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NG v KR (Pre-nuptial contract) [2008] EWHC 1532 (Fam)

Judgment in big money case involving consideration of a pre-nuptial agreement valid under German Law

The couple had married in England in 1998 and separated in 2006 and have two children. The children now live for 2/3 of their time in Germany with the mother (her native country) and 1/3 of their time with the father in England, though he was born in France. The mother is extremely wealthy, mainly through inheritance, while the father had been a successful hedge fund manager before pursuing a doctorate at Oxford University. In the light of the imbalance in wealth before the marriage the couple had signed a pre-nuptial agreement that in effect meant that the husband would not seek anything if the marriage broke up.

A key factor in this judgment therefore is how Baron J should account for the pre-nuptial agreement in any award. Counsel for the wife argued that to ignore the agreement would be a breach of her human right’s and further the agreement was a maintenance agreement under s34 of the MCA. Counsel for the husband argued that the pre-nuptial agreement was not binding in English law, that as it was signed before the HRA came into force it would not be caught by the ECHR and that the husband had not received sufficient advice or disclosure before signing the agreement so it should not play a part in any award.. He therefore sought a settlement of £9m out of the wife’s estimated wealth of £100m.

In this judgment Baron J reviews the case law relating to the handling of nuptial agreements in the English courts and the relevant law relating to human rights points. She concludes that: i) the agreement would be enforceable in both Germany and France; ii) the agreement is not enforceable under English Law “until adopted by the Court”; iii) the agreement was not an agreement under s34 as such agreements have to be made during the term of the marriage; iv) the approach of the English Courts in handling such agreements did not infringe the wife’s human rights; and v) the agreement was flawed under English law.

However in considering the s25 factors Baron J did state that the amount of the award would be affected by the by the husband’s decision to enter into the agreement as 

“he understood the underlying premise that he was not entitled to anything if the parties divorced. In essence, he accepted that he was expected to be self-sufficient. As a man of the world that was abundantly clear.”

Neutral Citation Number: [2008] EWHC 1532 (Fam)


Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Given on the 2nd  July 2008 and finally handed down on the 28th July 2008

Before :

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Between :

NG (Applicant)

- and - 

KR (Respondent)

(Pre-nuptial contract)
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Mr Nicholas Mostyn QC and Mr Deepak Nagpal (instructed by Messrs Payne Hicks Beech) for the Applicant

Miss Cherie Booth QC, Mr Philip Moor QC and Mr Richard Todd (instructed by Ayesha Vardag) for the Respondent

Hearing dates: 23rd June – 2nd July
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Mrs Justice Baron:
1) This is a claim by NG (“the Husband”) for ancillary relief arising upon the breakdown of his marriage to KR (“the Wife”). The parties were married in England on the 28th November 1998 and separated after almost 8 years in August 2006. They have two children namely A who was born on the 4th September 1999 (now almost 9 years old) and B born on the 25th May 2002 (now 6 years old). They spend about 2/3rds of their time with their Mother in Düsseldorf (where they go to school) and 1/3rd of their time with their Father. Both parents are devoted to their children. There were contested proceedings before HHJ Collins upon cross applications for residence and upon the Mother’s application to remove the children permanently from the jurisdiction so that she could return to the land of her birth. As a result the parties have joint residence and the Mother was able to return to Germany.

2) This is an unusual case for two reasons. First, because it is a claim by a former Husband against a former Wife who has great riches and secondly because, as it has been described, of the magnetic feature of a German Pre-Nuptial agreement (“PNC”) which was entered into by the parties on the 1st August 1998. That agreement which is annexed in full at Annex 1 provides for a separation of assets upon marriage and makes no provision for either spouse upon divorce.

3) It is the Wife’s case that the Husband (a man of commerce) knew what he was doing when he entered into that contract and, consequently, he has no entitlement to ancillary relief. She points to the fact that under the Laws of Germany (where she was born) and France (where the Husband was born) the contract would be lawful and would be enforced. Thus, she submits, it would be a breach of her Human Rights for the English Court to apply its laws in derogation of that basic principle. As a matter of concession (and appreciating that the Husband is also the Father of her two children) the Wife originally offered him £1 million for housing on terms (similar to awards under Schedule 1 of the Children Act 1989) to the effect that he could retain that housing until the children ceased full-time secondary education whereupon the funds would revert to her.

4) In addition, to her “knock out” blow under the terms of the PNC, she submits that the Husband was earning substantial sums as a banker during the marriage (at its zenith some $470,000) and so he should deploy those skills to earn monies in that region from now on and be self-supporting. It is her case that, during the marriage, the parties kept their finances separate and, despite her wealth, the Husband was expected to make a full and equal financial contribution. This factor, she submits, reinforces her case that he should receive nothing from her.

5) It is an agreed fact that the Husband left banking in July 2003 and, since then, has been pursuing research in biotechnology at Oxford University where he expects to attain a D Phil in the very near future. The Wife maintains that, during the marriage, it was his stated plan to undergo research as a precursor to either establishing an investment fund based upon biotechnological companies or working as a fund manager in that field. She asserts that the Husband told her that he was driven to become a “billionaire” in his own right. Consequently, she does not accept the low earning capacity that he puts before the court as a long term researcher (being £30,000 gross). Moreover, she considers that he has deliberately delayed his D Phil so as to maximise his claim. As a subtext to this it is asserted that if the Husband wishes to be an academic he must live as such and not expect a millionaire’s lifestyle funded (as would be necessary because he has no funds) by his former spouse to whom he made a binding promise that he would seek nothing if they divorced.

6) By his closing submissions, Mr Moor QC (who acted for the Wife) amended her position so that the offer was to the effect that the Wife would provide as follows:-

(a) A property in this jurisdiction for the Husband for £1 million “on a Schedule 1 of the Children Act basis” in which the Husband could reside for his life. 

(b) A property in Düsseldorf for a value of up to €500,000, on the basis that the Husband would be free to choose the property and the Wife would grant him a legally binding right of residence with exclusive occupation until the children attain their majority. (The Wife has been advised by a German lawyer that this can be done either by a right inter partes or by a right in rem (article 1093 of the German Civil Code).  As the right in rem is a restricted personal easement it could be registered at the German Land Register. Any further regulation, such as rights and duties in connection with the right of residence (e.g. duties to repair/maintain the property), could be dealt with in a Notarial Deed).

(c) Periodical payments to the Husband for the benefit of the children in the sum of £18,000 per annum per child, until they complete full-time secondary education, to cover his costs relating to his time with the children (particularly the cost of flights to Germany).

(d) Her primary submission is that, in every other respect, the Husband “should stand on his own two feet”. But her “secondary position”, entirely without prejudice to her primary case, is that there should be a periodical payments order in favour of the Husband to cover any shortfall between the court’s assessment of his earning capacity and his needs. Her case is that his reasonable needs total approximately £60,000 pa independent of the costs of his seeing the children. As he can earn £35,000 per annum gross (£25,588 pa net), the shortfall is therefore some £35,000 per annum until his retirement. She submits that such maintenance order “should not be capitalised, given the PNC and the fact that the reduction in his earning capacity is self-inflicted” and the periodical payments “should only continue until the younger child finishes secondary education”. 

7) The reasons for this modest offer in the context of the Wife’s wealth are as set out above and it is suggested that the major factual (as opposed to legal) reasons why he has a limited claim, if any, are because:

(a) The PNC was willingly signed by him in August 1998;

(b) There would have been no marriage (and therefore no rights) without the PNC having been completed.

(c) All of  the Wife’s assets are inherited and are separate property;

(d) There is no matrimonial property, as now described in English Law;

(e) There was no owned matrimonial home during the marriage;

(f) The Wife would not have her current level of assets if it had not been for the PNC because her father would not have made over monies during the marriage. In particular, she points to the fact that:

i. In 2002, her father gave her an additional 6% in the main family company, MN (to increase the 10% she had held since 1973) with he result that she holds 16% in that company and the subsidiary MN companies;

ii. In 2005, her father transferred shares in the HS group to her to increase her interest from 13.8% to 23.4%; and

iii. In the same year, she received €25 million (approximately £17 million) from her father, in return for which she gave up any entitlement under German Inheritance Law to a portion of his estate.   

(g) The Wife is the primary carer for the children and will have to fund them throughout their minority without any real assistance from the Husband. 

8) The Husband seeks a conventional order based upon his needs. He accepts that the Wife’s wealth (which he puts at about £100 million) emanates entirely from her family and so concedes that he is not seeking a percentage share. He accepts that he entered into the PNC but he maintains that it should disregarded entirely because

a) he did not receive independent advice before signing it;

b) he was not given any disclosure of the Wife’s wealth before he signed it;

c) it made no provision in the event of the birth of children; and

d) it was manifestly unfair in that it made no financial provision at all for either party in the event of divorce.

He dismisses the Wife’s case in respect of the Human Rights Act upon the basis that

e) its terms do not apply because the PNC pre-dates those provisions coming into force and the Act is not retrospective; and

f) the application of Human Rights legislation under English Law to a private law dispute in circumstances where this Court has undoubted jurisdiction cannot be a breach of its provisions provided that the Court’s order is not capricious or arbitrary.

9) In short, the Husband submits that the PNC should play no role in the resolution of this case. Accordingly, his open position set out in a letter dated the 11th June 2008 is that he seeks capital of £9.009 million in order:

a) to purchase a house in England (at a cost of £2.825 million inclusive of costs);

b) to cover his capital needs put at £146,000;

c) to cover his debts put at £581,000 as at 11th June 2008 – which sum was increased to some £800,000 when the case began in front of me about 2 weeks later. (As an aside, I note that the bulk of those debts arises from the costs of this claim and the Children Act proceedings which total some £552,000 odd); and

d) to cover his income needs a lump sum put at £5.458 million as a Duxbury fund based on his annual budget of £266,600 per annum. This latter budget includes (per the offer letter) some £105,600 in relation to the children. Thus, he concedes (if that be the right terminology) that, when B reaches 21 years,  his budget will reduce to £161,000 odd. He also accepts that between now and his reaching 65 years he can earn £30,000 net. All those factors have been folded into the Duxbury calculation to give the capital sum approaching £5.5 million.

10) In his opening written submissions Mr Mostyn QC (who represented the Husband) adjusted the needs upwards to a degree and I quote:

“H’s total claim is thus for:

a) Housing £2,825,000

b) Other capital needs £145,622

c) To clear debts £799,770 (which includes a costs order made against him in favour of the Wife)

d) Capitalise fund £5,458,000 (which was reduced to some £3.12million by closing submissions)

e) Total  £9,228,432 (which reduced to £6.914 million in final submissions)

This is 9.7% (which, I observe, assumes that she is worth just less than £100 million) of W’s fortune. W’s proposal is very extreme and will bring about a very large disparity in the respective standards of living of these parents.”

The Factual Matrix.
11) I will now set out the relevant facts as I find them. For the avoidance of doubt, insofar as the matters set out differ from the evidence of the Husband, the Wife or another witness, this is because I have preferred the evidence of another or because I consider that the documents produced confirm my finding of fact.

12) The Wife was born on the 25th April 1969 (39 years old) in Cologne Nippes, Germany. She has two older sisters, C (with whom she has an unfortunate relationship) and S. She comes from a very rich German family whose wealth is derived primarily from  two successful commercial ventures (and their subsidiaries) namely:

a) the MN Group which deals with chromatography, filtration and the processing/refinement of paper. This business is run by C who is General Partner (100%) and holds 68% of the shares. The Wife and her sister S hold 16% each.

b) the HS Group which is a specialist paper manufacturer.  This group is currently run by the Wife’s father whilst S is head of Human Resources (HR). It is hoped that when S takes over the general management of the business in the near future, the Wife will replace her in the HR department. The Wife holds a 23.4% share of this business with the remaining shares being held by other family members.

13) I have not been given a valuation of the Wife’s share holdings in these entities but it is clear that they produce a very significant annual income for the Wife by way of dividends. The figures for the year ended 2005 were set out in the Wife’s Form E and showed that her gross income from this source was some £2,689,000. This netted down after tax to some £1,474,800. The figures for 2006 are broadly similar. The figures for 2007 are not finalised but are expected to be in the same range. The Wife informed me in her oral evidence that she has never received the full amount due because about half the income remains within the companies to assist working capital. This claim is not accepted by the Husband’s advisers but I do not regard it as of real significance to the outcome of this case because, even if correct, the Wife has more than sufficient income to cover her own needs and those of the children.

14) Mr Mostyn QC sought to place an economic value on the Wife’s income stream from the companies. Apparently, it was agreed at an earlier hearing that some £52 million would be required to produce that amount of  annual income and so that is the figure which he asserts should be included in the asset schedule. Mr Moor QC protests that is a far too simplistic an approach. He contends that no figure should be inserted in the schedule. I shall resolve that dispute below.

15) Apart from her shareholding the Wife has assets totalling some £54.3 million held in various investment accounts. There is no dispute as to the make up of these assets. An asset schedule is annexed to this Judgment marked 2 setting out the assets which are agreed . It is obvious that the Wife is very rich and her wealth results primarily from the industry of her Father, his forebears and her sisters. I am satisfied therefore that her assets would be classed (per Miller and McFarlane) in the category of non-matrimonial assets.

16) The information with which I have been provided indicates that her assets have been shrewdly managed over the years and have grown substantially (even allowing for the 14% drop in value of Sterling against the Euro since about 2007). In addition to capital growth, I have little doubt that her asset base has increased because part of her annual income has been saved. The £54.3 million produces about £1 million per annum net (1.84% net return) which is in addition to the company dividends. On a purely mathematical basis (and ignoring the monies reinvested in the business) her net annual income would seem to be about £2.4 million net. Her evidence to me is, in that context, her expenditure is (and will continue to be) modest. I accept that evidence but it is relative because her credit card statements reveal that she is able to live an expensive and luxurious lifestyle.   

17) The Wife came to London in the late 1990s and set up a business with her sister, S at Beauchamp Place, Knightsbridge. They took a ten-year lease of the premises and so it is likely that they hoped that the business would be successful in the mid to long term. In essence, the sisters ran a boutique which traded under the name of X. The Wife rented a flat in SW10 which is situated on the borders of Kensington and Fulham. She met the Husband in Tramps nightclub and was immediately attracted to him.

18) The Husband was born in 1971 (now almost 37 years old) in Antibes, France and has one sister. He is French by nationality but has, as his name would suggest, part Italian ancestry. His father worked for a multi-national computer technology and consulting corporation prior to his retirement and was, at one time, in charge of its European operations. Mr G Senior was obviously a successful corporate businessman. He now lives in London for tax reasons although he retains his property in Antibes (it is supposedly worth €800,000 and is subject to the French rules of forced heirship upon death). The Wife claims the Husband’s father spoke of his wealth as being some £20 – 30 million and so she maintains that the Husband will receive a substantial sum by way of inheritance/gift when this litigation is completed. The Husband asserts that his parents are worth a much more modest €7.5 million (some £6 million). I am in no position to make any findings on the basis of evidence that I have heard but have doubts that Mr G Senior would be resident here for tax reasons on the basis of the figures suggested by his son. However, his wealth is of little direct relevance to me because as a resident of the United Kingdom he has freedom of testamentary disposition with the result that the Husband cannot be sure of a share save in respect of the French house. Authority makes it clear that a possible inheritance is no more than a background factor. That stated, the Wife has already received her inheritance and has waived her rights under German Law so to that extent the parties may (and I stress may) be in a different position. The Husband claims that she will receive additional funds which are currently held in a Swiss Foundation but I am not satisfied on the evidence that I have heard that this assertion has any weight and so I disregard it.

19) As a child the Husband lived in France and USA. He then studied sciences at the Ecole Polytechnique in France where he was a very successful student. Upon leaving university in 1995 he came to London and took up a career in banking with JP Morgan and Co. Initially, he specialised in the emerging markets sector. As a young man, he was ambitious and was determined to make money. I accept his evidence that his father expected him to go into commerce and do well financially. When the parties met in November 1997, the Husband was earning about £50,000 which was a substantial sum at that date, particularly given his age. The Wife told me that the Husband was always keen to earn and said that he wanted to be very rich in his own right. I accept that, when they met, he expected to and wanted to work hard in order to become prosperous. However I am clear that in 1998 he had not accumulated much by way of capital resources.

20) The parties became engaged in June 1998 and began to live together at a fashionable part of South Kensington.

The PNC.
21) The Wife informed me that, as a young woman, she was concerned lest a man should choose her for her money rather than for her personal virtues. She was, she maintains, anxious that any man should marry her for love rather than mercenary motives. It was for this reason that she was keen to have a pre-nuptial agreement. She believed that, if her intended was prepared to sign away any financial rights upon divorce, she could be more assured that the marriage was based on mutual love. She said that she discussed this with the Husband prior to their engagement and he made it clear that he was not interested in gaining financially and so was prepared to sign a pre-nuptial agreement. She told me that she would not have agreed to marry without this protection being in place.

22) The Husband has a slightly different take on their discussions. He informed me that the Wife stated that she would be disinherited if she married without a pre-nuptial agreement which protected her family wealth. Consequently, she presented the need for and driving force behind the pre-nuptial agreement as being her father. The Husband told me that he was anxious to marry and did not want to cause a rift in the family. He was earning well, did not feel that he would want to make a claim and so he was agreeable to entering into a pre-nuptial contract. In any event, he did not perceive it to be an issue between him and his future Wife because she did not seem to want the document for her own reasons as opposed to wishing to placate her father. He implies that its central importance to her (as she described it to me) was never made clear to him. Consequently, it is implicit in his case that he took the PNC less seriously than might otherwise have been the case.

23) I do not believe that either party was deliberately lying to me when giving their version of events. I expect after, some 10 years, their recollections are clouded by the importance which the PNC has assumed in this litigation. Unravelling the various contentions, I consider (and so find) that the Husband was told that Mr R Senior wanted the contract signed and the Husband was eager to comply because (a) he did not want the Wife to be disinherited (b) he wanted to marry and (c) he could not perceive of circumstances where he would wish to make a claim. For her part, although I am sure that the Wife wanted her husband to love her for herself, she emphasised her Father’s insistence about the PNC because, I suspect, she felt it made her seem less insensitive to her future spouse, given the deal was to exclude all his potential rights (even in times of crisis). I do not believe that she made it obvious that she personally demanded it as a precondition to marriage.   

24) I am clear that it was agreed that a pre-nuptial agreement would be drawn up on the basis that neither party was to gain financially in the event of divorce. The Wife’s family had already insisted that C’s Husband sign such a contract before marriage. This pre-nuptial agreement had been prepared by a German Notary called Bücker. It was later found to be defective as to certain provisions relating to inheritance and amending documentation had to be drawn up and implemented.

25) The R family decided that this agreement would be drawn up in Germany by a different notary called Dr NM (who, by this time, had undertaken other work for the R family). It is the Wife’s case that a copy of the draft agreement was posted to her in London a couple of weeks before it was signed. She informed me that she showed that draft to the Husband and translated it to him line by line (as he does not speak German). She said that he was given a copy of the document and therefore had the opportunity to take legal advice upon it if he had so wished. She told me that he was not interested in the document, said that he did not need a translation and chose not take any legal advice because it was never “an issue between them”.  According to her, the Husband made it clear that he wanted nothing and was simply prepared to sign any document placed before him.

26) The Husband denies that he was ever shown the draft document in London. He maintains that he was first made aware of its terms in the notary’s office in Germany on Saturday the 1st August 1998 which was the day appointed for signature because the young couple were on a visit to see the Wife’s parents. He maintains that the document was translated to him by the notary in broken English but he had no real opportunity to consider its terms, take advice or amend it because he was faced with a fait accompli. He states that he had no information about the Wife’s asset base and therefore did not have any appreciation of the rights he might be signing away. Despite all these flaws he accepts that he signed the document.

27) A more accurate chronology of events may be pieced together from the notary’s papers which have been disclosed (although they are to a degree incomplete). On 6th July 1998 the Wife’s mother attended Dr NM and informed him that her daughter was to be married in London in the autumn. She told him that “they both agreed that in the event of their divorce neither of them wishes to make any claim on the other”. The notary pointed out that such a deal might leave a young mother with children in difficulty but he was informed that the daughter’s income was some DM500,000 a year plus other monies managed by their father and so despite the future son-in-law’s excellent income “even in the worse case scenario there would be no risk to their daughter”. The notary was given a draft of C’s pre-nuptial agreement and the mistake contained therein was specifically pointed out to him (that agreement had, inadvertently, permitted to C’s spouse to inherit in the event that they had children).. Mrs R Senior did not want the same mistake to re-occur. Consequently, it was agreed that the necessary wording would be incorporated in the PNC to avoid this previous difficulty.

28) Later that same day Dr NM spoke to the Wife in London and she confirmed the facts given by her mother. It was agreed that the draft was to be prepared as quickly as possible “in order to give the future Husband an opportunity to prepare for the conclusion of the contract”  which was to be signed on the first weekend of August some 24 days later. It was Dr NM who was insistent that the Husband had sufficient time so that he could take advice if he wished and fully understand the implications of what he was signing.

29) On the 17th July 1998 the notary sent a letter with a draft contract enclosed. It was addressed to the Wife at SW10 although, by this date, it would seem she was already living with the Husband in South Kensington. Dr NM cannot recall if he posted a copy (although he thinks it likely). In any event, this did not matter because letter and contract were faxed to the Boutique. The Letter stated “You wanted to discuss the content of the agreement with your future spouse and have it translated into a language convenient for him”. The draft which was sent had included a term “we put the net value of our combined assets at some     DM. Of this approximately     DM is attributable to the future Husband and      DM to the former Wife”. Later that day, the Wife phoned Dr NM and informed him that she still had to discuss the content with her father. However, she wanted 2 “minor amendments –“Value of assets: not to be in the deed but notified separately” and “She alone to pay the costs (will probably be assumed by her parents)”. It would seem that the Notary’s charges (scale fees) were based on the value of her assets which according to his papers was put at a modest DM 1.455 million. This sum was calculated on their real value which he stipulated totalled “DM1,051,006”.plus notional values for the waiver of rights in relation to pension, maintenance and statutory portion. Apparently, Dr NM had the relevant information on file as a result of previous work undertaken by him for the family. This very precise figure does not represent the true value of her wealth because, as I perceive from the evidence available, she also had company shares that produced DM 500,000 per annum and monies that had been invested on her behalf by her father.

30) A second draft had been produced by the 20th July 1998 and it was sent to Mr R (the Wife’s father). The Wife was specific that it was to be posted and not faxed to the office for reasons of privacy. The notary indicated that he was willing to speak with Mr R about the new draft but needed the Wife’s specific permission to send the document to him. In passing, I consider that it might have been prudent to have ensured that the Husband agreed to Mr R seeing the document but it is clear that Dr NM did not consider that he was required to take instructions from the Husband about any aspect of the PNC.

31) On the 23rd July the Wife phoned Dr NM and told him that she had discussed the draft with her father and he wanted additions in relation to company shares – specifically that the Husband should not be able to inherit them directly or “circuitously via their children”. This was perceived as a potential difficulty because the Husband was French. It was agreed that this would be dealt with by the Wife drawing up a will. It would seem that a final draft version was made available to the Wife in London at about this date which I note was only some 7 days prior to the formal signing.

32) Mr Mostyn QC suggested that, given this time frame, it was unlikely that the Wife showed any draft to the Husband in London. But the Wife was clear that she recalled one specific occasion when she took the Husband through the draft “line by line”. She could not recall which draft it was but felt it might have been the first draft because she had “nothing to hide” and said that she may well have discussed the subsequent changes although she had no recollection of such conversations.

33) Once again, I do not believe that the Wife has told me any deliberate untruths but I consider it highly unlikely that she showed the Husband the first draft. It is equally unlikely that she informed him about her mother’s or father’s intimate involvement in the drawing up the terms of the agreement. That said, I do not accept the Husband’s evidence that he did not see the draft at all for I note that the document states on its face that it had been available for “about 2 weeks” before it was signed and this point was not raised during cross examination. As I find on the balance of probabilities the Wife showed him the draft document but only the final draft which was available on about 24th July 1998 which was, in fact, only about one week before the signing ceremony. Moreover, although she discussed the broad terms, I am not convinced that she went through it line by line. I believe that the basic terms were made clear to the Husband but, given the shortage of time, the fact that document was in German and was based on German Law I am clear that the Husband did not have sufficient time to seek a proper translation or separate legal advice.

34) Moreover, given the time available, it is not surprising that he said, as I find that he did, he did not need a translation. I do not think that he was made aware that Dr NM wanted him to have such a translation to give him a proper opportunity to consider the precise terms and see a lawyer. All this was, as I find, extremely unfair to the Husband because he had no realistic period for mature reflection or opportunity to take proper advice. Moreover, given the Wife’s attitude that this document was more for her father’s than her own needs I am satisfied that the Husband took it far less seriously than he should have. To this extent he was lulled into a false sense of security.

35) The young couple were deeply in love and, as they saw it, this piece of paper was much less important than pleasing the family and making preparations for their wedding. It is for this sort of reason, amongst others, that the English Courts have been reluctant to enforce pre-nuptial agreements per se.

36) The question of the enforceability of pre-nuptial agreements is to be considered by the Law Commission in its current programme. I expect, therefore, that these types of agreements will be a hot topic for debate over the next few months. This is not the first time that pre-nuptial agreements have been considered by Government in recent times. The Green Paper entitled Supporting Families (4th November 1998) reached a number of conclusions about the safeguards which ought to be in place before the contract became enforceable. Those factors were for the protection of individuals in circumstances where it has to be accepted that emotions are in turmoil and the thought of divorce is, for those involved, a highly unlikely scenario.

37) The protective measures are encapsulated in paragraph 4.23 of the Green Paper and I quote:

Also, we would protect the interests of a party to the agreement who is economically weaker and the interests of children through six safeguards. If one or more of the following circumstances was found to apply, the written agreement would not be legally binding:

• where there is a child of the family, whether or not that child was alive or a child of the family at the time the agreement was made

• where under the general law of contract the agreement is unenforceable, including if the contract attempted to lay an obligation on a third party who had not agreed in advance

• where one or both of the couple did not receive independent legal advice before entering into the agreement

• where the court considers that the enforcement of the agreement would cause significant injustice (to one or both of the couple or a child of the marriage)

• where one or both of the couple have failed to give full disclosure of assets and property before the agreement was made

• where the agreement was made fewer than 21 days prior to the marriage (this would prevent a nuptial agreement being forced on people shortly before their wedding day, when they may not feel able to resist).
(Emphasis added)

38) The PNC falls foul of a number of these safeguards. In particular:

a) There was no disclosure of the parties’ assets. The clause was originally included but was omitted on the direct instructions of the Wife. This was deliberate and, having heard her evidence, I am satisfied that she did not discuss this decision with her future Husband because she wanted to keep her asset base secret. Indeed, even before me she was cautious in her answers about her worth at that time. She suggested that her own assets were about DM1 million. Of course, that answer (and similar information as to capital given to Dr NM for the purposes of his scale fees) was incomplete because she held 6% interests in the family companies which produced a very substantial income plus funds had been accumulated over time and invested/husbanded by her Father on her behalf. The value of her shares and the accumulated income in 1998 remains unquantified and was not even disclosed to the notary. The lack of proper disclosure would not affect the validity of a pre-nuptial contract in Germany but I consider that it is a relevant factor under English Law because without full knowledge of the assets it is impossible for any party to make a fully informed decision. 

b) The Husband had no realistic opportunity to take proper independent legal advice on the terms of PNC. The German draft was, as I have found, only shown to him about 7 days prior to final execution. Whilst I accept that a notary has an independent role within the German legal system, I note that Dr NM took instructions from the R family, prepared the draft, amended it upon R instructions, had no input from the Husband at all and was paid by the R family. In that sense he was not truly independent and, whilst I am confident that he explained the terms to the parties in accordance with his duty under law, that does not mean that the Husband received independent legal advice. In so stating I not making any adverse finding about Dr NM who, I am sure, undertook his work with professionalism and diligence.

c) Of course, the Husband was a man of commerce, came from a tradition where such pre-nuptial contracts are commonplace and knew that under the PNC he was making no, and could make no, claims upon divorce under German Law. However, to my mind, neither that knowledge, his background nor the information he was given are the same as understanding the full legal consequences of his decision or its later enforceability.

d) The agreement made no provision for either party even in the event of the birth of children. Normally, the omission of this type of consideration redounds to the disadvantage of women but, in fairness, the birth of children alters the relationships and priorities of both sexes. Therefore the arrival of children can transform an ambitious man dedicated to his work into a father who sees a new role which demands more family commitment at the cost of earnings. The Husband in this case portrays himself as that type of man. The Wife states that his devotion to the children became more manifest upon the separation and she may well be correct. However, often it is only at the point of loss that the children’s company on an easy and regular basis becomes doubly prized. It is clear that during the course of this marriage – in 2003 to be precise – the Husband, who had been unhappy in his work for some time, told the Wife that he wished to change direction and became a research student. I deal with the Husband’s motivation elsewhere but I am conscious that one of the reasons that he wanted to change his job was so that he could spend more time with his family. In this marriage the birth of children was a real factor which affected the Husband’s ability to earn substantial sums. The fact that the PNC made no provision in such circumstances and indeed omitted any consideration of such factors is a flaw which I consider makes the deal, prima facie, unfair.

e) The most obvious unfairness of the PNC is that it provides no prospect of any financial settlement even in the case of real need. In 1998 neither party could have foreseen how their finances might unfold during the marriage. For example, it was possible that the Husband might have become a billionaire, whilst the Wife might have lost funds. In that situation, if this agreement were simply upheld it could have produced a grave injustice to her. I expect that, in those circumstances, the English Courts in accordance with present Authority, would have been minded to right that perceived wrong. Discrimination upon gender lines is, quite correctly, not tolerated in these Courts; therefore if injustice could apply to a wife in particular circumstances then it should equally well apply to a husband if the factual matrix has turned to his disadvantage. This Court will not discriminate between the sexes where it is the Wife who has amassed great riches whilst the Husband has suffered a financial downturn. In this case the agreement, its validity under another (and chosen) system of Law and the parties’ actions/nationalities are all dynamic factors but the reality of injustice (if any) is always fact specific and must be considered carefully. I will set out my detailed findings in that regard hereinbelow.

39) On Saturday 1st August 1998, the parties attended the office of Dr NM to complete the PNC. He told me, and I accept, that the Husband informed him that he seen the agreement but did not have a translation. Dr NM said, and I accept, that he was “very angry” when he was informed that the Husband did not have a proper translation of the document. Dr NM had considered it to be very important because he had wanted to be sure that the Husband had had proper time to consider the terms. Dr NM told me that he had been minded to abandon the finalisation of the contract but had been persuaded to continue because he was told that the couple were unlikely to be in Germany on another occasion prior to their wedding.  Dr NM was clear that he took the parties through the terms of agreement in detail and I accept that he did. Equally, it is clear that the session was not as he would have wished.

40) Clause 2 of the contract deals with the choice of Law. It provides “We hereby agree, pursuant to art 14 and 15 of the German Act on the Reform of Private International Law, that the effects of our marriage in general terms, as well as in terms of the law of matrimonial property and the law of succession shall be subject to the Law of the Federal Republic of Germany”. Dr NM was clear that this term meant that insofar as domestic law permitted it, the Court hearing the case was to apply German Law. He was equally certain that, the clause did not mean that the case could only be heard in or by the German Courts. He confirmed that Clause 3 included the provision “The notary pointed out that it would be advisable to publish the separation of property according to the respective local of our matrimonial residence, so that the separation of property can be cited against third parties”. Moreover Clause 7 (2) provided “The notary has pointed out that despite the choice of German Law made at the beginning of the contract, foreign law may, from the standpoint of foreign legal systems, come to apply to the legal relationships between the spouses, in particular with the respective local law of our matrimonial residence, the law of the place of location and/or pursuant to the nationality of the Husband…….
The notary has pointed out that he has not provided any binding information about the content of foreign law, but has recommended that we obtain advice from a lawyer or notary practising in the respective legal system

41) Dr NM told me that he knew that the couple were planning to marry in England and, although he did not know the law of England, he knew that  not every country would apply German law (as required by the PNC) in their courts. He said that he knew that French courts would. He informed me that he had specifically discussed the example of Belgium (which would apply German law) and the Netherlands (which would not). In this way he put the couple on notice that not every jurisdiction would implement the Choice of Law clause.

42) On the 3rd August 1998 Dr NM sent a letter to the parties which gave even greater emphasis to the point that not every country would automatically implement the terms of the agreement. He wrote “Finally, I must again inform you that before purchasing property abroad and taking up permanent residence there, the advice of a local notary (in countries where Roman Law operates) or a solicitor (in countries where Anglo-Saxon law operates) on matters touched on in your pre-nuptial agreement, taking note of the agreement. If necessary according to the relevant local form, please also note enforcement of the publication that may be required to be able to invoke the agreement against a third party”.

43) At the outset of this Hearing the Wife argued that Clause 2 of the pre-nuptial contract dated 1 August 1998 amounted to a jurisdiction clause in favour of the German Courts which invoked Art 23 of Brussels I (Regulation No 44/2001). She therefore argued that all questions of maintenance (which included property rights) should be deferred to the German Courts which had exclusive jurisdiction. The Husband argued that Clause 2 was a mere choice of law clause and not a jurisdiction clause. As set out above Dr NM confirmed in his evidence that the Clause was, and was intended to be, only a choice of law clause. He acknowledged that a court other than a German court might well adjudicate on this marriage. In the light of that evidence the Wife was obliged to withdraw her argument on the applicability of Brussels I. Although lengthy written arguments were put before me on this point it is not necessary for me to deal with them as the point has been conceded.    

44) For completeness, the Wife drew attention to the inconsistency between the Husband’s Form E where he said “the document is in German and as I do not speak German I have no idea what it says” and his maintenance pending suit affidavit where he says “the Notary explained, in broken English, what the various clauses said, but he did not give a verbatim translation of the agreement”.  The Husband explained that by the 1st statement he meant that he did not have a copy of the agreement when he compiled the Form E and therefore could not recall the precise terms. That may be correct but it is unfortunate phraseology. He also maintained that Dr NM did not give him a lucid translation. I feel sure that Dr NM did his best and that the general terms were clear to the Husband but, for the reasons I have already enumerated, the manner in which the meeting was conducted was far from ideal and the Husband did not have a verbatim translation of every line.

45) Neither party took any steps in England to investigate the enforceability of the pre-nuptial agreement. In fact, so far as I know, neither party involved lawyers until the marriage had broken down.

46) To return to the chronology, the parties married in London in 1998 and had a religious ceremony in Switzerland. They had an exotic honeymoon in the Far East and then returned to London where they made their home. The Wife has sought to suggest that it is merely fortuitous that this case is before the English Court because this couple were international and might have lived anywhere. She points to the fact that they discussed living in Germany (where the Husband was to take over running HS). If this argument is made to suggest that they only have a passing connection with England then I beg to differ. This marriage was very closely connected with this country. The parties were married here, lived here (save for about a year) for the bulk of their marriage and their two children were born here. This is the country with which the marriage is most closely and obviously connected.

47) In April 2000 the Husband was posted to New York. The Wife joined him there with A. Initially they lived in an apartment in Manhattan which was provided by JP Morgan and Co but the Wife did not enjoy being in central New York. After a while they rented a large house with grounds in Connecticut. However, despite having more commodious accommodation, the Wife still did not take pleasure in life in America and it was therefore agreed that the parties would return to London. The Wife came back in May 2001 and the Husband in October of that year.

48) Upon arrival they rented accommodation at a flat in Sloane Street, Chelsea. The Wife wanted a family home in a rural setting but the Husband enjoyed city living, hence the flat. The parties sought a compromise position and looked at very expensive properties in Wimbledon but never purchased a home. Instead they remained in the Sloane Street apartment until the marriage ended in about August 2006. The rent is currently £7,203 per month (some £86,500 per annum). .

49) It would seem that the Husband was well remunerated at JP Morgan and Co.  His evidence is that he earned $200,000 in 1998 (£120,000 at $1.66), $473,597 in 2001 (£328,886 at $1.44) and $318,506 in 2002 (£212,337 at $1.50).  However by 2003 the Husband was disillusioned with his career in banking. He had been unhappy for some time and considered that he wanted a new occupation. He had a scientific background and decided that he would like to return to academic study, particularly in the field of biotechnology. The Wife accepts that he was unhappy at the bank.

50) The Husband left his employment on 17th July 2003.  There is a dispute between the parties as to whether the Wife was given the full picture at that time.  She maintains that she was just told that he had been “fired”.  In his oral evidence in the Children Act proceedings the Husband said that he was put “at risk”, which meant that he was given six weeks to find another position within the bank.  He stated “a lot of – a few people managed to do [that]”.  In fact, he made no attempt to find another position. I do not believe that anything turns on the point and make no finding because whatever the Wife knew it was sufficient given that both parties accepted that the Husband was miserable and discontented with the result that a change of tack was inevitable.
51) Despite his current denials, I am sure that in 2003 the Husband thought that a combination of scientific knowledge and his banking experience would put him in a good position to capitalise upon and exploit his financial expertise in future years. He planned to work as a venture capitalist in/fund manager of specialist biotechnological funds or, if he could find a backer, set up a similar fund. In 2003, fund management of this sort was seen by many City workers as a means to earn significant profits relatively quickly.

52) The Wife told me that she had many conversations with the Husband during which such plans were discussed. She said, as I have already noted, that he spoke of being a “billionaire”. A M and Mme CL came to give evidence of some 4 dinner dates from late 2004 to Summer 2006 during which the Husband spoke in similar terms of his academic studies being a means to a substantial financial end. I accept their evidence which, even after aggressive cross examination, rang true. I am clear that the Husband planned to improve his scientific qualifications in the expectation that he would then earn well in the future. Thus, I do not accept his evidence on this point.

53) However, his plans have come to nought for several reasons. First, he could not have foreseen the downturn in the world economy with its impact upon the City and financial institutions. Currently, large numbers of city workers are being made redundant and there is a global credit crunch. Secondly, he has been away from financial markets for some 5 years with the result that his expertise is stale and his contacts have lessened. The Wife would argue that the delay in completing his studies is deliberate but I do not accept that contention. Thirdly, his marriage has crumbled so that he needs to be able to spend significant periods of time with his children to maintain a proper relationship with them. This would undoubtedly affect his ability to earn within a pressured financial environment. Finally, I accept his evidence that he has found his research work to be very worthwhile and so now wishes to pursue it in the hope that he may find exploit this talent to cure disease and/or make significant scientific strides.

54) I do not know why he considered it necessary to run this part of his case on a false basis because the evidence of Mr McK (a Head Hunter) convinced me that the Husband has no realistic opportunity of  work in the City for the foreseeable future (if at all).               

55) Notwithstanding the parties’ lifestyle, by the time he started at Oxford in 2003 the Husband had accumulated savings of approximately $500,000 by virtue of his earnings and trading. He told his Wife that he would continue to contribute to their outgoings (particularly 50% of the rent and expenditure on restaurants/holidays). However, by March 2005, he informed the Wife that his savings were depleted and so he wanted her to carry their entire expenditure until he completed his studies which he thought would be in October 2006. She agreed to do so but, I believe, she was annoyed that she was being expected to bear this additional burden. I have no doubt that this put an added strain on the parties’ relationship.

56) The Husband had undertaken his studies for a D Phil at Hertford College, Oxford working with Professor S whose unchallenged written evidence reports him to be a “highly assiduous” worker and an “absolutely outstanding student” who is a “technically highly proficient researcher”. Professor S reports that the Husband has made significant strides in isolating enzymes/gene products important in cell division. His work to date has been so significant and novel that the Husband has patented part of his work. Currently, he is experimenting in hope of finding the “partner” to his earlier discoveries. The work has been highly complex and results have been less successful than were originally predicted. It is for this, as I find, legitimate reason that his doctorate has been delayed. He could have published his results to date but hopes that he will have better data in the near future. If his current experiments are successful they will enhance his status and assist him with finding a better post-doctoral research post for competition is “very fierce”.  

57) In addition to his research the Husband kept his eye on the financial markets and invested his own savings. He also assisted his Wife with the investment of part of her portfolio. She has claimed that he lost her monies by so doing. A schedule was produced which indicated that the value of her portfolio diminished during the period when the Husband had a limited power of attorney over it. Her schedule omitted one very profitable holding because she stated that her father had introduced that share into her portfolio. The Husband denied her assertions, particularly that his investment strategy caused her loss. He produced a detailed counter-schedule showing that, over a greater period of time, he had made the Wife many millions. I thought that the evidence in relation to this point, whoever was right, amounted to an “own goal”. If the Wife prevailed then the Husband was a poor investor (probably because he was out of the markets) and this weakened her case about his ability to return to the City. Whereas if the Husband were correct, it could submitted that he would be able to augment his paltry income as a researcher by making significant gains in the market, thereby reducing his needs as put before me. Having considered the evidence I consider that neither party is wholly correct. The Wife’s schedule is incomplete because, as I find, the additional shareholding should not have been omitted. However, the Husband’s schedule over emphasises his abilities. As I find, the Husband did not make a significant contribution to the Wife’s wealth by his investment strategy. Once he went to Oxford, it was much more difficult for him to keep pace with the markets. I think that in future he may be able to invest his own funds for a reasonable return but I would not expect him to beat the market by much. His needs, therefore, will not be reduced by his investment skills.

58) The Husband has patented his novel discovery and will, no doubt, continue to patent such others as are capable of being protected. His work may be of interest to drug companies and he may be able to licence his discoveries. In this way he may be able to make money above and beyond his modest earnings. The Husband thought that it was unlikely that he would make gains from his patent and I was given no evidence in relation to this possibility. Accordingly, this potential source of income is incapable of quantification and it cannot impact on the Husband’s needs even though it may be a potential resource in the longer term. 

59) Whilst the Husband was based in Oxford, he spent many nights away from the former matrimonial home. By this time the marriage was in difficulties. In fact, the parties had been having couples’ counselling since 2002 and the Husband had additional, individual therapy.

60) By August 2006 separation was inevitable and  the Wife sought new accommodation. She found a flat at Cadogan Square at a cost of £14,000 per month (£168,000 per annum). It was a temporary measure and she moved there in October 2006 whilst the divorce was finalised. I accept her evidence that she found that property in a hurry and was prepared to pay a substantial rent principally because (a) she was desperate to separate and (b) the Husband insisted that she and the children lived within the vicinity of the former matrimonial home. I do not consider that apartment was (or is) a marker of the Wife’s determination to live extravagantly.  

61) There is little dispute about the basic chronology of events or the proceedings. Counsel have prepared a document which is not disputed and I append it to this Judgment as Annex 3.

62) When the marriage broke down the Wife instructed Messrs Manches (who have vast experience in matrimonial matters). With their assistance and, it must be assumed, in the full knowledge of the facts she caused a petition to be issued in English Courts on the 26th October 2006 and in that petition she sought full ancillary relief. The Husband filed an answer and cross-petition on 6th November 2006 and included the usual claims.

63) Eventually, it was agreed that the suit would proceed undefended on cross-decrees. A decree nisi was pronounced on 16th May 2007 and was made absolute on 2nd July 2007.

64) The parties were also in dispute about the children. On the 19th September 2006 the Husband applied for residence of the girls. On 7th February 2007 the Wife made an application for leave permanently to remove the children to Germany. As I have already outlined those applications were heard by HHJ Collins. He gave judgment on 28th  September 2007. He made a joint residence order and gave leave to the Wife to remove the children to Düsseldorf at the end of the Christmas school term. In fact, she left with the children in February 2008. The Husband’s application for permission to appeal that decision was dismissed by the Court of Appeal on 11th December 2007.  

65) Following their relocation the children reside with their Father half of the school holidays and half-terms (a total of 16 weeks each year) and three nights every fortnight in the school terms when he travels to Düsseldorf to be with them. Consequently, he has the girls with him about 110 nights a year or 30% of the time of the children.

66) The Father’s precise routine of residence with the children as follows:-

(a) Alternate weekends from after school on Friday to the commencement of the school day on Monday, in Germany;

(b) For two weekends per term in the autumn and summer terms and for one weekend in the spring term, in England from Friday after school to Sunday evening, when they return to Germany; and

(c) For one-half of the holidays and half-terms on dates that are agreed. He likes to take the children away on expensive holidays during those breaks.

67) The Husband continues to reside in the rented former matrimonial home, at Sloane Street, Chelsea, London. The Wife is residing temporarily in a rented house in Düsseldorf.  The accommodation is in a nice part of Düsseldorf and costs some €3,700 per month. The children attend a private international school in Neuss (the fees are paid solely by the Wife).  They are taught in English.

68) As is apparent the Children Act proceedings were fully contested and the costs of the hearing (with Leading Counsel) were substantial. The Husband had to borrow to pay his bill. The court made no order as to costs at 1st Instance with the result the Husband has a considerable debt in that regard. It is the Wife’s case that she should not be made to pay those costs as part of the Husband’s indebtedness. However, if I base my award on his needs without more and do not cater for this debt in my award the Husband will not have sufficient to cover his requirements as I thought fit. Accordingly, as I find, it is appropriate for me to provide for those costs. However, the same reasoning does not apply in relation to the costs of the Appeal which the Husband launched or the sum that he was ordered to pay the Wife (being some £48,500 odd). The Court of Appeal obviously did not consider that the appeal was necessary and so I will make an adjustment for those costs. I have not been given a figure for the Husband’s own costs which he should bear from his own resources and so I will permit further argument on the amount of the total deductions involved.  I am sure that those proceedings took their toll on the parties.

69) During the build up to this Hearing there were a number of allegations that the Husband had failed to make proper disclosure of his assets and had been economic with the truth in March 2005, when he told the Wife that his savings had depleted and he no real funds left. As to the latter point it would seem that he had some capital remaining and so the Wife was, to a degree, given an incomplete picture. However, this point was not pursued with any vigour in the course of the trial. Likewise there was no cross examination on the non disclosure point and it was not pursued in submission. In the circumstances, I acquit the Husband of deliberate non disclosure in the preparation of this case.

70) It is undoubtedly correct that the Wife has a very poor opinion of her former spouse. During these proceedings she has made a number of derogatory remarks about his motivation in wishing to gain financially from her/her family. Many of her comments are not worthy but I do not castigate her for such because she truly believes that the Husband agreed to take nothing from her and she cannot understand why he is not simply held to his deal as he would be in Germany. She has a huge sense of injustice that the English Court, which has undoubted jurisdiction, should depart from the terms of the PNC. She has put up a spirited fight and deployed every weapon including some unwarranted slurs to achieve her end.

71) The litigation has cost some £1.1 million and no argument had been overlooked. The Wife can rest assured that, in these proceedings, her case has been put at its highest and she has had excellent representation. Equally, the Husband has had high level advice and his case has been put with consummate skill. I am indebted to all Counsel and solicitors for their industry and for the co-operation in making this trial run smoothly with a good spirit.   

72) The Husband has continued with his researches in Oxford. The Wife believes that he has delayed deliberately. She points to the fact that he was due to complete his D Phil in October 2006. When he swore his Form E on 29th January 2007, he said that he had a “further 3-6 months” of study remaining which would have taken him to the end of July 2007 at the latest.  On 8th June 2007, he estimated he would not complete the DPhil “until the end of this year”.   An Affidavit sworn on 12th June 2007 in support of his application for maintenance pending suit suggested that “it may be that I am not able to complete my DPhil until early next year, with the result that this timetable may be put back further”. His oral evidence in the Children Act proceedings suggested completion by Easter 2008. Yet, despite these predictions, he has still not finished and is now some two years behind schedule. Although his target date has changed frequently, I do not consider that this is a deliberate ploy to increase his award in this case.

73) Mr Moor QC’s written submissions also include a passage in which the Wife “does say, however, that if H is serious about academic life, he should live the same life as his colleagues, rather than aspiring to continue the life of an investment banker/fund manager, which he claims to have turned his back on. At the end of the day, it is a matter for H how he conducts his future life but he is clearly an extremely intelligent and very successful individual.  The law says that the court must pay regard to his earning capacity, which is clearly very substantial in this case.  If he chooses not to exploit it, he cannot expect W to make up the difference”. The Husband asserts that that position is unworthy and he should not be penalised for his commendable change of career. It would seem to me, in fairness, I cannot overlook this issue. As I have found the parties agreed the original change of direction on the basis that once the Husband had completed his research, he would go back into the financial world and be, at the very least, able to contribute equally to the bulk of the annual family outgoings. His current position is not, as I have found, a litigation tactic but is the result of numerous life events altering the planned course. Obviously, if the Husband had been the sole breadwinner in this family, then the families’ lifestyle would have altered of necessity.  Most adults who have a change in career which affects their income adversely alter their lifestyle to meet the new financial circumstances. Those with sufficient wealth dip into capital to make up the difference so that alterations to lifestyle are ameliorated or extinguished. In this case, if the parties had remained married, then I expect that the Wife would have funded the parties’ lifestyle albeit reluctantly. I have no doubt, having seen give her evidence, that in those circumstances she would not have been keen to permit of fripperies or expensive luxuries. My clear findings in this regard must, in fairness, inform the Husband’s future needs as I perceive them.  

74) It is the Wife’s intention to work in the future. As I have outlined, she intends to take over as head of HR at HS. She intends purchase to a home in the countryside outside Düsseldorf.  The property particulars which she produced show such accommodation costing between €985,000 and €1,150,000. Of course within reason, she can spend whatever she wishes. Her presentation seeks to persuade me that she will remain in modest accommodation hereafter and that her expenditure will be equally modest. I have come to the conclusion that part of the motivation for such supposed parsimony is the knock-on effect it is thought her needs may have on the Husband’s claim. Once again I am not criticising the Wife for such as it is perhaps inevitable when litigation in on going. However, I have no doubt that she will live properly in accordance with her financial station in life. She is not flashy by nature but, as I find, she will live in an upscale area in an unostentatious but somewhat opulent fashion from now on. She will deploy her income to provide for herself and the children with care but she will buy anything which she thinks is necessary to provide her family unit with the good things in life. Since the separation she has not spent a great deal on holidays (some £22,000 odd) but in the future I would not be surprised if she spent more on one lavish holiday per annum. In addition, she has the advantage of being able to use her father’s chalet in Verbier.

75) The Husband is altogether more interested in appearances. He likes branded goods, luxurious holidays in 5 star hotels at exotic locations. He enjoys good quality but sensible motor cars (for instance, he did not like a series 6 BMW). Of course, as the Father of these two children I accept that he does not wish to be marked out by them as being unable to provide a fine home and a good way of life. However, for the majority of his time, he will be working in an academic environment where luxury goods are not prized. This factor is relevant in my determination of his future needs.
The Witnesses who gave oral evidence.
76) I have dealt with most of the relevant findings of fact in my rehearsal of the history and my determination of numerous issues that have been raised. I shall now set out in short form my impressions of and other findings in relation to the various witnesses.

a) The Husband.
The Husband is superficially very charming but he struck me as a having a brooding and contemplative presence. The Wife described him as being pretentious, disdainful of those with less money and image conscious. He saw himself as a dedicated student tasked with finding (or helping to find) effective treatments for cancer. Having seen him in the witness box I consider that they are both correct in their analysis of him. As I find, the Husband likes the good life with its attendant luxuries. Moreover, he likes to feel rich which to him means living in the best part of town, eating in the best restaurants, driving an up-market car and spending at will.

As set out above, I do not accept all his evidence but I do not think that he set out deliberately to deceive, rather his failing memory and the need to support his case caused him to slant matters to his advantage. Despite these failings I accept his evidence to the effect that he enjoys his current work and is dedicated to it. I acquit him of the charge that he has deliberately extended his researches so as to maximise his claim. I do not consider it was fair to assert, as the Wife did, that he saw the Wife’s family as the “goose that lays the golden eggs” and that he was effectively motivated to make this claim as a money-making exercise. If he succeeds in obtaining a lump sum then, he will receive R family funds but I consider that will only occur because he needs those monies as a father and because, by agreement, the parties agreed that he would change the direction of his career during the marriage with the consequence that unforeseen events have altered his ability to earn. Realistically, he has not put his claim forward on the basis of sharing wealth nor founded it upon the need for compensation. He seeks an award based only upon need which will be assessed by me in accordance with the Law based upon the factual matrix which I have outlined. Accordingly, I exonerate him from the accusation that he had base or mercenary motives in pursuing this litigation.       

b) The Wife.
The Wife told me the truth as she saw it but, like her former spouse, she shaded parts of her evidence to support her case. Of the two characters, I thought that she was far nicer being more engaging and open. Her experience of the Husband has left her with a sense of mistrust and antipathy with the result that many of the accusations against the Husband set out in her affidavit evidence were, as I have found, unacceptable.

Her family have worked hard over at least three generations to make their business enterprises very successful. In the context of their vast wealth, they have lived modestly and husbanded resources. The Wife spent more freely during the marriage partly, as I find, because the Husband liked luxuries but primarily because she actually enjoyed (and enjoys) a good lifestyle. However, given the level of her capital wealth and substantial income she is quite careful with her funds. During the marriage, she expected her Husband to contribute to the best of his ability and was rather resentful when he failed to make financial contributions and did not mark sufficiently her generosity towards him.

In the future she will continue to live stylishly and will, if she chooses, be able to have the best of everything. I accept that she will buy a good home in a prosperous area of Düsseldorf which will be expensive but not over lavish or showy. She will continue to have good holidays, buy pricey consumer goods and elegant clothing. The children will brought up to understand the value of money in accordance with the R family philosophy which I assess as being careful but not stinted.
c) Mr McK
Mr McK is an experienced executive with XYZ which, as he described it, is the leading executive search consultancy for global financial services. He produced a written report having interviewed the Husband in which he concluded that “There are a number of significant issues with Mr G’s ability to return to investment banking. Any one of these would make his return to banking extremely difficult in the current (that was April 2008 and the more so now) down turned market”. He pointed to the Husband’s lack of technical skills which should have been gained in the early part of his working life but were not. He outlined the fact that his career was focused upon sectors which are now defunct. He also alluded to the fact that the Husband has been out of the City for some 5 years and to his lack of skill in debt capital markets/derivatives. In summary, Mr McK did not believe that the Husband was an attractive proposition because he is now deskilled and required flexible working conditions to fit round his commitments to the children. Mr McK accepted that the Husband was a highly intelligent and motivated individual but he stated that he would not be able to place him in the finance industry particularly as so many skilled workers have been made redundant, are seeking employment and are better prospects for employers. Mr McK was extremely despondent about the Husband’s chances of ever returning to banking or City life.

This witness was measured, sensible and obviously had great experience of the current market place. I found his evidence compelling and I accept it. 

d)  Dr NM.
This charming, now retired, German notary gave extensive evidence before me. He was precise but rather verbose in presentation. His English was good but not idiomatic. I considered him to be an honest and likeable witness. He wished to make the point that he had refused to speak with Mr Moor QC for a pre-court consultation because he was present to assist the Court as an independent notary. I found this stance to be faintly ridiculous given his role in drawing up the PNC when, as outlined in detail above, he had been prepared to take instructions from one side without any contact with the Husband prior to the date of execution of the document.

He maintained he was independent but I do not accept that he can be regarded as such from an English perspective. For example, I note that he was giving clear advice to Mrs R senior about the pitfalls of these contracts to women with children. Obviously, his concerns were not merited in this case but the tenor of his advice was client protective. He did not have a similar conversation with the Husband on his own.

I accept that he spent some 2-3 hours with the couple on Saturday 1st August 1998 and explained the terms clearly with the assistance of diagrams (so far as inheritance law was concerned). It is quite likely that he gave the couple great detail on German Law from an historical perspective as he did to me. Whilst this evidence was fascinating, especially in relation to social policy, it took a long time and was often not directly on point.

I accept him as a witness of truth. However, the preparation of the PNC was very one-sided and therefore was demonstrably not neutral.         

e) M CL and Mme CL.
This French couple became friendly with the parties at a dinner held by the Wife’s former school in late 2004. M CL works in industry. They live in South Kensington and became occasional dinner companions of the NG and KR. They gave evidence about the Husband’s discussions at dinner during which he put forward his grandiose schemes for future wealth. I found this couple to be honest with no axe to grind. They were obviously telling me the truth and I have no doubt that during the relevant period the Husband hoped to use his academic success to launch a new financial career and he liked to talk “big”. However, for reasons advanced by Mr McK I no longer consider that his proposed option is open to him.

Foreign Law
77) German Law.

a) Professor Kirschner deals with the validity and the effect of the PNC in German Law.

i) He confirms that the PNC is valid under German Law.

ii) He states that the agreement on applicable law in section 2 of the prenuptial agreement is an attempt by the parties to ensure that the law of the FRG is applicable irrespective of where the divorce takes place.
This provision is admissible under German law, particularly German conflict of law rules…….. In particular the disclosure of assets is neither necessary nor standard procedure in Germany when prenuptial agreements are concluded.  These prenuptial agreements serve the purpose of protecting the financially stronger spouse without giving the other spouse full insight into his or her pecuniary circumstance”.

iii) He confirms that there is a risk pursuant to article 15, para 3 of the Articles of Association of MN (the company run by C) that if the English Court decides that the pre-nuptial agreement is invalid, the Wife could well forfeit her shares. Specifically the letter states, inter alia:
if the British Court makes an order providing for a financial settlement which includes the partnership interest in the company despite the existence of a prenuptial agreement which provides for the separation of goods pursuant to article 15, para 3 of the articles of association”.
“Article 15, para 3 of the articles of association satisfies this requirement:  it is precisely worded and clearly expresses the company’s intention to ensure that it is not affected by the family relationships of its shareholders

The objective of the exclusion clause is to prevent the company being exposed to risks arising from the financial settlement following divorce”
 “In any event a British Court will have to assume if it makes a financial provision order which extends to the partnership interest – thereby failing to observe the choice of law clause in section 3 of the prenuptial agreement – that it will, as a result be possible, to exclude KR  from the company

b) Another expert Dr Martens states that:

There are no doubts about the validity of the Agreement of the parties under German law.  A German court would consider it as formally and generally binding”.  

ii) He went on to deal with whether or not H might be able to obtain some limited maintenance provision pending him completing his studies.  He concludes:-

Since the husband was due to complete (his studies) in 2006, he would have to give the court good reasons and evidence why it takes him now till summer 2007 and that he indeed is unable to maintain himself whilst he is completing his studies. 

I have strong doubts that a German Court would grant the husband any maintenance (which would be a periodical monthly contribution till the end of his education or retraining).

It is my opinion that a German Court would be upheld the prenuptial agreement in full and deny any claims of the husband

iii) He states that it is unlikely that the Husband would receive anything under the terms of that Law. Although I have not been given a great deal of information about this, I observe that the German Courts can make provision for spouses in exceptional circumstances when the pre-nuptial agreement would cause injustice.

78) French Law.
The position is equally clear in France. The Wife’s expert, VC states:

It seems that due to the requisites of the German Civil code, there is no reason to exclude the validity of the said prenuptial agreement in Germany.  Therefore the prenuptial agreement will be considered binding in a French Court pending the divorce. 

Any French court if requested to void the contract, would apply the German law.”  

79) As the written evidence is unchallenged I accept it. In the light of it I am clear that the PNC is valid under German and French Law.

80) For the avoidance of doubt, I am certain that the Wife’s shareholding in the family companies has never been under any threat of transfer to the Husband in these proceedings. The PNC has been protective of the company position even in these Courts because it has meant that, at the very least, the Husband’s claim has been restricted (as is conceded) to his reasonable needs. I am in no doubt that the Wife did all that was required of her under Articles of Association to protect the company shares and, from my perspective, she should not be regarded as falling foul of those Articles as a result of the operation of English Law over which she has no control as a result of this Court having undoubted jurisdiction over the parties.

English Law.
81) The legal niceties with which I am required to deal in this application are very numerous and varied. I have been presented with no less than 5 lever arch files of Authorities and the Wife has deployed Miss Cherie Booth QC to deal with the many arguments raised on her behalf in relation to the effect of the Human Rights Act on this case.

82) At the outset I remind myself that I decide this case in accordance with English Law and tradition. In terms of financial relief upon divorce I am bound by the terms of the Matrimonial Causes Act 1973 (“the Act”) as it has been interpreted in the House of Lords and the Court of Appeal. Decisions of my fellow 1st Instance judges may also be persuasive and/or illuminating. Under statute my first consideration is the two children of the family whilst they are minors. I must also take account of all the circumstances of the case and the factors set out in Section 25 of the Act to produce a result which is fair, just and does not discriminate against either party on the grounds of gender or for any other reason. Although fairness has been stated to be in the “eye of the beholder” and I am conscious that I must apply the Law carefully and clearly.

83) Counsel have spent no time in their excellent oral or written submissions on the underlying Case Law in this case. That, I am confident, is because they know that I have undertaken this specialist work for some 30 years. However, I do not believe that it will harm to set out shortly the fundamental principles that apply.

84) In White v White [2001] AC 596 their Lordships decided that the Court should apply statutory criteria to ensure a fair result

 Lord Nicholls said

“Self-evidently, fairness requires the court to take into account all the circumstances of the case. Indeed, the statute so provides. It is also self-evident that the circumstances in which the statutory powers have to be exercised vary widely. As Butler-Sloss LJ said in Dart v Dart [1996] 2 FLR 286, 303, the statutory jurisdiction provides for all applications for ancillary financial relief, from the poverty stricken to the multi-millionaire. But there is one principle of universal application which can be stated with confidence. In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles.

Typically, a husband and wife share the activities of earning money, running their home and caring for their children. Traditionally, the husband earned the money, and the wife looked after the home and the children. This traditional division of labour is no longer the order of the day. Frequently both parents work. Sometimes it is the wife who is the money-earner, and the husband runs the home and cares for the children during the day. But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering para (f), relating to the parties’ contributions. This is implicit in the very language of para (f): ‘… the contribution which each has made or is likely … to make to the welfare of the family, including any contribution by looking after the home or caring for the family’. If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the home-maker and the child-carer. There are cases, of which the Court of Appeal decision in Page v Page (1981) 2 FLR 198 is perhaps an instance, where the court may have lost sight of this principle.  

A practical consideration follows from this. Sometimes, having carried out the statutory exercise, the judge’s conclusion involves a more or less equal division of the available assets. More often, this is not so. More often, having looked at all the circumstances, the judge’s decision means that one party will receive a bigger share than the other. Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.

This is not to introduce a presumption of equal division under another guise. Generally accepted standards of fairness in a field such as this change and develop, sometimes quite radically, over comparatively short periods of  time. The discretionary powers, conferred by Parliament 30 years ago, enable the courts to recognize and respond to developments of this sort. These wide powers enable the courts to make financial provision orders in tune with current perceptions of fairness”.

85) The Law was developed in Miller and McFarlane [2006] AC 618 where  the concept of matrimonial and non-matrimonial property was delineated and their Lordships introduced the separate bases of award, namely sharing, compensation and need. The relevant part of the Headnote reads:

“Under the English system, the redistribution of resources from one party to another following divorce was justified on the basis of: (1) the needs (generously interpreted) generated by the relationship between the parties; (2) compensation for relationship-generated disadvantage; and (3) the sharing of the fruits of the matrimonial partnership. These three principles, each of which looked at factors linked to the parties’ relationship, rather than to extrinsic, unrelated factors, could guide the court in making an award; any or all of them might justify redistribution of resources, although the court must be careful to avoid double counting. Which of the three would be considered first would depend upon the circumstances of the case. In general it could be assumed that the marital partnership did not stay alive for the purpose of sharing future resources unless this was justified by need or compensation. The ultimate objective was to give each party an equal start on the road to independent living”

86)  Per Lord Nicholls

“[11] This element of fairness reflects the fact that to greater or lesser extent every relationship of marriage gives rise to a relationship of interdependence. The parties share the roles of money-earner, home-maker and childcarer. Mutual dependence begets mutual obligations of support. When the marriage ends fairness requires that the assets of the parties should be divided primarily so as to make provision for the parties’ housing and financial needs, taking into account a wide range of matters such as the parties’ ages, their future earning capacity, the family’s standard of living, and any disability of either party. Most of these needs will have been generated by the marriage, but not all of them. Needs arising from age or disability are instances of the latter”.

[22]   This does not mean that, when exercising his discretion, a judge in this country must treat all property in the same way. The statute requires the court to have regard to all the circumstances of the case. One of the circumstances is that there is a real difference, a difference of source, between: (1) property acquired during the marriage otherwise than by inheritance or gift, sometimes called the marital acquest but more usually the matrimonial property; and (2) other property. The former is the financial product of the parties’ common endeavour, the latter is not. The parties’ matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose. As already noted, in principle the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been.

[23]   The matter stands differently regarding property (‘non-matrimonial property’) the parties bring with them into the marriage or acquire by inheritance or gift during the marriage. Then the duration of the marriage will be highly relevant. The position regarding non-matrimonial property was summarised in the White case, at 610 and 994 respectively:
‘Plainly, when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered. However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant’s financial needs cannot be met without recourse to this property.’

The effect of the parties’ foreign nationality and the application of English Law
87) In the field of family law England is a lex fori country. This is a central pillar of our system of private international law and Mr Mostyn QC pointed me to Dicey and Morris (14th Edition) at Paragraph 18-207 where it is stated

“It has never been doubted that the court, when making an order for financial provision under the Matrimonial Causes Act 1973 …always applies its own law, irrespective of the domicile of the parties. Thus where a divorce is granted by an English Court in a case in which the parties are domiciled in Scotland one party cannot be heard to say that the order proposed to be made by the English court is more generous to the other party than any order which the Court of Session would be likely to make”.

 I accept that is an accurate statement of Law

88) The United Kingdom Government, pursuant to its opt-out powers preserved in the Treaty of Maastricht, has refused to enter into the Commission proposal for  (a) a Regulation on “jurisdiction, applicable law and enforcement of decisions and cooperation in matters relating to maintenance obligations(COM (2005) 649 final 15 Dec 2005) and (b) the Proposed Regulation “Rome III” as regards “jurisdiction and introducing rules concerning applicable law in matters of divorce and legal separation” (2006/0135 (CNS) 12 January 2007. Each of those Regulations would introduce an obligation to apply foreign law if it is the “applicable law” to persons seeking a divorce or maintenance in these Courts. The  Government having rejected those positions, whatever the nationality of the parties and whatever their personal agreements as to jurisdiction, at present English courts applies English Law.

89) Whilst this formulation cannot be gainsaid I am of the view that the Court does not act in a blinkered fashion. Accordingly, where there are foreign elements involved, in fairness these factors must be weighed in the balance. In the case of Otobo v Otobo  [2003] 1 FLR 192 (which was a forum conveniens case, with the competing fora being England and Nigeria), it was held that England was the appropriate forum for resolution of the divorce. Thorpe LJ stated at Paragraph 57:

[57]  Even if I am right in that assumption, however, there remains an issue as to whether the conduct asserted by the husband would meet the statutory threshold. Johnson J thought that it would. By the moral and social standards applied in Western Europe that view must be questioned. No doubt the judge's opinion reflected the different standard and culture applied in Nigeria. That introduces what for me is potentially the most difficult consequence of continuing proceedings in this jurisdiction to conclusion. In carrying out the exercise under s. 25, to what extent should the judge reflect the fact that this is primarily a Nigerian family with only secondary attachment to this jurisdiction and culture? It is my opinion that if the ancillary relief order is to be determined by a London judge (and any order would be manifestly enforceable against London assets) he should give due weight to what I might loosely describe as Nigerian factors and not ignore the differential between what the wife might anticipate from a determination in London as opposed to a determination in Lagos [emphasis added]. The dispute to date, like most of these disputes as to jurisdiction, has undoubtedly been driven by the husband's conviction that a Lagos award would be to his advantage and the wife's contrary conviction that a London award would be more generous. These contests are particularly arid and in my view should be discouraged by permitting a reflection of the differential within the review under s. 25(1) of the Matrimonial Causes Act 1973 of 'all the circumstances of the case'. I accept the consequence that the ancillary relief trial in London would be more complex, and more expensive, than it would be in a conventional case between British subjects.

90) In A v T (Ancillary Relief: Cultural Factors)  [2004] 1 FLR 977 I held:

[44] I also have to consider the cultural background of this case. As Otobo v Otobo [2003] 1 FLR 192 (albeit a case which concerned forum conveniens) makes clear, a factor when carrying out the court’s function is to have regard to the parties’ cultural mores and I quote from the headnote:

‘When carrying out the exercise under s 25 of the Matrimonial Causes Act 1973 in a case involving a family with only a secondary attachment to the English jurisdiction and culture, an English judge should give due weight to the primary cultural factors, and not ignore the differential between what the wife might anticipate from a determination in England as opposed to a determination in the alternative jurisdiction, including that as one of “the circumstances of the case”. In consequence, an ancillary relief trial in England would be more complex and expensive in such a case than it would be in a conventional case between British subjects.’

[45] It is my view that this rationale applies to an application for full ancillary relief. Thus I will take into account the agreement which the parties reached and determine how the Iranian court would have been wont to deal with this case.
(i) If the husband had divorced the wife by way of Talaq or failed to give her a divorce at all, then, in my view, in Iran she would be entitled to retain the whole of her marriage portion.
(ii) If the wife wanted a divorce, because she does not have sufficient grounds in Iran, she would have been bound to enter into a negotiation in order to agree what percentage of her marriage portion, if any, she would sacrifice for her freedom.
I take these matters fully into account”.

91) In C v C  [2004] Fam. 141 Wilson J held:

 “[36]….English law chooses no substantive law other than its own for the despatch of applications for ancillary relief following divorce, even though belatedly it is beginning to recognise the need, in a case with foreign connections, for a sideways look at foreign law as part of the discretionary analysis required by its substantive law (Otobo v Otobo [2003] 1 FLR 192)”.

92) Mr Mostyn QC argues that I should effectively ignore the fact that the Wife is German and had a pre-nuptial agreement which was/is valid and enforceable in the land of her birth. Equally, he asks that I ignore the fact that the Husband is French and that, even in his country of origin, the PNC would be accepted and enforced. To my mind to give no weight to these factors would be both unfair and unjust. These points are obviously matters which should be considered by me in the proper analysis of the appropriate outcome because the Act enjoins me to consider all the circumstances of the case.

93) Given the factual matrix, whilst I do not regard the foreign elements as determinative or ultimately fully decisive, they are definitely relevant because they are essential features. In particular, they are discounting factors in the sense that the amount of the Husband’s claim (if not extinguished) should be reduced by pointing me towards the lower end of the bracket of any possible award.

94) In reality, Mr Mostyn QC partially acknowledges this analysis by basing his client’s claim upon need rather than sharing or compensation. At its highest he asserts that need should “be informed by the sharing principle” but that assertion does not diminish the implicit concession that the PNC is a discounting factor.

95) I am clear that the Husband’s claim should be based upon his needs as judged against the lifestyle that the parties lived and the fact that the Husband agreed that he did not intend to seek any financial award if the marriage ended. I so state even allowing for the “vitiating factors” which, as I shall outline below, mean that the terms of the PNC will not be mirrored in the order that I make. It seems to me that vitiating factors go primarily to the Court’s acceptance (or otherwise) of the precise terms and their possible implementation (or not). But they do not undermine the simple fact that the Husband agreed not to make a claim in event of divorce. His decision in 1998 was stark and so, even if it was flawed in the sense that he did not have disclosure or separate legal advice, it is worthy of note and must be taken into account in the appropriate disposal of his claim.     

The Human Rights Act.
96) Hours of time (and costs approaching £80,000) have been expended on points in relation to the Human Rights Act (HRA). Whilst, of course, I must give effect to the terms of the HRA in this and every case, I consider that there has been an unnecessary focus upon this aspect of the matter. At the outset of this case it seemed (per the Wife’s position statement in this regard) that I was being asked to declare that Section 34 (as applied by Section 25) of the Act was incompatible with the human rights of the Wife because the Act wrongfully restricted the Wife from entering into binding contractual relations with her spouse by way of an ante-nuptial agreement. It was submitted that the PNC had been nullified by no reason other than the parties’ move from one EU jurisdiction to another and such interference constituted a vertical inference by the State in the parties’ freedom to contract. As such the Wife’s Article 8 rights (that is her right for respect for private and family life) had been violated. In addition it was claimed that the Wife’s rights under Article 1 First Protocol (“A1P1”) applied to the pre-marital agreement and a refusal to give effect to the Protocol would be an improper inference with her property rights under its terms. Specifically, it was asserted that A1P1 would be violated because the removal of assets from the Wife would be contrary to public/general interest and would fail to strike a fair balance between the demands of that general interest and the interests of the individual.

97) Fortunately, by the commencement of this Hearing, Miss Booth QC had altered that original stance so that I was no longer being asked for a declaration of incompatibility. I asked Miss Booth QC whether it was still the Wife’s case that her Convention rights meant that I had no discretion but to enforce the PNC. Her reply was, realistically, that was not her case. However, she submitted that the Wife’s human rights were of central and highly persuasive importance so as to  “boost” the PNC and make it the focus/starting point of any discretionary exercise.

Do the terms of European Convention on Human Rights apply?
98) The answer to this question in broad terms is in the affirmative. Of course, it goes without saying that in every trial Article 6 rights are engaged because all parties have the right to a fair trial in accordance with the Law.

99) Section 3 of the HRA provides:

Interpretation of legislation
(1)  So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights. 
(2)  This section -
(a)  applies to primary legislation and subordinate legislation whenever enacted;
(b)  does not affect the validity, continuing operation or enforcement of any incompatible primary legislation; and
(c) does not affect the validity, continuing operation or enforcement of any incompatible subordinate legislation if (disregarding any possibility of revocation) primary legislation prevents removal of the incompatibility.

100) Section 6(1) of the HRA makes it unlawful for a public authority (which includes a court) to act in a way which is incompatible with a Convention right. Section 6(2) provides:

(2)  Subsection (1) does not apply to an act if –
(a)  as the result of one or more provisions of primary legislation, the authority could not have acted differently; or
(b)  in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions.

Accordingly, this Court, as a public body, has to interpret the Act in a way that is compatible with Convention rights.

Is Article 1 of the First Protocol engaged?
101) Article 1 of the First Protocol (“A1P1”) provides:

Protection of Property
Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. 

102) The three rules in A1P1 were recently confirmed by the Grand Chamber in Pye v The United Kingdom (30th August 2007) at Paragraph 52:

“[52]  Article 1 of Protocol No. 1, which guarantees the right to the protection of property, contains three distinct rules: “the first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property; the second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions; the third rule, stated in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest ... The three rules are not, however, 'distinct' in the sense of being unconnected. The second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule” (see, as a recent authority with further references, Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 62, ECHR 2007 ...)”.

103) The Protocol’s primary objective is to protect the private individual from the expropriation of or interference with their property by public bodies / the state. Despite this, I accept that A1P1 can be engaged when two individuals are litigating and, in consequence, a public body (the Court) makes an order which affects their property rights. I am clear that a transfer of property order or a lump sum is an order which is capable of affecting an individual’s peaceful enjoyment of their possessions and in such circumstances the protocol is engaged. It is also evident that no person should be deprived of their property unless it is in the public interest and any transfers should only be undertaken upon the proper and fair application of law.

In Wilson v First County Trust (No 2) [2004] 1 AC 816 Lord Nicholls held A1P1 could apply to matrimonial cases such as this, he stated at Paragraph 106:

“[106]Article 1 of the First Protocol has a similar character. It does not confer a right of property as such nor does it guarantee the content of any rights in property. What it does instead is to guarantee the peaceful enjoyment of the possessions that a person already owns, of which a person cannot be deprived except in the public interest and subject to the conditions provided for by law: Marckx v Belgium (1979) 2 EHRR 330, para 50. Here too it is a matter for domestic law to define the nature and extent of any rights which a party acquires from time to time as a result of the transactions which he or she enters into. One must, of course, distinguish carefully between cases where the effect of the relevant law is to deprive a person of something that he already owns and those where its effect is to subject his right from the outset to the reservation or qualification which is now being enforced against him. The making of a compulsory order or of an order for the division of property on divorce are examples of the former category. In those cases it is the making of the order, not the existence of the law under which the order is made, that interrupts the peaceful enjoyment by the owner of his property. The fact that the relevant law was already in force when the right of property was acquired is immaterial, if it did not have the effect of qualifying the right from the moment when it was acquired”.

104) Mr Mostyn QC submitted that A1P1 was not engaged in this case as a result of M v Secretary of State for Work and Pensions [2006] AC 91. In that case their Lordships held that A1P1 was not engaged when an absent parent suffered statutory deductions from income in respect payments pursuant the provisions of the Child Support Act. The decision confirms that the deprivation of income for maintenance purposes did not affect a property right under the Protocol. Mr Mostyn QC asserts that his client’s claim is based upon need and, as such, it amounts to a claim for maintenance. Consequently, he considers that the Protocol cannot be engaged. I do not accept that proposition. It is too simplistic and does not deal with the point that this Husband is seeking substantial capital for housing which I do not consider can be deemed simple maintenance. Therefore on this ground alone I do not accept his argument. I also note that his client is claiming £3.21 million for capitalised “maintenance”. Whilst I accept that a lump sum in lieu of income is properly characterised as maintenance, where the amount is substantial the award can amount in an interference with the other party’s capital rights. This factor distinguishes capitalised maintenance from simple deductions from income per M v SSWP (supra) where the sums involved were relatively small. Accordingly, I find that A1P1 is engaged in a general way in this case.

105) Miss Booth QC argues that A1P1 is also specifically engaged in relation to the PNC. She maintains that the PNC itself amounts to property because it is a valid contractual right. The effect of this Protocol engagement is, as I have recounted, to promote its terms so that they become the primary focus for the court’s resolution of this claim. In short, she submits that the terms of A1P1 point ineluctably to enforcement of the PNC and a dismissal of the Husband’s claims.  

106) Mr Mostyn QC argues that A1P1 is not engaged because (a) the PNC is not a valid contract in law and (b) in any event, was entered into on 1st August 1998 which pre-dates the coming into force of the HRA in England in October 2000. He submits that the application of that statute and its terms cannot be retrospective. Consequently, it is his case that the PNC is immune to the terms of the Protocol.

Matrimonial agreements.
107) I accept that there are 4 circumstances in which a matrimonial agreement can be made between spouses (future or former). They are:

a) Before marriage – a pre-nuptial agreement;
b) During marriage but before separation – a post-nuptial agreement;
c) At or after separation – a separation agreement;
d) A compromise of an actual or prospective ancillary relief claim.

108) I am concerned only with the first situation. Miss Booth QC does not accept the division into 4 categories but I consider it is merely a convenient way of setting out the different occasions upon which spouses (future, current or former) may seek to reach agreement about their finances in the context of separation or divorce.

Are pre-nuptial agreements valid at English Law?
109) I accept the submission by Mr Mostyn QC that pre-nuptial agreements are not enforceable, per se, in English Law. In X v X (Y and Z Intervening) [2002] 1 FLR 508  Munby J set out in convenient form the current position
In particular Paragraphs 78-81:

“[78]  In this area of the law there were three distinct but related cases in which the common law treated a contract or any other form of inter vivos or testamentary disposition as being unenforceable on grounds of public policy: (i) agreements between spouses or intending spouses for future separation; (ii) certain collusive and other agreements in contemplation of divorce; and (iii) agreements purporting to oust the jurisdiction of the court. In each case equity, following the common law, similarly treated the contract or disposition as void and accordingly refused to decree specific performance of the 'obligation'. However, none of these doctrines gives rise to any difficulty in the present case.

[79]  It remains the rule that any agreement or arrangement entered into by a husband and wife, whether before or during the marriage, which contemplates or provides for the separation of husband and wife at a future time is against public policy and void: see N v N (Jurisdiction: Pre-nuptial Agreement) [1999] 2 FLR 745. The agreement in the present case is not such an agreement. In contrast, a contract which provides for or regulates a present separation is, and always has been, in principle perfectly lawful and enforceable: see, for example, Wilson v Wilson (1845) 14 Sim 405, (1848) 1 HLC 538, and Hyman v Hyman [1929] AC 601. Thus, as Mr Pointer observes, as early as 1864 it had been held in Rowley v Rowley (1864) 3 Sw & Tr 337, (1866) LR 1 Sc & Div 63, that an agreement not to petition for divorce was in principle enforceable.
[80]  However, at common law any arrangement or agreement between parties to divorce proceedings was invalid if made collusively or with a corrupt intention: see Hope v Hope (1856) 22 Beav 351, (1857) 8 DeGM & G 731. So, as Ewbank J pointed out in N v N (Divorce: Agreement not to Defend) [1992] 1 FLR 266, 268C, an agreement not to defend a petition would, notwithstanding Rowley v Rowley (1864) 3 Sw & Tr 337, (1866) LR 1 Sc & Div 63, have been collusive, contrary to public policy and of no effect. This rule has, however, been transformed by s 1(2)(d) of the Divorce Reform Act 1969 and collusion no longer invalidates such a contract: Sutton v Sutton [1984] Ch 184, [1984] FLR 579 and N v N (Divorce: Agreement not to Defend) [1992] 1 FLR 266. There is, therefore, no longer anything intrinsically objectionable either to an agreement not to petition for divorce or an agreement not to defend the other spouse's petition for divorce.

[81]  A contract which purports to deprive the court of a jurisdiction which it would otherwise have is contrary to public policy. Thus, a spouse cannot validly agree, whether expressly or impliedly, not to apply to the court for maintenance or other forms of ancillary relief. Such a stipulation is contrary to public policy and unenforceable: Hyman v Hyman [1929] AC 601, Sutton v Sutton [1984] Ch 184, [1984] FLR 579 and N v N (Jurisdiction: Pre-nuptial Agreement) [1999] 2 FLR 745. This rule remains, but can have no application in the present case where the agreement expressly contemplates the obtaining of the court's approval”.

110) In N v N (supra) Wall J (as he then was) confirmed this underlying principle at page 751 (no paragraph nos included in the Report)

“Are antenuptial agreements as a class specifically enforceable?
The attitude of the English Courts to antenuptial agreements (as opposed to antenuptial settlements, which are, of course, variable under Section 24 of the Matrimonial Causes Act 1973 has always been that they are not enforceable. The difference between an antenuptial settlement and an antenuptial contract or agreement is that the former seeks to regulate the financial affairs of the spouse on and during the their marriage. It does not contemplate the dissolution of the marriage. By contrast, an agreement made prior to marriage which contemplates the steps the parties will take in the vent of divorce or separation is perceived as being contrary to public policy as it undermines the concept of marriage as a life-long union.

Although held to be unenforceable, the Courts have accepted that antenuptial agreements may have evidential weight when the terms of the agreement are relevant to an issue before the Court in subsequent proceedings for divorce”

Movements in the approach to pre nuptial agreements.
111) I am certain that English courts are now much more ready to attribute the appropriate (and, in the right case, decisive) weight to an agreement as part of “all the circumstances of the case”.

112) In F v F (Ancillary Relief: Substantial Assets)  [1995] 2 FLR 45  where Thorpe J (as he then was) stated at 66e-h:

“The other special condition which has to be considered in this case, albeit briefly, is the existence of the ante-nuptial contracts.  It is not in dispute that contracts of this sort are commonplace in the society from which the parties come.  They are much emphasised by the husband in his affidavits, since if strictly applied they would have the ridiculous result of confining the wife to the pension of a German judge, whatever that may be.  Equally, in the affidavits the wife is urgent in protesting the circumstances in which they came to be signed.  I regard the protestations of both in relation to these contracts as having an urgency that the documents themselves do not demand.  In this jurisdiction they must be of very limited significance.  The rights and responsibilities of those whose financial affairs are regulated by statute cannot be much influenced by contractual terms which were devised for the control and limitation of standards that are intended to be of universal application throughout our society.  It is said that these contracts would be strictly enforced against the wife in Germany.  I have declined to enlarge the arena to allow evidence from German experts in that field.  I cannot think that even in Germany the wife would not have the right to deploy a case either that there was some inequality of bargaining power, alternatively undue influence, or that they are inconsistent with social policy in Germany. For the purposes of my determination I do not attach any significant weight to those contracts”.

Thus, he concluded that the agreement was of little relevance.

113) In S v S (Matrimonial Proceedings: Appropriate Forum) [1997] 1 WLR 1200 Wilson J (as he then was) said at 1203d-1204b:

“I am aware of a growing belief that, in the despatch of a claim for ancillary relief in this jurisdiction, no significant weight will be afforded to a prenuptial agreement, whatever the circumstances. I would like to sound a cautionary note in that respect. No one could have more profound respect than I for the observations of Thorpe L.J. In F. v. F. (Ancillary Relief: Substantial Assets) [1995] 2 F.L.R. 45, 66 he said:

“In this jurisdiction [prenuptial agreements] must be of very limited significance. The rights and responsibilities of those whose financial affairs are regulated by statute cannot be much influenced by contractual terms which were devised for the control and limitation of standards that are intended to be of universal application throughout our society.”

There is a danger that these wide words might be taken out of context. There is no doubt that, where the English court proceeds to determine an application for ancillary relief, section 25 of the Matrimonial Causes Act 1973 precludes any choice of foreign law, however vividly the circumstances of the case might protest its relevance. So the application is of English law and under section 25(1) regard must be had to all the circumstances of the case. In F. v. F. itself, the result of a strict application of the effect of the prenuptial agreements would have been, as the judge said, “ridiculous.” In those circumstances they inevitably constituted circumstances of negligible significance. But there will come a case-were I to refuse a stay, might this be it?-where the circumstances surrounding the prenuptial agreement and the provision therein contained might, when viewed in the context of the other circumstances of the case, prove influential or even crucial. Where other jurisdictions, both in the United States and in the European Community, have been persuaded that there are cases where justice can only be served by confining parties to their rights under prenuptial agreements, we should be cautious about too categorically asserting the contrary. I can find nothing in section 25 to compel a conclusion, so much at odds with personal freedoms to make arrangements for ourselves, that escape from solemn bargains, carefully struck by informed adults, is readily available here. It all depends. The matter must be left open and on the footing that, were she to be enabled to claim ancillary relief in England, the wife might secure an award of substantial further provision. In what follows my duty is to appraise the relevance of the prenuptial agreement to the determination not of the wife’s potential application for ancillary relief but of the entirely different issue as to forum.

114) K v K (Ancillary Relief: Prenuptial Agreement) [2003] 1 FLR 120. Rodger Hayward Smith QC sitting as Deputy High Court Judge reviewed the authorities and set out the following questions at 131b-132c:

I distil from those authorities the following questions, which I ask myself in determining the issue whether as against the wife the agreement is binding or influential in any of the decisions I have to make.
(1)   Did she understand the agreement? Yes.
(2)   Was she properly advised as to its terms? Yes.
(3)   Did the husband put her under any pressure to sign it? No.
(4)  Was there full disclosure? No. There was disclosure of assets, but the decision not to press for values came from the wife’s side and it was known that the husband was very wealthy; figures of up to £150 million were mentioned by the wife’s father.
(5)  Was the wife under any other pressure? The circumstances in which she found herself put her under pressure and there was pressure from her own family but she was not under pressure to sign the agreement. The husband too was under pressure. He was being pressed by the wife’s family to enter into a marriage about which he had serious misgivings. The wife says in one affidavit that she signed the agreement in a hurry the day before the marriage. But the terms of the agreement had been discussed and agreed before then and she had had plenty of time to consider it. Having heard her evidence I do not accept that she felt under any pressure at the time she signed the agreement.
(6)   Did she willingly sign the agreement? Yes.
(7)  Did the husband exploit a dominant position, either financially or otherwise? No.
(8)  Was the agreement entered into in the knowledge that there would be a child? Yes.
(9)  Has any unforeseen circumstance arisen since the agreement was made that would make it unjust to hold the parties to it? No.
(10)  What does the agreement mean? It is suggested on behalf of the wife that cl 4 is so vague as to render the whole agreement bad. I consider the agreement is clear as to the capital provision to be made for the wife if the marriage broke down within 5 years. Clause 4 means that provision for the child was to be either agreed or adjudicated upon by the court bearing in mind that such provision would have to include the mother as full-time carer for the child.
(11)  Does the agreement preclude an order for periodical payments for the wife? I think not. If the agreement had meant to bar any claim by the wife for periodical payments, it would surely have said so. It does not. It refers to ‘property’ which I interpret as capital. But if I am wrong see para [16] below.
(12)  Are there any grounds for concluding that an injustice would be done by holding the parties to the terms of the agreement? My answer is no; not insofar as capital for the wife is concerned. On the contrary, I think an injustice would be done to the husband if I ignored the agreement insofar as capital for the wife is concerned. This was a very short marriage. The wife contributed nothing to the husband’s wealth. The husband married the wife only under pressure from her family and on the understanding that the wife’s capital claim in the event of a short marriage would be governed by the agreement which both the husband and the wife and her family wanted.
(13)  Is the agreement one of the circumstances of the case to be considered under s. 25? Yes.
(14) Does the entry into this agreement constitute conduct which it would be inequitable to disregard under s. 25(2)(g)? Yes.
(15)  Am I breaking new ground by holding the wife to the capital terms of the agreement? No. Pre-nuptial agreements have been regarded as influential by Wilson J in S v S (Divorce: Staying Proceedings) [1997] 1 WLR 1200, [1997] 2 FLR 100 and by Connell J in M v M (Pre-nuptial Agreement) [2002] 1 FLR 654.
(16)  Insofar as maintenance for the wife is concerned, if I am wrong in my interpretation of the agreement as above, and if the agreement does preclude a maintenance claim, would it be unjust to hold the parties to that aspect of the agreement? My answer is yes, it would be unjust to the wife but not to the husband. The wife has a child to bring up. Although this was a short marriage with no contribution by the wife to the acquisition of the husband’s wealth, I must have regard under s. 25(2)(f) to the contribution that the wife has made and is now making and is likely for the next 18 years or so to be making in caring for their child. That is an enormous contribution. The wife is now 28. When the child has finished full-time education the wife will be approaching 50. Furthermore, any earning capacity she may have is clearly prejudiced by the time she must invest in bringing up their child. I accept that, but for the child, the wife would not have been financially prejudiced by this short marriage, but to suggest that in the circumstances as they are, she should have no maintenance, either because of the shortness of the marriage or because of the pre-nuptial agreement strikes me as wholly unjust to her. On the other hand her maintenance claim in my judgment should be in her capacity as a mother and to enable her to live as mother to a reasonable standard commensurate with the wealth of the husband/father”.

115) The Deputy High Court Judge held that the wife’s capital provision was to be limited to that which had been agreed but he made a substantive periodical payments order.

116) In M v M (Prenuptial Agreement) [2002] 1 FLR 654 Connell J held at Paragraph 44:

 “[44] The prenuptial agreement in my view is relevant as tending to guide the court to a more modest award than might have been made without it. I reject outright the suggestion that it should dictate the wife’s entitlement; but I bear it in mind nevertheless”.

117) Recently Crossley v Crossley [2008] 1 FCR 323 was dealt with in these Courts. It was a short marriage between two wealthy individuals who entered into a pre-nuptial agreement after having taken legal advice. Mrs Crossley has asserted that her husband’s disclosure had been inadequate and therefore the agreement should be avoided. The issue before the Court concerned disclosure. The Court of Appeal held that, in an appropriate case, the court has power to dispense with detailed disclosure and provide an truncated hearing. 

Thorpe LJ observed at Paragraphs 14-15:

[14]  …In relation to the first ground Mr Turner has submitted that the judge plainly did not direct the husband’s summons to be heard as a preliminary issue.  That, I think, is incontrovertibly correct.  Mr Turner accepts that the court must conduct the section 25 exercise by reference to all the statutory criteria.  He accepts that the existence of the agreement cannot oust the court’s obligation to apply section 25.  He accepts that a prenuptial agreement is one aspect of the case.  However, he emphasises that this is a childless marriage of very short duration, for a substantial portion of which the parties were living apart.  The marriage was between mature adults, both of whom had been previously married and divorced; both parties have and had prior to the marriage very substantial independent wealth.  The prenuptial agreement provides for the retention by each of the parties of their separate properties and division of joint property if any, and finally that there is no such joint property.  Upon those facts Mr Turner, correctly in my view, adds that the combination of these factors gives rise to a very strong case that a possible result of the section 25 exercise will be that the wife receives no further financial award. 

[15]  All these cases are fact dependent and this is a quite exceptional case on its facts, but if ever there is to be a paradigm case in which the court will look to the prenuptial agreement as not simply one of the peripheral factors in the case but as a factor of magnetic importance, it seems to me that this is just such a case”.

118) This review shows that, over the years, Judges have become increasingly minded to look at the precise terms of agreements and will seek to implement their terms provided the circumstances reveal that the agreement is fair. Despite this, having considered the Authorities, I am clear that the old common law rule remains to the effect that a party who has made a pre-nuptial agreement cannot sue on it as if it were a valid contract so as to enforce its terms; for example in the Queens Bench Division by seeking an injunction to enforce it or by seeking specific performance of its provisions.

119) Upon divorce, when a party is seeking quantification  of a claim for financial relief, it is the Court that determines the result after applying the Act. The Court grants the award and formulates the order with the parties’ agreement being but one factor in the process and perhaps, in the right case, it being the most compelling factor. This analysis has been clear for almost 30 years (see de Lasala v de Lasala [1980] AC 546). The enforceability of the parties’ agreement results from the Court order and not from the agreement itself.

120) Miss Booth QC relies upon Soulsbury v Soulsbury [2007] EWCA Civ 969 to counter the proposition that pre-nuptial agreements are invalid. She maintains that they are valid and, although she accepts that the Court has a supervisory role, she asserts that because this agreement is valid in law, it should be enforced unless it is manifestly unjust (which she asserts it is not).

121) The case of Soulsbury involved a couple who had been divorced in about 1986. In September 1987 the court made an order whereby the Wife was to receive periodical payments at the rate of £12,000 per annum less tax. In 1989 after the Husband had sold his business (and made generous gifts to both his former spouse and their children) he suggested that the Wife should not enforce the maintenance order on the basis that he would leave her £100,000 in his will. She agreed and he made a new will containing the agreed provision. Thereafter he remarried, failed to make a new will and so his bequest was invalid. The executors of his estate sought to avoid the debt of £100,000 on the basis that spouses (former or otherwise) cannot enter into enforceable agreements in Law. Their argument was to the effect that because such agreements are always subject to the supervisory role of the Court (and only derive their enforceability from a court order) they have no legal effect unless and until a Court order is made.

122) The Court of Appeal held, counter to this assertion, that the contract was enforceable. Thus, Miss Booth QC submits, per the reasoning of Ward LJ, spouses can enter into valid contracts and the PNC must be regarded as being a valid/enforceable contract. Miss Booth QC further asserts that the agreement was made for valuable consideration, namely marriage and was entered into by two competent adults who must be assumed to have intended to create enforceable legal relations.

123) First, I note that the Soulsbury contract related to a will and so was not on all fours with a matrimonial case. Of course, it was between 2 former spouses but it was not a matrimonial agreement with the attendant public policy ramifications. The Judge at  first instance found that there was a binding agreement entered into for good consideration (being the former Wife’s agreement not to sue). Moreover, it was not void for public policy reasons because the agreement did not oust the Court’s Jurisdiction as nothing prevented Mrs Soulsbury from applying to enforce her periodical payments order. The only sanction if she did so being that she forfeited the £100,000 capital sum. Thus, he upheld the agreement.

124) Numerous Authorities (which are set out in full in Ward LJ’s Judgment) were referred to in argument and Judgment. I note a passage from Lord Denning’s Judgment in Smallman v Smallman [1972] Fam. 25 which arose out of a dispute under s. 17 of the Married Women’s Property Act 1882 for determination of the parties’ shares in their matrimonial home. He held at p.31G:

“In my opinion, if the parties have reached an agreement on all essential matters, then the clause “subject to the approval of the court” does not mean there is no agreement at all. There is an agreement, but the operation of it is suspended until the court approves it. It is the duty of one party or the other to bring the agreement before the court for approval. If the court approves, it is binding on the parties. If the court does not approve, it is not binding. But, pending the application to the court, it remains a binding agreement which neither party can disavow. Orr L.J. has drawn my attention to a useful analogy. Many contracts for the sale of goods are made subject to an export or import licence being obtained. Such a condition does not mean that there is no contract at all. It is the duty of the seller, or the buyer, as the case may be, to take reasonable steps to obtain a licence. If he applies for a licence and gets it, the contract operates. If he takes all reasonable steps to obtain it, and it is refused, he is released from his obligations. If he fails to apply for it or to do what is reasonable to obtain it, he is in breach and liable to damages.”

125) Ward LJ’s “own researches” showed that there had been cases where specific performance of contracts between spouses had been permitted (see, for example, Merritt v Merritt [1970] 2 AER 760 which was decided before the current divorce Law had taken effect). Ward LJ stated

“44. I do not see how I can evade dealing with Mr Millett’s direct attack. It is reinforced by my own researches. Thorpe L.J. was of the view that:

“The parties seeking to uphold a concluded agreement for the compromise of such an application cannot sue for specific performance,”

yet in Merritt the Court of Appeal allowed specific performance. Can those decisions be reconciled? Merritt was decided before the divorce law reforms had taken effect. I can see an argument that the reforms have changed the approach but, if it has, it must be limited to cases where there is the compromise of an ancillary relief application [emphasis added]. I cannot see any justification for denying relief if the spouse or former spouse concludes an agreement which is not part of the settlement of any pending claim for ancillary relief. As I have pointed out, Thorpe J. himself in Peacock refused specific performance more because of a clash of jurisdiction between the Chancery Division and the Family Division than on the basis that the agreement itself was unenforceable. Furthermore, our case concerns the enforcement of a promise to pay a sum of money, or, perhaps more accurately, damages for breach of the promise to pay it. In the judgment of Thorpe L.J. in Xydhias the only way of rendering a bargain to make payment of money enforceable would be to convert the concluded agreement into an order of the court. Stated in those terms, it cannot be correct. It is in conflict with Goodinson and also Gould. It is contrary to what Lord Diplock was saying in de Lasala and it was contrary to the clear understanding of Butler-Sloss in Kelley v Corston.

45. In my judgment the cardinal conclusions expressed by Thorpe L.J. are stated in terms which are too wide. I accept that if there are negotiations to compromise a claim for ancillary relief, then there is a duty to seek the court’s approval as is stated in Smallman. But as Smallman states, and I do not see how that authority of this court can be ignored by me, even an agreement subject to the approval of the court is binding on the parties to the extent that neither can resile from it.”

126) In the light of this, I accept that, in certain circumstances, spouses can make agreements which can be binding inter se unless there are void for public policy reasons. However, if such a deal relates to the compromise (or future compromise) of claims for financial relief upon divorce, then that type of agreement is not enforceable per se for public policy reasons and is not valid in Law unless there is a specific statutory expression to that effect (See Section 34 of the Act). Moreover, if any such contract purports to prevent a party from applying for ancillary relief that term is void and unenforceable.

127) The distinction between this case and Soulsbury was neatly formulated and set out in the Judgment of Longmore LJ where he pointed to the fact that the agreement between Mr and Mrs Soulsbury (which was not related to the implementation of the Court’s matrimonial jurisdiction) was a “classical unilateral contract of the Carlill v Carbolic Smoke Ball [1893] 1 QB 256 or the “walk to York” kind”.  As he pointed out

“This kind of contract is quite different from an “agreement for the compromise of an ancillary relief application” to which Thorpe LJ referred as being “unenforceable in law” in Xydhias v Xydhias 1999 1 FLR 683, 691.”

128) To date, Parliament has legislated in respect of maintenance and separation agreements (Section 34 of the Act) and has thereby given them validity. Miss Booth QC argues the PNC is a maintenance agreement but, for the reasons which I set out below, I do not accept her formulation. As I find, pre-nuptial agreements remain unenforceable until adopted by the Court and so in that sense the PNC is not a valid legal contract. To date, although there have been attempts to codify the position in relation to pre-nuptial agreements none have been brought into effect. Consequently, this type of agreement remains invalid at law.

129) It is understandable that English society in general (therefore the state) regards Court supervision as a necessary safeguard. To my mind, independent scrutiny of these agreements remains as necessary in modern times as it was in last century because of the vulnerability of parties involved at times of high emotion where inequality of bargaining power may exist between them. Although civilization has made much progress over the centuries and the roles of men and women have altered so that, in some cultures, equality has been achieved that does not mean that fundamental human nature has changed. Whilst the Court must permit of current mores and will take full account of contemporary morality it should not be blind to human frailty and susceptibility when love and separation are involved. The need for careful safeguards to protect the weaker party and ensure fairness remains.

Section 34 of the Act.
130) Miss Booth QC argues that the PNC falls within the ambit of section 34 of the Act and is therefore a valid maintenance agreement. I do not accept that submission because pre-nuptial agreements do not fall within the language of the section..

Section 34(2) provides:

“maintenance agreement” means any agreement in writing made, whether before or after the commencement of this Act, between the parties to a marriage, being –

(a) an agreement containing financial arrangements, whether made during the continuance or after the dissolution or annulment of the marriage; or
(b) a separation agreement which contains no financial arrangements in a case where no other agreement in writing between the same parties contains such arrangements;

“financial arrangements” means provisions governing the rights and liabilities towards one another when living separately of the parties to a marriage (including a marriage which has been dissolved or annulled) in respect of the making or securing of payments or the disposition or use of any property, including such rights and liabilities with respect to the maintenance or education of any child, whether or not a child of the family.

131) The strict reading of the statute demands that a maintenance agreement must be made during the continuance of the marriage and not before it has even come into being. I am reinforced in this conclusion by the language of section 24(1)(c) which specifically refers to “any ante-nuptial or post-nuptial settlement”.

132) I hold that the PNC is not a valid contract under English Law and is not a maintenance agreement under the terms of Section 34. The consequence is that it is not an enforceable right and so A1P1 cannot apply to it because it is not property as so defined.

133) I was treated to extensive submissions on whether A1P1 would be applicable in the event that the PNC was a valid contract. Those arguments centred on whether the HRA could be applied retrospectively given the specific dates in this case. As such I was referred to Wilson v First County Trust (No 2) [2004] 1 AC 816, but it is not necessary for me to give a ruling on this point as there is no distinct property right which is capable of protection.

Does the Act (section 25 included) infringe A1P1?
134) In determining whether or not A1P1 has been infringed, I am entitled to take into account the margin of appreciation which is afforded to Contracting States because European Law on human rights has long recognised that Contracting States will not have a uniformity of approach. Thus each Contracting States is entitled to evaluate its own public policy decisions and make such laws are appropriate to fit its particular state needs. Obviously, in the field of financial provision after divorce, the margin of appreciation will reflect the different traditions and approaches between civil and common law jurisdictions. The width of the margin of appreciation in A1P1 cases is apparent from paras 71, 74 and 75 in Pye:

“[71]   As to the existence, over and above the general interest in the limitation period, of a specific general interest in the extinguishment of title and the attribution of new title at the end of the limitation period, the Court recalls that in discussing the public interest present in the case of Jahn, in the context of a deprivation of property, it stated that, “finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one [the Court] will respect the legislature's judgment as to what is 'in the public interest' unless that judgment is manifestly without reasonable foundation” (Jahn and Others v. Germany [GC], nos. 46720/99, 72203/01 and 72552/01, ECHR 2005-VI, § 91, with reference back to the cases of James and Others and The Former King of Greece [GC], no. 25701/94, ECHR 2000 XII, and to Zvolský and Zvolská v. the Czech Republic, no. 46129/99, § 67, ECHR 2002 IX). This is particularly true in cases such as the present one where what is at stake is a longstanding and complex area of law which regulates private law matters between individuals.

[74]   It is a characteristic of property that different countries regulate its use and transfer in a variety of ways. The relevant rules reflect social policies against the background of the local conception of the importance and role of property. Even where title to real property is registered, it must be open to the legislature to attach more weight to lengthy, unchallenged possession than to the formal fact of registration. The Court accepts that to extinguish title where the former owner is prevented, as a consequence of the application of the law, from recovering possession of land cannot be said to be manifestly without reasonable foundation. There existed therefore a general interest in both the limitation period itself and the extinguishment of title at the end of the period.

5. Whether there was a fair balance
[75]  The second paragraph of Article 1 is to be construed in the light of the general principle enunciated in the opening sentence. There must, in respect of a “control of use”, also exist a reasonable relationship of proportionality between the means employed and the aim sought to be realised. In other words, the Court must determine whether a fair balance has been struck between the demands of the general interest and the interest of the individuals concerned. In determining whether a fair balance exists, the Court recognises that the State enjoys a wide margin of appreciation, with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the general interest for the purpose of achieving the object of the law in question (see AGOSI v. the United Kingdom, referred to above, § 52 and, for a more recent authority concerning a deprivation of possessions, the case of Jahn and Others, cited above, at § 93). In spheres such as housing, the Court will respect the legislature's judgment as to what is in the general interest unless that judgment is manifestly without reasonable foundation (Immobiliare Saffi v. Italy [GC], no. 22774/93, § 49, ECHR 1999-V). In other contexts, the Court has underlined that it is not in theory required to settle disputes of a private nature. It can nevertheless not remain passive, in exercising the European supervision incumbent on it, where a domestic court's interpretation of a legal act appeared “unreasonable, arbitrary or ... inconsistent ... with the principles underlying the Convention” (Pla and Puncernau v. Andorra, no. 69498/01, § 59, ECHR 2004 VIII)”.

135) The Act provides a bespoke remedy in each case because its terms enable the Judge to take into account all the circumstances of the case. Section 25 only highlights a number of specific factors. Miss Booth QC argues that this results in an element of uncertainty so that parties can never be sure what the result will be after the application of the statutory criteria. It is this uncertainty that may lead to arbitrary results with the consequence that A1P1 is breached. I do not accept that argument. The Court is enjoined to apply the Act fairly. The House of Lords in White; Miller and McFarlane and the Court of Appeal in Charman (No 4) set down clear guidance and principles which Judges must apply. Some professionals took time to assimilate their Lordships speeches but to my knowledge most cases continue to settle before trial. To enable this to occur the perceived outcome must be within sufficiently settled parameters of an expected award. By its nature, every piece of litigation involves a degree of uncertainty because no one can ever predict how a tribunal will decide the facts or interpret the Law. But there is nothing arbitrary in the application of the Act in financial proceedings. I accept Mr Mostyn QC’s formulation that section 25 of the Act strikes a fair balance between existing property rights and the entitlement of the claiming party to share, to receive compensation or have his needs met. This fair balance is well within the margin of appreciation afforded to this country.

He submits:

a) The fair balance is not affected by a consideration of whether the property rights would be differently treated in the country or countries of origin of the parties.
b) The judicial process is not “unlawful” in the sense of being arbitrary, obscure or unforeseeable. On the contrary, the principles are clear and have been lucidly explained in Charman No 4
c) The public and general interest is fully satisfied by that process not least in that it prevents the throwing of a party onto state support and fully recognises the equality of spouses within marriage.

Consequently A1P1 is not breeched as a result of the method by which the English Courts resolve financial applications on divorce pursuant to the Act.     

The PNC and the factors which vitiated it.
136) Standard contractual vitiating factors could affect the agreement. By that I am referring to mistake, misrepresentation, undue influence, duress or fraud. None of those matters applies in this case.

137) As I find the PNC is defective under English Law for the following reasons:

a) The Husband received no independent legal advice.
b) It deprives the Husband of all claims to the “furthest permissible legal extent” even in a situation of want and that is manifestly unfair.
c) There was no disclosure by the Wife.
d) There were no negotiations.
e) Two children have been born during the marriage.
The terms of the PNC plainly recite at Clause 1 that the parties intend to establish their first matrimonial residence in London and it confirms by clause 7(2) that the law of their matrimonial residence may come to apply to their legal relationship as spouses. It was therefore inherent in the agreement that another system of law might not apply its terms and so it could never be regarded as foolproof.

Section 25 Factors.
138) I now turn to deal with the Section 25 factors:

a) Income, earning capacity, property and other financial resources.
The Wife.
The Wife has great wealth. There is no dispute about the bulk of her assets and an agreed asset schedule has been prepared which is annexed to this Judgment at “2”. It shows that her wealth (apart from her interests in the family companies) is some £54.3 million net. Mr Mostyn QC asserts that this sum may be even greater because her 2007 net income from the companies has not been paid over and so is not included. I do not consider that it is necessary to be precise about the Wife’s capital because in the context of this claim it matters not whether she is worth £54.3 million, £55million or, for that matter, £60 million. 

The value of her interest in the family companies.
The most recent information of the annual income which she receives by way of dividends relates to 2006. In that year she was entitled to €3.647 million gross. Tax due amounted to €1.243million and the net sum available was €2.4million in the round (at current exchange rates that amounts to £1.9million). Obviously, it would have been more in sterling terms in 2006. Mr Mostyn QC asserts that this income stream must be given a capital economic value and asserts that £52million was accepted as that capital value. In opening he maintained that such a figure should be added to the asset schedule. In final submission he put the value at £58 million odd using a 5% return on the basis of the income outlined above. No expert values of the companies have been provided.

Giving an arithmetical value on the basis of known parameters of investment returns will obviously produce a capital figure but that will not necessarily give a true reflection of the value of Wife’s minority interests in family companies.

What is clear is that her net annual income from the company is vast (even if some is reinvested). If the Wife has been ploughing back some 50% as working capital then on a normal commercial basis that sum would be reflected in the accounts as a loan or other capital entitlement as so augment her capital value.

I am not persuaded that it is necessary to include a capital value for the income stream in the asset schedule in this case. The asset base is so substantial and the income so large that the figures are sufficient to enable me to make a proper award when, as is conceded, the claim is limited. Whether I consider that the Wife (a) is worth £100 million plus or (b) is worth £54.3 million plus with a net annual income in the region of £2 million net from the company makes no difference in this case. After all money is money. Whichever way I look at it, the figures speak for themselves and the award sought will not impinge on the company position at all.
In addition to company dividends, the Wife has an income from her £54 million which produces just over £1 million gross per annum. This income will reduce somewhat after this Court makes an order but the amount of the award will not, in reality, produced a significant overall dent in her income.

The Wife’s total gross income in 2006 was:

(a) £1,073,904 investment and dividend income on her Swiss portfolios (assuming that this is gross and the figures relate to 06);
(b) £2,894,809 from the German companies;
(c) Total £3,968,713, say £4million.

It would seem that her company income suffered tax of €1,243,261 or 34%.
If that rate were applied to her £4m income then W’s net annual income is a little over £2.6m. I might have expected the applicable tax rate to be higher but, even if it is, I do not regard it as affecting my decision.

The Husband.
As I have found the Husband was once a high earner in the City but he embarked upon an academic life during the marriage, albeit with the intention of returning to the financial world and earning well thereafter. That opportunity has been lost with the passage of time, the changing markets and the Husband’s genuine decision that he wants to make a life in academia. The consequence of that decision is that his earning capacity has dropped to less than 10% of that total at its zenith. Whilst he cannot be criticised for his decision, it was not jointly made in the context of the marriage and so its effects, in fairness, cannot simply be visited upon the Wife in the sense that she has to fund a lavish banker’s lifestyle for the remainder of the Husband’s life. The financial consequence of his decision must in truth be marked in the balancing exercise.

The Husband’s current capital position as set out in the asset schedule shows that he has debts totalling some £800,000 odd of that some £740,000 odd relates to the costs of this application and the Children Act Proceedings.

He has been in receipt of interim maintenance at the rate of £215,000 per annum net (from which he pays rent totalling some £84,000). Prima facie therefore, it would seem that he has been living at the rate of £131,000 per annum plus whatever part of his additional indebtedness (£60,000) is referable to his annual spend.

In the future he expects to earn about £30,000 per annum gross (median point) as a researcher.     

b) The financial needs, obligations and responsibilities which each has for the foreseeable future.
The Wife.
As set out above the Wife will buy a new home and will fund the lifestyle of herself and the children. Her assets and income are such that she can afford to live as she pleases. I remind myself that she will be responsible for funding the children without any meaningful financial assistance from the Husband.
The Husband.
The Husband needs a home in England and a base in Germany from which he can be with the children during his weekends stays.
In addition he needs sufficient income with which to pay for the children whilst they are with him and additional income to make up the shortfall between his paltry earnings and his reasonable needs. I deal with my specific findings in relation to all those matters below.

c) The standard of living enjoyed by the family before the breakdown of the marriage.
The parties lived at a very high standard rate. They had a stylish, rented home in, arguably, the best part of London. They enjoyed a good social life, ate in the top restaurants, wore fashionable clothes and drove good cars. In short they wanted for nothing. In addition, it was a feature of this marriage that they had lavish holidays abroad several times each year, staying in opulent 5 star hotels. The Wife asserts that this level of expenditure was driven by the Husband but I do not wholly accept that evidence. They both enjoyed travel and wanted to live in the best possible surroundings upon arrival. I accept that the Wife was brought up with more modest tastes than she acquired whilst living with the Husband but her new found sophistication was not out of place with the amount of wealth available. I expect that she will continue to spend on the good things of life. That said, I do not consider that she is extravagant by nature and, together with her children, she will live a grounded life but in a smart environment. I do not expect that she will spend extravagantly on holidays.

d) The age of each party and the duration of the marriage.
The Husband is 37 years old. The Wife is 39 years old. The marriage lasted some 8 ½ years.

e) Any physical or mental disability of either party.
Not applicable.

f) The contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home and caring for the family.
Until 2003, when the Husband took up his post as a D Phil student in Oxford, the parties made broadly equal income contributions. Thereafter, the Wife made an increasingly large financial contribution particularly after the Husband’s savings became depleted (or were stated to be depleted) by March 2005. She will undoubtedly continue to make a very substantial financial contribution hereafter. She expects nothing from the Husband (who has nothing to give) and she will, in all probability, pay all the costs of the children from now on as the Husband does not anticipate being self-supporting let alone having sufficient to cover his children’s costs. Hence from a financial perspective this Wife will make a far greater long term financial contribution to the welfare of the family in the broadest sense.
Emotionally and in a caring capacity both parties will continue to invest energy and devote time to their children. The Court has ordered a time allocation of two-thirds to one-third in favour of the Wife, but that does not detract from the wish of each parent to contribute as much as they can to the benefit of their children.   

g) The conduct of the parties in so far as it would be inequitable to disregard it.
Not applicable.

h) The value of any pension which will be lost upon divorce.
Not applicable.

Conclusion and award.
139) In assessing the Husband’s needs I will take account of all of the circumstances of the case. For the avoidance of doubt, and for the reasons which I have set out above, I consider that his award should be circumscribed to a degree to reflect the fact that at the outset he agreed to sign the PNC. Of course, from an English perspective the agreement was flawed and I take full account of the fact that the Husband’s agreement was tainted because he did not know what his future wife was worth and did not have independent legal advice about the ramifications of the deal. Nevertheless, he understood the underlying premise that he was not entitled to anything if the parties divorced. In essence, he accepted that he was expected to be self-sufficient. As a man of the world that was abundantly clear. His decision to enter into the agreement must therefore affect the award.

140) Housing
a) England

The Husband wishes to live in a nice area of London. He seeks a lump sum of £2.825 million inclusive of costs. He needs 3-4 bedrooms and he wishes to live in or about Chelsea because the children are familiar with the area and have friends close by. The Wife submits that he should live in Oxford or less fashionable parts of London (eg Putney). She considers that £1 million should suffice. On her case the house should be held on trust for the Husband’s life and be available primarily as a base for the children. I consider the Wife’s case to be unsupportable. Whilst, I accept that the parties lived in rented accommodation throughout the marriage, I am of the clear view that, after some 8 years of marriage and in the context of the Wife’s wealth, the Husband is entitled to a home of his own.

I have looked at the housing particulars which have been made available and, taking Judicial notice of market conditions, I consider that the Husband needs £2.5 million inclusive of costs and refurbishment to enable him to buy a home in England as a base for himself and the girls. He has indicated that such monies as he receives for a house (subject to equity release if required over the years) will be passed to A and B upon his death. His acceptance will incorporated as a recital to my order. This capital sum will enable him to purchase a small property in Chelsea or larger home elsewhere. The price of houses in the nice residential areas of North Oxford, whilst not as high as London, are very substantial and £2million plus would not be surprising with additional attendant costs. Equally, good country properties between London and Oxford command a premium for they are in commuter land. The sum set above is inclusive of the costs of redecorating and buying additional furniture for the property (given that the Husband will be retaining the contents of the former matrimonial home).

b) Germany
In his original presentation the Husband sought a capital sum to represent the rent of an apartment/small house in Düsseldorf for his weekend stays with the girls. This seemed to be a complete waste of money and so I suggested that the Wife might wish to consider buying a home on the basis that the Husband could live in it rent-free until the children ceased full time tertiary education or the youngest attained her majority. This was in line with the Wife’s case with regard to the English property and, after consultation with her legal team, she agreed to provide the necessary funds which will revert to her or the children (as she chooses) when the home is no longer required. The parties disagreed about the cost of such a property. The Husband sought €1 million and the Wife offered €500,000. I have looked at the particulars provided and I have come to the conclusion that a reasonable property can be purchased for about €600,000 inclusive of the attendant costs. It will need to be furnished (the Husband sought £25,000) I think that €30,000 will suffice. The total which I consider is appropriate is therefore €630,000.

The terms upon which the house/flat will be held will include the following

(a) The house will owned by her or such entity as the Wife is advised is appropriate.
(b) The Husband will be entitled to remain in the home until the youngest child attains majority or the last child ceases 1st Degree whichever is the later.
(c) Subject to (b) the Husband’s rights will terminate on his earlier death.
(d) His use of the premises will be rent-free to the Husband.
(e) He will be responsible for all the usual outgoings (including a service charge, if any) and will pay for all on going maintenance repairs. The Wife (or the entity which owns the property) will pay for structural repairs unless they are included within the normal annual service charge in which event the Husband will pay for them.
(f) He will keep the property in good tenantable order. He will be entitled to quiet possession of the same.
(g) He will be entitled to choose the property, subject to the Wife’s consent, such consent not to be unreasonably withheld.
(h) If the Wife moves to a different town or country so that the Husband’s “contact” with the children is affected, then he shall be entitled to purchase a property in the new place by using the net proceeds of sale on the same terms.
(i)  The costs of drawing up such legal documentation as is necessary to protect the Husband (as opposed to the underlying ownership of the home which will be paid by the Wife) will be borne equally by the parties. (j) Such furniture as is bought with the €30,000 shall be inventoried and shall revert to the Wife’s ownership or to her order when the Husband is no longer entitled to use a property as his weekend base.
(k) The Husband’s rights will survive his remarriage and he shall entitled to bring his spouse or settled partner to the property.
(l) There may be other terms which the parties wish to have added and I will hear submission in that regard before finalising this aspect of my decision.

c) Other Capital needs.
(a) Debts
The Husband has debts of £800,000 in the round of which some £691,000 relate to the Husband’s own legal costs. Of those about £556,000 are the costs of the financial proceedings and so it follows that about £135,000 of current debts are in respect of the Children Act Proceedings. The Husband owes his Wife £48,500 in respect of the Court of Appeal costs which must be deducted from his debts. Thus, his recoverable debts are some £750,000 less the monies which he spent on his own Appeal costs. I do not have a figure for them as the point was not raised by Mr Moor QC. I propose to deduct £50,000 in this regard but will adjust the figures upon further submission if my “guesstimate” of his fees is incorrect. This reduces the recoverable debt to £700,000.

I have already explained why I am covering the remainder of the costs referable to the Children Act proceedings. This case falls under the new cost provisions and so unless there has been some litigation conduct of which I am not aware, each party bears their own costs in accordance with the Rules. When the Court is assessing a case on the basis of need that means that costs have to be covered or needs are not met. Thus, in reality, in this case the payor will bear all the costs but there is no alternative.

The Wife will therefore pay £700,000 to cover the Husband’s debts.

(b) Additional capital items
The Husband produced a schedule which showed that he needed an additional £146,500 for capital items, including a car at £50,000; furniture in England of £50,000 (when he is retaining the contents and I have provided for such costs in the overall housing budget above); furniture in Germany £25,000 (which I have catered for already) and the installation of a kitchen in Germany (£16,000 which I consider unnecessary). The other expenses of some £4,500 relate to an alarm, satellite dish and finder fees for the German home. I think that the Husband can pay for these minor items himself.

I heard a great deal of evidence about the Series 6 BMW that the Wife gave the  Husband as a present. He did not like this ostentatious car and sold it to cover his own expenses. He now seeks a replacement. I consider that £25,000 will buy a suitable and safe car for him.

Thus, the total additional capital is £25,000.
d) Income
(a) For the Children
In his original presentation the Husband sought a total of £105,612 in respect of the children alone (Schedule 6 – London £7,159 per month and Germany £1,642 per month). The bulk of that expenditure was £5,833 per month in respect of “holidays with children (3)” which is an annual cost of £70,000. In the past the Husband has expended a great deal on holidays.  Since May 2007, the Husband has spent £115,310 on holidays per his own schedule.  During the same period, the Wife has spent £22,697. Whilst she may have minimised her costs in the short term, as I find, the Husband’s expenditure at this level is simply not sensible in the long term. It is unrealistic and unbridled extravagance given his new life as a man who can only earn £30,000 per annum gross. I note that the Husband has not allowed any element for the running costs of his homes in this children’s budget. His original position was that he wanted the £105,612 capitalised and paid to him as a lump sum. He would still prefer that route to be taken because it is asserted that an order for periodical payments for the children would be variable in Germany (unless it be an interim order). The Wife is prepared to obviate this difficult by paying such periodical payments as may be awarded to him for the children. I do not consider that the Husband should receive monies for the children by way of lump sum.

He is a resident parent, the potential payor is abroad and so I have jurisdiction to make an order for periodical payments. There may be a possibility that he will be able to contribute in the future (if, for example, his patents do well) and periodical payments would permit of adjustment in that regard. Consequently, I consider that this area of need should be covered by a maintenance order. The Wife is prepared to pay some £18,000 per annum for each child but this is far too low in the context of her income and the needs of the children. Looking carefully at the Husband’s budget allowing him a reasonable sum for holidays (being £30,000 per annum) and a roof element of £5,000, I consider that the Wife should pay periodical payments for the children at the rate of £35,000 per annum each payable monthly in advance from a date to be agreed or determined by me. (Calculated as £105k-£70k (holidays) + £30k (reasonable holidays) + £5k (roof element). – total £70,000 per annum). The order will be index linked and will remain in being until the children cease full time education (including education to the completion of a 1st University degree). I do not consider in this case that the Husband’s expenditure on the girls will lessen whilst they are being educated at University/College. 

(b) For the Husband
The Husband’s budget excluding the rent for the German home and the girls’ maintenance was £125,000 per annum net. The Husband seeks £3.21 million for his Duxbury fund. That figure is based on the assumption that he will earn £30,000 gross from now until he is 65 years old. The Wife made no offer originally. By final submissions she was offering periodical payments at the rate of £35,000 per annum (based upon a net need of £60,000) until the children ceased full time education. She did not consider that those payments should be capitalised because of the terms of the PNC.

Given the wealth in this case and the manner in which the parties lived during the marriage, it could be argued that £125,000 net spendable per annum is not unreasonable. But given the overall factual matrix in this case, I do not consider that that sum would represent a fair result especially as I consider that a clean break has merit in this case. By so deciding I have balanced the need to produce a result which takes into account the PNC, the Wife’s extensive fortune and the Husband’s entitlement under English Law. I have come to the conclusion that the Husband needs a net spendable income of £100,000 odd. This Duxburizes (if there be such a word) at £2.331 million which I round up to £2.335 million.
141) In total therefore the Husband’s needs are

(a) Housing                £2,500,000
(b) Debts                   £   700,000
(c) Additional Capital  £     25,000
(d) Duxbury Fund       £2,335,000

In addition the Wife will provide €630,000 (£504,000) for housing in Germany and she will pay periodical payments totalling £70,000 per annum for the girls as outlined above.

142) The terms of the order will require careful drafting and I will leave it to Counsel to agree a draft and seek assistance from me if they cannot agree on any point. Subject to the matters upon which I invited additional argument that is my Judgment.