In exceptionally complex and protracted proceedings Mostyn J ignored the terms of a Post-Nuptial Agreement which was entered into under duress, in the absence of material financial disclosure and which was unfair to the wife and children.
Ms Kremen (W) had signed a Post-Nuptial Agreement with her former husband, Mr Agrest (H), a Russian financier. The Agreement was signed after a 10 year marriage and it purported to restrict her claims on divorce to £970,000.
This was W’s appeal under Part III of the Matrimonial and Family Proceedings Act 1984 Mostyn J described the litigation as “chronic and complex”. Indeed, he rather doubted that his was the final word on the subject.
By the time of the Final Hearing Mostyn J had given three previous Judgments in the matter and there had been earlier Judgments by HHJ Hughes QC, Mr Jonathan Cohen QC and Thorpe LJ. This was an appeal against the Judgment of Holman J in litigation spanning 3 years. Holman J had ordered both parties to attend. H had defied him although he had sent a McKenzie friend.
The Background:
H was 51. W was 44. Both are Russian nationals and married in Moscow in 1991. There were three children of the marriage. H asserted that the marriage was invalid as he was still married to his first wife. H obtained Israeli citizenship in 1995 as did W as his spouse. In 1994 the parties acquired Greek citizenship. W also had Canadian citizenship. At no time during the marriage did the parties live in Israel or Greece for any appreciable period!
They did, however, begin to live in Vienna in 1992 and they purchased a family home there. In 1999 they purchased a family home in Weybridge and moved permanently to the UK.
In 2004 W went to Canada where a second child was born. She returned to the UK later that year and continued to live with H. The marriage was very unhappy by 2007. H commenced proceedings in Israel to enforce the Post-Nuptial Agreement which the parties had signed in May 2001 and which had been approved by the Israeli Court and reconfirmed when the Israeli Court pronounced the divorce in August 2003. Bear with me – it is all extremely complicated!
In May 2007 when H sought to enforce the Pre-Nuptial Agreement W transferred the UK property to him in a moment of significant pressure and duress.
Later that year proceedings followed for Occupation Orders, Residence and Contact, setting aside transfers of property and W sought leave to bring proceedings under Part III which were granted by Mr J Cohen QC in February 2009. At the same year H applied in the Moscow District Court for annulment of the marriage on the grounds that he was already married to someone else. This was granted. H then applied in Israel to set aside the divorce on the basis that the marriage had been annulled. Such prolific litigation is generally a sign of great wealth. Of course, the nullity proceedings were very colourful but not entirely relevant as Part III applies even after a foreign annulment.
By the time the matter came before Mostyn J H claimed that he had no assets whatsoever and that he worked for a Russian business earning the monthly equivalent of £150. By contrast W asserted that he was very rich indeed and worth approximately £100,000,000. She had made an open proposal to settle the case in return for a lump sum of £10,000,000 and presumably she knew that she would face formidable difficulties in litigating and enforcing any Judgment. Assets in this jurisdiction were limited to £654,000 which was deposited in the Court funds office as a result of a freezing injunction plus the house in Weybridge which had a net value of £400,000. Accordingly, there was only around £1,000,000 or so of secure funds.
The Post Nuptial Agreement:
The Agreement dated 15 May 2001 and signed by the parties in Israel provided the following:
i) H would pay for the children’s education until 25 years of age
ii) W would obtain all real estate outside England in her name
iii) W would transfer all real estate in England to H
iv) $1,000,000 would be paid to W
v) Any sums in accounts in excess of $1,000,000 would go to H
This was on the basis of a clean break settlement. Obviously this was highly disadvantageous to W giving her $1,500,000 dollars from a multi million pound fortune. There was no disclosure or real independent advice. This, with all the other factors, led Mostyn J to ignore it completely.
W’s award:
Mostyn J found that she needed a housing fund of £2,000,000 by reference to the family home and the standard of living enjoyed during the marriage plus an annual income of £200,000 capitalised at £5,481,000. He judged general maintenance needs for each of the two children at the rate of £20,000 per annum plus school fees and decided to capitalise these. The Judge addressed the wife and childrens’ needs as follows:
Housing £2,000,000
Duxbury at £200,000 per annum £5,481,000
W’s debts £163,000
Child maintenance for Victor at £20,000 per annum capitalised £80,000
Victor’s School fees capitalised £102,000
Maxim’s maintenance (capitalised at £10,000 per annum) £220,000
Maxim’s School fees £254,000
TOTAL £8,300,000
The Judge then looked at the sharing principle and made an award of £12,500,000 of which the needs figure of £8.3m was certified as constituting “maintenance” with a provisional view that W would be entitled to indemnity costs subject to further argument. No separate Order for child maintenance or school fees was made (as it was included in the £8.3m figure).
He acknowledged that she might only ever receive the sum of £1,000,000 which was in the jurisdiction but felt that the role of the Court was to make a fair award regardless of the potential difficulties of enforcement.
The case is unusual on its facts and has a truly international appeal. What it does make clear is that the Court will ignore a Post-Nuptial Agreement where the terms are manifestly unfair.
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