NG v KR (Pre-nuptial Contract)

JurisdictionEngland & Wales
JudgeMrs Justice Baron
Judgment Date28 July 2008
Neutral Citation[2008] EWHC 1532 (Fam)
Date28 July 2008
CourtFamily Division
Between:
Ng
Applicant
and
Kr
Respondent
(Pre-nuptial contract)

[2008] EWHC 1532 (Fam)

Before:

The Honourable Mrs Justicebaron D.B.E.

IN THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

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

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

Mrs Justice Baron
1

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

2

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

3

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

4

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

5

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

6

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

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

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

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

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

7

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

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

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

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

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

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

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

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

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

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

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

8

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

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

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

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

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

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

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

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

9

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

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

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

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

d) to cover his income needs a lump sum put at £5.458 million as a Duxbury fund based on his annual budget of £266,600 per annum. This latter budget includes (per the offer letter) some...

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    • Singapore Academy of Law Journal No. 2012, December 2012
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