Analysis
HN (the wife) married AN (the husband) on 30 September 2001. In July 2000 they had chosen a property known as Brooklands Farm (Brooklands) to be their future matrimonial home; it had been purchased in July 2000 for £725,000 by a Bahamian company called WP Ltd, which was owned by a Guernsey trust called the F Trust.
The F Trust was created on behalf of AN’s grandparents by a trust deed dated 19 January 1989. In 1998 various beneficiaries had received distributions in satisfaction of their respective entitlements and from this date only AN remained a beneficiary. In July 2000, AN had contacted the trustees to say that he had identified a property which he would like to acquire, and that he wished to investigate the viability of restoring the property to its former use as a riding school and would develop a business plan. The purchase was facilitated by an interest-only mortgage of £500,000 from the bank. The balance of the purchase price was provided by the F Trust. The origin of that equity balance was monies generated by the husband through business dealings and deposited in the trust.
From about March 2001 the trustees were in correspondence with the husband about the terms of a tenancy which was to be put in place between the company and the husband and wife. For the following three years discussions took place about the terms of the tenancy and the rent which should be payable. It was a slow process. Two tenancy agreements were signed on 25 March 2004.
Not very much rent was paid and by June 2005, more than half the rent was outstanding. The main purpose of establishing the tenancy was to provide comfort to the mortgagees, who required a proper legal arrangement to ensure that the interest on the bank loan was met in a secure and timely way. In fact the trustees had sufficient other resources (also originating from the husband) to defray the mortgage repayments so one way or another there was no special urgency so far as the trustees’ position was concerned.
The marriage broke down and the wife presented a petition on 20 May 2004. On 20 August 2004 the trustees served a formal notice to vacate by 15 September 2004 and on 19 December the wife left the property. The husband remained in occupation until the middle of this year when, unable to sell the property, the trustees re-let it for a period of 12 months to third parties.
The wife sought a property adjustment order but not in respect of the matrimonial home. During the interlocutory stages of the wife’s ancillary relief application the point was taken that Brooklands was and is subject to an ante-nuptial settlement and that the court therefore had the power to vary its terms under s24(1)(c) of the Matrimonial Causes Act 1973. The trustees of the F Trust were joined as parties and permitted to file and serve written evidence. The wife argued that looking at all the circumstances surrounding the purchase of Brooklands the property was held by the trustees of the F Trust on the terms of an ante-nuptial settlement capable of variation by the court. While it was conceded by the wife that in its original form, established as it was in 1989, it could not be, at that stage, regarded as a nuptial settlement, she argued that by the purchase of Brooklands as their future home in 2000 (by which time the husband was effectively the only remaining beneficiary of the trust), Brooklands itself became subject to an ante-nuptial settlement.
Both the husband and the trustees resisted that interpretation. While they accepted that the purchase of a matrimonial home might in some circumstances constitute an ante-nuptial or post-nuptial settlement, in this case, they maintained, the terms under or by which the husband and wife occupied Brooklands were no more than as tenants of the trustees pursuant to an assured short-hold tenancy. That tenancy agreement was eventually reduced to writing and signed on 25 March 2004, some two months before the wife presented a petition for divorce.
Held:
- 1) The authorities made it clear that the court should consider the question broadly and ask itself whether or not it was an arrangement which made ongoing provision for the husband, wife and/or child in those capacities. Motive is irrelevant.
- 2) Brooklands was bought by the trust during the parties’ engagement and prior to their marriage. There could be no doubt it was nuptial. In terms of the question of ongoing provision for them during their marriage, it was hard to think of any arrangement that was more ongoing than the provision of a matrimonial home. If the matter ended there, there could be little argument but that this was an ante-nuptial settlement on the parties to the marriage and later the child.
- 3) The intervening tenancy arrangement did not alter the character and true legal relationship between the husband and the trustees. The intervention of the rental arrangement or tenancy agreement was more form than substance created largely to satisfy the requirements of the lending house who provided the mortgage. Such a legal arrangement was to give them comfort that there was some method of enforcing payment against the beneficiary to ensure that the interest payments were met.
- 4) The husband and the trustees always remained in the relationship of trustee and beneficiary and the tenancy did not affect that fundamental position. That was a subordinate and intermediate legal arrangement which did not undermine the fundamental relationship of trustee and beneficiary which pre-existed its creation and has carried on since its expiry. The settlement stood behind that tenancy which, in a sense, was only a part of the terms of the settlement.
5) On the basis of the evidence available and looking at all the circumstances of the purchase of Brooklands and its use throughout the parties’ marriage, it constituted an ‘ante-nuptial settlement capable of variation pursuant to s24 of the Matrimonial Causes Act 1973‘.
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