Radmacher heiress case to guide law on pre-nuptials
23rd March 2010
The status of pre-nuptial agreements is being scrutinised by the Supreme Court as the divorce settlement of one of Europe's richest women is tested. Paper heiress Katrin Radmacher, thought to be worth £100m, won her bid to have the agreements recognised under English law at the Court of Appeal last July.
But Nicolas Granatino has taken the battle to the UK's highest court.
Now a university researcher, her ex-husband claims cutting his divorce deal would leave him in financial ruin.
Ms Radmacher's former husband had agreed not to make any claims on her fortune if they split up, but was awarded £5. 85m by a High Court judge in 2008.
However, judges at the Court of Appeal last year said a pre-nuptial contract should be taken into account when the assets of the marriage are divided after a marriage fails.
Their ruling slashed his lump sum payment to about £1m with a £2. 5m fund for a house, which would return to Ms Radmacher when the younger of their two daughters, aged 10 and seven, reaches 22.
The court said "decisive weight" must be given by the courts to the terms of pre-nuptial agreements.
Ultimate test
Mr Granatino is now asking the Supreme Court to decide whether to overrule that judgement.
Before it was handed down, it was understood pre-nuptial agreements were not recognised in English law.
The outcome of the case is being eagerly anticipated by divorcing couples and their lawyers.
It is seen as the ultimate test of whether "pre-nups" are applicable in English law.
At the Supreme Court on Monday, Nicholas Mostyn QC, representing Mr Granatino, told the nine justices headed by Lord Phillips that the Court of Appeal ruling was not only unfair, it was impermissible, because it amounted to a court legislating over pre-nuptial agreements which are not recognised in English law.
He said that when Mrs Justice Baron decided the case in the High Court in 2008, she said the pre-nuptial agreement signed by the parties in 1998 was "manifestly unfair" because the husband had no separate legal advice, Ms Radmacher did not disclose how much she was worth and it left him with no money on divorce.
Appeal judges overthrew this ruling as "plainly wrong", saying "decision weight" should be given to the pre-nuptial agreement.
Cases 'stalled'
The Law Commission is due to report in 2012 on whether a change in the law should be made to ensure pre-nuptial agreements are fully enforceable.
Until then, the Supreme Court ruling will provide the clearest guide.
Mr Mostyn told the Supreme Court: "We are aware that a number of cases have been stalled pending the outcome of this case.
"What are the correct principles to be applied when a court is faced with a pre-nuptial contract?"
If his appeal at the Supreme Court is dismissed, Mr Granatino must pay back maintenance from his former wife plus the costs of the case from his reduced lump sum, said Mr Mostyn.
Mr Granatino, 38, who is French, gave up a lucrative City job in 2003 to become a £30,000-a-year biotechnology researcher at Oxford University.
He was divorced from his former wife, who is a German heiress to a paper company, in 2007.
They spent most of their life together in Chelsea, west London.
Housing agreement
Ms Radmacher, in her argument before the justices, denies that her former husband is facing "financial catastrophe".
Richard Todd QC, representing her, will say during the two-day hearing that Mr Granatino will have the use of a £2. 5m property rent-free for 15 years, meaning he would have been housed by his ex-wife for 20 years from their separation.
He will also have a holiday home near his parents in the south of France until their younger child is 22, a personal income of £76,000 a year for 15 years, and child maintenance, even though he is not the primary carer, of £70,000 a year.
He will receive £25,000 for a car and have most of his debts paid off by his ex-wife.
Mr Todd said: "The husband chooses to work as a researcher at the relatively low figure of £30,000. He could earn more if he chose. "
He said any inheritance Mr Granatino might receive from his multi-millionaire parents would be free of claim by his former wife, as would any future earnings he could still make if he returned to his previous career as an investment banker.
Mr Todd said the couple married in reliance on the pre-nuptial deal. Mr Radmacher's father trusted the agreement when he advanced her more than £20m in family company shares.
He called for pre-nuptial agreements to be treated as binding by judges, as they are in most other countries.
The hearing continues on Tuesday, with judgment reserved to a later date.
Source: BBC News & Sports - London
