This judgment is being handed down in private on 19 January 2012. It consists of 91 paragraphs and has been signed and dated by the judge.
The judge gives leave for the case to be reported without anonymisation as Kremen v Agrest (No.11) (Financial Remedy: Non-Disclosure: Post-Nuptial Agreement)
Strand, London, WC2A 2LL
B e f o r e :
| Jenna Kremen
|- and -
|- and -
The Respondent (who did not appear) was assisted by Mr J Beck as a McKenzie Friend
Mr F Feehan QC (instructed by Horne Engall & Freeman) for the Intervener
Hearing dates: 12-16 December 2011
Crown Copyright ©
Mr Justice Mostyn:
A McKenzie Friend is a person who is permitted to sit beside a litigant-in-person in court in order quietly to assist that person in a range of ways fully described in various authorities, and indeed now very fully in the President's Guidance of 14 October 2008, now reproduced at page 2882 of the 2010 edition of the Family Court Practice (the Red Book). All those authorities and everything in that President's Guidance clearly contemplate that a McKenzie Friend is somebody who has a very important role in relation to a litigant-in-person who is himself personally present in the courtroom. There is absolutely nothing in any authority of which I am aware, and certainly nothing in that President's Guidance, to suggest that a McKenzie Friend is somebody who in some way can come to court without the presence at all of the litigant-in-person, but in some way to appear as a representative or advocate on his behalf. Before that can happen, an application has to be made for a case specific grant of a right of audience under the relevant statutory provisions, and no such application has been made to me, or so far as I am aware, to the court.
i) Agrest & Anor v Kremen  EWCA Civ 259 (24 January 2011) where Black LJ dismissed the applications by H and Mr Fishman for permission to appeal my judgment of 15 October 2010.
ii) Everclear Ltd v Agrest & Kremen  2 FLR 506 (9 March 2011), where Mr Chesnokov's appeal against my judgment of 3 December 2010 was dismissed (Wall P, Sedley and Arden LJJ). Mr Chesnokov's application for permission to appeal to the Supreme Court was dismissed on 27 June 2011.
iii) Kremen v Agrest  EWCA Civ 1014 (13 April 2011) where Black LJ granted W permission to appeal the order of Holman J dated 14 February 2011.
iv) Kremen v Agrest  EWCA Civ 1482 (19 October 2011) where the Court of Appeal (Thorpe and Arden LJJ) allowed W's appeal from the order of Holman J dated 14 February 2011.
Pulling the threads together it seems to me that where the court is satisfied that the disclosure given by one party has been materially deficient then:
i) The Court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden.
ii) But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the Court is satisfied he has not got.
iii) If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.
iv) In making its judgment as to quantification the Court will first look to direct evidence such as documentation and observations made by the other party.
v) The Court will then look to the scale of business activities and at lifestyle.
vi) Vague evidence of reputation or the opinions or beliefs of third parties is inadmissible in the exercise.
vii) The Al-Khatib v Masry technique of concluding that the non-discloser must have assets of at least twice what the Claimant is seeking should not be used as the sole metric of quantification.
viii) The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that than that the Court should be drawn into making an order that is unfair to the Claimant.
"...my starting point (albeit I stress that I base it entirely on the judgments of others) is one of enormous sympathy for the plight and position of the wife in her titanic struggle to obtain any justice and any significant funding from her former husband and the father of her children. … At paragraph 29 of his judgment of 16 April 2010 Mr Mostyn described the husband as "a very rich man". Yet this wife and mother has struggled remorselessly to obtain even small sums from him."
"This matter first came before the court in, I believe, late 2007. Since then there have been approximately 50 court orders made. The demands that this dispute has made of the family justice system has been prodigious and disproportionate"
i) The non-molestation and occupation orders against H were renewed for 12 months.
ii) W was granted leave to bring proceedings under Part III.
iii) An interim maintenance order was made in the Part III proceedings that H pay W £8,000 a month and the children's school fees.
iv) In event of Whitecliff being sold, the proceeds were to be held by the conveyancing solicitors to the order of the Court
v) Everclear and H were restrained from dealing with or mortgaging Whitecliff. It is this order to which I referred in paras 28 -32 of my judgment of 3 December 2010.
"I have come to the clear conclusion that, as regards his obligations to maintain his wife and his children, the husband is actuated by extreme malice towards the wife. He has the means to pay but he refuses to do so."
i) Provision be made for the imposition of a freezing injunction against [H] and Everclear Ltd whether by themselves their servants, agents or otherwise that they shall be restrained from taking or permitting any step to be taken that leads to a charge, sale or any disposition or transferring out of the jurisdiction or otherwise dealing with any kind of property including South Lodge, Burhill Road, Surrey, monies standing to the credit of the Court Funds Office and other bank accounts with intent to defeat a claim for recovery of the debts by the applicant under Part 7 of the Civil Procedure rules as well as the creation of any tenancy of that property save with the written permission of [LF] or order of this court.
ii) Provision be made for the imposition of a charge on the South Lodge as well as monies standing to the credit of the Court Funds Office and any other property items of Mr Agrest located in the United Kingdom for securing the payment of any money due or to become due under the judgment or order.
iii) Provision be made for the payment of the debt of Mr Agrest amounting to US$ 10 million (or £ 6,397,953 calculated at the exchange rate GBP/USD=1.563 as of 6 December 2011) to [LF].
iv) The net proceeds of sale of the South Lodge, Burhill Road, Walton-on-Thames, Surrey as well as net proceeds of sale of any other property items of Mr Agrest located in the United Kingdom to be released to [LF]
i) The application by GC for a charging order absolute made in proceedings numbered HQ11X02561, which proceedings have been transferred to the Family Division by the Queen's Bench Division, shall be heard on 12 December 2011 at the same time as the hearing of the Applicant's substantive claim for a financial remedy. …
ii) The application of LF dated 19 October 2011 shall also be heard on 12 December 2011 at the same time as the hearing of the Applicant's substantive claim for a financial remedy. The Court however notes that the application appears to seek a civil judgment and should properly have been issued pursuant to the CPR in the Queen's Bench Division. LF is therefore put on notice that his application is liable to be struck out for not adopting the correct procedure or venue.
iv) As to the Respondent's various applications contained in his faxed letter of 28 October 2011:
a) The application that the Court pay for his travel and hotel expenses for the hearing on 12 December 2011 is refused as being totally without merit;
b) The application that £300,000 be released to him from the funds in Court, which was not supported by any sworn evidence as to his means, is refused as being totally without merit;
d) The application that the court provide him with a translator at public expense is refused as being totally without merit, the court being satisfied that his command of the English language is highly proficient; and
e) His application that Mostyn J be recused from the final hearing is refused as being totally without merit.
The means of the parties
"It is submitted there is ample evidence upon which the Court may properly conclude that the respondent has is a very wealthy man indeed. It is impossible to assess his wealth accurately because he has chosen to hide the truth. The logical inference to be drawn is that chooses to do this because he is, as the applicant claims, a very wealthy man. In all the circumstances it is submitted an estimate of his worth as at least £100,000,000, would not be unreasonable on the evidence available."
"I have not worked since 1998. Having earned approximately US$10m by that time I stopped working as I wanted to devote all my time to my children."
In an affidavit dated 6 May 2009 he stated:
"As previously stated in this affidavit, my financial situation deteriorated rapidly in 2007. I do not dispute that when I came to England I was a man of significant means."
In an affidavit dated 8 October 2009 he stated:
"As earlier in my life I was a successful businessman, I retired in 1998. Since 1998 I have no office and was a passive investor in a few companies. But in 2007 my investments became practically zero due to the actions of Russian Government and wrong business decisions."
"Mrs Kremen-Agrest is able to demonstrate that she owns personal net assets of a value exceeding the sum of £2 million in the form of Whitecliff, Horseshoe Ridge, St George's Hill, Weybridge, Surrey a property, which was purchased in September 1999 for £2,100,000 which has been recently valued at £3,250,000 and which is held in her sole name. We are instructed that there are no outstanding charges or liabilities in respect of the property.
The funds used to purchase this property were derived from her husband's varied entrepreneurial activities which is confirmed in the letter enclosed from Banque Safdie, Mr Agrest's Swiss bankers since 1994. In particular, Mr Agrest began his career in 1982 as an engineer at the Rosgiprovodhoz Institute. In 1984 he commenced work for the Moscow Management Office of "Circus on the Stage" as head of the staging section. He was very successful in this post and by 1986 was promoted to the position of Director of Special Events of the Roskontsert Festival Department. In 1987, when private concerts were permitted in the USSR, he became the Director of the Nautilus Pompilius Group - the most popular group in the USSR at that time.
In approximately 1988, we are instructed that Mr Agrest established a Co-operative in Kazakhstan which was to concentrate on the production of promotional merchandise for the stars on the Soviet stage at that time, having previously obtained exclusive rights to trade such merchandise at their performances.
In 1989, in partnership with others, Mr Agrest established a company called "Red Line Moscow". This company entered into a number of diverse ventures. For example, it opened one of the first independent publishing houses in Moscow, established factories producing and manufacturing permanent magnets using rare metals, headlights and steel-wedded girders for theatrical/concert lighting. The company also engaged in concert based activities and opened an advertising agency. In addition, the company had departments dealing with trade in textiles from China and footwear and furniture from Italy.
We are instructed that a considerable amount of income was generated by the company and its owners by exploiting the difference between credit interest rates and inflation and trading in clearing currencies of countries of the former COMECON (Council for Mutual Economic Assistance).
From approximately 1994, we are instructed that Mr Agrest began to engage in projects connected with oil, for example, settlement of accounts of oil companies and NGDU with energy specialists.
Contemporaneously Mr Agrest was a co-owner of a company called "Slavtek" in Nizltnevartovsk. From 1996 to 1998 he was also a co-owner of the Business-Paritet Bank in Moscow and actively participated in the placing of promissory notes belonging to the company "Interural" for the total sum of US$l50 million.
We are instructed that Mr Agrest, also undertook projects connected with property and was and continues to date to be a co-owner of the company "BioMix" which was concerned with wholesale trade in yoghurts and has investments in the woodworking industry.
From 1998 onwards, we are instructed that Mr Agrest began to limit his involvement in business activities to enable him to devote more time to his family. Since this time, he and Mrs Kremen-Agrest have supported their family with the dividends received from monies invested in the companies above, property as well as incomes generated from activities on the bonds markets."
i) On 20 January 1997 an agreement, handwritten and unwitnessed, that LF would have the use of all companies registered in H's name in Liechtenstein for five years.
ii) On 21 January 1997, again handwritten and unwitnessed, an agreement that H would pay to LF "US$500,000 annually within three years (sic) starting from the day of execution of this note". This was in respect of LF's "share in profit of the STA Bank Inc., registered in Aiwo, Nauru".
iii) On Saturday 1 February 1997, again handwritten and unwitnessed, an agreement, said to be supersessory of the agreements referred to above, which provided for:
a) Transfer by LF to H all of his (LF's) 50% share in all businesses outside Russia including an Austrian entity called BAST, as well as the Liechtenstein firms and the Nauru bank referred to above.
b) A current valuation of LF's interests in these businesses of US$2.5m.
c) An agreement that H would pay US$5m for LF's interests no later that 1 February 2007.
iv) On Saturday 1 February 1997 an agreement, this time typed up and witnessed by four witnesses namely Messrs Dubinin, Klimashevskiy, Frolov and Sheynin. This agreement relates to the Russian businesses of H and LF. It is basically the same as agreement iii) above. LF was to transfer his 50% share in the Russian businesses to H; that 50% share was valued at $2.5m; but H was given until 1 February 2007 to pay $5m for that 50% share.
i) July 1992: Family moves to Vienna. Family home is purchased in W's name.
ii) 1997: H buys land in Austria in W's name.
iii) 1997: Flat in Israel in Israel purchased in W's name.
iv) 28 November 1997: H buys land in Russia.
v) 4 June 1998: H buys flat in Novopodmoskovny Moscow.
vi) 26 October 1998: Land in Greece bought in W's name.
vii) 1999: Former matrimonial home, Whitecliff purchased for about £2,500,000 (mortgage free) in the sole name of W.
viii) 1999: H buys a flat in Herzlia, Israel in W's name.
ix) 9 April 1999: H establishes Arenta Liechtenstein Stiftung ("Arenta"). Bank statement shows nearly CHF10 million in the foundation.
x) 4 July 1999: STA Ltd and STA Aviation Management Services incorporated. H is a director of both.
xi) 1 September 1999: STA Ltd agrees to buy Grantley Place Esher (6 plots/properties) for £5,375,000.
xii) 31 December 1999: Statement from Arenta Liechtenstein shows foundation has a value of CHF 9,639,546.57. Statement from Pitaro Stiftung Liechtenstein, (of which H is trustee), shows foundation has a value of almost CHF 10m.
xiii) 17 August 2001: GCC Investments Incorporated. H appointed director.
xiv) 15 July 2003: H buys 18901 Collins Avenue, Unit 2404, Sunny Isles Beach, Florida 33160.
i) In the transcript of the dialogue with Mr J Cohen QC H explained how Jolima was the middle-man between a steel production company and the bank. He stated
"If, let's say, if this deal we are working with now successful, which should be, the price of the company should be let's say $100 million … let's say £75 million. … Then my share, because I sold the company I can't receive but I think if they have now renegotiated because now [inaudible] second is available, we are thinking the company has to have about 25 … Let's say 15% to be on the safe side, it means £15 million and my share should be £15 million if it successfully goes though"
ii) In my judgment of 16 April 2010 at para 31 I referred a letter which purported to describe H's role as a mere employee within Jolima. While I am sure that it was false for the author to have thus portrayed H, the letter demonstrated huge and varied business activity by Jolima. It stated:
"Decisions about necessity or business trips are made solely by the company management on the basis of economic expediency. I would like to state that Boris Agrest's business trips are highly effective. Typically 20% of negotiations result in making deals. Boris Agrest's performance is about 90%. Specifically, his business trip to Mauritius resulted in joining a large electric grid company as a founding shareholder, while his business trips to India and Austria resulted in signing profitable contracts with Russian and Norwegian fishing companies. Boris Agrest's trips generate considerable profit for our company, far exceeding their costs. We are going to continue sending Boris Agrest on these business trips that we regard as expedient."
iii) In my judgment of 3 December 2010 I referred in para 14, 17(iv), 22 and 24 how Jolima was used to enter into tenancy agreements of South Lodge on and after 27 March 2008.
iv) In that same judgment at para 25 I described how on 1 March 2009 GC entered into an agreement with Jolima whereby Jolima agreed to act as his agent/consultant in the sale of an ailing Kyrgyzstani bank owned by GC called Akylinvest Bank.
v) In the EFG memo dated 13 May 2010 referred to in para 10 of my judgment of 16 April 2010 H is described as having investments in Los Angeles and in Russian Banks and described the nature of his business as "energy/investments". It is reasonable to suppose that this was largely transacted through Jolima.
"Hereby I confirm that Mr Boris Agrest since 15th May 2010 no longer works as a Representative of Jolima Holdings Ltd. Jolima Holdings Ltd wishes great success in Mr Agrest career and personal life"
"On 6 June 2007 contracts were exchanged in relation to South Lodge with H named as purchaser. The purchase money derived from off-shore entities called Garry Trading Inc, Gratex Finance Ltd and Tricommerce SA. On 1 August 2007 South Lodge was transferred into the name of Everclear Ltd as H had earlier assigned the benefit of his contract to buy South Lodge to Everclear upon completion. Thus Everclear was the nominee H decided to use at the time of purchase."
"He says that although he has been very rich his business activities have suffered greatly. He told me that his first fortune was made by operating some 250 gaming machines which 10 years ago were bringing him in the enormous sum of £40,000 a month. The second fortune was by the provision of snack machines in over 2000 Moscow schools. But he says changes in legislation have brought both those businesses to an end. I have seen no documents about the businesses, their profitability or their demise and I cannot form a view about it. He says that he is now worth nothing and that all his money has gone."
Within his position statement produced by Mr Beck H stated that a company called Makensa was set up for participation in the snack machine project. He stated that:
"Only three payments were made from the bank account of this company since 16 December 2005 till 7 June 2006 to the total amount of US$45,502.86, as a payment of office rent. This company wasn't used anymore. I have no information about it further destiny".
"Our research identified that Makensa Holdings limited was found to be part of the Starpoint Group of Companies. This is a specific network of associated companies involved in the Financial Services sector. Starpoint Trading is a commercial vehicle created to introduce and allow Cypriot and Russian registered businesses to do work with each other. The following information has been obtained on Starpoint Trading:
Starpoint Trading - Part of the Starpoint Group and Starpoint International Network.
This company has three main offices located in North America (New York) Contact details being E-mail: nyWistarpoinLhk, Europe (Moscow) The International Center for Logistics BFG-Trans Grant, 25212 Moscow, Russia and China (Hong Kong) Starpoint Trading Limited, Dina House, Ruttonjee Central, 11 Duddell Street, Hong Kong - CEO firstname.lastname@example.org. There were over 40 separate businesses making up the Starpoint Group from Russia alone, anyone of which could have further connections to the subject of enquiry."
"Ms Kremen in her court bundle made a claim without any proof that I have control of assets worth 100 min GBP. Relying on support of Mr Mostyn, she made such claims now not only without any proof but clearly contradicts her own signed documents which she submitted to the Home Office, UBS, EFG Banks and where she claimed my total wealth was 10 min. GBP. I categorically deny any ownership over the companies mentioned by Ms Kremen. As she makes such claims without any proof and to stop wasting the Court time I am ready to sign documents re transfer of ownership of LUKOIL, Petrocommerce Bank, Deutsche Bank Ukraine, Makensa, Kendastar, Hallmark etc to Ms Kremen as well as BP, Sheil, GAZPROM, Dresdner Bank etc "
" I do not accept Mr Mostyn's submission that the materials I have seen justify the inference that the husband's wealth amounts to the $200 million which the wife believes it to be. I am not saying that it does not. All I am saying is that the materials I have seen do not properly justify an inferential finding that it does. But Mr Mostyn does not have to go that far. The inference which in my judgment I can properly draw, and which I do draw, is that the full extent of the husband's present wealth is such as will very comfortably justify on a White v White basis the kind of award which the wife is seeking. If a figure needs to be put to it I would draw the inference, and do, that the full extent of the family assets (that is the assets of both the wife and the husband) is very comfortably in excess of £50 million and probably significantly more than that figure. Reference to White v White and the size of the wife's claim apart there is, I accept, no process of purely mathematical calculation that can be prayed in aid to arrive at or justify such a figure. But there is one valuable cross-check which can be deployed. I ask myself this question: bearing in mind (i) my findings as to the continuing scale of the husband's business activities and (ii) the evidence, summarised in paras – above, as to the size of the commissions the husband can be shown to have been capable of earning, is it reasonable or unreasonable to conclude that the husband over a period of some 20 years was able to amass a fortune of this size? Far from being unreasonable, such a conclusion is in my judgment entirely reasonable. "
" It is quite clear from the wife's evidence, which I accept, that she and the husband enjoyed a very high standard of living, just as it is quite obvious that the husband, whatever his origins, is now a man of significant wealth. But the picture must be kept within the bounds of reality. Whatever the wife's belief – and I neither dispute the honesty of her belief nor dispute that it may be correct – the evidence before me does nothing to support her case that the husband's wealth is to be measured in hundreds of millions. Their lifestyle was undoubtedly grand, but it was not marked with the opulence or extravagance one might have expected if the husband was really worth what she says, nor is she able to point to tangible assets remotely approaching in value what she says he is worth. It may be that there are hundreds of millions invested in intangibles – I am certainly not finding that there are not – but the picture I have does not suggest it. Theirs was not, for example, a lifestyle characterised by yachts and private jets, nor is there anything to suggest that the husband ever engaged in the kind of expensive hobbies and pastimes one often associates with the mega – or even the very – rich"
The post-nuptial agreement
i) H will pay in full for the children's education until each achieves 25 years of age.
ii) W will retain all real estate outside England in her name.
iii) W will transfer all real estate in England in her name to H.
iv) $1m will be paid to W.
v) Any sums in accounts in excess of $1m will go to H.
vi) "Contemporaneous to the performance of the conditions of this contract, the spouses affirm that they will not bring against one another any claims or legal actions of any kind resulting from and/or relating to their marriage and in contravention of the terms of this contract."
"In February 2001, Mrs Janna Agrest turned to me with a request to draw up an agreement of Marital Separation (hereinafter: "the Agreement") and children education, to the case if she will decide to separate from her husband and live apart. Mrs Janna Agrest asked me to represent her, and draw such an agreement, that in a case of their separation, it will guarantee her material situation, and she herself stated me her demands about dividing the mutual property. Mr Boris Agrest agreed to all her demands, mentioned that he does not planning a separation or divorce, and signed the Agreement."
In her oral testimony W firmly denied this account and stated that the entire arrangement was instigated by H. That evidence was not challenged and I accept it. What is striking about Mrs Damsky's evidence is what she does not say. She does not say that she gave any legal advice to W as to the content of the agreement and as to what rights under English, Israeli or any other law she was giving up.
"The husband was due to pay the money back by 31st December 2007 with interest. He has not paid any of it back, save for £10,000. He says he cannot pay it back. It has all gone. So the wife finds herself having handed over the property, which is very valuable, and lost virtually every penny of the million dollars that she was due to receive. The husband shrugs his shoulders and says: well, I have lost much more than that over the last year or so. She is bound, he says, by the 2001 Israeli agreement. She made a bad investment when she lent it to me. Too bad. She is stuck with it. That, to me, is at least at first sight a deeply unappealing argument."
"Although the wife seeks to say that it was the husband's idea to seek the 2001 agreement following a violent attack by him upon her (see B4) that is not supported by Mrs Damsky's account to which I have already referred. Mrs Damsky says it was the wife who approached her and the husband went along with the terms and, of course, the 2001 agreement was approved by the Israeli Court and incorporated into the 2003 divorce. I am not in the least persuaded that the documents were in Hebrew or that the wife did not understand them or the divorce proceedings at the time. I do not believe for one minute that the wife did not know until the spring of 2007 that the parties had been divorced in Israel in 2003. "
In contrast Mr J Cohen QC found:
"14. On 13th August 2003 in the presence of both parties the marriage was dissolved in Israel. There are several bizarre aspects about this. The wife says that she did not know that the marriage had been dissolved and Judge Hughes did not believe her on this. But before the judge there was not the document which appears in my bundle at 2:53, a document which the husband might have claimed privilege about but was happy for me to see, which shows that he consulted solicitors in 2007 about proposed divorce proceedings, and they had trouble finding out where the marriage certificate was, but the note says that he confirmed there is one in the safe. The solicitors were asking subsequently whether he had found out whether there had been proceedings in Israel and he said that he had not yet found out. So it appears that he was uncertain as to whether or not there had been a divorce.
15. Even stranger than that, the parties have lived together as man and wife at all times, both before the agreement and its registration in 2001, and the divorce in 2003. Indeed, in August 2003 the mother was pregnant with Maxim, although it is not clear that she knew that she was at that time. The purpose of the divorce is completely lost on me. Indeed the husband said to me he did not really know what the purpose of it was either. He thought it was some sort of parlour game that she was playing, while she said that she was unaware of it happening at all. They went together from their jointly occupied home to court and back again and continued as if nothing had ever happened. No steps whatsoever were taken to implement the agreement of May 2001."
"… it is an inescapable conclusion that the husband has the capacity to be very aggressive indeed and to dominate the wife. On that point I accept the evidence of the wife that he was on his best behaviour in Court and I accept the evidence of the housekeeper and driver that he was very aggressive towards the wife at home and frequently denigrated her, that he was the boss and what he said happened irrespective of the wishes of the wife or others in the household."
i) For reasons to do with asset protection H decided in 2001 to prevail on W to enter into a marital agreement that was highly disadvantageous to her. An agreement which gave W only about $1.5m out of a huge fortune accumulated during the marriage is likely to be unfair, whether viewed from a needs or sharing perspective.
ii) Although W would have had some idea of the scale of H's wealth, there was no prior disclosure by H.
iii) While W had some help from H's relative Mrs Damsky she did not receive truly independent advice.
iv) While W would have understood the literal words of the agreement she did not know what rights under English law she was foregoing by the agreement. Her agreement was therefore not an informed one.
v) The exercise was in fact a charade, and was made doubly so by the parlour game divorce obtained in 2003.
vi) H has not complied with the agreement. He is not paying for the children. While he formally paid the $1m he almost immediately prevailed on W to give it back.
vii) H has repudiated the whole legal basis for the agreement in Israel.
i) The court should give effect to a nuptial agreement which is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement (para 75).
ii) In determining whether an agreement has been "freely entered into by each party with a full appreciation of its implications" there is no absolute black and white rule for full disclosure or independent legal advice. Rather, the question is whether in the individual case there is a material lack of disclosure, information or advice. Each party must have all the information that is material to his or her decision that the agreement should govern the financial consequences of the marriage coming to an end. An absolute rule would only be necessary if the agreement were to be contractually binding, but this is not the case as there is a safety-net of (un)fairness (para 69).
iii) The presence of any of the standard vitiating factors of duress, fraud or misrepresentation will negate any effect the agreement might otherwise have (para 71). Further, unconscionable conduct such as undue pressure (falling short of duress) will likely eliminate the weight to be attached to the agreement (ibid). Other unworthy conduct, such as exploitation of a dominant position to secure an unfair advantage, will reduce or eliminate the weight to be attached to the agreement (ibid). The court may take into account a party's emotional state, and what pressures he or she was under to agree, as well as their age and maturity, and whether either or both had been married or been in long-term relationships before (para 72). The court may take into account foreign elements to determine whether or not the parties intended their agreement to be effective (para 74).
iv) In determining whether "in the circumstances prevailing it would not be fair to hold the parties to their agreement":
a) The agreement cannot be allowed to prejudice the reasonable requirements of any children of the family (para 77).
b) Respect should be accorded to the decision of a married couple as to the manner in which their financial affairs should be regulated particularly where the agreement addresses existing circumstances and not merely the contingencies of an uncertain future (para 78). This is likely to be so where the agreement seeks to protect pre-marital property (para 79). By contrast it is less likely to be so where the agreement leaves in the hands of one spouse rather than the other the most part of a fortune which each spouse has played an equal role in their different ways in creating (para 80). If the devotion of one partner to looking after the family and the home has left the other free to accumulate wealth, it is likely to be unfair to hold the parties to an agreement that entitles the latter to retain all that he or she has earned (para 81).
c) Is likely to be unfair to hold the parties to an agreement which leaves one spouse in a predicament of real need, while the other enjoys a sufficiency or more (para 81). However, need may be interpreted as being that minimum amount required to keep a spouse from destitution. For example, if the claimant spouse had been incapacitated in the course of the marriage, so that he or she was incapable of earning a living, this might well justify, in the interests of fairness, not holding him or her to the full rigours of the ante-nuptial agreement (para 119).
i) W did not freely enter into the agreement with a full appreciation of its implications. It was the product of pressure from H and there was a material absence of independent legal advice and disclosure.
ii) Moreover, it is doubtful that the parties ever actually intended that the agreement should govern the financial consequences of the marriage coming to an end.
iii) It would be grossly unfair to hold W to an agreement which deprived her of her fair share of a fortune to the formation of which she has, in her own way, equally contributed.
iv) Moreover, the agreement did not then, nor does it now, remotely meet her reasonable needs.
v) And the agreement grossly prejudices the needs of the children.
Assessment of W's award
|W Duxbury at £200,000 p.a.||5,481,000|
|Victor maintenance at £20,000 p.a.||80,000|
|Victor school fees||102,000|
|Maxim maintenance at £20,000 p.a.||220,000|
|Maxim school fees||254,000|
This amount of £8.3m I certify as constituting "maintenance" for the purposes of any enforcement action that W may take under the EU Maintenance Regulation 4/2009 (see Van den Boogaard v Laumen  QB 759, ECJ, and Al Khatib v Masry at paras 128 - 129).
The application of LF
The application by GC for a final charging order
i) When considering an application to make a charging order final the court should bear in mind that a judgment creditor seeking to enforce a judgment debt is justified in expecting that a charging order will be made in his favour (p99E-F)
ii) Where a charging order is sought to be made final after there is an application in train for financial relief the family court should hear both applications (p99C-E); however that does not mean that the wife's claims have priority over those of the judgment creditor (see Austin-Fell v Austin-Fell  Fam 172); the application remains one for a charging order and is not to be treated as if it is an application by the wife for a disposition of the husband's property for her and any children's benefit (p105E-H). Nevertheless the court will take into account all of the circumstances of the parties.
iii) Where there is sufficient money in the case to rehouse the wife and children adequately, albeit at a lesser level than when in the marriage, the charging order should be made (p99C; Llewellin v Llewellin (unreported but see reference at p99C); p99F; see also Austin-Fell)
iv) Where there is insufficient equity to rehouse the family adequately, a Mesher type order ought to be made or a condition attached so as to prevent enforcement until the youngest child is 18 (p99G).
v) Only in exceptional circumstances should there be an outright transfer to the wife with no charging order granted (p100A).
"While it is perfectly true that this court has to take into account any liabilities that a party to the marriage may have, it does not seem to me right that the court, exercising this particular jurisdiction, should necessarily prefer the claims of the creditors to those of the wife and children, and the order, which the registrar made and the judge affirmed, which requires a sale of the house and therefore the forced move of the home and the family, seems to me to result in a preference being given to the creditors over the claims of the wife and the children"
See also Paulin v Paulin  2 FLR 354, CA where Wilson LJ (as he then was) stated at para 54:
"…although I accept that in proceedings for ancillary relief a court will strive to quantify its award to a wife upon a basis which will enable the husband to meet all his liabilities as well, of course, as to maintain himself, it by no means follows, particularly where money is in short supply, that, whether in the context of capital or in that of income provision, the interests of the husband's other creditors always take precedence over those of the wife..."
i) H will pay W a lump sum of £12.5m.
ii) Of this £8.3m is certified as constituting "maintenance".
iii) As a credit against the lump sum W will be paid the net proceeds of sale of South Lodge. I will hear further argument in relation to the form of the order concerning South Lodge, specifically as to whether there should be an immediate order for sale or whether the property should be transferred to W subject to its mortgage.
iv) GC's application for a final charging order is dismissed and the interim order discharged.
v) As a further credit against the lump sum W will be paid the sums held in court save for £80,000 which will remain frozen pending assessment of Kendastar Ltd's costs.
vi) There will be no separate order for child maintenance or school fees.
vii) LF's application is dismissed.
viii) On payment in full of the lump sum there will be a clean break between the parties.
ix) I will hear counsel as to the form of the order and as to costs. My provisional view is that W is entitled to an order for indemnity costs against H and to an order for indemnity costs against GC in relation to his application.