By Jordana Adams of OTS Solicitors.
Earlier this week, you may have seen the documentary on BBC2, Millionaire’s Ex-Wives Club. The programme highlighted how acrimonious and bitter divorce can be when there are millions (or billions) of pounds at stake.
It is well known that London is the divorce capital of the world. This is because English judges are renowned for providing generous settlements to the weaker financial party in a High Net Worth (HNW) divorce.
And although things are changing, the weaker financial party in these cases are predominantly women.
A 50/50 starting point
One of the bitterest pills for a wealthy individual to swallow is that they may have to give up 50% or more of their wealth to their spouse if their marriage breaks down. In many HNW divorce cases, the wife has stayed home to look after the home and children and the husband has earned the fortune. Due to the enormous number of hours and gruelling travel schedule that is often the price of a multi-million-pound lifestyle, many partners end up sacrificing their careers to look after the children and home during the marriage. And English courts are very willing to recognise this fact, which is why wives will fight tooth and nail to have their divorce cases heard in the British capital.
- establishing the relevant jurisdiction to bring the divorce
- the expectation of a certain standard of living
- non-disclosure of assets and the need for forensic accounting
- freezing orders
Establishing the relevant jurisdiction for hearing the divorce case
For international couples, there may be several countries where divorce proceedings can be heard. Given the reputation that English courts have in being generous to the financially weaker party, it is little wonder that often the first battle in HNW divorce cases is over which country the divorce will be heard in.
When it comes to establishing jurisdiction between EU countries, the question is determined by an EU regulation commonly referred to as Brussels IIR (this does not apply to Denmark). Typically, the courts in England and Wales will have jurisdiction if:
- both parties are habitually resident in the UK; or
- both parties were last habitually resident in the UK, and one person still resides in the country; or
- you are or have been habitually resident in the UK one year before the divorce proceedings were issued; or
- you are or have been habitually resident in the UK for six months before the divorce proceedings were issued and are domiciled in the country; or
- both parties are domiciled in the UK
Habitual residence essentially means your place of ordinary residence. For HNW people who have homes in multiple locations, this can be the subject of dispute. In Marinos v Marinos  EWHC 2047 (Fam), Justice Munby defined habitual residence as:
“the place where the person had established, on a fixed basis, his permanent or habitual centre of interests, with all the relevant facts being taken into account for the purpose of determining such residence".
Often in HNW divorce cases, if a couple is eligible to file in two jurisdictions, a petition race develops, as the party who files first is generally in a better position.
The expectation of a certain standard of living
Under section 25 of the Matrimonial Causes Act 1973, the courts must consider the standard of living the couple enjoyed during their married life when making a financial order.
In the case of White v White  2 FLR 981, although the House of Lords stopped short of approving a presumption of equality in ‘big money’ cases, they did state that the court’s task was to achieve fairness between the parties and to test any proposed financial order against the yardstick of equality, and that as a general guide “equality should be departed from only if, and to the extent that, there is good reason for doing so”.
In HNW divorce cases, each party’s ‘needs’ are going to be approached more generously than in cases involving a couple with a more ‘normal’ income.
In FF v KF,  EWHC 1093,  All ER (D) 94 (May), Justice Mostyn stated that:
“Plainly “needs” does not mean needs. It is a term of art. Obviously, no-one actually needs £25m, or £62m, or £224m for accommodation and sustenance. The main drivers in the discretionary exercise are the scale of the payer’s wealth, the length of the marriage, the applicant’s age and health, and the standard of living, although the latter factor cannot be allowed to dominate the exercise.”
One aspect that may impact on court’s consideration of the standard of living enjoyed by the party is the duration of the marriage. In these cases, the financially weaker spouse may not receive the same settlement as someone who has been married for 25 years.
Non-disclosure of assets and the need for forensic accounting
One of the foundational principles when working out a fair and equitable financial settlement is both parties are expected to make a full and frank disclosure of their assets. However, in HNW divorce cases, where cash and assets can be tied up in multiple off-shore companies and trusts, it can be easy for the financially stronger spouse to hide their wealth. Therefore, to achieve the best result for their clients, London-based family lawyers often have to work with forensic accountants to unearth or track down hidden assets which may be placed in multiple jurisdictions.
If one spouse believes the other may try and hide or dispose of assets to prevent them from becoming part of the financial settlement, they may apply to the court for a freezing order (historically known as Mareva injunctions) as an interim remedy.
A freezing order will prevent not only the spouse, but any third parties from dealing with the assets subject to the injunction. Because of the implications such an order can have on the party made subject to it, a strong case must be made before the court will consider granting such a remedy.
HNW divorce can bring some unique challenges. However, despite this, most cases are resolved without the need for litigation. Round-table meetings and/or litigation can assist couples with resolving disputes surrounding a financial settlement, saving time, stress and money.
OTS Solicitors is one of the most respected Immigration and family law firms in London and is highly recommended by the Legal 500. By making an appointment with one of our family solicitors, you can be assured of receiving some of the best legal advice available in the UK today.
Posted on: Monday, 22 January, 2018