High Court upholds French pre-nuptial agreement Z v- Z (No 2)

The main issue in this case was whether a French marriage contract (a pre-nuptial agreement) should be upheld.

Facts

Both parties were French. The wife was 50 and the husband 53. It was a 14 year marriage with a period of 4 year cohabitation preceding the marriage. The parties had 3 children aged 14, 12 and 9. In June 1994 they entered into a “marriage contract” in accordance with French law. In July 1994 they married and lived in Paris and moved to live in England in August 2007.

The parties separated in 2008 and in July 2008 the wife issued divorce proceedings in England.  The first issue was whether the English courts had jurisdiction to deal with the divorce.  The court held that since the parties were both habitually resident in the UK, the court had jurisdiction in respect of the divorce.

Financial proceedings

In this case, it fell to Mr Justice Moor to adjudicate the merits of a French prenuptial agreement – a “Separation des Biens” – between two French citizens living in London. In that agreement, the wife had surrendered any right to share in the couple’s shared assets. Only the assets in their own names would ever remain their own. However there was no mention of maintenance in the agreement.

There were assets of approximately £15 million of which the wife had £1.3 million in her name. The husband was an extremely high earner: between 2006 and 2011, his average annual income was in the region of €3 million. His income was thereafter projected to drop, to exclude bonuses.

The wife’s case was that everything should be shared equally and she therefore sought 50% of the total assets.  The wife also argued that it would be unjust to hold the parties to the French agreement.

The husband’s position was that the French agreement excluded sharing of the assets and, following the Supreme Court in Radmacher v Granatino, [2010], it was fair to hold the Wife to the Agreement.  (NB- The court had held in Radmacher –v- Granatino 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).

The husband accepted the narrow window provided in that particular agreement – that the wife’s needs should be met. After assessing and capitalising the wife’s housing and maintenance needs, he offered her an overall total of 35% of the assets.

Mr Justice Moor held that this was undoubtedly a case for equal division of assets without the French pre-nuptial agreement. However, the issue was whether the marital contract (pre-nuptial agreement) took the case out of ‘sharing’. There was no dispute that the agreement was entered into freely and with full understanding of its implications. No formal advice was given by the two notary witnesses and there was no formal disclosure. This did not matter as the wife knew exactly what the agreement entailed and each party new the financial position of the other.

The wife said that on a number of occasions the husband had promised her that he would not enforce the agreement and she argued that it would be unfair to enforce it now. This was denied by the husband. On the evidence, the court held that the agreement had not been altered and it followed that both parties knew that the agreement was still operative.

The court upheld the agreement but stated that it might have been very different if the agreement had also purported to exclude maintenance claims in the widest sense, but the agreement did not do so. The wife was awarded 40% of the assets which was held to be a suitable departure from equality to reflect the agreement.

What is the position regarding pre-nuptial agreements following this case?

Following the case of Rachmader –v- Granatino, the court gave prenuptial agreements “decisive weight”. The case of Z –v- Z does not alter the current law. It is still not necessarily the case that prenups are upheld by English law. To fill the gaps in the current law and avoid any further possibility of “fairness” being raised in pre-nuptial cases, new legislation would have to be brought in.

Although the Law Commission published a consultation paper “Marital Property Agreements” in January 2011 on the future of pre-nuptial agreements, so far, the law has not been changed. It is still down to the courts (in financial proceedings) to decide on a case by case basis how much weight to give to an agreement made between the parties – the law does not allow couples to prevent each other from asking the courts to decide how their property should be divided.

If you would like further advice in connection with the matters raised in this article then please contact one of our family solicitors, Miss Vincent or Miss Booth on 01926 422 101.