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.
