Rejecting the wife’s case that the contrat de mariage should be ignored and that she should be awarded 50% of the marital assets, Mr Justice Cusworth awarded the wife a ‘lifestyle award’ which amounted to approximately 20% (£22.93m) of the overall assets.
In adding to the body of case law in this area, the court made clear that in cases where a marital agreement is being challenged and there are very substantial assets, consideration should be given to determining the validity of the agreement at a preliminary hearing.
Background
The parties are French, married in May 2001 and separated in September 2022. They had three children during their marriage. The husband was a banker who, after a first business failure, became a successful entrepreneur. The wife was a strategy consultant until 2005, before moving into a different sector until 2013.
At the time of their marriage, the parties lived and worked in Hong Kong but relocated to London. A week before the wedding, they signed the Contrat de Mariage (‘the contract’), in the French Consulate in Hong Kong, electing for separate property (separation de biens). The effect in French law would be that on divorce they would each retain the assets in their sole names and share only jointly owned property. It was accepted by the husband that absent the existence of the contract, under English law all of the assets would be considered matrimonial and subject to the sharing principle.
The key issue to be determined therefore was the extent to which the outcome of the wife’s application for financial remedies should be impacted by the contract. The wife argued that the marriage contract should be ignored because she claimed not to have had a full appreciation of the implications of signing the agreement. She sought 50% of the net marital assets.
Contrat de Mariage
The contract itself was in fairly conventional terms, adopting a regime of separate property. It did not deal with maintenance or needs more generally, which in France would be dealt with under the principle of prestation compensatoire.
Notwithstanding the wife’s evidence that she did not recall reading the contract or understand the implications of it on divorce, Mr Justice Cusworth held that both parties had fully understood and acknowledged that they had elected the separation de biens regime to apply to their marriage, and the implications of this on the breakdown of the marriage. He was also satisfied that the contract had sufficient formality to potentially be given effect.
The Assets
On the wife’s case, the assets were £115.15m, compared to the husband’s case of £87.25m, the majority of which was held within a discretionary trust. The main differences between them were (a) tax payable by the husband and (b) the level of discount to be applied to the business assets.
Counsel for the wife sought to argue that by placing the majority of his assets during the marriage into a discretionary trust, the husband had changed the nature of those assets and rendered them no longer sole property but rather property to which the sharing principle should apply, even if the contract should otherwise be determinative of the wife’s capital entitlement. Mr Justice Cusworth did not accept this argument and found that the trust assets should be treated in the same way as the other assets held in the Husband’s sole name.
Decision
In upholding the contract, Mr Justice Cusworth had to weigh the fairness to the husband in upholding the contract, against the contributions the wife made during the marriage, and whether it would be ‘fair’ in the circumstances of the case to exclude any element of sharing and restrict the wife to her needs.
He considered Brack v Brack [2018] EWCA Civ 2862 and highlighted that a sharing award may still be made even where there is a valid nuptial agreement, albeit he concluded in this case that a sharing award was not required to reach a fair outcome.
Mr Justice Cusworth did acknowledge that the parties had both made a full contribution to their long marriage, had three children and amassed a significant fortune, and in those circumstances, it would not be appropriate to subject the wife to a too rigorous ‘needs’ assessment. ‘Needs’ being a misnomer in a case of this magnitude, the wife was awarded an appropriate ‘lifestyle’ and capital base in the sum of £22.93 million.
Practical Consideration
Significant costs were incurred in valuing the husband’s business interests, in particular his interest in a sports club and pursuing disclosure of EUR30 million he received by selling a stake in it. Mr Justice Cusworth found there to be ‘palpable frustration and anger between the parties’, which was mainly driven by their different perspectives on how the proceedings should have concluded. Once clarity was achieved as to what had been received from the deal and where it had been invested, little was added to the understanding of the key issues in the case.
It is for this reason that in similar cases involving very substantial available assets which are subject to significant valuation issues, consideration should be given (where appropriate) to determining the validity of a marriage contract at a preliminary hearing. This will allow an opportunity to avoid unnecessary and costly valuations of the parties’ assets, such level of detail being unnecessary to achieve a fair outcome.
Read the judgment in full here.