B v S (Rev 2)

In financial remedy proceedings, a foreign matrimonial property regime does not determine the outcome under English law. It may provide evidence of the parties’ intentions, but it will influence the assessment only if they understood that it was intended to operate wherever they might divorce, including in a jurisdiction applying discretionary equitable distribution.

Capital acquired during the marriage will normally be shared equally, subject to needs and other established principles. Periodical payments should generally be assessed by reference to need alone. The sharing principle should not ordinarily be used to uplift maintenance based on post-separation earnings, except in an exceptional case involving compensation, such as McFarlane v McFarlane [2006] 2 AC 618.

The applicant wife sought financial remedies following divorce from the respondent husband. The parties had married in Catalonia, where separate property was the default matrimonial regime, and had later executed a separate-property agreement in Country A. They subsequently lived in several jurisdictions before settling in England.

The principal issues were the weight to be given to the foreign regime and agreement, the treatment of the husband’s business and trust interests, the appropriate division of matrimonial property, the level and duration of spousal maintenance, and child maintenance. The central question was whether the agreements had been entered into with a full appreciation of their implications for an English divorce.

1. Foreign matrimonial property regime. The court held that the financial consequences of the divorce were governed exclusively by English law. Foreign law was relevant only as evidence of the parties’ intentions when the agreement was formed. The Catalan regime and the Country A agreement did not show an intention that they should regulate an English discretionary financial remedy claim. The agreements therefore received no weight.
2. Nuptial agreements. Applying the guidance in Granatino v Radmacher [2011] AC 534, the court held that a party must have understood more than the agreement’s operation in the country where it was made. The parties must have intended it to have effect wherever they might be divorced, particularly in a jurisdiction applying discretionary equitable distribution. On the facts, neither party had entered the agreements with a full appreciation of those implications.
3. Capital division. The court applied the sharing and needs principles. The parties’ matrimonial assets, including the value attributed to the husband’s business, were to be shared equally. The business was valued at £6m, with a £3m lump sum payable to the wife in three annual instalments. Its assets were treated as resources of the husband under the principles discussed in BJ v MJ [2011] EWHC 2708 (Fam).
4. Periodical payments. The court held that, save in the exceptional circumstances illustrated by McFarlane v McFarlane [2006] 2 AC 618, maintenance should generally be assessed by reference to need alone. The sharing principle should not be used to uplift periodical payments from post-separation earnings, because there is no reliable standard by which such an uplift could be quantified.
5. Orders. The husband was ordered to pay spousal periodical payments of £10,000 per month from 1 March 2012, reducing as the lump-sum instalments were paid. A further payment of £344,000 would effect a clean break in June 2015. No separate child maintenance order was made because the children spent equal time with both parents and the husband paid the school fees and more than half the childcare costs.

First-instance financial remedy proceedings in the High Court (Family Division). No appeal history was stated in the judgment.