S v S (Matrimonial Proceedings: Appropriate Forum)
| Jurisdiction | England & Wales |
| Judgment Date | 07 March 1997 |
| Court | Family Division |
WILSON, J
Divorce – stay in proceedings – concurrent divorce proceedings – Šbalance of fairness and convenience – appropriate forum – immensely wealthy husband – parties entering into pre-nuptial agreement before marriage – terms providing for financial provision for the wife in the event of husband's death or a divorce and appropriate forum of proceedings relating to any dispute arising from agreement – husband setting up substantial trust fund for the wife during marriage – wife petitioning for divorce in England and applying for financial provision under English law – husband filing for divorce and declaration as to the validity of pre-nuptial agreement in the Supreme Court of the State of New York – parties' concurrent applications for stay in American and English proceedings – judgment in State of New York court that pre-nuptial agreement was valid and within exclusive jurisdiction of American court – whether English proceedings should be stayed in all the circumstances.
The parties met in 1983 when they were each undergoing divorce proceedings from their former spouses. The husband was of Austrian descent and over the years had built up a vast international financial empire worth about US $84m. He maintained residences in the United States, France and England but his main business and residence were based in New York where he had the status of a non-resident alien for tax purposes. He had had two previous marriages with grown up children living in the United States. The wife was a Swedish national with two children from her previous marriage. During the relationship the parties were primarily based in New York but in 1985 the wife decided to set up home in England where her daughters were to be educated. In 1986 the parties began to talk about marriage. However, the husband, with the experience of his previous two failed marriages, was not prepared to enter into another marriage without the protection of a pre-nuptial agreement to limit the wife's claims against him or his estate in the event of divorce or death. In May 1986 negotiations began between the parties' respective American lawyers regarding the terms of a pre-nuptial agreement which was finally executed in November 1986. Under the agreement, the wife agreed to relinquish her rights to claim against the husband's property and the husband agreed to make provision for the wife in the event of his death or a divorce. The husband was required to pay $250,000 into a trust for the benefit of the wife on the date of the marriage and thereafter to make quarterly payments of $12,500 during each year of the marriage until either party commenced an action for divorce, and upon the commencement of such an action, a final sum of $100,000 would be paid into the fund which would then be released to the wife. The agreement also provided that it would be governed by the laws of the State of New York and the parties' rights under the agreement would be interpreted and enforced only in the ŠSupreme Court of the State of New York. In March 1987 the parties were married in London where the wife had her primary residence. During the marriage the parties enjoyed an opulent lifestyle,
the husband made substantial gifts of jewellery and financial payments to the wife and her two daughters. Pursuant to the agreement, he set up the trust fund in Zürich for the wife and made payments into the fund totalling $765,000. In 1988 to 1989, due to a change in the location of her daughters' education, the wife's primary residence shifted from London to New York and back to London. In October 1996 the wife consulted solicitors in London to commence divorce proceedings. When the husband was served with the English petition, he immediately went to New York and instructed lawyers to file for divorce and to apply for a declaration as to the validity of the pre-nuptial agreement in the Supreme Court of New York. In December 1996 the husband applied for a stay of the English proceedings pursuant to s 5(6) and para 9 of Sch 1 to the Domicile and Matrimonial Proceedings Act 1973 and the wife applied for a stay in the American proceedings. On 14 February 1997 the Judge in the Supreme Court of New York held that the pre-nuptial agreement defeated the wife's argument that the forum in New York was non conveniens since the parties had chosen to litigate any dispute in respect to the agreement in New York and any action for divorce which included an application for financial distribution, triggered off the provisions of the agreement and required the dispute to be conducted in New York. He concluded that any claim for distribution of property was a challenge to the validity of the agreement and therefore within the exclusive jurisdiction of his court. Accordingly the Judge rejected the wife's application for a stay and fixed a further hearing for 14 arch. At the hearing of the husband's application for a stay, the main issue before the court related to the amount of financial provision which the wife could claim against the husband in the respective jurisdictions. If the application for a stay was granted, there was expert evidence that since the wife had been represented by an independent lawyer at the time of the pre-nuptial agreement, it was unlikely that the agreement would be set aside and the wife's ability to claim for further financial provision from the husband would be questionable.
Held – granting a stay of the English proceedings: (1) Although the wife's primary reside had been in England for the past 12 years, she also had close past links with New York where she had lived during her first marriage, during the relationship before the parties married and for over a year during the marriage when her daughters were educated elsewhere. Furthermore, the husband's primary residence had been established for many years in New York where his business was also based. It was also Špossible for a wealthy international couple with various homes to each have a primary home in different jurisdictions and still maintain the parties' style of married lie. Therefore, the parties' roots in either jurisdictions would not be as deeply rooted as those couples who live in normal circumstances.
(2) The significance of the pre-nuptial agreement could not be overlooked and the fact that the husband would not have entered into the marriage without the agreement which had been negotiated at length by respective lawyers of each party. Furthermore, the effect of the forum provisions in the agreement was that the parties themselves had created a categorical and exclusive connection between the wife's intended financial litigation and the Court of New York. It was also important that the agreement had provided significant financial provision for the wife while the marriage subsisted for the eventuality of divorce which had been substantially performed by the husband. If a stay was granted and the wife was confined to the provision under the agreement, although she would have to adjust to a lifestyle on assets of less than £1m which might be less than that awarded by an English court, it could not be said that the provision was substantially unjust. Therefore, on the balance of fairness, substantial justice would be done in New York which was clearly the more appropriate forum for the divorce proceedings and the determination of financial issues between the parties.
Spilada Maritime Corp v Cansulex Ltd [1987] 1 AC 460; de Dampierre v de Dampierre [1988] 1 AC 92 followed.
Statutory provisions referred to:Domicile and Matrimonial Proceedings Act 1973, s 5(6); Sch 1, para 9.
Cases referred to in judgment:Butler v Butler [1977] 2 FCR 300.
Chatelard v Chatelard (unreported) CA, 24 October 1988.
de Dampierre v de Dampierre [1988] 1 AC 92; [1987] 2 All ER 1.
F v F (Ancillary Relief: Substantial Assets)[1996] 2 FCR 397.
R v R (Divorce: Stay of Proceedings)[1995] 1 FCR 745.
Spilada Maritime Corp v Cansulex Ltd, The Spilada [1987] 1 AC 460; [1986] 3 WLR 972; [1987] 2 All ER 1.
Jeremy Posnansky, QC and David Balcombe for the husband.
Barry Singleton, QC and Philip Moor for the wife.
MR JUSTICE WILSON. Section A: IntroductionThe husband, who is the respondent to a petition for divorce presented by the wife, applies for the petition to be stayed. He brings his application under s 5(6) of, and para 9 of Sch 1 to, the Domicile and Matrimonial Proceedings Act 1973. It is agreed that proceedings in respect of the marriage are continuing in another jurisdiction, namely in the State of New York. So the issue turns first upon whether the husband can establish, in the words of para 9(1(b), that the balance of fairness (including convenience) as between the parties is such that it is appropriate for Šthe proceedings in the State of New York to be disposed of before further steps are taken in the proceedings here; and then second upon whether he can persuade this court to exercise its discretion to grant the stay.
The hearing of the application proceeded for about five days; and at times I wondered whether I was allowing it to proceed for too long. But there had been a direction for the parties to give oral evidence; and their evidence is indeed at odds in numerous areas, including some germane to the issue of forum. Furthermore, a considerable quantity of written material, collected into 12 bundles, had been put in evidence, mainly by the wife, upon which it would have been less than fair to exclude oral evidence. I have found it exceptionally difficult to reach a decision; and it was the insight into the case collected from the oral evidence, coupled with the exceptional degree of assistance from counsel on both sides, that has at length enabled me to do so. In what follows, however, I must strive not to decide more issues of fact, nor to survey more material, than is necessary for the despatch of the issue of forum.
Section B: The main issueOstensibly, the issue is whether the wife should be permitted to seek...
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