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Divorce – Protecting Your Assets

The first working Monday in January is affectionately know to Family Lawyers as Divorce Monday based upon anecdotal evidence of the increase in divorce enquires with “New Year New Me” and a desire to change things.

This year has been a bit different in that the enquiries I have had have not been based upon the desire to end a marriage but in contemplation of one and specifically in regard to Pre Nuptial Agreements which appear to be increasingly important to parties particularly in circumstances where further marriage is being considered and the protection of existing assets maintained.

In the recent case of CMX v EJX (French Marriage Contract) [2022] EWFC 136 Moor J made an award in W’s favour to meet her reasonable needs after upholding the validity of French marriage contract.

Facts

This was a 26 year marriage with 2 adult and 1 minor child aged 17 living with the wife. The Husband was 56 and the Wife was 54.

The parties had signed a marriage contract in France in the presence of a notary on 16 June 1994. The parties had lived in England from 1994 when they moved to London. The marriage contract was a simple “separation de biens” contract. Article One, of the contact states, “the future spouses declare that they are adopting the SEPARATION OF PROPERTY regime as established by Articles 1536
and 1541 of the Civil Code”. There are similar provisions in Italian Law to the community of assets “comunione dei beni” and separation of assets “separazione dei beni” so France and Italy have this in common.

The parties did not obtain separate legal advice before signing the marriage contract. I stress the word separate as the Wife claimed that she understood the marriage contract operated only to exclude inherited wealth and she could not recall any discussions about entering the contract before they did. The Husband said the parties intended to be financially independent and were advised of the ramifications of the marriage contract by the notary before they signed it. The parties had kept their finances separate throughout the marriage, save for their two English properties, which were jointly owned.

In the present case, it was part of the obligation in France that they get advice from the Notary and after hearing the evidence, the judge preferred the evidence of the husband as to the discussions and information given by the notary at the time.

At paragraph 62 of the judgement, he said

“somebody must have asked the firm to prepare the first draft of the Contract and I find it almost impossible to believe it was the Husband” The Notary was the recommendation from the Wife’s family.”

He goes on to say at paragraph 64

“This Wife is extremely intelligent. She had been working for three years in responsible employment.  I cannot accept that she would not have known that the whole point of such Contracts was to deal with the position on divorce or separation given that there is no real need for them otherwise.  In any event, even if she did not, the Notary told her.  At the time, she was earning more than the Husband.  She wanted to retain her career and keep the rewards from that career.  Whilst I cannot be entirely sure of the motivation of her or her family, I am clear that the Radmacher test for upholding this Contract is satisfied.  Those who sign marriage contracts must understand that it is a significant step with very important consequences.  These contracts will be enforced in France and will not simply be torn up in this jurisdiction.”

At Paragraph 65 of the judgement

“There is no doubt that this Marriage Contract would have failed the Radmacher test if it had attempted to exclude a needs-based award as it would not then have been fair but the Contract does no such thing.  It follows that I must go on to consider the correct needs based award to make to this Wife following this long marriage in which she has made as full a contribution as she could possibly have made”

Moor J considered that it did not matter that the document did not mention divorce, nor that neither party had had independent legal advice, because he found that the Notary had explained the consequences of divorce to the parties when the document was signed and straightforward “separation de biens” contracts are very common in France. The Radmacher test was satisfied, and the court proceeded to consider W’s reasonable needs without sharing. In Radmacher v Granatino [2010] UKSC 42, The majority of the Supreme Court held at paragraph [75] 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”.

It should be remembered that Mr Granatino was held for the most part to the agreement which most lawyers would have considered unfair and excluded claims for maintenance.

At paragraph 82 of that judgement the court said

“Where, however, these considerations do not apply and each party is in a position to meet his or her needs, fairness may well not require a departure from their agreement as to the regulation of their financial affairs in the circumstances that have come to pass. Thus it is in relation to the third strand, sharing, that the court will be most likely to make an order in the terms of the nuptial agreement in place of the order that it would otherwise have made”.

In Kremen v Agrest [2012] EWHC 45 (Fam), Mostyn J stated that it would be unusual for a party to freely enter into a marital agreement with a full appreciation of its implications without having taken independent legal advice. However, in Versteegh v Versteegh [2018] EWCA Civ 1050, Eleanor King LJ noted that this could not be the case where a pre-marital agreement was signed in a country where such agreements are commonplace, simply drafted and generally signed without legal advice or disclosure.

In this case, the Wife’s award amounted to 38.9% of the total matrimonial assets and 44.56% of the liquid assets, which was correct and appropriate in light of the marriage contract and the section 25 factors.

As a side note at Paragraph 84 of the judgement the court also dealt with the “occupation rent” argument that had been raised by the Husband

“Although occupational rent is an important element of TOLATA and bankruptcy claims, it has no place in financial remedy proceedings. The court cannot investigate the parties’ respective conduct to see if the party who vacated was forced out or went voluntarily. Moreover, it does not matter. If one party has incurred rent, it will have reduced his or her assets.  If the assets are shared equally, the liability will have been shared. If it is a needs case, the fact the money has been spent will be taken into account in assessing the needs of the party who paid the rent.”

And so we move on with the courts appearing ever more willing to uphold a pre marriage agreement from Crossley v Crossley  [2007] EWCA Civ 1491, [2008] 1 FLR 1467, and in some respects continuing the line of judgements that started with Edgar v Edgar [1980] EWCA Civ 2.

The courts continue to retain overriding discretion taking into account all of the circumstances of each case and based upon the often-unique circumstances of each party.

As Shakespeare penned all those years ago in Julius Caesar

“There is a tide in the affairs of men
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat;
And we must take the current when it serves,
Or lose our ventures.”

Advice from our divorce Solicitors

If you have any questions regarding this article or any other matter regarding Pre Nuptial Agreements or Divorce, please get in touch with our experienced divorce solicitors who form part of our team of family law solicitors.