Rachmacher v. Gratino 2010 UKSC42: The Supreme Court upholds the Court of Appeal decision, 20th October 2010

Rachmacher –v- Gratino [2010]UKSC42 – The Supreme Court upholds the Court of Appeal decision – 20th October 2010

The Supreme Court found in favour of the wife and held that the Court of Appeal was correct in allowing the enforcement of pre-nuptial agreement and that the pre-nuptial agreement was binding on the husband.

The facts

The parties were married in London in 1998. The husband (Mr Grantino) is French and the wife (Mrs Rachmacher) German. They entered into an ante-nuptial agreement before a notary in Germany three months before the marriage at the instigation of the wife, to whom a further portion of her family’s considerable wealth would be transferred if an agreement was signed. The agreement was subject to German law and provided that neither party was to acquire any benefit from the property of the other during the marriage or on its termination. The husband, who at the time worked as a banker, declined the opportunity to take independent advice on the agreement.

The parties separated in October 2006 after 8 years of marriage. They have two daughters, born in 1999 and 2002. By this time the husband had left banking and had embarked on research studies at Oxford.

High Court

The husband applied to the court for financial relief. In the High Court he was granted a sum in excess of £5.5m which would afford him an annual income of £100,000 for life and allow him to buy a home in London where his children could visit him. The judge took into account the existence of the ante-nuptial agreement but reduced the weight she attached to it because of the circumstances in which it was signed.

Court Appeal

The wife appealed successfully to the Court of Appeal, which held that in this case the agreement should have been given decisive weight. The husband should only be granted provision for his role as the father of the two children and not for his own long term needs. The husband appealed to the Supreme Court.

Supreme Court judgement

The Supreme Court (by a majority of 8 to 1) dismisses the husband’s appeal. The Supreme Court found the Court of Appeal was correct to conclude that there were no factor which rendered it unfair to hold the husband to the agreement. The Court found that the husband is “extremely able” and his own needs will in large measure, be indirectly met from the “generous relief” given to cater for the needs of his two daughters until the younger reaches the age of 22. The court further held that there is no compensation factor as the husband s decision to abandon his career in the city was not motivated by the demands of his family but reflected his own preference.

The Court concluded that that “Fairness did not entitle him to a portion of his wife’s wealth, received from her family independently of the marriage, when he had agreed he should not be so entitled when he married her”.

In reaching their decision, the justices first considered the circumstances in which the agreement was made and the court held that parties must enter into a pre-nuptial agreement voluntarily, without undue pressure and be informed of its implications.

Secondly, the justices considered if the foreign elements of the case enhance the weight that should be accorded to the agreement. The fact that it was binding under German law was relevant to the question of whether the parties intended the agreement to be effective, at a time when it would not have been recognised in the English courts.

Finally, the justices considered if the circumstances prevailing at the time the court made its order make it fair or just to depart from the agreement. They considered that a pre nuptial agreement may make provisions that conflict with what a court would otherwise consider to be fair. The principle, however to be applied is that a court should give effect to a pre nuptial agreement that is freely entered into by each party with a full appreciation of its implication unless, in the circumstances prevailing, it would not be fair to hold the parties to their agreement. A pre nuptial agreement cannot be allowed to prejudice the reasonable requirements of any children of the family, but respect should be given to individual autonomy and to the reasonable desire to make for existing properly.

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