Unfair to share? Family Court limits a wife to a generous needs-based financial award on divorce on the basis of a foreign pre-nuptial agreement

If there was ever a case to grant a spouse a claim to “share” in the family assets despite the presence of a pre-nuptial agreement, this was probably it. Prior to the Court of Appeal in Brack v Brack [2018] EWCA Civ 2862, it was generally considered that a valid prenuptial agreement would mean restricting a spouse to their reasonable “needs”. The decision in Brack clarified that in search of a fair outcome the court has the power, albeit unusually, to make an award based on an entitlement to share what is built up during the marriage despite the presence of a pre-nuptial agreement.

In the recently reported case of BI v EN [2024] EWFC 200, the parties had accumulated huge wealth during the marriage in the region of £115m. The Judge declined to award the wife a share due to the existence of a French contrat de mariage. This was a separation de biens agreement which provided for each party to retain their respective assets on divorce and which did not deal with the concept of needs or maintenance. Instead, the Judge restricted the wife to a generous assessment of her needs and awarded her approximately 20 per cent of the assets in the case.

Background of BI v EN

The husband and wife were both French nationals, aged 51 and 50. They had a 24-year marriage (including cohabitation) and shared three children, now aged 22, 19 and 17.

The parties signed a French separation de biens (ie separation of property) marriage contract seven days prior to their wedding. The husband’s family were of modest means, whilst the wife’s family were relatively affluent, with her parents also having entered into a separation de biens contract before their marriage. Nevertheless, the wife’s position was that it was the husband who wanted them to enter into a contract which provided for separation of property, as he wanted to take steps to progress his career as an entrepreneur and the separation of their assets would protect them from the risks associated with this venture (ie by protecting assets held in the wife’s name from creditors). The wife otherwise said she had very little memory of entering into the agreement, nor an understanding of what its effect, if any, would be on divorce.

The Judge did not accept this and found the wife to be an intelligent person who could not have been under any illusion as to the ramifications of a separation de biens regime. The contract specifically referenced the dissolution of marriage and the parties understood that it would govern their financial affairs both during the marriage and on divorce. Further, given that the wife’s parents later divorced and the wife was privy to discussions about how her parents’ separation de biens contract played out, there was no doubt that by then she fully understood what her own contract would mean if she and the husband were to divorce. This prompted her to have discussions with the husband about putting their properties and other funds into their joint names, but she did not seek to vary the separation de biens contract.

The contract itself dealt with the parties’ respective interests in the property, but not with maintenance or needs-based claims after divorce. At the time of the signing of the marriage contract neither of the parties could have foreseen the significant fortune which the husband would amass. On divorce, the total assets in the case amounted to approximately £115 million, all of which was generated during the marriage and so would have been subject to the sharing principle absent the marriage contract.

As such, the Judge had to deal with whether it would be fair, after a long marriage during which vast wealth had been generated, with full contributions from the wife, to uphold the marriage contract and exclude the wife’s sharing claim. If so, in circumstances where the contract did not set out the level of assets needs or maintenance on divorce, the court was ultimately left to determine how to make provision for the wife as the financially weaker party.  

The wife’s position was that the contract should be torn up and disregarded, and that she should share equally in the total assets in the case. The husband maintained, however, that the contract should be upheld, that the wife should not have an equal share in the assets generated during the marriage and that provision made to her should be limited to her needs (the assessment of which should also be limited due to the fact that the separation de biens regime had been operative throughout their marriage).  

Outcome of BI v EN

The Judge noted that the Court of Appeal judgment in Brack left open the possibility that the court might, in certain circumstances, consider a sharing outcome to be fair even where there is a valid nuptial agreement which seeks to exclude sharing claims. The Judge said that if there were ever to be such a case, it would be a case with this sort of background, however, on balance he was satisfied that it was not unfair to exclude the wife’s sharing claim and limit provision to her needs. 

The Judge did not agree with the husband that the assessment of the wife’s needs should be limited by the very existence of the separation de biens contract, and in fact assessed them generously to reflect her contribution. It was relevant that all the assets were matrimonial in nature, the asset base in the case was very large, the marriage had been a long one, and the contract itself did not purport to limit any needs-based claims. The Judge noted that the contract did not “provide for no recovery from either spouse against the other. It leaves the court to determine how fairly to make appropriate provision for the wife”.

Ultimately, the Judge awarded the wife with £22.9 million, approximately 20 per cent of the total assets. The Judge determined that that this was a fair award on the basis that it is less than what a sharing claim would be, given the existence of the marriage contract, but was high enough to reflect the wife’s full contribution to the marriage and therefore to the building up of the matrimonial assets (the wife worked for the first approximately 16 years of the marriage and was the family’s homemaker throughout). The Judge acknowledged that ‘needs’ is a misnomer in this case: he was looking at the provision of an appropriate lifestyle and capital base to provide for the wife for the rest of her life.

Take away

The Court of Appeal in Brack indicated that the presence of a pre-nuptial agreement does not restrict the court to make an award based solely on a party’s needs. Fairness may require, albeit unusually, an award on a sharing basis in excess of needs even where this is contrary to the terms of a pre-nuptial agreement. However, the decision in BI v EN shows that such circumstances must be highly unusual indeed. This decision reinforces the general expectation that the presence of a valid pre-nuptial agreement may exclude claims to share in matrimonial assets, even when those assets are significant and built up over a long marriage.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, September 2024