Decision of Cusworth J concluding financial remedy proceedings between W and H. The principal issue concerned the extent to which the outcome of W’s application for financial remedies should be impacted by the ‘Contrat de Mariage’ (the elected séparation de biens property regime).

Outcome

W awarded c.£23m (20–26% of total assets) out of an asset base of between £87m–£115m (subject to tax and discounting). The séparation de biens regime in the parties’ French marriage contract was held to be a valid and unvitiated pre-nuptial agreement.

Background

Marriage of c.21 years with three children; both parties are French. The parties moved to Hong Kong and entered into a ‘contrat de mariage’ electing ‘séparation de biens’ (a regime of separate property) before a French consular official in Hong Kong, prior to the marriage. The parties moved to London and H co-founded an investment vehicle that has enjoyed substantial success.

The assets had all accrued during the marriage (which H accepts) and are estimated to be between £87m–£115m (subject to decisions about tax and discounting). In the proceedings, W sought 50% of the assets and H offered a needs-based award amounting to c.£22.6m.

Evidence

Cusworth J, after a detailed review of the evidence, concluded as follows.

Motivation

W would have understood what a marriage contract was, and its various purposes, and that her family’s instincts in 2001 would have been for her to have similar protection that her mother had when she married her father (W’s parents also elected séparation de biens). This is not a case where the contract has been ‘foisted onto an unwilling and ill-informed ingénue, who signed and then married without any understanding of the consequences’; [18].

W’s account that she never considered that the contract would be important on divorce is not accepted. Although the main motivation for the contract may have been to protect assets from the vicissitudes of H’s business career (which as at time of marriage did not look promising), if anything, W’s initial lack of recollection about what happened would suggest that she had few concerns about what was being arranged (rather than she did not have any understanding of what the contract meant).

Signing Process

The contract was signed seven days before the wedding (this is not viewed to be of any significance) and is set out in fairly conventional terms.

Reference is made to Z v Z (No 2) (Financial Remedy: Marriage Contract) [2011] EWHC 2878 (Fam), in which Moor J found that due to an additional article governing the parties’ property division upon the ‘dissolution of the marriage’ that the agreement was not simply entered into to provide the Wife with protection from the Husband’s creditors. Cusworth J considers the same argument enunciated by Moor J in Z v Z (No 2) applies in the present case; it was very clear from the contract that under French law (the law the parties were electing) the contract would have consequences on divorce; [24].

The fact that French consular officials no longer carry out the duties of notaries for these purposes does not undermine or impugn the process the parties carried out in signing the contract. An SJE on French law opined on this matter and confirmed the contract would be recognised and accepted by a French court; [29].

Overall

Both parties understood and acknowledged by their actions and attitudes that they elected the séparation de biens regime to apply to their marriage. They had all of the information that was material to their respective decisions; were fully aware of the implications of the agreement; and understood and so intended that the agreement should govern the financial consequences of the marriage coming to an end; [45].

Assets

Cusworth J finds that W’s prima facie entitlement on a sharing basis, in circumstances where the contract is held to have no weight at all, would be between £43.5m and £56.5m.

Club

In calculating the assets Cusworth J takes neither of the parties’ proposed values and instead takes a mid-point value of the figures calculated by the SJE, derived from two differing bases.

Trust

H placed the majority of his assets into a discretionary trust (an irrevocable Guernsey trust with trustees based in Geneva). As opined by the SJE in French law, the establishment of the trust would not have affected the way in which a court might have approached the séparation de biens arrangement. Although not determinative in English law, Cusworth J does not find that the assets in the trust should be treated in any different class from the rest of his solely held assets, notwithstanding W’s status as a discretionary beneficiary. H accepts these are his resources and should be included in any cross-check.

The Law

Contract

Cusworth J considers Granatino v Radmacher [2010] UKSC 42, starting with the useful and accurate precis provided by Lewison LJ in Versteegh v Versteegh [2019] EWCA Civ 1050 at [178] summarising the key points from Radmacher. Cusworth J addresses the relevant principles in turn:

• At the time the parties signed the contract disclosure was not important as neither had built up significant assets. The extent to which W was fully aware of the implications of the contract must be considered. Reference is made to the approach set out in Versteegh by King LJ at [59]–[61] and [65] and Lewison LJ at [182].
• The decision to live and spend their lives outside France does not undermine the significance of the choice to apply French law to their marriage, in circumstances where neither of them has sought to alter or cancel the agreement in the intervening years.
• Undue pressure was not applied to W, nor was her emotional state a matter of any relevance (Lord Phillips in Radmacher, [71]). The parties were both highly intelligent and educated people who were making plans for what they hoped and intended would be a successful professional life together.
• Fairness of the contract and whether the contract should be torn up are further relevant factors. The decision to hold the parties to the agreement also depends upon the flexibility the court requires to reach a fair result (Lord Phillips at [73] and [75]–[76], Radmacher). This flexibility was emphasised by Peel J in AH v BH [2024] EWFC 125 at [50] and addressed by King LJ in Versteegh at [68].
• Autonomy is an important consideration dealt with by Lord Phillips at [78] of Radmacher, stating, ‘It would be paternalistic and patronising to override their agreement simply on the basis that the court knows best. This is particularly true where the parties’ agreement addresses existing circumstances and not merely the contingencies of an uncertain future.’ Cusworth J draws parallels with the present case, finding that ‘contingencies of an uncertain future’ was exactly what the couple were addressing in signing the contract, before children were born, and at a time when W’s employment was more reliable and H’s business venture was failing; [76].
• The contract does not address maintenance or needs more generally which in France would be dealt with under the principle of prestation compensatoire. It therefore leaves the court to determine how fairly to make an appropriate provision for W, in circumstances where she has agreed that she should not acquire a share per se in the value of the assets H built up during the marriage. The importance of this element is made clear by Lord Phillips in Radmacher from [81] and was confirmed by Baroness Hale in her dissenting judgment at [177].
• The court is not precluded from considering in all the circumstances whether a sharing outcome might be appropriate, even where it finds there has been a valid agreement. This was made clear by King LJ in Brack v Brack [2019] EWCA Civ 2862 at [103].

An outcome without sharing

Cusworth J finds the couple understood and accepted the contract throughout their long marriage. Thus, the fairness to the husband of upholding the contract must be weighed against the contributions of W over that same period, and whether these can properly be met by an award limited to W’s ‘needs’.

• Considering the value of the assets, needs is a misnomer in this case. Instead, it amounts to the provision of an appropriate lifestyle and capital base to provide for W for the rest of her life, in all of the prevailing circumstances. Moor J describes the exercise to be undertaken fairly in CMX v EJX [2022] EWFC 136 at [48].
• In fairness, what an appropriate award on a needs basis would amount to must first be determined before any final consideration as to whether such an award would be fair for W, or whether further consideration should be given to an element of sharing.
• When considering what an award on a ‘lifestyle’ basis might consist of, it may be appropriate in some cases to temper the basis of the assessment of any claimed items by reference to the existence of the contract. This is confirmed by Roberts J in KA v MA [2018] EWHC 499 (Fam) at [111].

Cusworth J is not persuaded that any such curb on the assessment of W’s needs would be appropriate. NB. In KA v MA, the asset base was four times smaller, a constraint on need had been agreed and an element of the husband’s wealth was pre-acquired.

Outcome

• The election of the séparation de biens regime in the parties’ French marriage contract was a valid and unvitiated pre-nuptial agreement.
• Cusworth J makes a needs-based award to W of c.£23m all in, amounting to between 20%–26% of the assets. It is acknowledged that although this is less than what a sharing outcome would have produced, it nevertheless reflects an amount that properly rewards W’s contributions.
• Cusworth J makes clear that this is not a case where an element of sharing is required to achieve a fair outcome, stating: ‘I anticipate that, if ever there were to be a case for such an outcome, it would be in a case with a background such as this where significant assets have been built up during a long marriage, but that by reason of an agreement at the outset the right to a sharing outcome at the dissolution of the marriage has apparently been waived’; [101]. It is also confirmed that an element of sharing would not be fair for H who had throughout the marriage believed the contract to be understood and operative; [102].
• No compensation arguments arise as W ‘could not have hoped for a more secure financial future by her own efforts if she had not made the significant career sacrifices’; [103].

NB. As an aside, Cusworth J adds that it may be wise in such cases, where the parties have signed a similar contract or executed an English nuptial agreement and there are very substantial assets subject to significant valuation issues, for the court to consider a preliminary hearing as to the validity of the agreement. This would not usually be a Crossley-type hearing (where the claim could be dismissed/curtailed). Rather, it might enable the court to move forward proportionately to carry out the exercise mandated by MCA 1973 (saving time and money); [106]–[107].