One laudable aim of most pre-nuptial agreements is to simplify the division of assets should a marriage end in divorce. As a High Court ruling in an extraordinarily high-value case showed, however, that objective is not always achieved.
The case concerned the nearly nine-year marriage of a property entrepreneur whose fortune, once in excess of $1.7 billion, was said to have plummeted to between $600 million and $800 million due to an economic downturn. He and his wife enjoyed a billionaire lifestyle, complete with five fully staffed luxury homes in fashionable places around the world. Money was, in short, never a concern for them.
Prior to their marriage, the couple signed a pre-nuptial agreement, the detailed provisions of which sought to protect the husband’s pre-marital wealth and to itemise the wife’s entitlements were their marriage to end in divorce – which it did. The pre-nuptial agreement, which was subsequently modified so as to increase the wife’s provision, was properly executed and she did not dispute that it was valid and binding.
The intended objective of the pre-nuptial agreement was to spell out the financial consequences of a divorce with clarity so as to prevent, or at least seriously circumscribe, the scope for future litigation. However, the scale and ferocity of the financial disputes between them arising from the divorce demonstrated the enduring vigour of the law of unintended consequences.
The interpretation of the pre-nuptial agreement was hotly disputed and they had, to date, incurred legal costs of close to £5 million in financial relief proceedings. The Court observed that the litigation had probably been more intense and extensive than would have occurred in a routine financial remedy case in which a pre-nuptial agreement did not feature.
Ruling on the matter, the Court found that, on a correct reading of the pre-nuptial agreement, the wife was entitled to exit the marriage with £37,489,392, net of tax. She would receive about £28 million in cash, with the balance being made up by property transfers. She was also entitled to live in the former matrimonial home, worth about £35 million, until the younger of their two children reached the age of 21.
The husband was further required to pay the mortgage on the family home, cover the children’s school fees and pay a maximum of £100,000 a year towards the cost of employing nannies for them. His child maintenance liabilities were fixed at £23,100 per child per month until they reached the age of 18 or completed full-time tertiary education.