Judge splits assets of reluctant husband

Divorce|March 27th 2015

The High Court has split the assets of divorcing US couple despite the husband’s claim that the wife had broken a postnuptial agreement.

In Gray v Work, the couple in question had been married since 1992. While the husband enjoyed a successful career with a private equity firm based in Texas, the wife become a stay-at-home mother to their two children, both now in their teens. The family lived in Tokyo, Japan, for eight years, during which the man ran the company’s local office and made many successful investments, generating millions in profits as well as significant personal wealth.

Whilst there, the couple signed a postnuptial agreement. At the High Court Mr Justice Holman explained:

“One clear purpose and effect was to “partition” the parties’ separate property, that is, to terminate any community of property under Texan or American law, and to provide that the property, including future earnings, of each of them was kept separate and distinct and was the property respectively of him or her alone.”

The agreement was drawn up because the husband wanted to renounce his American citizenship for tax purposes, he continued. The husband subsequently became a citizen of Grenada.

Later the family moved to Hong Kong, and in 2008, to England. In 2012 the husband became a citizen of Ireland, again for tax purposes.

The couple’s marriage ended in 2013 when the wife began a relationship with another man. This had, said the Judge, caused shock and upset to the family.

She left the couple’s home and moved in with the man nearby. Not long afterwards, her husband filed for divorce. During the subsequent financial proceedings, he insisted that his estranged wife was not entitled to a full share of his wealth.

Mr Justice Holman explained.

“The husband’s open offer, which he has never increased during the hearing, is that he will not pay to the wife a single dollar or penny of his own assets or own separate property. He will merely pay to her $5,000,000, which is the value that he attributes to her own separate property which is currently in his possession or control.”

That $5,000,000 would have to cover all debts and legal costs, pay for a new home and provide her with an income. It represented approximately 2 per cent of the couple’s joint assets of approximately $225,000,000.

This was, the husband claimed, because the wife had failed to comply with terms of the postnuptial agreement.

But Mr Justice Holman was unconvinced. He noted that the two decade marriage had been of “relatively long duration” and that:

“During the 20 years the wife was a good wife and a good mother to their two children.”

The wife may not have received proper legal advice when she signed the postnuptial agreement, he declared, and consequently she should not be held to the agreement. The ‘total sum payable” specified in the agreement was “grossly unfair”, he said, if the net result was that she could receive nothing.

Mr Justice Holman also rejected claims that the husband had made a ‘special contribution’ to the couple’s joint wealth and so was entitled to keep more, departing from the general rule that assets should be divided equally on divorce. Such rulings are uncommon and are only granted when the wealthier partner has played an exceptional role in the generation of the couple’s wealth.

But the Judge did not believe that the husband’s role in this case fell into that category or that it would be “inconsistent with fairness” for his contribution to be given special weight in the couple’s financial settlement.

He declared:

“…it would, in my view, be unjustifiably gender discriminatory to make an unequal award.”

Consequently, the couple’s assets were to be split equally.

During the proceedings, Mr Justice Holman displayed a certain impatience with the couple’s apparent unwillingness to settle, telling them that reaching an agreement “should be so easy”.

Read the judgement here.

Photo of Tokyo by Morio via Wikipedia under a Creative Commons licence

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Comments(3)

  1. Luke says:

    “The wife may not have received proper legal advice when she signed the postnuptial agreement, he declared, and consequently she should not be held to the agreement.”
    ========================================================
    .
    What does the Judge base this assumption on ? One suspects nothing as usual, unless unreasonable duress can be shown then if she signed it she should be accountable for it.
    .
    Forget prenups – even postnups are ignored by our judicial system !
    .
    The lesson is clear again for men, don’t let the courts dictate your life.
    Do. NOT. Get. Married.

  2. Caroline says:

    The judge upheld the post nuptual agreement, finding that its terms entitled W to make a claim in the English courts for all financial remedies.

  3. Andrew says:

    You can settle any other sort of litigation or anticipated disagreement by contract which will be binding. Matrimonial law should follow the same path.

    Pre-nups and post-nups should be made cast-iron, with delay if necessary to protect the children (of both parties, not one) during minority. With such legal advice as the individuals choose to take. If none, none.

    In the absence of an agreement the yardstick of equality should apply to rich and to poor, with the same qualification.

    And if parties insist on fighting there should be a Calderbank system with no discretion; again, if necessary to protect minor children, postpone payment – with compound interest at a penal rate.

    It’s not rocket science. It’s about treating adults as adults and making them accept responsibility for their own decisions.

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