Big City. Big Money. Big Divorce

Word count: 838     Time to read: 5 minutes

The jurisdiction of England and Wales, and London in particular, has gained a reputation over recent years for being the divorce capital of the world and the favoured jurisdiction for wives to get big pay outs from their wealthy soon to be ex-husbands. The recent decision of M v M [2013] EWHC 2534 (Fam), where the wife was awarded a cool £54m (the largest ever pay-out in a contested divorce), will no doubt fuel this perception. But should it?

According the Matrimonial Causes Act 1973, when deciding how the matrimonial assets should be divided up the English Courts are required to take into account “all the circumstance of the case” and a list of non-exhaustive factors to which the court is to give regard are included in section 25 of the Act.  Those factors include the length of the marriage, contributions made within the marriage and the standard of living enjoyed before the breakdown of the marriage. In M v M all of the family’s wealth had been generated during that time through the husband’s business enterprises. Under English law, a spouse who contributes to the marriage by taking care of the family’s home life (and in doing so often sacrifices her own earning capacity) is usually held to have made an equal contribution to the marriage and after a long marriage the starting point for division of assets will generally be 50/50. In M v M the parties had been married for 17 years and so the wife’s award, whilst record breaking, represented only 50% of the ascertainable matrimonial assets.

Those coming from jurisdictions where wives do not receive such generous pay outs, may find such a judgement difficult to accept particularly if they consider that the wife did not really “work” herself during the marriage and enjoyed a high standard of living thanks to the husband’s efforts. However, there is more to this case than a simple division of matrimonial assets after a long marriage and it would be a mistake to think that the case of M v M was nothing more than an example of a wife looking to use the English court’s generosity to get her hands on as much of her husband’s hard earned cash as she possibly can.  A read through of Mrs Justice Eleanor King’s judgment quickly reveals that much of the wife’s three year legal battle was preoccupied with the husband’s flagrant disregard for the legal system and his attempts, at all costs, to keep all of the family’s wealth out of sight and out of reach.  His infractions included hiding assets within company structures, forging signatures to facilitate the transfer of assets, moving assets offshore, using his employees and other family members to distance himself from transactions, lying in his affidavit, disobeying court orders, issuing malicious satellite litigation and failing to attend hearings. The final award was not 50% of all of the matrimonial assets but only those which the wife’s legal team had managed to find and the court actually acknowledged that the wife could have asked for more on the basis that there was likely to be many more millions squirreled away as a result of the husband’s schemes.

It would also be a mistake to think that Mrs M is enjoying her big pay out. The award is only the first step to actually getting what the court had decided she is entitled to particularly given her husband’s determination to avoid participating fairly in the process. Just like Yasmin Prest (whose husband’s non-disclosure contributing to the Supreme Court upholding an order for £17m worth of property to be transferred to her) and Michelle Young (whose husband served time in prison for failing to comply with court orders), Mrs M will appreciate that a court order is little more than a piece of paper if you can’t actually enforce it. Enforcement can often mean more costs and many more months of fighting and if the assets are offshore there may be little light at the end of the litigation tunnel.

But despite such difficulties, London’s reputation as the divorce capital of the world is unlikely to be challenged any time soon and not just because wives want their fair share of the wealth but because that wealth wants to be in London in the first place. London is an incredible city with many international high net worth families traveling from other jurisdictions to experience everything that it has to offer whether on a temporary or more permanent basis.  Those wanting to enjoy the benefits of having a home in here may want to give some thought as to the consequences of the English courts being able to accept jurisdiction should their marriage come to an end.  The risks (for both parties) can be mitigated through the use of a pre-nuptial agreement (or post-nuptial agreement if already married) and such agreements have become increasingly popular in recent years since word got out that the English courts will uphold them as long as certain conditions are met.