December Case Law Update 2

CMX v EJX (French Marriage Contract) [2022] EWFC 136

Moor J considers the impact of a French Marriage Contract on a wife’s application for financial remedies, and comments on the use of actuarial reports to calculate pension sharing on the basis of equality of income in equal division cases.

The husband, aged 56, was French and the wife, aged 54, was French/Lebanese/ British. They were engaged in 1993 and married in 1994. Before the marriage in France (in June 1994) they signed a Marriage Contract which was a straightforward “separation de biens” contract. After marrying, they moved to London and had 3 children. The husband worked in finance and the wife worked in a senior capacity for a bottled water company, before making a success of her own business venture which she later sold for a significant amount of money. The marriage broke down in 2020 and the wife issued proceedings in this jurisdiction.

Total assets were £24.3 million of which pension assets were approximately £3.5 million. Almost all the liquid financial assets were held in the husband’s sole name. The wife’s case on the marriage contract was that the parties had pooled their financial resources in accordance with a shared vision that they would be as one. She said she had no legal advice in the run up to signing the contract save for one appointment at the office of the Notary. She did not recall any discussions about money earned during the marriage being excluded from division on divorce. There was no formal disclosure of either party’s resources. She had therefore understood that the Contract just excluded inherited resources. The judge rejected this case and accepted as more plausible the husband’s case that they both signed the Contract with full knowledge as to its ramifications. He was clear that the Radmacher test for upholding the Contract was satisfied and indicated that those who sign marriage contracts must understand that this is a significant step with very important consequences. These contracts will be enforced in France and will not simply be torn up in this jurisdiction. Having accepted that the Marriage Contract did exclude equal sharing, the judge went on to consider the two other limbs of the Miller/McFarlane test, namely compensation and needs. Given the significant resources available and the parties’ high standard of living during the marriage, these were assessed generously and completely. This provided her with an award of about £9.5 million, which would provide her with 3 properties, a pension fund of circa £1.4 million and a Duxbury fund of £2.09 million, plus her interest in a family property in France. This was 38.9% of the total assets and 44.56% of the liquid assets. Inherited / gifted assets were excluded from the calculation.

It is noteworthy that when considering pension sharing the judge said:

“In general there is no justification for awarding more to one party because they are younger or have a longer life expectancy… Moreover, in my experience, the only thing that can be said is that life hardly ever goes to plan, whether it be one party living far longer than expected or another remarrying immediately. It follows that I have become very troubled by directions that ask a pensions actuary to calculate a division on the basis of equality of income in retirement. Apart from the fact that such reports tend to be very expensive, the simple fact is that such a direction almost enshrines the Duxbury paradox into practice. It cannot be right, in general, that the younger you are, the greater your award. In any event, it has no place whatsoever in equal division cases.”

The judge had jurisdiction to deal with child maintenance for the youngest child, the father having been assessed at the maximum of £15,288 per annum. He decided follow the suggestion of Mostyn J in CB v KB [2019] EWFC 78 to calculate the top-up by applying the same rate as the CMS for the income between £156,000 and £650,000 as this would produce a total award of £63,804 which was more than the wife had budgeted for the child. He awarded £25,000 excluding school fees and extras.

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