Mr Justice Moor’s decision in Z v Z [2011] EWHC 2878 (Fam) is believed to be the first contested case in the High Court in which the principles of Radmacher have been considered. As Moor J stated in his judgment, Radmacher ‘changed the position fundamentally’ of pre-nuptial agreements and there has been a ‘seismic shift’ in the area since that decision.

As Moor J noted, save for the existence of the pre-marital agreement, this would be an appropriate case for equal division of the assets. The central issue therefore was whether the agreement took the case out of ‘sharing’. If the judge decided that it did, it followed that the wife’s claims would be based upon her reasonable needs which should be assessed generously.

The case concerned a French couple who married in 1994 and relocated to England in 2007 soon before the marriage broke down. They have three children, aged 14, 12 and nine. Prior to entering into the marriage, they entered into a standard separation de biens agreement in France.

In France every married couple is subject to a default community of goods matrimonial property regime, unless they enter into an agreement providing for separation of goods. In this particular case, the judge noted that the parties’ parents and the majority of their friends entered into separation de biens agreements prior to their marriage. He therefore noted that it would have been very surprising if they had not entered into such an agreement.

The judge accepted the husband’s evidence that he would not have married the wife had she not entered into the agreement. By contrast, the wife stated that the only reason for the agreement was to protect her assets from creditors in the event that the husband went into business and the business failed. However, the judge did not accept that was the overriding reason for the agreement. The judge did accept that the husband and wife entered into the agreement freely and with full understanding of its implications; however, neither was given formal advice by the notaries prior to signing the agreement and no formal disclosure was given of financial circumstances. Neither of those points however affected the decision of Moor. It is worth noting that this reflects the facts of Radmacher. In that case, the husband had not sought financial disclosure nor had he taken independent legal advice prior to the signing of the agreement.

The wife’s position was that it would be unjust for her to be held to the agreement and she therefore sought an equal division of the total assets of the marriage which were worth in the region of £15m. By contrast, the husband stated that the separation de biens agreement excluded the sharing of the assets. Following the decision in Radmacher, it would therefore be fair to hold the wife to that agreement. However, the husband acknowledged that the agreement did not exclude maintenance claims which should be dealt with on the basis of a pre-White assessment of the wife’s needs. He quantified those needs at £5.28m, which equated to approximately 35% of the overall assets.

The husband also argued that this was fundamentally a French case and therefore the judge should take into account what the wife would have received in France, thereby relying upon the decision in Otobo v Otobo [2003] 1 FLR 192. The wife contended that the judge could not do so, thereby relying on the Court of Appeal’s decision in Dart v Dart [1997] 1 FCR 21. The judge preferred the wife’s position on this issue, stating that the court will normally apply English law, irrespective of the domicile of the parties, or any foreign connection. On a separate issue, the judgment in Radmacher makes it clear that issues of foreign law are relevant to the intentions of the parties, for example, whether or not they intended that the agreement should be binding upon them.

The application of English court as opposed to French law was relevant in assessing the appropriate level of spousal maintenance for the wife. The award which would have been made in France would have been lower than an award of the English court. In assessing the wife’s income needs, two further points are of note. Leading counsel for the wife questioned whether the Duxbury assumptions remained good in the current economic climate. Justice Moor did not propose to go behind the Duxbury figures as there was clear authority that it is appropriate to use the Duxbury Tables as a guide. Not only had the assumptions been revised downwards on a number of occasions, albeit not since 2003, but as the judge was looking at the life expectancy of over 38 years, during such a long period market fluctuations should iron themselves out.

The wife had also inherited assets which included properties and a share portfolio. The judge did not see why the wife should amortise the properties and therefore excluded them from the Duxbury calculation. By contrast, her share portfolio was included.

Although Moor J had decided that sharing was not appropriate in the present case, it was still appropriate to perform a cross-check against the overall assets, but in the present case only to make sure that the award was not in excess of one half of the assets. On the basis that the overall assets were £15m (there was an issue about tax liabilities), the award amounted to 40% of the assets which the judge held to be a suitable departure from equality to reflect the agreement.

The final evidential point was the relevance of a letter written by the husband shortly before the parties separated in which he had promised not to rely upon the separation de biens ‘if I start legal proceedings’. There was an earlier draft version of the letter which did not have the qualification and to which the wife had contributed towards its drafting. The judge rejected the wife’s argument that the earlier draft should be treated as more important than the final version. In any event, it was common ground that as a matter of French law, the separation de biens could only be altered by way of a further notarised agreement.

In summary, Moor J upheld the agreement insofar as it excluded sharing. This undoubtedly is the most important aspect of the judgment. The husband was not arguing that the pre-nuptial agreement quantified his wife’s claims - he was arguing that it excluded the sharing principle. This properly reflects the approach of the Supreme Court in Radmacher. The Supreme Court had taken the view that it would be easiest to show that a pre-nuptial agreement was not unfair if it excluded sharing, but that did not prevent the court from providing for the reasonable needs of an applicant. By contrast, a pre-nuptial agreement which did not meet the needs of an applicant would most readily render it unfair.

Andrew Newbury, Pannone