from their agreement. The courts will still look at the strands of needs and compensation as set out in Miller, but it may be easier to argue in favour of a departure from the sharing principle, where there is a pre-nuptial agreement.
The Law Commission is considering how to modernise the law in this country concerning nuptial agreements, perhaps to bring it in to line with European law. It is due to report in 2012 (having sought the profession's views in the near future) and it should make detailed proposals for legislative reform. Many practitioners have high hopes that the scope for reform will not end with nuptial agreements, but will look more generally at the reduction in litigation costs for divorcing couples, the lifting of the heavy case load on the court system and the avoidance of bitter battles which often affect the children of the family.
So, whilst many areas of family law are ripe for systematic review and reform, perhaps pre-nuptial and post-nuptial agreements can, following the Supreme Court decision, offer clients a way forward. Whatever the Law Commission's findings, practitioners require above all, clarity in any moves for reform, so that they can give clear advice to clients about the steps which they will need to take to give them a level of certainty for the future.
Antonia Mee is a solicitor in the Family office of Withers LLP. She advises on all aspects of family law including divorce, co-habitation, pre-nuptial agreements, complex financial disputes, jurisdictional issues and children.