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.

Hey, where did my divorce go? Some alternative thoughts on Vince v Wyatt

click on image to enlarge timeline

Word count: 694

Time to read: 4 minutes 

The case of Vince v Wyatt [2013] EWCA Civ 495 was heard at the Court of Appeal in May 2013 and related to an application for a financial remedy which was brought by the Wife 27 years after the parties separated and 19 years after decree absolute was granted. At the end of their relatively short relationship neither party had any assets or significant income to speak of, and the Court noted that both had embraced a “New Age” lifestyle.  Over the course of the next three decades the parties’ financial lives had little to do with the other save for a couple of child maintenance applications by the Wife.  Both parties started new relationships, the children of the family grew up and reached maturity and the Husband launched a business recycling discarded materials into wind turbines.  That business, to everyone’s surprise, went on to be worth millions.

Given this timeline, it is difficult not to look at the Wife’s application with a degree of cynicism particularly when she also issued an A v A application to the tune of £125,000 for the Husband to pay her legal fees so that she could pay her lawyers to bring the claim against him. The Husband, perhaps understandably, issued an application to have the Wife’s claim struck out under the seldom used Family Procedure Rule 4.4(1). Whilst he was not successful initially the Court of Appeal allowed his appeal on the basis that the first instance judge had construed the rule too narrowly.  The Wife’s claim made it no further.

The analysis of Rule 4.4(1), and its relationship with its counterpart in the Civil Procedure Rules 3.4(2), is undoubtedly the most valuable point which practitioners can take away from this case and will be of particular use when analysing claims which involve a significant delay between separation/divorce and the application for a financial remedy, despite the extremely unusual circumstances of this case.  Among those unusual circumstances was the fact that there remained only one piece of documentation relating to the original divorce proceedings, the decree absolute, which the court was required by law to keep a copy of.

At the time of the divorce, both parties had instructed solicitors (the Wife actually consulted with solicitors on no less than 5 different occasions between 1984 and 2011) but none had retained their files.  It was therefore not possible to know for sure whether the Wife was even entitled to bring a financial claim or whether any such claim had been dealt with and dismissed, although the trial judge did acknowledge that this scenario was unlikely given the standard practice to include such an application in the petition and the lack of financial assets at the time of the divorce.

Whether a firm retains the client’s files and for how long will depend on the agreement made with the client (who is the legal owner of the files) which is usually made at the point of engagement.  If no agreement is made the SRA’s guidance on the retention of client files suggests that firm keep in mind any statutory limitation period which may arise out of the files when deciding how long to keep them.  Given that there is no limitation period for a claim for a financial remedy under the Matrimonial Cases Act 1973, how long should firms who practice family law keep their client’s files for?  After all, file storage is not cheap and even digital data will degrade over time.  The court certainly cannot be expected to keep a complete file for every divorce, they have enough trouble keeping track of the active cases let alone managing decades of historical files (plus who would meet the cost?)  Another solution, which would have solved this issue in the Vince v Wyatt case, would be to record the status of any financial claim on the Decree Absolute. Surely there is space for an extra sentence or two setting out whether any financial claims had been issued and/or dismissed? Any other suggestions?

A copy of the judgement for Vince v Wyatt can be found here and an analysis of the application of Rule 4.4(1) can be found here.

Divorcing After Decades: Why are the over 60s so keen to untie the knot?

Words: 436

Time to read: 2 minutes

The Office of National Statistics has recently released data that shows that divorce among the over 60s is on the rise.  This has sparked a great deal of debate surrounding the underlying reasons for this trend. Suggestions include increased life expectancy, the lack of stigma associated with being divorced and people (men in particular) having their midlife crisis later in life once the children have left the nest.

There is potentially another aspect of modern living which could be contributing to the growing number of the 60+ generation who are willing to call it a day on marriages. Thirty years ago, when these so called “silver splitters'” parents were in the 60+ bracket few homes had a computer, there were only four channels on the television and if you wanted to stay in touch with old friends you had to either put pen to paper or pick up your (home) phone or take a handful of change to a local phone box. Today social media is everywhere and our scope for interaction with people and information has increased exponentially over the last few decades whether through computers, television or mobile phones. This has made connecting with long lost school chums or old girlfriends/boyfriends much easier and the 60+ generation is no exception. After all, who hasn’t run into their parents on Facebook! Online dating is also more accessible and socially acceptable than ever before and there are many websites dedicated to finding love for the older/post-retirement generation. Thanks to the online revolution, becoming single again in one's 60s may not be as daunting or lonely a prospect as it used to be.

Whilst it is important to remember that each divorce will turn on its own facts, couples who have reached, or are approaching, retirement will often have different priorities to those who are divorcing in their 30s or 40s. The children are likely to have grown up and will have completed their education and the parties will be at or near the end of their working lives and will most likely be looking to pensions for their income.  After so many years of financial interdependence, providing each party with adequate means to live financially independent lives may be difficult to achieve, particularly where one party has been out of the workforce for several decades and has no scope for developing any earning capacity or contributing further to a pension. Perhaps then, those silver splitters wanting to re-establish their independence or start a new relationship following their divorce might find it more difficult to achieve the financial independence to go with their new found single status.

UPDATE: Supreme Court Hands Down Judgment in Prest

Supreme Court Unanimously Decides in Wife's Favour

The Supreme Court of the United Kingdom has today delivered its decision in the case of Prest v Petrodel Ltd & Others, finding that, for the purposes of section 24(1)(a) of the Matrimonial Causes Act 1973, the husband was indeed "entitled" to various properties which are held within a corporate structure and which had formed part of the wife's award at first instance. It is a huge decision, particularly for big money divorce cases, and one which many people may be surprised at following the judgement of Lord Justice Rimer at the Court of Appeal.  The judgement and summary press release can be found here and previous discussions on this topic, including on the husbands failure to provide adequate disclosure can be found here and on Chambers Women in Law Blog here.

No doubt this is a decision which will generate a huge amount of debate and is arguably as significant a family law decision as Jones v Kernott (cohabitation) and Radmacher v Granatino (pre-nuptial agreements).