UK: An Introduction to Family/Matrimonial Finance: Ultra High Net Worth

The last year has seen the family court in London return to normal after the disruption of the pandemic, but “normal” in this context means judicial resources continue to be stretched thinly. This means litigation can be slow, and there is some evidence of a rise in arbitration, which can be conducted more quickly, as well as confidentially.

Recent High-Profile Cases 

Misconduct 

The High Court has had to grapple with bad behaviour by divorcing spouses in a number of well-known cases. Perhaps the most infamous of those cases was Xanthopoulos v Rakshina, which involved a Part III application (for financial remedies following a foreign divorce) brought by the husband whose litigation misconduct was found to have caused the wife to incur excessive and unnecessary costs, about which the judge was extremely critical. The parties’ combined legal costs funded by the wife and driven by the husband’s misconduct (as found by the judge) came to nearly GBP9 million, and the judge awarded the husband a fraction of what he sought at the final hearing. This case is surely destined to serve as an example for many years to come of how not to litigate. The wife’s misconduct in the case of VV v VV was found to have caused the husband to suffer tens of millions of US dollars in financial loss, outweighing any sharing claim she may have had. She instead received a needs-based award.

Fairness of agreements 

Another issue at the forefront of some big money cases this past year has been the court’s treatment of agreements between the parties. In HD v WB the husband argued that he had not properly understood a prenuptial agreement in a case involving over GBP40 million of assets, almost all of which were held by the wife, and asserted that the agreement was unfair on him. The judge rejected the notion that the husband had not understood the prenuptial agreement but did find the lump sum due to the husband under the agreement was unfair.

Collardeau-Fuchs v Fuchs involved a dispute between an ultra high net worth couple over the interpretation of aspects of a post-nuptial agreement (in fact, a prenuptial agreement modified after marriage) and the amount of financial support for the parties’ children. The judge ordered unusually high child maintenance of over GBP500,000 per annum to ensure that the children’s lifestyle was not out of kilter with their father’s “billionaire lifestyle”. In ARQ v YAQ, there was no prenuptial or post-nuptial agreement, but the husband had transferred GBP77 million to his wife during the marriage for tax planning reasons before becoming domiciled in the UK. The wife was non-domiciled. She did not, however, subsequently set up discretionary trusts as planned. The court found that these assets were in most part premarital but had become matrimonial property. The wife received 40% of the matrimonial assets and 34% of the overall assets.

Pierburg v Pierburg was a reminder that divorcing spouses can be held to an agreement reached between them during litigation, even if one party seeks to repudiate it afterwards. In this big-money Part III case, the parties signed a written agreement in Germany shortly before the final hearing. The wife subsequently sought to repudiate the agreement, on the basis that she had not had legal advice and was placed under pressure to sign it. The judge took the agreement into account finding that the wife had been keen to conclude the agreement, had chosen to negotiate without solicitors, and had not been placed under undue pressure. The judge then made orders for financial provision for the wife in line with the agreement, but the wife was left with possible enforcement issues in Germany as a consequence of her repudiation of the agreement.

There were a couple of notable Schedule I cases dealing with financial provision for a child where the parties were not married. A v V was a big-money Schedule I case notable for what was described by the judge as “a relatively straightforward” application resulting in combined costs of GBP5.5 million. The father ran a millionaire’s defence and was found to have behaved unreasonably within the litigation. He sought to rely upon an agreement the mother had signed some seven years before the child was born limiting her to EUR845 per month. The judge did not hold the mother to that agreement and made generous provision in respect of housing to be held in trust and the amount she was to receive in periodic payments. In Re Z (No 4) (Schedule I award) the overseas high net worth father did not take part in the final hearing, and although the mother had twice admitted to having misled the court about her finances, this did not prevent the judge from making substantial orders for housing, maintenance and costs.

Hidden wealth 

As of the date of writing, the enforcement case Barclay v Barclay rumbles on. Three judgment summonses were brought by the wife, who argued that the husband’s assets were held in a number of trusts controlled by his relatives. The wife’s second and third summonses were successful, and the husband was found to be the primary beneficiary of a trust which held sufficient money, and that the trustees had never refused to provide him with funds when he had required them.

The Report on Transparency in the Financial Remedies Court

Finally, the long-awaited and mammoth report on transparency in the Financial Remedies Court (FRC) was published in May 2023. This has long been a source of interest and concern to practitioners and litigants involved in high net worth cases. It addressed the thorny issues concerning transparency, and in particular whether cases should be heard in private or open court, and the heavily debated matter of anonymity in FRC cases. This debate followed judgments of Mostyn J from late 2021 onwards, in which he declared his default position would no longer be to publish anonymised financial remedy judgments. This marked a sharp contrast with his earlier proclamations on this issue, and with the ongoing practice of his High Court colleagues dealing with FRC cases. Indeed, in the space of little over a week Mostyn J and his successor as national lead judge of the FRC, Peel J, each published very similar big-money interim maintenance decisions where the former named the parties and the latter anonymised in full before publication. The transparency report reached its recommendations that a starting point of general anonymisation was the correct place to strike the balance between the public interest and protecting the rights and welfare of litigants, especially children, and guarding the integrity of financial remedy proceedings. The report explicitly did not adjudicate on the law, noting that competing approaches persisted at High Court level. The implementation of these recommendations will be watched with interest, not least given the continued lack of a binding Court of Appeal judgment.