Her Royal Highness Tessy Princess of Luxembourg, Princess of Nassau and Princess of Bourbon-Parma v His Royal Highness Louis Xavier Marie Guillaume Prince of Luxembourg, Prince of Nassau and Prince of Bourbon-Parma and another

JurisdictionEngland & Wales
Judgment Date20 December 2018
Neutral Citation[2018] EWFC 77
Date2018
Year2018
CourtFamily Court

Financial remedies – Matrimonial assets – Family home purchased by legal entity holding royal family money – Documentation setting out legal position incomplete – Resulting trust – Form TR1 contained declaration of express trust in that beneficial interest held by husband and husband’s father – Status of Form TR1 – Whether inheritance prospects and family money were financial resources available for distribution – Variation of post-nuptial settlement.

The husband was the third son of the Grand Duke of Luxembourg; the wife was Luxembourgish but not of royal descent. The couple began their relationship in 2004 and married in 2006; they had two children, now aged 12 and 11. Following the birth of the younger child, the wife gave up her position as an officer in the Luxembourg army, at the request of the husband and his family. In 2009, the wife was formally recognised as a member of the royal family. During the marriage the couple lived first in the USA and then in London, pursuing academic studies. The marriage broke down in the summer of 2016 and decree nisi was granted in early 2017. The husband then moved from the family home in London to Paris to live with his sister in a family property; the wife remained in the family home with the children. There was considerable media coverage of the couple’s separation and divorce proceedings, some of which took the form of personal attacks on the wife.

The fortune of the Grand Duke’s family was defined in ‘the Family Pact of 1783’, as restated by the Grand Ducal Decree of 11 June 2012. The ‘Pact’ identified ‘old family money’ (the Großherzogliches Fideicommiss/fidéicommis grand-ducal), analogous to the Crown Estate in the UK, and a separate category of money received from the Luxembourg state, analogous to the Civil List in the UK. A structure known as ‘ADB’ held and managed both categories of asset, on behalf of the reigning Grand Duke, and, in addition, managed the current Grand Duke’s ‘private’ money. When real property was purchased outside Luxembourg, the practice of ADB was to acquire the property in the name of one or more members of the Royal Family and to transfer money from one of the categories of fund directly to the vendor. The individuals who held the legal title did so as nominees and entered into a declaration, usually a document known as a ‘compromis de vente’, confirming that the asset was held on behalf of ADB and/or that on request they would surrender the asset to ADB. Although ADB could not easily be categorised as a company, trust or foundation, the wife ultimately accepted that ADB had a separate legal identity, capable of holding an interest in property, and ADB was joined to the proceedings.

During the financial remedy proceedings, the couple exhausted the majority of their own liquid funds on legal costs, spending about £500,000 between them. The wife still owed £66,000 to her former solicitors; she was now representing herself. The wife was now seeking, among other things, either a lump sum of £1.5 million, plus purchase costs, with which to purchase a home or a life interest in a property of that value; spousal maintenance of £10,000 pa; child periodical payments of £30,000 pa per child until completion of tertiary education; and payment of her outstanding legal fees (plus school and medical fees). Her main arguments as to where the funds should come from were that: the husband would inherit considerable sums in the future; his family would provide any money needed to ensure that he could meet any award ordered by the court, and, specifically, the family home in London had been owned by the Grand Duke and the husband together, and was not beneficially owned by ADB. She accepted that ADB had provided the funds used to purchase the property and that the family’s intention had always been to return the proceeds of any eventual sale to ADB, but relied on the property’s Form TR1, which listed the husband and the Grand Duke as holding the property on trust for themselves as joint tenants, and on Goodman v Gallant [1986] 1 FLR 513, to argue that this express declaration of trust in the conveyance governed the beneficial interests in the property.

The husband was seeking dismissal of the wife’s claims for spousal maintenance; child periodical payments of £3,000 pa per child until they each ended secondary education; ownership of the family car to be transferred into the wife’s sole name, and no order as to costs. Neither the husband nor ADB disputed that there was a post nuptial settlement in respect of the former matrimonial home, accepting that it had been purchased as a home for the family, but both claimed that the husband and the Grand Duke held the legal title as nominees/bare trustees for ADB, relying on a compromis de vente which had been signed by the Grand Duke but not by the husband and which had not been dated or registered. The husband accepted that he had previously inherited €510,750, but claimed that his prospects for any further inheritance were uncertain. A letter from the Grand Duke and Grand Duchess stated that while they were prepared to continue to pay their grandchildren’s school fees and medical insurance, plus any additional medical expenses, they did not intend to pay the husband anything with which to meet an award in the wife’s favour, because they did not consider that this would be fair to the husband’s siblings.

The wife was currently earning £75,000 pa gross, but had recently handed in her notice. The husband was not currently in employment; he received an annual allowance of €40,000 paid to him by his parents.

ADB was offering the wife occupation of a new property, at a cost of £1.5 million plus purchase costs, on the basis of a licence to remain until the younger child completed his first degree, irrespective of whether the wife remarried or cohabited. This offer was initially said to be conditional upon the couple signing a non-disclosure agreement, prohibiting them both from commenting negatively about each other or the wider family, or from publishing any private information to the media, but ADB accepted during the hearing that, even if such an agreement was not signed, the offer would stand.

Held – (1) The court was satisfied that the husband did not have a beneficial interest in the former matrimonial home and that the property was not a matrimonial asset available for distribution by the court. The purchase price had been paid directly to the vendor by ADB, acting as a purchaser, from the ‘old family money’ fund; it was relevant that the preparations had included a compromis de vente, which evidenced the parties’ intentions, albeit that the document was not complete. There was nothing in the evidence to suggest that the monies originally provided from the old family money fund constituted a loan or a gift to husband and the Grand Duke. The court was satisfied that, at the time the purchase monies had been paid by ADB, it had been the settled intention of ADB, the Grand Duke and the husband that ADB would hold the beneficial interest in the property (see [106], [109], [112], [113], [116], [117], below).

(2) Having been satisfied on the unchallenged expert evidence before the court that both the old family money fund and ADB had separate legal personalities, the court was satisfied that upon the payment of the purchase monies by ADB, a resulting trust of the beneficial interest in the former matrimonial home had been created in favour of ADB. Stack v Dowden[2007] UKHL 17 did not apply, as this was not a ‘domestic consumer context’ case, in which a couple in an intimate relationship jointly purchased a property in which they intended to reside, perhaps with the assistance of a mortgage; and, in the transfer document, executed an express declaration of trust over the property in favour of themselves, thereby setting out their beneficial entitlement as part of the purchase they had made. Whether the beneficial interest in the former matrimonial home was owned under the resulting trust by ADB, which had paid the purchase monies, or by the old family money fund, which had provided the purchase monies, was not clear, but it was not necessary to decide that point for these purposes. The key point was that the purchase monies had not come from the husband or the Grand Duke and they had not intended to own the beneficial interest in the property (see [71], [112]–[114], below).

(3) The declaration of an express trust purportedly evidenced by the TR1 could only be effective if, at the time they had purported to declare it, the husband and the Grand Duke had been ‘able’ to declare a trust of the beneficial interest for themselves, for the purposes of s 53(1)(b) of the Law of Property Act 1925. They had not been able to do this, as, at the time of the declaration, the beneficial interest in the property already vested in ADB. Whilst Goodman v Gallant [1986] Fam 106 stated that there was no room for the application of the doctrine of resulting or constructive trusts ‘unless and until the conveyance is set aside or rectified’, the more recent Pankhania v Chandegra[2012] EWCA Civ 1438 expressed it differently, stating that there was no room for the application of the doctrine of resulting or constructive trusts unless the defendant had ‘established a case for setting the declaration of trust aside’. It would be artificial to proceed on the basis of Form TR1 when it was plain on that evidence that the husband and the Grand Duke had not been ‘able’ to declare a trust of the beneficial interest by reference to s 53(1)(b) and that any application to set aside the TR1 declaration on the grounds of mistake would be bound to succeed. A person could not declare an express trust in a beneficial interest that was not theirs (see [111], [115], below).

(4) The purchase of the family home had comprised a post-nuptial settlement; the interest created by that settlement was analogous to a bare licence, determinable on the giving of a...

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1 cases
  • B v B (Ancillary Relief)
    • United Kingdom
    • High Court (Northern Ireland)
    • 26 Febrero 2019
    ...v His Royal Highness Louis Xavier Marie Gu illaume Prince of L uxembourg, Prince of Nassau and Prince of Bourbon-Parma and another [2018] EWFC 77 : “I am likewise satisfied on the evidence before the court that the husband's prospect of a future inheritance is not sufficiently certain to en......

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