A court should give effect to a nuptial agreement, whether entered into before or after marriage, that was 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 the agreement.

The Supreme Court so held in dismissing an appeal by the husband, Nicolas Joseph Jean Granatino, from a decision of the Court of Appeal (Thorpe, Rix and Wilson LJJ) [2009] EWCA Civ 649 allowing an appeal by the wife, Katrin Radmacher (formerly Granatino), against a financial settlement in favour of the husband ordered by Baron J [2009] 1 FCR 35.

LORD PHILLIPS OF WORTH MATRAVERS PSC, LORD HOPE OF CRAIGHEAD DPSC, LORD RODGER OF EARLSFERRY, LORD WALKER OF GESTINGTHORPE, LORD BROWN OF EATON-UNDER-HEYWOOD, LORD COLLINS OF MAPESBURY and LORD KERR OF TONAGHMORE JJSC, in a combined judgment, said that they wholeheartedly endorsed the conclusion of the Board in MacLeod v MacLeod [2010] 1 AC 298, paras 38 and 39 that the old rule that agreements providing for future separation were contrary to public policy was obsolete and should be swept away, for the reasons given by the Board. But that should not be restricted to post-nuptial agreements. If parties who had made such an agreement, whether ante-nuptial or post-nuptial, then decided to live apart, there was no reason why they should not be entitled to enforce their agreement. There was no material distinction between ante-nuptial and post-nuptial agreements. The court should apply the same principles when considering ante-nuptial agreements as it applied to post-nuptial agreements.

If an ante-nuptial agreement, or indeed a post-nuptial agreement, was to carry full weight, both the husband and wife had to enter into it of their own free will, without undue influence or pressure, and informed of its implications. What was important was that each party should have all the information that was material to his or her decision, and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end. White v White [2001] 1 AC 596 and Miller v Miller [2006] 2 AC 618 had established that the overriding criterion to be applied in ancillary relief proceedings was that of fairness and identified the three strands of need, compensation and sharing that were relevant to the question of what was fair.

A problem arose where the agreement made provisions that conflicted with what the court would otherwise have considered to be the requirements of fairness. The fact of the agreement was capable of altering what was fair. It was an important factor to be weighed in the balance. The following proposition was to be applied in the case of both ante- and post-nuptial agreements, in preference to that suggested by the Board in the MacLeod case: “The court should give effect to a nuptial agreement that was 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.”

That left outstanding the difficult question of the circumstances in which it would not be fair to hold the parties to their agreement. That would necessarily depend upon the facts of the particular case, and it would not be desirable to lay down rules that would fetter the flexibility that the court required to reach a fair result. There was, however, some guidance that it was safe to give. S 25 of the Matrimonial Causes Act 1973 provided that first consideration had to be given to the welfare while a minor of any child of the family who was under 18. A nuptial agreement could not be allowed to prejudice the reasonable requirements of any children of the family. Of the three strands identified in the White and Miller cases, it was the first two, needs and compensation, which could most readily render it unfair to hold the parties to an ante-nuptial agreement. The parties were unlikely to have intended that their agreement should result, in the event of the marriage breaking up, in one partner being left in a predicament of real need, while the other enjoyed a sufficiency or more, and such a result was likely to render it unfair to hold the parties to their agreement. Thus it was in relation to the third strand, sharing, that the court would be most likely to make an order in the terms of the nuptial agreement in place of the order that it would otherwise have made.

LORD MANCE JSC delivered a concurring judgment. BARONESS HALE OF RICHMOND JSC delivered a dissenting judgment.