Tuesday, November 15, 2011

Z v Z: Radmacher applied

Z v Z [2011] EWHC 2878 (Fam) is, I believe, the first reported pre-nuptial agreement case since Radmacher v Granatino.

The facts: Both parties are French. They married in 1994, and there are three children of the family. They moved to England in 2007. The marriage broke down in 2008 and the wife commenced divorce proceedings in England. Decree Nisi was pronounced in 2010, after a jurisdiction dispute. The wife then proceeded with her application for financial remedies.

Prior to the marriage the parties entered into a pre-nuptial agreement in France, which provided for separation of assets, i.e. that each party should retain their own assets.

The wife's case was that everything should be shared equally and that she should not be held to the pre-nuptial agreement. She put forward several arguments in support of this, such as that the husband had promised her that he would not enforce the agreement.

The husband argued that the agreement excluded sharing of the assets, and that, following Radmacher, it was fair to hold the wife to it. However, he accepted that the agreement did not exclude maintenance claims, and quantified the wife's needs at about 35% of the assets.

The total assets were agreed at some £15 million, of which some £13.8 million belonged to the husband.

Held: Mr Justice Moor made clear (at paragraph 31) that, absent the prenuptial agreement, "this would undoubtedly be a case for equal division of the assets", as each party had contributed equally to the marriage (all of the assets had effectively been generated during the marriage). The question therefore was whether the agreement took the case out of "sharing" (paragraph 32).

Before dealing with the evidence, he reviewed the law as to pre-nuptial agreements, particularly the Radmacher decision, where the Supreme Court of course held that:
"The court should give effect to a nuptial agreement that is 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".
Mr Justice Moor went on (at paragraph 36):
"... the [Supreme] Court clearly took the view that it would be easiest to show that an agreement was not unfair if it excluded sharing but did not prevent the court from providing for the reasonable needs of the applicant."
He did not accept an argument put forward on behalf of the husband that that this was a French case and that he should take into account what the wife would have got in France, saying (at paragraph 40):
"There is no doubt that in this jurisdiction, when dealing with an application for financial remedies in English divorce proceedings, the court will normally apply English law, irrespective of the domicile of the parties, or any foreign connection (see Paragraph 103 of Radmacher). Nevertheless, Paragraph 108 of Radmacher makes it clear that issues of foreign law are relevant to the intentions of the parties (eg whether or not they intended that the ante-nuptial agreement should be binding upon them). It follows that it is relevant to the issue of fairness to know what the position would have been in France but not to reduce the award simply because the Wife would have got less there."
He then went on to reject all of the arguments raised on behalf of the wife to say that it would not be fair to uphold the agreement in so far as it excludes sharing (paragraph 64). He did, however, say that: "It might have been very different if the Agreement had also purported to exclude maintenance claims in the widest sense but the Agreement does not, of course, do so."

He then proceeded to calculate the wife's reasonable needs, which he assessed at some £6 million, or 40% of the assets, saying (at paragraph 86) that:
"I have decided that sharing is not appropriate in this case. Nevertheless, it is appropriate to perform a cross-check against the overall assets if only to make sure that the award is not in excess of half the assets. On the basis that the overall assets are £15 million, this award amounts to 40% ... In my view, that is a suitable departure from equality to reflect the Agreement."

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