Y v Y (Financial Remedy: Marriage Contract)

Introduction

This is an application by a wife for financial remedy orders. It is made in the context of a long marriage in respect of which Decree nisi was pronounced in May 2013, some 22 years after its celebration. The parties married in June 1991, having by then lived together for two years. Three children were born during the course of the marriage. Two of the children are now in their early twenties and one is 15 years old.

There have been significant difficulties within the marriage for a number of years. The wife issued her original petition seeking dissolution of the marriage as long ago as October 2007. Despite the fact that there were ongoing attempts to repair the relationship, their marriage appears to have finally broke down at the beginning of 2013. The parties continue to live (albeit separately) under the same roof at the family home in central London. Their physical separation will happen imminently, however, since the husband has recently completed the purchase of a property a short distance from the family home in West London.

The parties are both French nationals. The husband is 50 and the wife, 49. They began their relationship at the beginning of 1989. Within 6 months they had moved in together and were sharing a flat in Paris. (That was a flat which the husband had purchased in 1989 at about the same time as their relationship commenced and about which I shall say more later in this judgment.) Having married in June 1991 (when the wife was in the early stages of pregnancy), they spent a further four months in Paris before the husband moved to London in connection with his employment as a banker. Their son was born some three months later and, when he was just weeks old, the wife left France to join the husband in London. Initially, they rented a property in West London as they settled into life in England. Their current family home in West London was purchased at the end of 1998.

Whilst London has been home to this family throughout the course of their married lives together, they have retained significant elements of their French heritage and identities. Each of the children have had a French education. The parties remain domiciled in France; H has a significant number of property investments in France and continues to submit tax returns to the French IRS; their family connections in France remain strong, and they retain an extended network of social ties within that jurisdiction.

I have provided that vignette of family life at this stage because it is the husband’s case as advanced by his leading counsel, Mr Timothy Scott QC, that the wife’s financial claims at the end of this marriage should be considered squarely within the context of a contrat de mariage into which these parties entered some 48 hours before their wedding in France (“the marriage contract”). It was a contrat which contained a specific election by this couple of a property regime known as séparation de biens, a concept well known and recognised within this jurisdiction as one of the European default regimes. In essence, French law makes provision for a set of legal rules which will determine the spouses’ respective interests in their assets both as between themselves and vis-à-vis third parties. Under French law, a marriage contract, once notarised, is absolutely binding on the spouses once the marriage is celebrated, save in very limited respects (none of which applies here). Its terms follow the spouses both during the subsistence of their marriage and in the event of its dénouement. In the absence of a specific election, spouses are deemed to have chosen the default regime of community property. If they do not wish to adopt that regime, they are obliged to enter into a marriage contract in order to adopt one of the alternatives defined in the French Civil Code.

That is what the husband and wife did in this case. Under the French separation of assets regime, assets are distinguished as either ‘own assets’ (biens propres) or ‘common assets’ (biens communs). Whilst it is possible under French law for a couple to extend or restrict the scope of this regime, there was no such provision in the marriage contract entered into by these parties. Under its terms, the legal presumption under French law was that each would keep his or her own assets, whether in existence at the time or subsequently acquired, separate and free from any claim by the other unless jointly acquired and specifically held in joint (or common) ownership. Whilst the marriage contract itself did not contain any specific reference to the dissolution of the marriage (other than by death), its terms would continue to apply in the event of a divorce were that divorce to fall under the jurisdiction of the French courts. In these circumstances, the wife’s only remedy would be to make an application for an award of maintenance (prestation compensatoire).

It is the husband’s case (with which no serious objection is taken by Mr Stewart Leech QC, who appears for the wife) that this marriage contract would be binding as a matter of law were the divorce proceeding in France. Following recent developments in English law, and particularly the enhanced status given to marital agreements in the aftermath of the Supreme Court’s decision in Radmacher v Granatino [2010] UKSC 42, [2010] 2 FLR 1900, the husband says that this marriage contract should be given a central and magnetic prominence in terms of its pull towards a financial outcome for this couple. It is his case that the wife should leave the marriage with no more than a ‘needs’ based award.

The global asset base (excluding the non-marital assets) is in excess of £13 million. (There are a few issues of computation remaining which I shall have to resolve in due course. If Mr Leech succeeds on his arguments in respect of ‘washing out’ a significant part of the potential tax liabilities in this case, the value of the assets may be in the region of £13.7 million.) In terms, the husband’s proposal is that the wife should receive no more than about a third of the family’s wealth whilst he retains almost twice as much as she. He relies, centrally, on the exclusion - reflected in the marriage contract – of any entitlement to share that which has been built up during the years of the marriage. He contends, in terms, that the election of the specific marital regime chosen by these parties should be considered in the same legal context as a decision to enter a pre-nuptial agreement which had the same effect of excluding an entitlement to share. In contrast, the wife, by her proposals, seeks a full share of the assets subject only to the exclusion of any which are agreed to be non-marital property (worth about £1.3 million in this case).

The central issue in the case is therefore the extent to which the wife is entitled to a full share of the marital acquest of over £12 million.

In due course, I shall need to consider the law as it applies to the marriage contract into which these parties entered and the extent to which it should influence my application of English law to these financial remedy proceedings. Before turning to these matters, it will be necessary for me to consider the circumstances and events which led to this couple’s decision to enter into such an agreement and, in particular, the full extent of the wife’s knowledge and understanding of its consequences.

Each of these parties was born and educated in France. Each attended highly prestigious universities in France, which is where they met at an alumni event. Having graduated, each went on to pursue highly successful careers in their chosen fields. The wife’s academic success at university enabled her to spend a further two years studying. She was thereafter to work for a telecommunications company, where she reached the rank of Managing Director. After five years with a start-up entity known as B, she joined a communications company and was employed there in a senior position for over seven years until she left in 2013.

The husband took up employment with a bank immediately after graduating. His own career in the banking world (albeit interrupted by short periods of unemployment) saw him rise through the ranks at a number of banks to the position of Managing Director where he is now head of his division.

Each of these parties is, as I accept, a highly gifted individual albeit that they present in very different ways. I shall in due course say more in relation to my observations about them as witnesses. At this stage, I record merely what the husband told me when he gave his evidence in chief. Of the early stages of their relationship, he said,

“We had a very similar outlook on almost everything. We were not ‘usual’ people and we were both aware of that and somehow our difference made the cement or gel.”

That this young couple were wholly absorbed by their romantic relationship as it developed over their two years of pre-marital cohabitation is obvious from both their written presentations and their oral evidence. The wife described to me in clear (and still vibrant) detail her joy at driving across Paris to collect the husband from work in the evenings. She described the manner in which they led a carefree and happy existence, enjoying each other’s company and a busy social life centred around the apartment they shared in Paris. The wife is an individual who has run her life in a highly organised manner. She is meticulously detailed in her approach to the framework of her day to day domestic and business life, a fact which the husband acknowledges as having been a feature of their married lives together.

He, in his turn, presents as a much more reserved and softly spoken individual who is not given to overt displays of emotion. He accepts that there is truth in the wife’s description of him as being somewhat secretive and introverted with those whom he does not know well. He told me that when they began their relationship in the early part of 1989, he could not believe his good fortune in having secured the affections of the girl who was the object of much attention from their fellow undergraduates. He told me that he felt the wife was more ready than he to make the commitment to marriage. He says that they had discussions about their future together during which they spoke about the possibility of their relationship breaking down at some point in the future. Uppermost in their minds, according to him, was the overriding principle that they were entering marriage as entirely independent young adults; that they had agreed to respect each other’s personal and financial autonomy; and that the fundamental principle which was to underpin their personal relationship was an acceptance that, whatever the future might bring, that personal independence would remain sacrosanct.

The wife’s recollection of those early days is somewhat different. She told me that she did not recognise the picture which the husband had painted in his evidence of the somewhat contrived structure which underpinned their personal relationship. She accepted that each valued their individuality as human beings and professionals, but she describes their relationship as that of a normal loving couple sharing many common interests and pleasures and who were planning to spend an entire lifetime together in a committed relationship.

Of the suggestion that she had previous experience of a lengthy relationship coming to an end and might wish to have made provision should the same thing happen to her relationship with the husband, she told me that she was 23 years old when they met and she had many previous boyfriends before meeting him. The longest relationship she had experienced (although I had the impression that it was not exclusive or, at least, an ‘on and off’ arrangement) was with a childhood friend. They had been together in a relationship of sorts from the age of 16 to 23 years. But the gravamen of the wife’s evidence was that her relationship with the husband was her first serious adult relationship and it was one to which she was deeply committed.

I record these matters because, to an extent, they bear upon the circumstances in which the marriage contract came to be signed. Whilst the time line of events leading up to its preparation and execution can be traced readily through a combination of agreed facts and contemporaneous documentation, each of these parties has a very different subjective perception and recollection of events, their discussions at the time both with each other and with various family members, and their individual motives for agreeing the election of a séparation de biens. Perhaps of greatest significance are their differing accounts of what each understood he or she was committing to in terms of the legal repercussions of the marriage contract.

It is to these events that I now turn.

Two years into their relationship and some 18 months into cohabitation in the Paris flat, the parties agreed to marry. I have a statement from the wife’s mother which records a conversation she had with her daughter on 27 January 1991 when she was informed of their engagement. This evidence was not challenged by the husband who told me that they had decided to marry some days earlier. Indeed, that was the date when he sought the wife’s father’s permission to marry.

It is the husband’s case that from February through to April that year (1991) there were ongoing discussions between this couple about the marriage contract. He told me that there had been several occasions when the subject had come up as a topic of conversation both as between themselves and as a result of conversations which had involved the wife’s father who had been firmly opposed to a séparation de biens regime. The husband told me about conversations which he remembered having with the wife’s father on other occasions when she had not been present. He thought that those had taken place in March 1991. He agreed during the course of cross-examination that there had been a significant amount of resistance from her father at the outset but that the principle of having a marriage contract had been agreed by the time of the formal engagement lunch in April 1991. As to the reasons why everything had been left until the last minute, he told me that he had not been party to the arrangements which were put in place to see the notary. That appointment was arranged for 13 June 1991, two days before the celebration of the marriage. He told me that it had not been a significant concern because the timing of the execution of the marriage contract remained well within their control and it was, in any event, not a top priority because of all the other tasks which needed to be completed in advance of the wedding day.

Over and above his general description of these conversations, the husband has been unable to provide me with any more specific detail or context. In a written statement which he signed on 13 September 2013, he said this :

In that statement, the husband also said that the discovery in the month before the wedding that the wife was pregnant had no bearing on the decision which they made in relation to the marital regime. That discovery, on his case, post-dated their decision to enter the marriage contract by a month or so. He is also clear in his written evidence that he would not have married had she declined to sign the contract.

When cross-examined about these matters by Mr Leech, the husband accepted that at no point between February and June of 1991 did he suggest to the wife that she ought to go and see a lawyer. When pressed about his conversations with her, he could not recall any specific reference to ‘divorce’ or the role which the marriage contract would play in such an event, although he does remember often speaking to her prior to their engagement about the fact that their relationship might not be immune from such a possibility at some point in the future. Whilst he was quite clear about the philosophical approach which they adopted as a couple to their future relationship as spouses (‘…..one factor which was critical in our relationship was our quest for equality and there was no perception that one of us should be dependent upon the other’), he accepts that he cannot be sure whether or not there was any direct discussion about the impact of the pregnancy upon their status as two independent equals should their relationship founder at some point in the future.

Again, the wife’s recollection of these events is somewhat different. She told me that there was no direct discussion between them about the general financial consequences of their marriage in the months leading up to the wedding ceremony. She said that they were two people who were earning well and money was never a problem. It was not a topic of discussion and there was no financial planning around the issue of marriage, save for the inevitable expense which came with a great deal of organisation and preparation for the wedding itself. She told me that the husband was working very long hours in the period immediately prior to the wedding and the practical aspects of the ceremony and reception (such as the location, flowers, catering and all that went with it) were left to her to arrange. In addition to her involvement in the wedding plans, she was also looking for a suitable crèche for the new baby they were expecting. When she was asked how she thought the forthcoming marriage might impact upon her own career, she agreed that there was never a question at that stage of her giving up her job. She told me that she was well aware that her pregnancy meant that there would be priorities which she would need to manage but her job remained important to her and she expected to continue to do well.

Mr Scott suggested to the wife during cross-examination that the existence of different property regimes between spouses was, at the time, an established part of French culture and – as an intelligent and highly educated French woman – the need to consider this aspect of married life would have been well known to her and an integral part of the arrangements for the forthcoming wedding. She told me that, coming from a family of engineers and scientists, this was not an aspect of French culture which had any significance for her. She accepted that the issue was likely to have been much more a priority for the husband, coming as he did from a family which had very close connections with the law.

The wife was taken to a publication which the husband had produced (‘Guide des Futurs Ēpoux’) and which is now apparently widely available to engaged couples planning to marry. It carries the endorsement of the local mayor in the district in which they married and has a separate section which provides a fairly brief synopsis of the four different property regimes from which couples are free to choose. The wife told me that there was no such guidance or information in this form or anything similar available to them when they married in 1991. Had it been available as part of the documentation given to them at the Town Hall, she says she would have kept it with all other important documents on the marriage file.

She described how she was totally engaged with, and happily immersing herself in, all the practical arrangements for the wedding in the weeks following the engagement. As well as holding down a full-time job, she was completely absorbed by the wedding plans and delighted by the prospect of all that the pregnancy would mean to them as a couple. She told me on more than one occasion that there was no tension or worry surrounding these arrangements and she had no anxiety about anything flowing from their pending nuptials. As late as April 1991, her focus was very much upon planning the wedding and the celebrations which were to follow. In relation to the husband’s evidence that, as a couple, they had decided to elect for the séparation de biens regime ‘a couple of months’ before the wedding in June 1991, her own recollection (as it emerged during the course of her oral evidence) is that the topic never came up for discussion until a week or 10 days before the wedding.

As Mr Scott pointed out to her, she had made previous inconsistent statements in her written evidence about the precise point in time at which the issue was raised. However, she remained adamant that the subject never came up until it was raised by the husband at some point in the pre-penultimate week before the wedding.

As to the existence of discussions between these parties about what was to happen in the event of the marriage ending in divorce, the wife was clear (and extremely distressed when she gave her evidence). She told me that the early months of 1991 were a time of great happiness and excitement about a shared future together. She told me that whereas they spoke often about their shared hopes for the future, there was no financial planning or ‘time line’ of the sort described by the husband. She told me that throughout their engagement,

The parties’ respective families came together on two occasions to celebrate the engagement. The first occasion was an informal lunch hosted by the wife’s parents on 2 February 1991. This was the first time the two sets of parents had met one another. The second family gathering was the official engagement party on 2 April 1991 hosted by the husband’s parents. As I have already recorded, it is his case that at some point in March that year, he had a number of conversations with the wife’s father who had expressed concerns about the prospect of his daughter entering into a regime governed by the principle of separate property. (The wife denies any such direct discussions on the topic with her father.) According to the husband’s evidence, the principle of having a marriage contract was agreed between the parties by the time of the formal engagement lunch in April that year.

I heard evidence via a video link from Paris from both the husband’s father and his sister. The wife’s father died in 2008 but I have a written statement from her mother dated 18 April 2014. Her statement is unchallenged and she was not required to submit to cross-examination.

In a written statement which had been signed by the husband’s father on 16 January 2014, he had deposed to the fact that, in advance of the marriage, he had had some discussion with the wife’s father about the choice of a séparation de biens regime. According to that statement, these discussions took place at the first lunch on 2 February 1991, which was the occasion when the two sets of parents met for the first time. By then, the husband had already been the beneficiary of some advance tax planning arrangements made by his paternal grandmother as a result of which he, with his siblings, had become entitled to interests in various properties in the South of France. He had also received some financial assistance from his parents when he purchased the flat in Paris. The husband’s father explained in his statement that, when each of his children had married, they had made a similar election. This was necessary, he said, so as to ensure what he described as ‘the guarantees of individual autonomy and free management of estate granted individually to each of [H] and [W] by this French matrimonial séparation de biens regime for all goods that they could receive from their respective family members’ [1/D:39].

By the time he came to give his oral evidence with assistance from an interpreter, the husband’s father accepted that his discussions with the wife’s father did not happen in February of 1991 but rather in April of that year. He accepted that it was difficult with the passage of so many years to recall the precise circumstances, but he knew that there had been no discussions about money matters over the course of their initial encounter with one another. When he was asked whether he was clear about the fact that the wife’s father had agreed with him that séparation de biens was the right regime for this couple, the husband’s father recalls no more than a consensual conversation during which there was no apparent opposition or conflict. He told me that the wife’s father and he had agreed on everything in the context of the sort of conversation he would have regarded as entirely normal in the circumstances of the impending marriage.

There is no first hand evidence available to me from which I can make any evaluation at this point in time as to what may have been the wife’s father’s views as they developed over the weeks leading up to the marriage. All I have at this stage is (i) direct evidence from the husband that he had spoken to his future father-in-law about these matters, and (ii) the evidence from the husband’s own father that, as of 2 April 1991, he appeared content with the idea of the election of this particular property regime for his daughter. The wife’s mother says the subject was never mentioned at all at their home and the wife is clear that there were no direct discussions between her and her own father. What I do know from the evidence of the husband, his father and his sister is that the wife’s father had apparently expressed significant reservations about the matter.

I heard evidence from the husband’s sister via the same video link. She had previously made a statement sworn on 17 January 2014. In that statement, she raises three points which have a direct relevance to this issue :-

Initially, the husband’s sister had been of the view that the wife’s agreement to the terms of the marriage contract had been given expressly as long ago as the original meeting of the families on 2 February 1991. She, too, was to accept in her oral evidence that this was a mistake.

I should say at this point that it is fairly clear that there has been an element of cross-fertilisation in relation to all this evidence. Both the husband’s father and his sister accept that each has seen the other’s witness statement and those submitted by the husband in these proceedings. There has evidently been fairly wide-ranging discussion about the case between the three of them. I say this not by way of any direct or specific criticism, but to highlight the potential for at least an element of subjective reconstruction based upon the views or observations expressed by others.

Certainly, both the husband’s father and his sister gave their evidence in a manner which suggested to me that each was doing his or her best to assist me with the benefit of truthfully held recollections of events which occurred many, many years before.

The husband’s sister was able to identify her mistake in the date by reference to a discussion she had with her father who told her that his own conversation with the wife’s father had taken place on the occasion of the engagement lunch. (It will be recalled that even his own statement recorded this discussion as having occurred in February 1991.) She said nothing to indicate that she herself was ever a direct party to the discussions between the two fathers. She was very candid in accepting that she could not truthfully say she remembered the precise date of her own discussions with the wife because these events had happened so long ago. She was, however, adamant, that she had discussed the marriage contract with her future sister-in-law.

She told me that she and her husband would frequently meet up with her brother and his (then) fiancée. She was able to recall one specific occasion when she was with the wife whilst the two of them watched her young daughter enjoying the swimming pool whilst wearing a little sun hat. She was able to date that as having occurred at some point in the summer because her daughter was not then walking. However, she said that she believed that these matters had first been raised in conversation about five or six months before the wedding. She recalled one specific occasion when the husband and wife were at their home for either lunch or dinner. The wife had accompanied the husband’s sister to a separate room where the baby’s nappy was changed. Whilst that was being done and the child was settled, they had ‘a friendly talk’ during which the wife had told the sister that she felt ‘uncomfortable’ because the husband wanted to marry under the séparation de biens regime, whereas her father took a contrary view. It was at this point that the sister told the wife that she herself had been married under the former regime and it appeared to provide an easy and flexible system compared to the other options which were available since it provided for autonomy and a complete freedom to manage property without any future problems of accounting.

The husband’s sister accepted that, whilst her discussion with the wife had been directed towards the benefits of the system as it operated within a marriage, she had also referred to the implications which it carried in the event of a separation. When she was asked how much information she discussed with the wife about the legal implications in the context of a divorce, she said,

Apart from this occasion, the husband’s sister believed there had been another, or other, conversations when the marriage contract came up in conversation. When she was pressed further, she accepted that the further conversation might have arisen in the context of a dinner at which her husband had been present when arrangements had to be made in somewhat of a hurry to seek an appointment with the notary, Maître C, in order that the marriage contract could be lodged in advance of the wedding date. She told me that, since her husband worked for the notary and W ‘got on well with and trusted [him] completely’, the choice of Maître C seemed an obvious one, given his ready availability (and probably at short notice).

Of this evidence, the wife denies any recollection of the specific discussion with her sister-in-law when they were changing the baby’s nappy. She does recall the four of them having dinner together about a week before the wedding. The two women were obviously close and the wife does not put her case from the foot of an assertion that her sister-in-law has deliberately tailored her evidence to support her brother’s case. I share that view. The husband’s sister struck me as a lively and animated woman who gave her evidence in an entirely straightforward and genuine way. She was careful to concede those occasions when she was not able to recall something asked of her. I accept that she, too, was attempting to assist me to put together an accurate picture of what was happening in those weeks before the wedding.

However, the functions of memory – without more - are not always easy to determine in terms of how well it operates, how accurate it may be, how it can be affected by the views or recollections of others or whether it has been selectively enhanced or erased. Memories can also be conditioned by emotional responses to situations, including stress. Some, all, or none of these factors may be present here. Mr Scott has asked me to consider the wife’s evidence in relation to these events as flowing from a deeply embedded feeling that she has over the years of this marriage been ‘hard done by’ a husband who has not always been open and honest with her about their finances (as he himself admits). Mr Leech points to occasions when the same use of language has cropped up in the descriptions given to me by both the husband and his sister (for example, the use of the word ‘taboo’ whilst referring to the absence of any inhibitions felt by the parties in discussing the issues arising from the marriage contract).

There is no evidence before me for these purposes from either the husband’s sister’s husband or the notary.

In searching for where the truth is likely to lie in this case, I am assisted to an extent by the existence of the contents of the wife’s diary for 1991 covering, as it does, the period of the fortnight leading up to the wedding ceremony and by a document which was completed as part of the formalities during this window of time.

In accordance with domestic regulation, the parties were required to lodge with the local Mairie (Town Hall) a dossier of documents in respect of their forthcoming marriage ceremony. In the context of these proceedings, that dossier has been referred to as ‘the wedding file’. In preparation for completing these formalities, each had signed a form called ‘Attestation sur L’Honneur’. The husband signed his part on 24 May and the wife her part on 25 May 1991. Those forms, together with a more important document (‘Projet de Mariage’) were lodged by the wife at the local Town Hall on 25 May 1991. It seems that each of the parties managed to secure a copy of that document as part of their evidence-gathering for this hearing. Whilst the wife has exhibited a copy of that form to her statement, the husband has not. Two days before she attended at the Town Hall, the wife discovered that she was pregnant. Mr Leech, on her behalf, says that these factors may not be without some significance.

The document to which I was taken is a single sheet which records the parties’ personal details and the date of their impending marriage [1/E:125]. In a separate column on the right hand side of the page, there is what appears to be a check list in which certain other information is recorded such as the parties’ occupations, their intended marital domicile and whether or not there was to be a Contrat de Mariage. From the face of the copy of the original document, one can see that in that box appear two handwritten words : the first is ‘Non’ which has subsequently been crossed out and replaced with the second, ‘Oui’.

In the box at the bottom of the page, there is a section entitled ‘Pièces Restant A Produire – Futur’. This appears to have been completed on 25 May 1991 with a reference to the need to provide some additional information as to ‘Prof et Nom de J.Fille’. Those words, too, have subsequently been struck through with a single line. The wife told me that the two entries which were subsequently crossed out were written when she was at the Town Hall on 25 May 1991.

It is her case that the reason why the form was subsequently amended in this way is because the information which was available to the official at the Town Hall changed between 25 May 1991 (when the dossier was submitted) and 14 June 1991 (when she returned to the Town Hall to lodge the notarised marriage contract). Significantly, she told me that the reason why the word ‘Non’ appeared in the first box was because, as at that date, there was no clear agreement between the parties about the marriage contract.

This raises the question as to why, if the agreement had been concluded by the time of the engagement lunch in April 1991 and all that remained was to formalise the document in front of a notary (as the husband contends), the clerk at the Town Hall had not left the box blank until such time as the notaire’s certificate was available ? Similarly, had the wife communicated to the clerk on 25 May 1991 that there was to be a marriage contract but that it had not yet been formalised, why was that information not recorded in the box at the bottom of the page under ‘Pièces Restant A Produire’ ?

What, then, had happened during the intervening three weeks ?

To help me resolve these issues of fact, I look to both the evidence of the parties and their supporting witnesses (family members) and to the contemporaneous written evidence which is available in the form of the diary which the wife maintained at the time. She told me that she has retained all her appointment diaries over the course of many years and had several of the original diaries available to her in court, as I was able to observe. In circumstances where an individual’s recollection of events which occurred almost a quarter of a century ago is inevitably vulnerable to the passage of time, subjective recall and a certain element of subsequent reconstruction and overlay based upon the recollections of others, the wife’s diary has provided me with an important and contemporaneous record of her movements at the relevant time. It is entirely in keeping with her organised approach to life in general that I am able to see from the extracted entries a fairly clear window into the days which comprised the fortnight leading up to the marriage in June 1991.

Her clear recollection, supported to an extent by the diary entries, was that the formalities associated with the marriage contract had to be arranged quickly. I can see from an aide memoire (under a separate column headed ‘Téléphoner’) which she wrote in her diary at the end of the week commencing Monday, 3 June 1991 that, at some point during that week, she had to telephone the local Mairie. She told me that the purpose of that call was to enquire about the deadline for lodging the marriage contract. The entry has been subsequently scored through as having been completed and/or actioned. Following through to her diary entries in the following week commencing Monday, 10 June 1991, I see – in the midst of a very busy week full of different appointments – an entry under Friday 14 June 1991 which reads, ‘apporter contrat de mariage – 17h – dernier délai’. As a separate note, the wife had recorded the official opening times of the Mairie.

Also recorded in her diary of appointments during that week (in addition to collecting her wedding dress and taking relevant paperwork into the crèche at which she had secured a place for their unborn child) was an appointment at 1.30pm on Thursday, 13 June 1991. That entry reads, ‘13.30 Signature contrat’. The diary entries for that afternoon reveal that, in order to keep that appointment and meet the deadline imposed by the Mairie, she had to cancel a pre-arranged meeting with her employer. It is common ground that the meeting with the notary did indeed take place on Thursday, 13 June 1991, some two days before the marriage. The signed marriage contract was subsequently delivered by the wife to the Mairie on the following day at which point the relevant entry on the Projet de Mariage was converted to ‘Oui’ by the official who checked the paperwork.

It was put to the wife by Mr Scott that the amendment which was made on that occasion by the Town Hall employee may not be of any assistance at all in terms of determining ‘intention’, as opposed to the ‘availability’ of the document. The wife accepted, fairly, that this was one interpretation which might be equally valid. However, she was relying upon her own recollections of what had been said to her and the discussions as they had emerged during the fortnight leading up to the wedding. I ask myself again the question : why, if Mr Scott’s interpretation is correct, did the official not take the step of either leaving the relevant box (Contrat de Mariage) blank or cross-referencing it with the box at the foot of the page where space was left to provide information about documents or details which remained outstanding and which needed to be produced in advance of the celebration of the marriage ?

The husband was asked in cross-examination why the wife should have needed to make a specific note to call the Mairie about time limits for filing the marriage contract if everything bar signing the document had been agreed by April 1991. He told me that he believed the reason for her call on that occasion was probably to provide the deputy mayor (a close friend of the wife’s mother) with information or anecdotes for a welcome speech he had been asked to deliver at the wedding. In the context of what I can see from the two consecutive weeks of diary entries, I reject the husband’s evidence (if it be more than simple speculation) about the reason for the wife’s call to the Mairie. I accept that during that period of time, she was under intense time pressure in terms of the various tasks and arrangements which needed to be put in hand and that this pressure required her, at points, to rearrange her commitments in order to comply with what were obviously tight deadlines.

I am also not persuaded by the husband’s statement to the effect that, despite her pregnancy, he would not have married the wife unless she had agreed to sign the marriage contract (and, on his case, in the full knowledge of its implications both during the marriage and on divorce). Whatever fractures were later to appear in this relationship, I am entirely persuaded that each of these parties was wholly committed to a shared future together at the time they celebrated their marriage.

As to the parties’ respective recollections of what transpired at the offices of the notary on 13 June 1991, there is no consensus. The wife says that this was the first occasion on which she saw the formal marriage contract. She had no opportunity to review the document in any detail before she signed it and, crucially, had no idea that it would have any impact on the division of matrimonial wealth in the event of a divorce. She recalls the meeting as being ‘light-hearted’. She recalls her brother-in-law being present throughout, laughing and smiling.

When she was taken by Mr Scott through the terms of the marriage contract, she accepted that its terms were intended to cover the management of their assets and liabilities during the marriage. She told me that no one had explained its consequences in the event of death or divorce. Specifically, she was quite clear that nothing which the notary had said had even touched on the position in the event of divorce.

The husband, in contrast, records in his written statement that the notary ‘talked them through’ the terms of the contract and explained the main characteristics of the regime they were electing. He recalls the notary asking at each step whether there was anything which was unclear or if either of them had any questions. He states that the notary summarised the implications of the regime both during the subsistence of the marriage and in the event of dissolution, in which event each would retain their own assets.

In terms of testing the reliability of his recollection of these long distant events, I remind myself of the content of other aspects of the written evidence which has been presented by the husband to the court. The report prepared in September 2013 by his expert, Delphine Eskenazi, a French lawyer, refers to the requirement under French rules for a marriage contract to be signed ‘in the presence of a notaire’. Her report goes on to explain,

When responding to questions put to him by Mr Leech during cross-examination, the husband accepted that, neither then nor at any stage of the discussions which led to the visit to the notary, had he said anything to the wife about taking separate or independent advice from a lawyer. He recalls nothing about discussions between them in advance of signing the marriage contract flowing from the possible implications of her (recently confirmed) pregnancy. He accepts that at no point during the discussions which he says did occur was there any reference to the wife’s possible entitlement to maintenance in the event of a divorce.

Where then does this lead me ?

Before turning to consider the law as it applies to marital agreements and property regimes such as these, I propose to set out my specific findings of fact in relation to the evidence concerning the marriage contract in this case.

Having considered carefully all that I have read and heard from these parties and their witnesses, and having taken into account all the submissions made to me on the specific issue of the factual matrix which underpins this particular marriage contract, my findings are these :-

I turn now to consider the law as I must apply it to the findings of fact which I have made. The fact that the parties entered into their marriage contract is one of the circumstances which I must take into account in considering where a fair result lies in this case.

The fact that the wife may not have had a full appreciation of the legal consequences of that contract in the event of death or divorce (as I have found) does not mean, without more, that it falls by the wayside as a complete irrelevance in this case. An important issue for me is the weight (if any at all) which I should attach to that agreement notwithstanding its deficiencies in terms of her understanding of its implications and terms.

Mr Scott on behalf of the husband reminds me quite properly that I should be alive to the underlying cultural distinction between a marriage contract which records the election of a particular marital property regime as they operate within many European jurisdictions (here, France), and a nuptial agreement made before or during the continuance of a marriage. The former anticipates a contract which is intended to govern financial arrangements between parties and which is binding as between the parties on marriage, death or divorce. There is no automatic expectation, under French law, that divorce will create or give rise to any change in underlying property rights as between the parties save and except to the extent that the marriage contract makes specific provision for this event. The latter generally comes into being with the specific purpose of excluding, restricting or specifying the rights which might otherwise arise in the event of divorce. Frequently, nuptial agreements may be the vehicles through which a couple will elect not only a marital property regime but also the applicable law which shall apply to the division of the financial claims arising on divorce.

It is a distinction which is recognised by Mr Leech on behalf of W and which is appropriately summarised by Mostyn J in his analysis in B v S (Financial Remedy : Marital Property) [2012] EWHC 265 (Fam), [2012] 2 FLR 502. Having set out in paragraphs [5] to [7] the key features of a civil law marital property agreement as extracted from Marital Property Agreements, Law Com No 198 (TSO, 2011), his Lordship concluded at paragraph [8],

The marriage contract entered into by these parties in June 1991 did not contain any choice of law clause. Had it done so, its relevance in terms of any consideration of French law to this case would have been the clear demonstration of a mutual intention shared by the parties that its terms should (if possible) be binding on them : see Radmacher (formerly Granatino) v Granatino [2010] UKSC 42, [2010] 2 FLR 1900 at paragraph [108] per Lord Phillips and others. To that extent, it is perfectly possible that the election of a marital property regime can (in an appropriate case) impact upon the division of a marital estate.

But there was no such election by these parties and there is no issue here but that English law applies to these divorce proceedings and the financial remedy claims which flow from them. Section 25 of the Matrimonial Causes Act 1973 (as amended) is therefore fully engaged. The existence of the marriage contract, and the wife’s willingness to enter into that contract, is one of the circumstances of the case which I shall need to consider. The weight which I can attach to that fact has to be considered in the context of my specific findings that :-

In this context, I remind myself what was said by the Supreme Court in Radmacher v Granatino about factors which might influence the weight to be accorded to an agreement of this kind (which, in Radmacher, was an ante-nuptial agreement providing for the separation of assets). The judgment of the majority was delivered by Lord Phillips of Worth Matravers, PSC and included the following observations :

Later, at para [75], his Lordship said,

Whilst there are underlying issues in this case about the full extent of the wife’s knowledge of the husband’s financial position at the time of the marriage, it is not necessary for me to resolve them since she accepts that her lack of detailed knowledge (other than in broad terms) was not a material factor in her decision to enter into the marriage contract. Rather, contends Mr Leech on her behalf, I should focus upon the absence of legal advice and a full understanding of the legal implications on divorce as being highly material to the balance of the weight which can be attached to this agreement.

In his written skeleton argument, Mr Leech submits that, in terms of holding the balance between the absence of information which is material to a party’s decision and overall fairness, the correct approach is a two stage test. The first step is to decide whether the agreement was entered into with a full appreciation of its implications. If it was, he says, the court can then go on to decide as a matter of fairness whether to hold that party to the agreement in whole or in part. If, however, the agreement falls at the first hurdle because the court reaches the conclusion that the party did not have a full appreciation of its implications, that should be an end to it. For all practical purposes in terms of outcome, it can be ‘discarded’.

In support of that proposition, Mr Leech argues that the husband’s approach to outcome is flawed in principle. Despite Mr Scott’s clear demarcation between the two legal entities (marital property regime and pre-nuptial contract), Mr Leech argues that what the husband is actually seeking to do is to elevate the parties’ election of a marital regime which was intended to govern what was to happen during the marriage to the status of a full-blown pre-nuptial agreement.

He further contends that, leaving aside what the wife knew and what advice she received in France, there is no evidential foundation for a finding that either party intended the agreement would operate outside France and/or that they intended it to operate in a jurisdiction such as England where the courts would be entitled to look at the agreement in the context of the very wide discretion bestowed upon it by section 25 of the 1973 Act.

I have some difficulty in accepting that last submission in the light of the oral evidence which both parties gave during the course of the hearing. In fairness to Mr Leech, it may be that it is not an argument he would pursue with any forensic vigour in the light of that evidence. I heard much about the wife’s early aspirations to live in different countries and experience different lifestyles. She made it plain to me that she would have been prepared to follow the husband wherever the demands of his employment took him. He secured employment in London in a little over three months after the marriage. She followed him some four months later after the birth of their son.

I also bear in mind the manner in which the parties lived their lives once they had established themselves as a family in London. The wife accepts that the marriage contract was the ‘blueprint’ for managing their financial affairs during the subsistence of the marriage. Apart from their jointly owned family home in West London, they continued to keep their financial affairs entirely separate. It is one of the wife’s main complaints about the husband that he was secretive with money to the extent that, until his disclosure in these proceedings, she had been unaware of the size of the bonus awards he had been receiving over the years. Each was earning and each was making a contribution to their joint and family living expenses.

When difficulties in the marriage arose in about 2007, both parties engaged in some preliminary counselling. One of the consequences of that counselling was the wife’s suggestion to the husband that they should address changes which needed to be made in their marriage. Discussions as to the need for change if the marriage was to be saved appear to have been ongoing between this couple over the course of the next two or three years. One of these issues which featured prominently in the wife’s ‘list’ was the need to modify the marriage contract which she felt did not properly reflect the spirit of their marriage, based as it was upon the idea of separation rather than togetherness [1/E:5].

She has exhibited to her statement dated 12 August 2013 a copy of the ‘Life Contract’ which she says reflected an agreement which she reached with the husband in about 2010 [1/E:11]. Under a separate sub-heading (‘Finance’), there appear the words ‘Modifier le contrat de mariage’ (‘amend the marriage contract’). She says that there was an agreement between them at that stage to amend the contract back to the default regime of ‘communaute de biens’ so that she would be protected should they ever decide to return to live in France. It seems that the husband approached a notary in France but the proposed change was never put into effect.

Nowhere in his written statements does the husband respond to that evidence. He was cross-examined by Mr Leech about the wife’s ‘list’ and he accepted that they were matters which, in 2011 and 2012, he had agreed to address as part of the ongoing process of trying to save the marriage, which both parties appear to have accepted had all but broken down by then. I was taken to two letters which he had subsequently written to her. They are written in French; I quote from the English translations with which I have been provided.

The first letter was written in July 2012. The husband accepts that he wrote this as part of what he described as his ‘mea culpa’ to the wife [2/G:4]. It speaks, amongst other matters, of his need in future,

The husband accepted that the latter reference was to the points in the wife’s ‘Life Contract’ which included the need to change the marriage contract.

The second letter was written two months later in September 2012 [2/G:1]. It appeared at one stage that the husband was seeking to disclaim authorship of this letter (which had been produced by the wife). By the time he was cross-examined on its contents, he appeared to accept that he had written it, although in what he described to me as ‘the heat of trying to save the marriage’. He told me that by this stage he may well have been prepared to say things which were not necessarily true. It is sufficient for these purposes to say that this letter followed the course of his previous apology and ‘mea culpa’ to the wife, albeit that there was no specific reference in this second letter to any changes proposed or agreed to the marriage contract.

Thus, it seems to me that in the context of this case I have to consider the applicable principles of law against the background of the facts as they apply to this marriage contract, and in particular, the fact(s) that :-

How far, in these circumstances, should I go in importing into the process of the financial dissolution of the marriage the principle of financial autonomy and separation of assets as between these parties ? Does the absence of legal advice and a full understanding of the terms and reach of the marriage contract mean, as Mr Leech contends, that I should simply discard it ? Alternatively, given the principle of personal autonomy and freedom of choice which underpinned the new approach adopted by the Supreme Court in Radmacher, should I follow the path mapped out for me by Mr Scott and confine any award to the wife to one based solely on her needs as I assess them to be ?

The question of materiality in the context of the Radmacher test (see above) was considered by Mostyn J in Kremen v Agrest (Financial Remedy : Non-Disclosure: Post-Nuptial Agreement) [2012] EWHC 45 (Fam), [2012] FLR 414. As is clear from his Lordship’s summary of the principles in paragraph 72, there is no black and white rule on a ‘one size fits all’ basis for full disclosure or independent legal advice. Rather the question is whether in the individual case there is a material lack of disclosure, information or advice : ‘Each party must have all the information that is material to his or her decision that the agreement should govern the financial consequences of the marriage coming to an end’.

In this context of materiality, Mr Scott raises an interesting argument which, as far as I am aware, has not been considered in any reported decision. He submits on behalf of the husband that the (acknowledged) lack of legal advice and the wife’s failure to appreciate in full the legal implications of the agreement she was entering cannot be said to have any bearing on her decision to sign the marriage contract because, in so doing, she was not giving up anything to which she might otherwise be entitled. The husband concedes that her needs will be met at the end of this case, whatever conclusions I may reach as to the exclusion of sharing the marital acquest which has been accumulated during the marriage. Thus, argues Mr Scott, had the wife secured appropriate legal advice in 1991 in advance of the marriage, she would have been told that her claims on divorce would be limited to her ‘reasonable requirements’ assessed against the list of factors set out in section 25 of the 1973 Act.

He reminds me that the wife knew that she was pregnant at the time she married; this knowledge had no impact on her willingness to sign the marriage contract. She had always intended to pursue a career and have children. In 1991, there was no guarantee that the husband’s career would prove to be as successful as it was in terms of the significant sums he has since been able to accumulate through bonus payments and awards. It was just as probable at that time that the wife might have had an equally ‘stellar’ career. Mr Scott submits that I should not now seek to look back down the road with the benefit of hindsight and factor in the supervening issues of the collapse in the wife’s health, its effect on her future earning capacity and the marked disparity in their individual resources (a disparity of some £7 million) so as to say that the agreement embodied in the marriage contract was unfair at the time. She is, he submits, in exactly the position she would be in if the marriage had broken down before the House of Lords’ decision in White in 2000.

In my view, Mr Scott’s argument fails to provide a complete answer to W’s case in relation to materiality for the following reasons.

First, I look to the scope of the legal advice she is likely to have sought or received. At the very least, it seems to me that she would have been advised as to the legal implications of the marriage contract under French law and its full reach into the future in the event of a subsequent divorce in France. Secondly, given what I have already said about the likelihood of a future move for this couple, she may well have sought advice about its implications in a different jurisdiction whose domestic law operated on the basis of a wider application of judicial discretion. In this event, it seems to me to be artificial to assume that the independent legal advice which she might have received at the time of the marriage would have been confined to a simple statement of the likely bracket of an award on divorce or even a statement of the principle that, under English law as it then stood, she would be entitled to have her needs met, but no more. The court’s discretion under section 25 of the 1973 Act has always been much wider than simply meeting needs. ‘Needs’, in any event, is a concept which is both elastic and adaptive in its application. Had this wife sought independent legal advice, she might well have been advised in the context of a range of different options and outcomes. In 1991, no one knew how long the marriage would last. It could have endured for two years, twenty years, or a lifetime. It might have produced a single child or many more children. Her expectation as to her ability to survive independently from the husband within the financial structure of her own career might or might not have been realistic, depending upon circumstances as they unfolded through the years.

Thirdly, even without a crystal ball which might have pointed to the sea change which was to come some nine years later in White, it is more likely than not, in my view, that any competent advice given to the wife at the time would have included advice about the possibility (if not probability) of a future change in the law which might exacerbate the strict effect and operation of the marriage contract to her further detriment.

Thirdly, whatever her (then) belief in her own future economic independence, she might well have thought very differently about the fairness of the regime she was electing even as it regulated this couple’s finances during marriage had its full impact on divorce been explained to her. In 1991, this couple had some limited experience of sharing a home and life together. They had no experience whatsoever of the potential impact which a family might make upon the way in which they might be obliged to share a division of responsibilities in the future. Had the true objective been to preserve assets which each brought into the marriage or which each might subsequently acquire during its subsistence outside the marital partnership, the wife could have been advised that there were other means of achieving this end without the strict rigours of a regime of séparation de biens. To my mind, it is not without relevance that significant tensions would subsequently emerge between these parties precisely because of the apparent unfairness which this financial blueprint produced. I remind myself about the various spreadsheets which the wife was to prepare as cracks started to appear in the marriage. These spreadsheets prepared in May 2003, December 2006 and October 2007, as she told me, were her attempt to spell out to the husband the fundamental unfairness of the limited contribution he was making to the family’s discretionary spending on an annual basis. This was a disparity which he, to an extent, was prepared to acknowledge and address in his attempts to repair the problems in the marriage.

I have no way now of knowing whether the wife would have signed the marriage contract had she been given an opportunity to consider these issues and the implications for her in the event that the marriage were to fail at some point in the future. What I do know is that she did not have that opportunity. In these circumstances, can it be said that she entered into the agreement with a full understanding of the implications of a divorce, whenever and wherever that divorce might be adjudicated ? If the answer to that question is no (as I have found it is), can I attach any weight at all to the agreement in this case ?

The court has considered the impact of Radmacher in the context of a marriage contract which includes an election of the séparation de biens regime in a number of first instance decisions since October 2010.

In B v S (Financial Remedy : Marital Property Regime) [2012] EWHC 265 (Fam), [2012] 2 FLR 502 (cited above), the court was dealing with a Spanish marriage celebrated in Catalonia where the default regime was separation of property. Some years into the marriage, the parties entered into an express agreement incorporating that default regime. Mostyn J rejected the husband’s case which rested upon a full recognition of the agreement. He did so on two principal grounds. First, the Catalan default matrimonial property regime enabled a court to depart from its terms if upholding these would produce a serious economic imbalance between the two spouses at the end of the marriage. Thus, this ‘agreement’ failed the ‘fairness’ test. Secondly, his Lordship found that neither party had entered into the default matrimonial property regime with a full appreciation of its implications in the sense described in Radmacher. These he described in para [14] of his judgment in this way :-

Of the requirement of ‘a full appreciation of its implications’, Mostyn J held, at para [20], that such requirement

Mr Scott launches a vigorous assault on the conclusions which the judge reached in the preceding paragraph. He submits that an application of the test advanced by Mostyn J would effectively jettison the great majority of civil agreements where couples were not at the time of their marriage intending to move to a country whose domestic law operated a discretionary system of distribution on divorce. He submits that such a test creates around the Radmacher principle a ‘superstructure’ which it cannot stand. In this context, he reminds me that one of the fundamental drivers of the significant change brought about by the decision of the Supreme Court in Radmacher was the need to recognise that weight should be given to autonomy and thus to the choices made by parties to a marriage.

This principle underpinned the decision of Charles J in V v V (Prenuptial Agreement) [2011] EWHC 3230 (Fam), [2012] 1 FLR 1315. In that case, a Swedish wife had received no independent legal advice prior to entering a prenuptial agreement with her Italian husband. The agreement provided that she was to have no rights over the property owned by the husband prior to the marriage, but it was silent as to what would happen in the event of a subsequent divorce. When the marriage broke down after three years, the family was living in London where the husband was employed as an investment banker. The wife had no income and was a full-time mother to two children. The judge at first instance placed little weight on the agreement because of the absence of any terms specific to a divorce and because the wife had not received independent legal advice before signing. The husband appealed and Charles J allowed the appeal to the extent of granting him a deferred charge over the wife’s property.

In his judgment, Charles J made clear the extent to which, in his view, the decision in Radmacher had swept aside previous jurisprudence insofar as it had a bearing upon the weight to be given to agreements and the autonomy of the parties. That said, he recognised and restated the fundamental principle that it is the court, and not any prior agreement between, or choices made by, the parties which will determine the award to be made under the Matrimonial Causes Act 1973. At para [42] of his judgment, his Lordship said this :-

Some sixteen months after B v S, Moor J had to consider the issue of the need for legal advice in the context of proceedings involving a Scandinavian couple : AH v PH [2013] EWHC 3873 (Fam). The husband came from a very successful and wealthy family of business people. Whilst he was still an undergraduate, the husband had been the beneficiary of a gift of a very significant amount of capital, including shares in the family company. Prior to the marriage, the parties entered into a marriage settlement which provided for a partial separation of property. Moor J found that the wife should not be held to the strict terms of the settlement because she did not have a full appreciation of the implications of those terms. Notwithstanding that finding, he paid some regard to what he found to have been the intention of the parties when they entered into the settlement, namely the protection of the husband’s inheritance.

As to the consequences of his findings in relation to the weight to be attached to the agreement, the learned judge said this :-

The solution adopted by Moor J in AH v PH was to tailor his award to the wife so as to take account of the fact that one of the acknowledged intentions of the parties in entering the marriage settlement was to protect the husband’s inherited wealth. The judge enlarged the provision for the wife’s housing fund over and above that provided for in the agreement on the basis that her (London) housing needs were now different. To that extent, he was prepared to invade the wealth which was intended to be quarantined from financial claims.

In another case which has many underlying factual similarities with the one with which I am dealing, Moor J was prepared to apply Radmacher so as to find it fair to uphold a French séparation de biens agreement insofar as it excluded sharing. In Z v Z (No 2)(Marriage Contract), a case which he decided some seven months before AH v PH, he found that although the wife had given up her job and had children, those were both factors which formed part of her needs case and did not directly impinge upon the fairness of upholding the agreement. Here, the husband places significant weight on the similarities between that case and this. However, there are significant points of contradistinction. First and foremost, there was no dispute in Z v Z that the agreement was entered into by both parties freely and with a full understanding of its implications (para [45]). The wife knew exactly what the agreement entailed (para [46]). Secondly, the agreement included a specific and unambiguous clause which provided exactly what was to happen upon a future dissolution of the marriage (para [48]).

At the end of the day, I come back to what was said by Lord Phillips and the majority of the Supreme Court in Radmacher. Para [69] concludes with these words (although the emphasis is my own):-

In the light of my findings, I would find it impossible to say that, at the time she signed the marriage contract, the wife had all the information which was likely to have been material to her decision and/or that she intended that the agreement should govern the financial consequences of the marriage coming to an end. I find no inconsistency in the fact that these parties did indeed operate upon the basis of self-contained financial arrangements within their marriage. That was exactly what the wife had agreed they would do when she signed the marriage contract. When tensions began to emerge towards the end of the marriage, there appears to have been an emerging consensus (never fully implemented) that these arrangements would need to change if the marriage was to survive and part and parcel of that change would be an alteration to the séparation de biens agreement.

To the extent that there appears to be tension between the approach adopted by Charles J in V v V and the test propounded by Mostyn J in B v S, I shall only express the view that I find it difficult to see how ‘a full appreciation of [an agreement’s] implications’ (per Radmacher) will not, in almost every case, involve both a full understanding on the part of both parties as to (i) the nature and effect of the terms, and (ii) of the circumstances in which its implementation in a jurisdiction other than that in which it is made will, or might, affect the scope of any legal award or remedy which otherwise be available to one of the parties in the event of divorce. That does not mean that parties will need to seek advice on all possible permutations; such a result would be plainly absurd. But, to the extent that the intention is that sharing or community of property is to be excluded both during the subsistence of the marriage and at its dissolution, I respectfully share the view expressed by Mostyn J (and adopted by Moor J in AH v PH). In order to gain traction or influence here, the parties must surely have intended at the time of the agreement that its terms would apply in the event of a subsequent divorce wherever that divorce took place and whether or not it was anchored to a jurisdiction which operated a system of discretionary equitable distribution.

I have reached the conclusion that the weight which I can legitimately attach to the existence of this marriage contract and the operation of its terms during at least part of this couple’s marriage is to give full recognition to the principle that, subject to any argument as to the wife’s needs, the non-matrimonial property owned by either of the parties should be excluded from any entitlement to share. Mr Scott very fairly concedes that there is no issue but that the marital acquest in this case (some £12 million) should be shared more or less equally if I find, as I have, that the husband has not made out his case in relation to the enforceability of the marriage contract in its strict terms. Since the wife seeks no part of, or share in, the husband’s pre-marital assets (nor he in hers), I am now able to move on now to issues of computation and distribution.

This case was opened to me on the basis that the schedule of assets which was put before me was, by and large, agreed. It is the schedule from which we have worked throughout the hearing, although it has gone through a number of permutations. There are still aspects relating to computation which are not agreed, principally in relation to the potential tax liabilities which the husband may incur if he is required to (or needs to) remit funds onshore.

It is agreed that the non-matrimonial property owned by each of the parties should be excluded from any entitlement to share equally, although I shall need to rule on three outstanding points relating to the treatment of the Paris flat, W’s pension and H’s bonuses.

The total expended by these parties to date on costs is £640,000. These sums have been omitted from the schedule as liabilities apart from sums which, as yet, remain unpaid.

The global asset base as computed by Mr Leech when he opened the case was £13.25 million. That figure included the non-matrimonial assets but on the basis that (i) the value of part of the husband’s French property portfolio was discounted by 15% to reflect the fact that properties were subject to residential tenancies; (ii) there would be tax to pay on certain of his offshore investments and on some rental income; (iii) certain of the wife’s offshore assets were pregnant with a tax liability; and (iv) her French state pension (in payment) was calculated on the basis of a Duxbury yield and discounted to reflect value accrued prior to her marriage to the husband. He has pension funds both on and offshore which are worth £3.12 million. Following a deal between his former employer and HMRC, his former EFURB pension was liquidated and paid out to him as cash funds. These are reflected in the non-pension assets of £6.835 million which is reflected on the schedule, although this sum will have reduced since the date of the hearing as a result of his completing the purchase of a new property for himself in London near to the FMH.

At that stage, it was anticipated that the potential burden of tax could be mitigated by almost £600,000 if part of the wife’s award was paid to her offshore prior to Decree absolute. With that potential saving factored into the equation, the available assets increased to c. £13.85m of which just over £1.3 million was non-matrimonial. The marital acquest in this case is just under £12 million. The wife sought an overall share (including the retention by each party of their non-matrimonial assets) of 49% which would have left her with c. £6.85 million and the husband with £6.995 million. His proposal, in broad terms, is that each party should retain his/her own assets, that the wife should retain in her sole name the former matrimonial home (worth £2.231 million net) and that he should pay to her a further sum of £200,000 to meet her short term needs until she is able to become self-sufficient in income terms. This would leave her with capital of some £4.27 million, depending on the value to be attributed to her pensions (or 32% overall, subject to the tax treatment of the husband’s offshore funds).

In terms of income, the husband is in employment and earns a base salary of c. £300,000 gross per annum. He receives a discretionary bonus award each year which comprises part cash and part deferred equity. In common with standard practice across the banking industry, the element of his cash award has reduced significantly in recent years, whilst his future equity participation is deferred for three years and is dependent upon him remaining in employment throughout that period. As is also common practice in these cases, the bank may seek to claw back some or all of the deferred equity awards in the event that it were to suffer future losses and/or in the event of material non-performance by the husband. What he actually receives when the deferred awards fall in will depend in each year on the value of the shares at the date of vesting.

The extent to which the husband’s income has declined in recent years is demonstrated by the following table :

His P60 for the year ended April 2013 showed his net employment income to be £568,000. His updating disclosure for 2013/2014 shows his gross income was just shy of £1.035 million (or £570,000 net). In addition, he has rental / investment income of c. £60,000 per annum although this will reduce significantly once he has purchased his London home and paid a lump sum to the wife.

In terms of his future, he has in the past expressed a wish to retire at 50. That was a birthday which he celebrated within the last year. He candidly accepts that his decisions will be dictated, in part, by the outcome of these proceedings as well as on any decisions which his employers may take. It appears to be common ground that he should be in a position to secure consultancy work after he ceases permanent employment.

The wife has over the years continued to work at a senior management level despite the demands of looking after the home and the family. Whilst she has had help within the home, I accept that these domestic duties have, by and large, fallen on her shoulders as the husband pursued his own career in the banking world. She moved from a successful career in a telecommunications company in 2000 to join a start-up telecommunications company. I accept her evidence that this move was prompted by her wish to devote more time to the family. She told me that she made the change ‘to get a better work life balance’. Whilst she was criticised by the husband for describing this as a sacrifice made for the benefit of the family at the expense of her career, I was shown a series of emails which demonstrate precisely why she was seeking a new position at this point in her life (the children then aged 8, 6 and 11 months old). In January 2000, she approached one of the key players in the start-up company. Her email to him includes these words,

In a later email which was sent to the wife by one of the directors at the start-up company on 6 June 2002, I see details of a new contract which was then being offered to her some two years into her employment [2/G:67]. It records a specific provision to enable her to work one day a week from home at her discretion (reviewable after a period of one year) and records her request for extended holiday of up to 6 weeks leave in a year. Her initial salary was £50,000 and she was paid commission of some £15,000 per annum. The 2002 email speaks of an improved package of £75,000 per annum as a base salary plus a discretionary bonus of 40% paid annually and based upon a combination of individual and company objectives. Whilst equity participation was mentioned at that stage, I am entirely satisfied that the wife’s move to this start-up company and her later negotiations with them around an improved package (but reduced working week) was driven primarily by her wish to devote more of her time to the home and children whilst maintaining her position as one of the senior ‘players’ in the developing telecoms world. In cross-examination, the husband accepted that she had, at one point, spoken about giving up work altogether. He was asked about his response to that suggestion in terms of his offer, in that event, to pay her ‘a nanny’s wage’. Whilst he sought to brush that remark off as something of a joke it seems to me that, whatever aspirations this young couple may have had about preserving their personal and financial autonomy when they first contemplated a shared life together, the natural evolution of family life as it developed over the years would inevitably have required some concessions and accommodation from both. Thus it proved, and I am satisfied that the wife was attempting to define for herself a role which would both enable her to devote time and energy to the children as well as perform at work under demanding conditions.

In late 2005, she moved to a senior position another telecommunications company, a job which the wife accepts she was lucky to get.

Her employment came to an end in 2013 when she accepted a leaver’s package and resigned. By that time, she was Director of the business. In her last full year of employment, she earned £135,730 gross (£96,804 net). She also has some investment income and her French pension which together provide her with an income of c.£27,500 per annum.

The circumstances in which she left her employment have been explored at some length both in the written evidence which was put before me and during the course of the oral evidence. In his written skeleton argument, Mr Scott says that ‘it is hard to avoid the conclusion that it suited W tactically to give up employment rather than to try and hold on to her job’ (para 46). This is a theme which finds echoes in the husband’s evidence and in the questions which were put to the wife by Mr Scott. She told me that she found this stance on the husband’s part to be particularly hurtful : ‘He knows I was a wreck; I was a shadow of my former self’; ‘I had lost the meaning of my life and broken down completely’.

I have in the papers an expert report from a jointly instructed expert, Dr Philip Hopley. He is a consultant forensic psychiatrist who was instructed in August 2013 to assess the wife and report upon her condition, prognosis, recommended treatment and ability to work. From that report and from the wife’s own evidence, I collect the facts that, by 2007, she was struggling both with the difficulties in the marriage and with the stress of holding down her job and running the home. She had some counselling and had been diagnosed as suffering from depression by her GP who later signed her off work for two weeks. Throughout this time, she was suffering from panic attacks and exhaustion for which she was prescribed anti-depressant medication.

In April 2013, she underwent an internal staff management appraisal, the results of which were poor. She was assessed to be underperforming at work. Having returned from a two week holiday with the children, she felt that she could no longer cope with her employment and the additional stress of the ongoing divorce proceedings. With assistance from her human resources department, she negotiated a severance package which included 7 months’ pay and the retention of her shares in the company. She told me that this particular package was not generally available to leaving directors but, in circumstances where the company was trying to reduce its ‘head count’, she was able to take advantage of it. A copy of her Compromise Agreement is amongst the papers which were put before me [2/G:69-96]. The facts underpinning the agreement are set out in para 2.4 and I do not need to repeat them here.

The husband criticises her for not staying in her employment on the basis of a period of sick leave. The wife’s evidence was that this would have necessitated her involvement in an overly intrusive ‘absence management process’ which involved home visits and the in-house occupational health service team. She told me that she did not want to feel a burden to her employer and, at a time when her ability to cope with developing life events was at its lowest, she decided to negotiate the best package she could and leave. She sought legal advice in relation to the severance package and was told that she would have been likely to get less if she launched a claim for unfair dismissal than the sums (then) on offer as part of the ‘paid leavers’ package’.

Is she to be criticised for taking this course ? In my view, this was not a calculated response to the ongoing divorce and financial remedy proceedings. If I am to be fair to each of these parties, I have to look at what was unfolding in this couple’s life over a period of months, if not years, prior to the breakdown in the wife’s health. The husband himself has told me how he found it quite impossible for many months to contemplate a house move in circumstances where he was trying to hold down a full-time job and deal with these proceedings. I have no doubt that he, too, has found the entire process deeply distressing, but his health has not been as fragile as this wife’s throughout this period. In my view, she is not a lady who would have voluntarily walked away from the career she had established over many years had she not genuinely felt that she was unable to cope any longer. That view is reflected to a degree in Dr Hopley’s report. I was able to observe her closely throughout a sustained period of time whilst she was giving her evidence. She is a lady who is still struggling to cope with these proceedings and I am not prepared to impugn her motives or attribute to her an animus in these proceedings which I do not believe she has.

The wife has been unemployed since the end of June 2013. She plans to retrain as a teacher, an aspiration which she told me she has long held and which accords with her wish to find less stressful employment which will nevertheless bring her job satisfaction. She has completed a course of cognitive behavioural therapy which may be supplemented by further anti-depressant medication. Dr Hopley’s report concludes that the prognosis for the wife’s depression is good and that she is likely to move forward and stabilise her life. In his view she was (at the end of September 2013) unfit for work but should be fit enough to start the process of returning to some form of work within six months of the completion of these proceedings. He questions her ability to return to working at director level in a large corporate organisation since, as he says in his report, the demands of her employment at her former place of work were a significant factor in the development of her depression [2/F:80]. In the event that the wife qualifies as a teacher, she is likely to earn in the region of £27,300 per annum gross.

Mr Scott invites me to take a robust view. He submits that, even if the wife does not return to work at a comparable level of seniority to her last management position, she is quite able to earn an income from which she can support herself in comfort. In view of my findings about the fairness of sharing the marital acquest in this case (and Mr Scott’s concession on behalf of the husband that this is the inevitable consequence if the marriage contract does not bite so as to exclude sharing), the wife’s future employment options will be very much a matter for her, just as they will be for the husband. Each of these parties will have sufficient resources to live comfortably (but carefully) from capital if that is what they choose to do. I suspect that the reality is that each will wish to pursue some form of remunerative employment or consultancy work, but the precise level of income which may be available in future from either of these sources is not something about which I need to make specific findings. With some adjustment as necessary, needs will be met even if the husband decides to resign from his current position with the Bank, although I suspect that he will not take that course immediately.

As the case developed over the course of the week, it became clear that there were still significant unresolved issues in relation to tax.

I have already referred to the report prepared by the single joint expert, Mr Lane, in relation to the tax consequences of liquidating the assets owned by these parties. Notwithstanding the fact that his report was prepared as long ago as October 2013 (some nine months before this hearing), it has proved to be something of a work in progress. By the third day of the hearing, it transpired from a series of overnight email exchanges that Mr Lane had been unaware from his original instructions that the husband’s case was that several of his accounts which had been assumed to contain ‘clean’ capital were in fact funded by unremitted foreign income as opposed to capital gifts. A revised schedule of tax liabilities was produced by Mr Lane which suggested an increased liability in the sum of £1.896 million (in excess of £500,000 over and above the figures on which we had been working when the case was opened from the foot of a largely agreed schedule).

This development raises issues as to the provenance of these funds as well as their tax treatment. In his Form E sworn on 29 May 2013, the husband had set out details of his cash savings (£2.654 million) and investments (£2.686 million). A very significant element of his investment portfolio is comprised of "B Bank" bonds and securities. In addition he referred to two investments with "A Bank" and "C Bank", then, together, worth some £213,330. In his Form E, he explained that these investments were transferred into his name by his parents who continued to manage the investments on his behalf. He had received no benefit from them and had always considered them to be earmarked for the future benefit of his parents, should they require financial assistance at some point in the future. He was to accept in cross-examination that this description was not entirely accurate since there had never been a ‘transfer’ of these assets, as such. They were, he says, purchased by his parents using funds which they themselves had gifted to him. In these circumstances, it is difficult to see how the A Bank and C Bank investments could be treated as unremitted foreign income, and the husband accepted this was unlikely to be the case. He was later to explain during re-examination that the A Bank fund had been built up by his parents over many years and that he would struggle to provide a history of accretions to or withdrawals from the funds. He said that his father had started tax planning and making distributions to each of his children from their births. His best estimate of the provenance of funds in A Bank and C Bank was (i) gifts from his parents over the years; (ii) the earnings generated on those gifts; and (iii) rental incomes from the French property portfolio. There had apparently been no attempt to segregate those accounts into income and/or capital deposits. His parents had from time to time withdrawn funds which were properly incurred in relation to expenditure on the French property portfolios but they had never in the life of the funds had a direct financial benefit from the underlying investments.

He told me that the major part of the B Bank securities had been rolled over as new investments in April 2008 in advance of the pending tax changes for non-domiciliaries, his intention having been to crystallise their value as capital at that stage so as to enable him to take advantage of a new base cost. However, the funds which were invested at that point in time represented unremitted income, (ie. his surplus earnings from his years of employment with a previous bank). There is nothing in the financial disclosure produced by the husband to date to demonstrate the provenance of these funds despite the fact that he had been asked a number of questions during the course of his financial disclosure as it developed in these proceedings. Given the sums involved (in excess of £2 million which is alleged to have been paid offshore over and above that paid by his previous employer into his offshore pension fund), I gave permission for the husband to speak to his legal team overnight in order that we might have some clarity in relation to the position.

When he resumed his evidence the following day, he was to tell me that he had been unable to produce any documents which might shed further light on the issue. He believed that there may have been a significant element of ‘mixing’ of funds with the result that even ‘clean’ funds may have become ‘tainted’ as a result of having been mixed with unremitted foreign income. When re-examined by Mr Scott as to the sources of unremitted income which might have fed into his foreign investment accounts the husband told me that, as far as he could recollect, it was a mix of employment income and revenue from the accretion of capital value in the underlying assets. He was able to identify three "N Bank" accounts and a "K Bank" 1 account (four accounts in total) which had been set up and segregated as ‘clean’ capital accounts. In relation to all the others, he had never kept records as he had not intended to remit the underlying funds to this jurisdiction since they had never been taxed as UK earnings, although earned in this jurisdiction. In the context of these proceedings and the enquiries which had been made, he told me that he had never turned his mind to the tax treatment of these funds in the event that he might need to bring them onshore as part of the dénouement of these proceedings. For the tax year 2013/2014, because of the distribution he had received from the EFURB, he had elected to pay tax on the remittance basis and thereby achieved a saving of some £200,000.

As to part of the B Bank investments (the Assu-Vie Bonds valued at some £1.1 million gross), it had been his case that he would have wished to transfer these assets to the parties’ three children. He confirmed that, in an ideal scenario and should they remain in his hands at the conclusion of these proceedings, he would be unlikely to bring them onshore, a tax saving of just over £114,000 according to Mr Lane’s latest schedule.

That this evidence was being put before the court on Day 4 of this case in circumstances where counsel for each of the parties were about to begin their closing submissions was extremely unfortunate, to say the least. It is quite clear from Mr Lane’s original report produced in October 2013 that the impact of tax on the offshore funds held by both parties and the extent to which such funds could be remitted without incurring tax penalties were issues which were always going to be an important element of extraction in this case. As long ago as the First Appointment (June 2013), directions were made which included consideration of the tax consequences of remitting offshore assets (including pensions) to the UK and the manner in which such tax might be avoided. Those directions informed the entire scope of Mr Lane’s report (para 2.3.1). He had sought from each of the parties further information about overseas income and gains accumulated since each became resident in the UK. On the basis of the information he received, he had consulted with the French member of his firm’s international network, Ms Delphine Parigi. In para 5.4 of his report, Mr Lane has dealt specifically with unremitted offshore income and gains in non-UK bank accounts and the restrictions in the manner in which the underlying funds might be dealt with in future without incurring additional tax penalties. He even states :

In para 7.3.1 and 7.3.2 of his report, Mr Lane set out his understanding of which of the husband’s offshore accounts and investments held segregated clean capital. He identified three specific accounts and stated, ‘I infer from this that his other non-UK savings accounts and investments may include unremitted and untaxed offshore income and gains. Consequently, an unquantifiable additional IT or CGT liability may arise on remittance of these funds to the UK by [H] from other sources. Due to insufficient information, I am unable to quantify this potential liability at the present time’. In para 7.7.1, he says of the B Bank investment portfolio (as distinct from the French life insurance policies), ‘I do not have full details of the base cost of these assets … and I have therefore relied on [H’s] own estimated calculation of the gain inherent on these policies (section 2.10 of his Form E) which he states does not take into account the effect of foreign exchange movements. The actual taxable gain in respect of the other B Bank investments may therefore be materially higher or lower than that indicated in Appendix 3’ (my emphasis). He makes exactly the same observations in relation to H’s K Bank accounts (para 7.10).

In para 7.4.1, he makes it clear that such liability as might arise did not need to be quantified in the event that it could be ‘washed through’ by transferring assets to the wife offshore prior to Decree absolute. Funds which she then remitted onshore would be non-taxable in her hands.

As to the A Bank and C Bank securities, Mr Lane’s underlying assumption, clearly set out in para 7.13 of his report, was to the effect that the husband held these assets on some form of bare trust for his parents. Thus, on the basis that he retained no beneficial interest in these assets, he should have no liability to tax in respect of any income or gains generated from them.

There was some correspondence between Mr Lane and the parties’ solicitors following the production of his report. On 17 October 2013, the husband’s solicitors wrote to clarify that Mr Lane’s assumption was correct and that his other non-UK savings accounts and investments included unremitted and untaxed offshore income and gains. They asked for an estimate of the parameters of any additional income or capital gains tax liability which might arise in the event of a remittance of these funds to the UK. They also corrected his previous assumption that the husband had not retained beneficial ownership of the A Bank and C Bank investments and pointed out that his French life insurance polcies (the Assu-Vie bonds) were financed from untaxed, unremitted foreign income. By his response to that letter (also dated 17 October 2013), Mr Lane was able to make some adjustment to his original figures, reflected in an updated computation schedule, but he made it clear he would need a detailed breakdown of the historic unremitted income and gains in order to provide detail of all the inherent tax liabilities. Whilst there was some further correspondence in the latter part of December 2013 between the solicitors and Mr Lane, it related in the main to the potential mitigation scheme referred to in the original report whereby assets might be transferred from the husband to the wife offshore and prior to Decree absolute.

As far as the provision of further information from the husband about the historic unremitted income and gains, the trail appears to have gone cold after October 2013. Nothing further happened until June 2014 when his solicitors wrote to Mr Lane to enquire what practice HMRC might adopt in circumstances where it is not possible to provide information regarding mixed capital held offshore [2/F:247b].

On 20 June 2014 (the last working day before this hearing began), Mr Lane provided an Addendum to his original report [2/F:247f-j]. There were a number of appendices attached to his report. In relation to the absence of information regarding mixed funds offshore, his advice was that a best estimate would need to be provided to HMRC explaining that insufficient records were kept, although some evidence would be needed if an argument was to be advanced that not all of the funds represented untaxed foreign income.

I did not hear evidence from Mr Lane and, in the light of the position adopted by the husband in relation to his inability to trace these funds back to source, it is difficult to see how Mr Lane might have been able to help me any further. What I did have was a small clip of email correspondence between the husband’s solicitors and Mr Lane which includes his overnight response sent on Tuesday, 24 June 2014 at 01:36pm. Amongst other issues raised, he says this at para 8 :-

To that email, Mr Lane attached a revised schedule. It is in the bundles at [2/F:247q.i]. In addition to the tax liabilities of appearing at lines 21, 22 and 50 of his previous schedule (those which had been identified prior to 24 June), there now appeared for the first time on Day 3 of the hearing an additional potential tax liability in excess of £½ million. I do not have within the bundle the schedule which Mr Lane prepared before his amended version at [2/F:247q.i] and so I cannot compare his original figures with those which now make up the global liability of £1.896 million. I can, however, see the new additions in italicised print on his revised version. For illustrative purposes, and in order to demonstrate the broad extent of the increase, I need only look to the total tax liability reflected in the revised asset schedule produced by Mr Leech as he opened the case to me on Day 1 : there, the liability was assessed to be £1.318 million (Footnote: ¹). As I have said, we are dealing here with an unknown but potential liability of some £½ million.

That was where the evidence stood when counsel began their closing submissions to me at the conclusion of the evidence on Day 4 of the hearing.

Standing back from the detail of the various tax calculations which have been produced, I ask myself this question : what is the likely reality of these funds representing unremitted foreign income ? The husband is now claiming that a total of sum £2.578 million (Footnote: ²) is the product of income which he has earned offshore. During the period with which I am dealing, he has been employed in London by three separate banks. He received remuneration for the work he did onshore and was paid in London. Unless there was some other arrangement with his employers whereby part or all of his bonus entitlement was paid offshore (and there is no evidence before me to that effect), his income would have been taxed at source in the UK. He has produced nothing to assist me with a history of his earnings over the relevant years other than the figures set out in paragraph 118 above. Whilst they were not in the bundle, I am told that his French tax returns demonstrate that he has been paying tax on all income generated and declared in France. Had these funds represented the product of one or a number of years bonus payments which H subsequently transferred (or which he asked his employers to pay) offshore, that would not have obviated a requirement for UK tax to have been paid on those earnings. I am in some difficulty in accepting the husband’s explanation that he has nothing whatsoever which he can put before this court in order to assist with the answer to what his own leading counsel has described as a ‘conundrum’. He is a sophisticated financial operator (and I say that with no disrespect to him); it is the inevitable consequence of the many successful years he has spent building the career he has enjoyed throughout the marriage. I do not believe that he has deliberately concealed facts from this court, but I have to bear in mind that, as recently as 2008, he was engaged in an overall tax planning strategy which he hoped and anticipated would mitigate the fiscal consequences of the pending rule changes as they would affect him as a non-domiciled UK resident.

Insofar as the A Bank and C Bank securities are concerned, it seems to me that the husband must be wrong in asserting that these funds represent unremitted foreign income (and I believe he himself accepts this now). The initial funds were provided by his parents many years ago as part of their own tax planning strategy. He accepts he is entitled to the entire beneficial interest in those funds. They may have been augmented over the years by payments in of rental income from the French property portfolio but that rent is fully taxable in France. Whilst I have set out above the history of the disclosure of these matters to Mr Lane, I do not believe that the husband can be wholly absolved in relation to the consequent state of uncertainty with which I am left in reaching conclusions about the tax issues. They are his liabilities and it is for him to establish on the balance of probabilities that the tax in the sums quantified by Mr Lane are likely to be paid in due course in the event that funds are remitted.

The extent to which the husband is likely to have to remit all, some or the majority of these funds at some point in the future remains an open question at the present time. Much will turn, I suspect, on the decisions which he makes in relation to remaining in employment over the course of the next four or five years. However, I have to bear in mind that he has recently had to fund the purchase of his new home in West London and, unless there have been put in hand more tax efficient arrangements as to the ownership of this property about which I have not been told, that will inevitably have involved the transmission of funds to this jurisdiction. It seems to me that, over and above that major expenditure, it is not possible for me at this stage to quantify with any degree of precision how the husband intends to manage his affairs once he has settled the wife’s outstanding claims. I have no difficulty in finding that he will, in all likelihood, elect to leave funds offshore for so long as he can sustain his own domestic economy out of UK earnings. I am also prepared to accept that the inevitable result of my finding that the marital acquest should be shared will leave him with less room to manoeuvre financially than would have been his position had he only had to find a sum of £200,000. I also bear in mind that the basis upon which the mainframe asset schedule has been presented assumes that, aside from the ‘new’ liability of some £500,000, tax has already been allowed for in relation to the non-pension assets. These can be remitted without any further or additional tax penalty to him. Further, the wife’s own non-domiciliary status as a UK resident will enable these parties to mitigate a significant element of the tax which would otherwise be payable.

Whilst I have well in mind Mr Scott’s submission that I must deal fairly with these parties in terms of the nature of the assets with which each will be left and their potential tax exposure in relation to those assets, I have reached the clear conclusion that it would not be appropriate for all the reasons set out above to bring in the potential liabilities which Mr Lane has identified on a ‘pound for pound’ basis. There may well be significant scope for negotiation with the Revenue in any event. In this event, I suspect that the husband may well have greater incentive to construct a much more detailed trace of his income and the manner in which funds have been built up in the various offshore accounts. For these reasons, I do not consider it would be unfair to either party to adopt the approach commended to me by Mr Leech in his closing submissions. In computing the assets which fall to be divided in this case, I propose to work on the basis that the ‘new’ liabilities calculated by Mr Lane in his latest figures can and should be discounted by 50%. The tax which is not the subject of dispute has already been factored into the schedule on the basis of 100% of that liability.

Before moving on to extraction, I propose to deal now in fairly short order with the remaining points on computation.

The husband acquired the flat in July 1989. The wife went with him to view the property because he did not wish to purchase the property without her first seeing it. Almost immediately, she moved in and they began to live together as a couple. She took up employment with a telecommunications company at the beginning of September 1989. She was aware that he had taken on a substantial mortgage to fund the purchase of the flat, although she was not a party to that transaction and was unaware of the precise details. In her turn, she bought some furniture to enable them to move in. She told me that she felt it was natural for her to wish to make a financial contribution towards their shared living expenses. There were other items for which she paid during that two year period, including curtains, a new car, and holidays : all without contribution from the husband.

Mr Scott invites me to treat this property as having no matrimonial element whatsoever. He submits that the husband paid the deposit using non-matrimonial funds and he paid the mortgage throughout the life of its term until it was discharged in full. Such financial contributions as the wife might have made do not entitle her to any share in the underlying equity of this property. On her behalf, Mr Leech invites me to focus upon the position once they had moved to London after a little more than two years. The mortgage funding represented 52.5% of the purchase price. There is no live issue between the parties but that they were effectively cohabiting (or about to cohabit) at the time of purchase. Whilst it may have been a good investment for the husband at the time, I am satisfied that the primary purpose of its acquisition was to provide the parties with their first home in Paris. During the time they lived there together, they became engaged and the wife became pregnant. By the time they left the apartment, they were married. In the years which followed, the mortgage was paid off. Regardless of the fact that those payments might have come from a bank account in the husband’s name, they were being paid from earnings which represented part of the financial partnership to which each was contributing in his/her own way. Whether or not the husband then, or now, would be prepared to characterise it as such, that is the consequence of my finding that the marital acquest in this case should be shared. On this basis, I have discounted the value to be retained by the husband by 52.5% with the effect that only 47.5% will be excluded as non-matrimonial property.

Given that this pension is in payment and represents future income payable to the wife for the remainder of her life, the issue is the basis upon which it should be valued for the purposes of attributing to it a capital value in these proceedings. She had been contributing to this fund for five years before the marriage. It is conceded that 11/16 of the pension should be treated as matrimonial. There is within the bundle a report from Smith & Williamson which has been prepared by Miss Daniela Glover. The husband contends for a value of £400,000 on the basis of the cost to him (or any other third party) of purchasing an inflation linked annuity in the UK (1.6% per annum). In other words, Mr Scott invites me to look at what it would be likely to cost in order to acquire a similar benefit were he to go out into the market tomorrow to purchase an annuity product. His approach makes no allowance for any value ‘banked’ in the fund by the wife in the years prior to the marriage. Mr Leech advances a number of criticisms about the underlying assumptions adopted by Ms Glover in reaching her figures (para 50 of his skeleton argument) and, in terms of methodology, submits that the appropriate way to value this pension is to look at the actual value to the wife in Duxbury terms. That produces, as I accept, a lower figure of £215,000.

In my view, the Duxbury approach is the correct one. The real value of this pension to the wife is the income it is going to produce for the remainder of her life, and not simply her working life. Over and above the Duxbury computation, there is already an in-built benefit to the husband in the element of dependant’s pension which will be paid to him in the event of the wife’s death if he has not by then remarried. Whilst I can see the intellectual basis of the argument advanced on behalf of the husband, it makes no provision for allowing credit to the wife for her pre-marital contributions of almost a third the value of the fund nor the potential benefit to him in the event she should predecease him. If the husband is to be given credit for his pre-marital contribution to the Paris flat, it is in my view only fair to proceed on a Duxbury basis and allow her credit for her own unmatched contributions to this asset.

The full liability to be paid in relation to these two tax mitigation schemes is £283,120. The wife relies on a lower figure of £240,652 on the basis that they will be paid out over time against future income receipts and thus a discount of some 15% is appropriate. These two schemes have respectively 8 and 9 years left to run. The husband is unlikely, in my view, to be earning at the level he has been over the three years prior to this hearing whether or not he continues to be employed by the bank for the next three or four years. He may or may not thereafter secure some consultancy work. Nevertheless, I take the view that it is more likely than not that he will continue to earn throughout most of the period over which this liability will be discharged. Against that, I weigh the possibility (and it is no more than that) that HMRC may decide to begin enquiries into either of these two schemes. The husband has confirmed that there are presently no open enquires. I also take account of the fact that income tax rates may rise to more than 45% in the future, but equally, they may fall. In these circumstances, I take the view that a small discount is not only conventional but appropriate. I have therefore worked upon the basis of the lower figure of £240,652 as that which should be deducted from the available assets.

Whilst the issue in relation to the deferred stock might more appropriately be dealt with as an extraction, as opposed to a computation, issue, I am going to deal with it here. The deferred stock held by the husband has a hypothetical value at the present time of just under £200,000. The wife has a minimal entitlement of just over £1,400 in terms of her own shares. She adopts a Wells sharing approach to the husband’s deferred stock which will vest over the course of the next three years in March 2015, 2016 and 2017. She meets his post-separation accrual arguments with an entitlement based upon the reality of the de facto domestic arrangements within the home they continued to share after she issued her first Petition seeking dissolution of the marriage in 2007.

Whilst they were not directly canvassed in argument before me, I am very familiar with previous decisions made at first instance within this Division in relation to the treatment of post-separation accrual and, in particular, the entitlement of one party to share in the post-separation income of the other. I do not set them out here because to do so would be to overburden an already lengthy judgment. Looking at the chronology of these proceedings, it seems to me tolerably clear that by February 2011 at the latest, when the wife issued her supplemental Petition, this marriage had all but irretrievably broken down. Despite the parties’ continuing attempts over the next few months to explore the possibility of repairing their relationship, those attempts came to naught. Whilst they did continue to occupy separate bedrooms under the same roof for the next three years, there is nothing in the evidence which suggests to me that there was any community in their joint living arrangements and certainly not one which would suggest any ongoing contribution qua spouse on the wife’s part. This is no criticism whatsoever of her; she was continuing to play a significant role in terms of the children’s care, but, had the husband acceded to her wishes, he would have moved out long before the hearing with which I was dealing. Mr Leech referred in his submission to the fact that she continued to do some cooking for the family. In my view, the most that can be said is that the deferred awards which might have vested in March 2014 might be susceptible to some form of Wells sharing arrangement. Since there were none, there is nothing to share. Those which will fall in in Mar 2015 to 2017 represent, in my view, an unmatched contribution by the husband.

I have considered whether some form of ‘run off’ entitlement might flow from mere occupation under a common roof but I have, on balance, decided that fairness dictates that the wife should not be entitled to a share of the deferred awards. To an extent, the husband’s retention of their value without further claim by the wife goes some way to mitigate my approach in relation to the tax issues. It represents a fair way to deal with sums of up to £200,000 (maybe more or less) which will represent fully taxed income in his hands onshore at the point of receipt. It takes due and proper account of the lengthy demise of this marriage within the context of several years of continuing (non-marital) cohabitation. I therefore propose to disallow any claim by the wife to these assets.

The wife’s updating disclosure was produced at least a month in advance of the husband’s. Insofar as there is a discrepancy with her Form H figures and those which she provided by way of updating in terms of her outstanding costs, I accept that the figure of £159,310 should be taken as the correct figure for this liability. As to the cost of her university fees for the coming academic year, I heard a great deal of evidence about the wife’s plans for the future and her commitment to this next stage of her life. I have already made a number of findings in terms of her reasons for leaving her previous employment and she told me in the course of her oral evidence about the remaining hurdles she has to overcome before she can embark upon her course. I am confident that these are procedural only and that she will be in a position to take up her place. In these circumstances, I propose to allow a sum of £9,000 as an existing liability on her side of the balance sheet.

It seems to me that each of these parties is going to need to replace their existing motor vehicles. The wife seeks an allowance of £30,000; the husband seeks £15,000 which has not as yet appeared as a liability on the schedule. I propose to allow each £15,000 for these purposes. To the extent that either wishes to spend more on a replacement vehicle, I am satisfied that there will be more than adequate resources available to each for these purposes. This will not affect the bottom line figures, but it will increase the husband’s assets by £15,000 and reduce the wife’s by a similar sum.

As to the figure which the wife has advanced in relation to the cost of various works which need to be carried out at the family home she is to retain, she was criticised by Mr Scott for having failed to produce any evidence to underpin a breakdown of her figure of £200,000. She accepts, candidly, that she adopted a similar figure to that advanced by the husband in respect of his own expenditure on moving into and kitting out his new property. She told me about a particular problem involving fumes entering the building from an underground car park. This appears to be a long-standing issue and she was not challenged on the need (if not the cost) for some remedial work to rectify the problem. In addition, I have had the opportunity to look at several photographs depicting the internal state of the property which does not appear to have had much spent on it since its acquisition some 16 years ago.

I am satisfied that, moving forward, each of these parties should be entitled to begin independent lives in homes of their choice which are comfortable and in respect of which they have been able to undertake appropriate work to make them so. Whilst I accept that I do not have written estimates or pro forma invoices to support the wife’s claim, I am nonetheless satisfied in the light of what I do know that the sum of £200,000 or thereabouts is not an inappropriate figure to adopt.

Thus, the figures on the mainframe asset schedule remain undisturbed in terms of quantum and I turn now to consider extraction and how the assets should be divided as between the husband and the wife.

For the purposes of his closing submissions to me on the final morning of this hearing, Mr Leech produced a slightly revised version of the extraction schedule which comprised a separate sheet forming part of the mainframe schedule which we had been using as the basis for the agreed figures, subject always to the ongoing tax issues which surfaced on an almost daily basis throughout the course of the week. The extraction schedule was amended to reflect his submission (which I have accepted) that the appropriate way to resolve the tax ‘conundrum’ with which we were left after the evidence had closed was to discount Mr Lane’s figures by 50% to reflect the uncertainty. When Mr Leech had concluded his final submissions late in the day on Friday (Day 5), Mr Scott sought to make various points in relation to the figures. I ruled that this was, in effect, an attempt to reopen evidence on matters of fact after common agreement that the evidence had closed. It will be recalled that I gave the husband permission to consult with his legal team notwithstanding that he was in the middle of his evidence in an attempt to secure some further clarity in relation to the tax treatment of the offshore assets and, in particular, their provenance. He was unable to take matters any further in terms of the clarification I had sought when he returned to the witness box the following day, and that was where matters stood when counsel began their closing submissions to me.

Having advertised the fact that I was proposing to reserve judgment since I was due to start a 10 day case the following week, I did, however, allow Mr Scott to confer with his client and to make such further written representations as he wished if and insofar as the husband could identify errors of computation flowing from Mr Leech’s amendment to his previous schedule and/or in the event that there were errors in relation to the formulae which he had not been able to check.

The following week, I received from Mr Scott a further copy of the extraction schedule which contained a number of comments which related to tax and which appeared in blue. These had been added by the husband and appeared to be an attempt by him to revisit issues concerning the provenance of the offshore funds and the likely impact on tax. The matters he raises are not, in essence, new evidence but a repetition and/or expansion of matters on which he had already given evidence. He provided no further corroboration or documents. Had he done so, I might have been receptive to an application for permission to adduce further evidence in advance of handing down my judgment. The commentary which the husband makes raises no error in terms of Mr Leech’s mathematics or formulae. As Mr Scott concedes in his covering email to me, the husband’s main concern is the fact that full allowance is made for all latent tax on the wife’s investments whilst leaving the husband with substantial potential tax liabilities. In fact, this is not what Mr Leech’s extraction schedule does. It provides for the vast majority of the potential tax which relates to the ‘new’ liabilities (assessed on the basis of a 50% discount) to be ‘washed out’ by a payment to the wife of a balancing sum / transfer of assets offshore. It goes on to demonstrate, in terms of the net effect of the proposed redistribution of assets, that the husband would retain ‘clean’ assets of £1.642 million which remain available onshore without any further tax liability, such liability having been accepted and incorporated into the first schedule produced on Day 1 of the hearing. It assumes that the Assu-Vie policies will not be remitted (and therefore no tax will be payable), but that assumption flows in no small part from the husband’s own evidence during the course of the hearing. I have dealt at some length with the taxation issues earlier in this judgment and my findings in relation to the unsatisfactory nature of the evidence which was before the court. I have also dealt with where the burden of responsibility for that state of affairs must lie and, whilst I do not hold the husband entirely responsible for the situation, he must clearly shoulder part of the responsibility for the fact that I was left with the tax ‘conundrum’. There was at no stage any application by him to adjourn the hearing in order that further enquiries could be put in hand, and I doubt whether such an application would have been productive of further information in any event.

Specifically, Mr Scott did not seek to put before me at any stage of the proceedings an alternative extraction route for delivering to this wife the value to which I have found she is entitled. His submissions on the penultimate day of the hearing went primarily to the issue of the quantification of the tax issues in the light of the eleventh hour revised calculations from Mr Lane. He did not join issue with Mr Leech in terms of the ‘mitigation’ issue : in other words, the ability which lies in the hands of these parties to ‘wash out’ the ‘new’ tax liabilities by a payment offshore to the wife. On the basis of the net effect of the wife’s proposals after tax mitigation, she will be receiving a lump sum payment from the husband of £1,661,139 (£454,671 from N Bank and £1,206,468 from B Bank/K Bank 2). It seems to me that, on this basis, (i) the tax of £204,602 on the N Bank funds (as assessed by Mr Lane) can be properly neutralised, and (ii) given the extent of the balancing payment required from the B Bank investments, the maximum tax exposure of £563,703 is entirely absorbed. To that extent, whether one discounts the tax by 50% or by some lesser percentage, it may matter not.

Since tax in accordance with the ‘established’ liabilities (ie. those to be found in the predecessor to the schedule at [2/F:247q.i]) has already been factored in to the main frame schedule, it is difficult to see how – in principle - fairness is not achieved. The husband may complain about the assumption which is made that the tax on the Assurance Vie life policies has been treated as a liability which is unlikely to arise if funds are retained offshore. As I say again, the evidential lacuna which remained at the conclusion of this hearing is not something for which the wife or her team can be blamed.

The figures in terms of paragraph 11 of the extraction schedule will be very slightly different because of my finding that some £200,000 odd (representing the deferred awards) should not be treated as matrimonial property to be shared equally between the parties. I accept that there is an underlying precision in the figures which flow from paragraph 12 into the illustrative breakdown which is presented in terms of net effect in paragraphs 13 and 14. However, the only amendments which flow, thus far, from my judgment in terms of the analysis at paragraphs 13 and 14 of the extraction schedule (which I propose to incorporate by reference as part of this judgment) is the deletion from paragraph 13 of entry (d) being the wife’s receipt in due course of notional funds from the deferred awards in the sum of £99,932. For that figure should be substituted a figure of £1,418 which will reduce her assets to £6,703,347. In paragraph 14 (g), the husband will retain the full notional value of £198,446 being the estimated current value of his deferred awards. That will increase his total assets post-division to £7,022,986. On this basis, the wife would leave with 48.83% of the global assets and the husband with 51.17%. Does my finding in relation to the deferred assets require some further adjustment to the lump sum which the wife should receive from the offshore assets ?

On balance, and taking into account (i) all the section 25 factors which I must apply in the light of my extensive knowledge about these parties and this case; (ii) the existence of the non-matrimonial property held by each of the parties; (iii) the fairness of sharing in this case insofar as that principle applies to the marital acquest; and (iv) the nature of the assets with which each will be left at the conclusion of the extraction process (into which I factor the likely extent of any remaining tax liabilities of the husband, insofar as I am in a position to assess them), I have come to the conclusion that no further adjustment is necessary. The wife will be just less than £100,000 short of her target extraction figure but, in my judgment, a very small departure from a position of overall equality properly reflects the fact that (i) her onshore cash reserves will be greater than those of the husband, and (ii) he will have some improved flexibility to deal with the tax which might in future arise should he elect (contrary to his current intentions) to transfer part of the Assurance Vie funds to this jurisdiction. I am also conscious of the fact that the likelihood is that over the course of the next three to four years, this husband is likely to be in a position to make further capital provision from his income, should he choose to do so. It is not an option which, on the basis of my findings, will be open to the wife.

Clearly, the detailed drafting of the order will require considerable further thought, but the order which I am proposing to make in terms of the fundamental structure of terms to be covered is as follows :-

In terms of sharing the offshore pensions, the husband has said that it will be necessary to obtain the approval of the Jersey Court to any pension sharing order before the order can be implemented in relation to his offshore pension. The trustees have already indicated that they would probably comply with an order of this court. That is encouraging news and steps should now be taken to ascertain whether or not the trustees’ approval is likely to be forthcoming. No doubt mirror orders can be secured in the Jersey court prior to any final sealing of orders in the English court.

In terms of child support, I did not hear detailed argument from either counsel on the proposals advanced by each of the parties. In essence, the wife seeks £25,000 per annum in terms of child support for their youngest child until she commences tertiary education, reducing to one-third of that sum (£8,333 per annum) as a ‘roofing allowance’ once she is in university. She seeks similar provision for each of the two elder children in terms of a roofing allowance. It appears to be accepted that the husband will meet the costs of the children’s secondary and tertiary education.

The husband offers £16,000 per annum for their youngest child together with school fees and agreed extras on the school bill. After she completes her secondary education, it is the husband’s case that he will deal with their youngest child, as he has dealt with the elder children, directly.

In circumstances where each of these parents is sharing their marital wealth and where each can be expected to make a contribution towards their children’s ongoing expenses, I take the view that some contribution from the husband towards the wife’s expenses relating to the children is appropriate. Notwithstanding the proximity of their new homes, the reality is that it is the wife who will be providing the day to day infrastructure of their younger daughter’s life with all the consequent expense which comes with that responsibility. I hope and expect that she will continue to spend time in each of her parents’ homes, but the preponderance of the burden of arranging her school and social routine is likely to fall upon the wife’s shoulders. I take into account the fact that the wife will have independent wealth of her own as a result of the order which will flow from this judgment. My view is that an appropriate figure for the husband to be contributing in terms of child support whilst their youngest child in in secondary education is £20,000 per annum. That is a sum which I am satisfied can be afforded from his current income. It is a fair reflection of the broad division of responsibilities which these parents have agreed.

As to the contribution which the wife seeks towards the ‘roofing’ element of the two elder children, I heard very little about the manner in which these young adults propose to divide their time between their parents’ homes in future. They will inevitably have their own friends and social lives. The husband’s position is that he would wish to be left in a position whereby he can deal with the children directly as to their financial arrangements in tertiary education. The wife’s open offer refers to previous difficulties in agreeing a regular contribution to their support. My provisional view is that the husband’s relationship with each of his children is such that he can, and will, make financial arrangements directly with each of them once they are in tertiary education, as the two elder children already are. There should be some residual provision towards the costs of the home which the wife will continue to provide for them, notwithstanding the proximity of their father who will open his doors to them, as I have no doubt, in the new home he has just acquired. The ‘roofing element’ payable to the wife should, in my view, not exceed £5,000 per annum for each of the children in tertiary education. Over and above this provision which should be paid directly to the wife for their benefit, I am entirely satisfied that this husband (and father) will make appropriate financial provision for each of his children in tertiary education. Those arrangements can, and should be, the subject of direct discussions between the parents and their children.

At the conclusion of my judgment, it is only necessary for me to say this. I am entirely satisfied that the order which I shall make (from the foot of my findings and my acceptance of the underlying structure of the extraction schedule which was before the court) is entirely fair to both parties and meets the requirements of the statutory considerations which I must address as they flow from section 25 of the Matrimonial Causes Act 1973. Because of the basis on which I have resolved this application, it has not been necessary for me to move to an assessment of the wife’s needs simpliciter. I have found that this is a sharing case and, as such, the sums which will be made available to each of these parties at the conclusion of these proceedings will provide more than adequately for the future needs of each of them. I conclude this judgment by saying only that, even if I had been persuaded that this wife should be held to the strict terms of the marriage contract (and I make it quite clear that, on the basis of the evidence before me and my findings of fact, that would not have been the result in this litigation), I would nevertheless have found the husband’s offer to be deficient in terms of this wife’s needs. The analysis of those deficiencies is not something which I need to explore any further.

I am most grateful to leading counsel, Mr Scott QC and Mr Leech QC, for the obvious care and detailed preparation which has gone into each of their respective presentations to the court. I am also grateful to the parties. It was very clear to me that, at times, the hearing presented each with a significant emotional challenge. That they were able to assist me in the consistently courteous way they did is testament to the very particular attributes which each of these two individuals possess, both as parties and as parents to three delightful and much loved children.