Author: Charlotte Lanning

At the point that two people decide to enter into marriage, they never expect that their marriage or civil partnership will end.

If you are faced with this issue, our experienced, compassionate, and tenacious family law solicitors will guide you through the processes involved and ensure that your best interests, and those of your children, are protected.

We have created this brief article to answer some common questions which might be of assistance in advance of any consultation with any of our solicitors.

Do I have to prove adultery or unreasonable behaviour to get a divorce in England and Wales?

Since April 2022, the Divorce, Dissolution and Separation Act 2020, changed divorce laws to the extent that neither party has to now ‘blame’ the other for the divorce. Instead, one or both parties simply need to make a statement that the relationship has ‘irretrievably broken down’.

There is no scope for either party to defend or contest the divorce in order to prevent it. The Court must accept the single or joint statement that the marriage has irretrievably broken down and then make the divorce orders, subject to court requirements in relation to the timing of the orders.

How is a financial settlement negotiated?

An experienced family law solicitor will take the time to understand what you and the family need in terms of a financial settlement, both in terms of capital funds but also in relation to the day to day income and outgoings.

To do this, you and your spouse or ex-partner will need to disclose what you each have and what you need. This process can take some time and is often the stage in the process that incurs the most cost, especially if either party is not clear about what they have, or if they are deliberately obstructive.

After establishing what the financial ‘pot’ looks like, together with assessing your respective priorities and positions, your solicitor will communicate with your ex-partner or spouse’s solicitor and commence negotiations.

In the event that it is not possible to immediately resolve matters by agreement, alternative dispute resolution methods such as round-table negotiations, mediation or an early neutral evaluation of the case are often productive and successful. That being said, it is true that sometimes going to court proves inevitable, especially in the context of non-disclosure. Court proceedings are hopefully a last resort in any case, and arbitration also remains an option in most cases; it is not reserved simply for high net worth and/or complex cases.

What factors does the Court consider when deciding on a financial settlement?

The court must refer to the provisions set out under section 25 of the Matrimonial Causes Act 1973 when deciding whether to move away from the starting point of equal sharing of matrimonial property.

The section 25 factors are:

• the income, earning capacity, property, and other financial resources each party has access to, both now and in the near future;
• the financial needs, obligations, and responsibilities of each of the parties now and in the near future;
• the standard of living enjoyed by the family before the breakdown of the marriage;
• the age of each party to the marriage and the duration of the marriage;
• any physical or mental disability of either of the parties to the marriage;
• the contributions that each of the parties has made, or is likely to make in the near future, concerning caring for any children of the marriage;
• the conduct of each of the parties, and particularly if that conduct is such that it would, in the opinion of the court, be inequitable to disregard it; and
• the value of any benefit one party would fail to acquire as a result of the divorce.

What is a Consent Order?

If you and your spouse have been able to negotiate an agreement using alternative dispute resolution methods, round table negotiations or mediation, for example, or indeed have reached an agreement between yourselves, the parties can apply to the Court to have the agreement approved in the form of a ‘Consent Order’ with the assistance of their solicitors, or with at least one of their representatives.

Although the Court has the ultimate discretion to decide whether or not to ratify a financial agreement, Baroness Hale stated in Sharland v Sharland [2015] UKSC 60 that if experienced legal representatives draft the order, it is likely to be approved and the Court will be “heavily influenced by what the parties themselves have agreed”.

Once approved, the Consent Order is binding on the parties, with only very specific elements of it being variable on strict application to the Court, about which a party would be encouraged to take very specific advice.

How does the family court decide who gets to live in the family home?

When deciding how property and assets are to be divided in a divorce financial settlement, the Court must consider all the factors under section 25 of the Matrimonial Causes Act 1973. As mentioned above, this includes (but is not limited to) the financial needs of the parties, the standard of living enjoyed during the marriage, and the current and future earning potential of each spouse. The welfare of any children involved will be the Court’s paramount consideration.

Most financial settlements on divorce are agreed outside of Court. We can advise you on a range of options concerning the family home and any other property that you and your spouse own together. For example, you may both agree to allow the party with whom the children live most of the time to reside in the family home until the children turn 18, after which the property will be sold, and the proceeds of the sale apportioned between you both. Another potential solution is to offset the family home against the value of any pensions.

We will guide you through the options and advise you in relation to an outcome which best protects your interests, and those of your children.

Edwards Family Law is a niche, London-based firm specialising in high net worth divorce and international family law. To find out more about divorce and financial settlements, please call +44 (0)20 3983 1818 or email contact@edwardsfamilylaw.co.uk to arrange a consultation with one of our specialist solicitors. All enquiries are treated in the strictest confidence.

Charlotte Lanning, a specialist family lawyer and associate solicitor at Edwards Family Law, outlines the factors that determine spousal maintenance payments and offers guidance on navigating changes in the face of ever-increasing living costs.

Courts in England and Wales can make various financial orders with regard to divorce. The three primary categories that such orders concern are:

• capital (ie, to purchase a home);
• income/maintenance (ie, to meet day-to-day living costs); and
• pension-sharing (ie, to meet day-to-day living costs in retirement).

If there are sufficient resources to meet both parties’ capital and income needs, matrimonial property will be divided equally as a starting point. If an equal division will not meet both parties’ needs, there can be a departure from such equality. Further, the court may utilise non-matrimonial property (such as inheritance, or funds acquired post-separation or prior to the marriage) to meet needs, if so required.

If the parties have children, child maintenance will always be payable by the party who spends less time with the child(ren). If a party is earning GBP156,000 or less, the amount of child maintenance is calculated using the Child Maintenance Service (CMS) formula. This is based on the paying party’s gross income and the amount of overnight contact that they have with the child(ren). Judges typically extrapolate and apply the same formula for incomes of more than GBP156,000; however, specific advice should be sought in these circumstances.

When Must One Party Pay Spousal Maintenance?

However, if the financially weaker party still does not have sufficient financial provision to meet their day-to-day needs after factoring in child maintenance as forming part of a parties’ income, they may be entitled to spousal maintenance. This is subject to whether the paying party has a surplus from their income after meeting their own needs.

The various financial orders are interlinked and complementary. An order for maintenance may end when the parties’ children reach the age of majority or conclude tertiary education, thereby reducing the recipient’s income needs and perhaps allowing them to downsize and release capital to supplement their income position.

“Spousal maintenance is always variable, which allows the court to revisit the order if either party faces a significant change in their financial circumstances.”

Similarly, as parties approach retirement, any maintenance provision is likely be for a limited period and ceases at the point when any pensions can be drawn down.

All parties are expected to maximise their earning capacity, even if they have been out of the work for a long time. The court will be realistic about what a party can earn based on their qualifications, previous income, and childcare responsibilities. Therefore, a court will only order one party to pay spousal maintenance to the other if:

• there is insufficient capital; or
• one party is incapable of earning enough to meet their income needs.

Spousal maintenance is always variable, which allows the court to revisit the order made if either of the parties faces a significant change in their financial circumstances, including – but not limited to – redundancies or, indeed, promotions. This prevents parties from being “trapped” by an order that they cannot afford but, equally, dissuades them from misrepresenting their income position (ie, downplaying their earning potential).

What Impact Does Inflation Have on Spousal Maintenance Payments?

A common feature of these orders is that they are often index-linked. This ensures that the payments keep up with the pace of inflation. The following three indexation rates commonly used.

• Consumer Price Index (CPI) measures the average change from month to month in the prices of goods and services purchased by most households in the UK.
• Retail Price Index (RPI) measures the average change in prices of goods and services purchased by most households in the UK – however, crucially, it also includes mortgage interest, council tax and other housing costs not included within the CPI.
• RPI All Items Excl Mortgage Interest (RPIX) is the same as RPI, apart from mortgage interest payments – therefore, it is closer to CPI (albeit still slightly different).

The most appropriate indexation rate to apply will depend on what the receiving party primarily requires the maintenance for. If the receiving party has a mortgage, it is essential that the spousal maintenance is RPI-linked to insure against any drastic changes to repayments (such as the ones seen in 2022). If a party owns a property outright, CPI or RPIX are likely to be more appropriate. Child maintenance will typically be CPI-linked because it relates to general costs, as opposed to mortgage interest payments.

“Salaries have not increased in line with inflation, and the huge wave of strikes faced by the UK in 2023 is testament to that.”

Where there is a lengthy term of maintenance, the inflationary uplift can be significant. There were huge upward variations in maintenance during the last few months of 2022. A monthly payment of GBP6,000 ordered in 2012 will now be more than GBP8,000. In previous years, the annual increase would have been a few hundred pounds per calendar month at most. Over the past year (2022), this sum has jumped up by almost GBP1,000 per calendar month – and, arguably, rightly so.

The court will typically order that any spousal maintenance award is index-linked. There is relatively little scope for negotiation on this point, and the recent spike in living costs demonstrates why it is so essential to factor this into any agreement.

How Can Spousal Maintenance Survive the Cost of Living Crisis? 

Nonetheless, it is commonly accepted that salaries have not increased in line with inflation, and the huge wave of strikes faced by the UK as the country enters 2023 is testament to that. Although the court’s starting point is to apply an increase in line with the order, there may be an oncoming wave of applications to vary quantum of maintenance downwards if the paying party simply cannot afford the uplift in line with inflation (or any uplift at all).

The best way to compromise this issue and avoid a costly court application for enforcement or variation of the order is to suggest an uplift that is perhaps a middle ground and affordable for the paying party in the longer term. Evidence should be provided to demonstrate why the payer cannot afford the uplift pursuant to the order – for example, confirmation of any increase to their income (by way of a letter from their employer or accountant), along with a budget setting out the paying party’s monthly costs.

The outcome of these applications is likely to be uncertain and it is always best to seek early legal advice to try and reach an agreement where at all possible. The costs of pursuing such an application can easily outweigh any financial gain, and there is no guarantee that either party will be successful – nor that they will be awarded the costs of their application if sought.

Whilst the Supreme Court decision in Radmacher v Granatino [2010] UKSC 42 held that weight should be given to a nuptial agreement it does not follow that such agreements will always be upheld by the court.

This was illustrated by the recent case of SC v TC [2022] EWFC 67, in which His HonourJudge Hess placed no weight on a post-nuptial agreement in financial remedy proceedings. He concluded that its terms were unfair due to the husband’s vulnerability at the time of signing and that the agreement would leave him in “a predicament of real need”.

Before examining the case, it is useful to briefly state the current law around the enforceability of nuptial agreements.

What makes a nuptial agreement legally enforceable?

The Radmacher decision states that the court will give weight to a nuptial agreement provided it is fair to do so, with ‘fair’ being the operative word. The Supreme Court referred to other landmark cases when deciding Radmacher, including McFarlane v McFarlane [2006] UKHL 24, in which it was established that fairness should be based on the principles of:

need compensation sharing

The Court will also apply a three-part fairness test concerning the nuptial agreement;

1. that the agreement was freely entered into (i.e. there was no undue pressure),
2. both parties understood the agreement (i.e. there was financial disclosure before the agreement was signed and both parties received or had the opportunity to receive independent legal advice), and
3. it is reasonable to hold both parties to the agreement (i.e. it is fair and the prevailing circumstances).

What were the facts in the case of SC v TC

The couple married in 1994 and had one child. The husband (H), worked in investment banking but had stopped after being diagnosed with early-onset Parkinson’s disease. From around 2003, H began to experience the early effects of his illness. He was formally diagnosed in 2011 and by 2013, the marriage was unhappy and lacked sexual intimacy. H visited a sex worker and later told the wife (W). W asked for a divorce, however, H asked for another chance to make the marriage work. W agreed on the condition H enter into a post-nuptial agreement to ensure her financial security.

Although the terms of the nuptial agreement were significantly more generous than what the court would award, H signed the contract. H’s solicitor told him the division of the financial assets was 80/20 in favour of W and recorded that he had advised H that it would be financially imprudent to agree to these terms. H stated that given his prognosis it made no sense for him to fight for assets and he, therefore, would not contest these terms of the post-nuptial agreement.

The post-nuptial agreement was signed in 2014 and divorce proceedings began in 2020. H wanted the marital assets to be divided evenly. Unsurprisingly, W argued that the post-nuptial agreement terms must be adhered to when alighting upon a financial settlement.

Why did the court not uphold the post-nuptial agreement?

Although His Honour Judge Hess concluded there had been financial disclosure, legal advice and both parties

were, when signing, mature and intelligent, he was concerned that the post-nuptial agreement disregarded any needs arising from H’s Parkinson’s diagnosis, including housing needs and home care requirements. The agreement would leave H in a position of “a predicament of real need”, with W comfortably provided for, and this would be fundamentally unfair.

His Honour Judge Hess stated:

“In summary on this area of the case, I have reached the conclusion that it would be wrong for me to place weight on the Pre-Marital Agreement. Not only was it very much to the husband’s disadvantage in financial terms, I have reached the overall conclusion that, at the time that it was signed, he was a vulnerable person (in the ways described above) and the wife rather took advantage of that vulnerable situation to gain a substantial financial advantage.”

Concluding comments

This decision highlights that even if all of the formalities required have been adhered to, fairness will always be the court’s primary consideration. The court fulfils a vital role in protecting vulnerable parties in situations of this kind and prevents a contracting out of the fundamental principles of English family law. In many cases, it is difficult or impossible to predict the situation a couple may find themselves in at the time of divorce, be that children, illness or otherwise. However, rather unusually in this matter, the husband’s future was a lot clearer given the reasons that the agreement was entered into. Therefore, when entering into a pre or post nuptial agreement, parties and their advisors must ensure that the agreement being entered into is in fact worth the paper that it is written on. A keen assessment of the likelihood that a court will deem the terms unfair is therefore essential to achieving the desired outcome.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about pre and post-nuptial agreements, please phone +44 (0)20 3 983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

The recent Family Court case of Randhawa v Randhawa raised the interesting question of what would happen if one party to a marriage filed for divorce and eventually received a decree absolute without the knowledge of their married partner. This also raises serious questions about the fallibility of the divorce system to fraudulent acts, how courts decide whether to set aside a decree absolute where it was gained on a false pretext, and what happens where a final decree is set aside if the guilty party has remarried.

Background to the case of Randhawa v Randhawa

Mr and Mrs Randhawa married in 1978, aged nineteen and sixteen years old, respectively. They went on to have four children, one of whom, Manpreet, died in 2003. Over several years, Mr and Mrs Randhawa invested in residential and commercial properties and, in the words of the judgement, “amassed a small fortune”.

The couple divorced in 2010 after being granted a final decree by Slough County Court. The divorce was granted on the basis that the marriage had irretrievably broken down due to Mrs Randhawa’s unreasonable behaviour. Mr Randhawa went on to remarry and have a child with his new wife.

Mrs Randhawa subsequently submitted a court application to have the final decree set aside for the following reasons:

• She did not receive any notice of the divorce
• The acknowledgement of service document, which told the court she did not wish to defend the divorce, was not signed by her, and
• The signature used for this purpose was a forgery.

In response to the application, Mr Randhawa denied the allegations, asserting that the divorce was genuine and Mrs Randhawa knew about the proceedings and actively engaged in them.

The parties also disagreed on the date of the separation. Mr Randhawa said this happened when he left the family home in October 2009, and there had been discussion of divorce prior to this. Mrs Randhawa denies having knowledge of this and did not know of the divorce until she petitioned for judicial separation in December 2019.

The Judge in the case, therefore, had to decide on the following questions:

a. What was Mrs Randhawa’s knowledge of the divorce Petition dated 22nd January 2010?

b. Did Mrs Randhawa sign the acknowledgement of service that was signed on 11th February 2010? If not,

c. Was the signature forged by Mr Randhawa or on his behalf?

d. Depending on the answers to the above questions, should the decree absolute stand or be dismissed?

The Judge relied on the basic legal principle that the person seeking to rely on a disputed fact must prove that fact.

Forensic Document Examiner confirmed the signatures were forged

Evidence was provided by nine witnesses, including a Forensic Document Examiner. The Forensic Document Examiner confirmed that there was “very strong evidence to support the proposition that the questioned signature was not written by [Mrs Randhawa] but that it is a simulation (freehand copy) of her genuine signature style, by another individual”. Falsified signatures were also used to secure a mortgage in the name of Mrs Randhawa and other property related matters. Despite this, the Judge made it clear that the evidence of the expert was not the determining factor and that this had to be considered “in the context of the wider evidential canvas”.

What did the Judge conclude?

Having heard evidence from nine witnesses over a period of eight days, Judge Moradifar agreed that both parties had a difficult relationship and were devastated by the loss of their son. He stated that Mr Randhawa was “highly evasive and his evidence devoid of any detail” during his testimony when it appeared that the answers he provided might damage his case. The Judge also stated of Mr Randhawa, “I have no doubt that he is a man who would take any necessary steps to achieve his ends and where such steps fall foul of the law or morality, he seeks to deny his conduct unless faced with no other option but to admit the same. In the latter instance, he will seek to divert attention onto others, blame others or become altogether evasive”.

On the key matter of whether Mrs Randhawa signed the Acknowledgement of Service form and hence was given proper notice of her divorce, the Judge reached the following final conclusions:

a. Mrs Randhawa had no notice of the divorce proceedings that were initiated by a Petition for divorce by Mr Randhawa on 22nd January 2010.

b. Mrs Randhawa’s purported signature on the Acknowledgement of Service form dated 11th February 2010 was a forgery.

c. The signature was forged by or on behalf of Mr Randhawa

Judge Moradifar set aside the final decree granted on 22nd January 2010.

Final words

The case of Randhawa v Randhawa highlights that any attempt to circumvent the divorce process will be looked on extremely unfavourably in the family courts. The legal implications of taking such a course of action can be extremely complex, especially if the party who used fraud to apply for divorce then goes on to remarry and have children. Where a decree absolute is set aside, the parties effectively remain married and, therefore, any claimed remarriage effectively becomes void. This may then lead to a more serious criminal charge of bigamy. Aside from the criminal charge, this also leaves questions about ownership of marital assets and the joint ownership of any property in the actual and purported marriages.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce, international family law, and children’s law. We are members of Resolution, an organisation of Family Law Solicitors that abide by a Code of Practice that promotes a non-confrontational approach to family law practice.

To find out more about divorce proceedings, please phone +44 (0)20 7129 7978 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

London has long been established as the preeminent centre of the world for divorcing high-net-worth couples, in large part because law courts here are known to award sizeable settlements to the financially less well-off party. This reputation was cemented in 2000 in the case of White v White, involving Martin and Pamela White, who had three children together and divorced after 30 years of marriage. During the case which reached the House of Lords, it was concluded that the couple’s £4.5m net worth should be split 57% to Mr White and 43% to Mrs White. Crucially, Lord Nicholls of Birkenhead made it clear that in such cases, “There should be no bias in favour of the money-earner and against the home-maker and the child-carer”. The judgement went on to say, “As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so”. Many high profile separations have now passed through London’s divorce courts, including that of Paul McCartney and Heather

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Mills (Ms Mills received a settlement of £24.3m) in 2008, and Bernie Ecclestone and ex-wife Slavica (Slavica Ecclestone receives £60m per year from her ex-husband) in 2009. Most recently, Her Royal Highness Haya Bint Al-Hussain received the largest ever settlement in British legal history of £554m from the Ruler of Dubai, His Royal Highness Sheikh Mohammed bin Rashid al-Maktoum, reconfirming London’s status as the divorce capital of the world.

Background to the divorce of Princess Haya from Sheikh Mohammad

The details of the divorce of Princess Haya from Sheikh Mohammad are notable not just because of the sheer scale of the settlement but also the background of the case. Princess Haya Bint Al-Hussain is the daughter of Jordan’s former King Hussein and married Sheikh Mohammed Bin Rashid Al-Maktoumon on 10th April 2004, becoming the youngest of six wives. The settlement followed a long-running custody battle, in which Princess Haya fled Dubai in 2009 to London along with her children, citing serious concerns for their safety. Her concern related to a High Court judgement in 2019 in which it was ruled that Sheikh Mohammed bin Rashid al Maktoum had previously abducted his other daughters, Sheikha Latifa Mohammed al-Maktoum and Sheikha Shamsa al- Maktoum, and held them against their will in Dubai. As a result and following several threats, Princess Haya had a real concern that her daughters would be abducted and returned to Dubai against their will. This was further reinforced after it was discovered that Sheikh Mohammed had ordered the hacking of the mobile phones of Princess Haya, her bodyguards and her legal team using spyware developed in Israel called Pegasus.

What did the Family Court rule in the divorce of Princess Haya from Sheikh Mohammad?

On 19th November 2021, in the Royal Courts of Justice Family Court, Mr Justice Moor ruled on the divorce case of Princess Haya from Sheikh Mohammad, specifically in relation to three applications; 1) a settlement for two children of the marriage, Jalila and Zayed, 2) financial provision following an overseas divorce and 3) declarations as to the ownership of various horses, jewellery, and other artefacts. Justice Moor made the following award in favour of Princess Haya and her two daughters, Jalila and Zayed:

Security – a lumpsum payment of £251,500,000 (£210m + £41.5m); Education – £3,040,000;
Maintenance and other costs – £5,600,000 to be paid each year for each child.

As such, this is believed to be the highest ever divorce settlement awarded in an English Court. The amounts awarded cover a range of costs, including education, holidays, visas, living costs, refurbishments, employee wages, IT costs, a vehicle fleet manager, VAT and other taxes, utility bills and insurance costs, wear and tear, horses and horse equipment, vets, nanny’s, tutors, and nurses. A sizeable portion of this award relates to security costs, given the extreme level of threat posed to Princess Haya and her daughters. Citing Princess Haya’s Head of Security, Justice Moor explained, “He [the Head of Security] considered that, although the threat level to HRH changes daily, it remains of a significant magnitude at all times. He exhibited his security assessment. He assessed the current threat level as “severe”. In other words, an attack is highly likely at some point, given the proven history of abduction. If there is a vulnerability in HRH’s security, the threat level rises to “critical”, which means an attack is highly likely in the near future.

In addition to the main threat from HH, there; plus the ever-present risk of kidnap and ransom”.

Final words

While it is true that the scale of the divorce settlement, in this case, is the highest of its kind in London, the background and circumstances of those receiving the awards are by no means normal. As Justice Moor stated, Princess Haya and her daughters will continue to face a “clear and present” risk to their safety for some time, and hence there is a need to fund effective security. Nevertheless, this case undoubtedly reaffirms London’s place as the capital of the world for divorcing high-net-worth couples.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about divorce and financial settlements, please phone +44 (0)20 7129 7978 or email contact@edwardsfamilylaw.co.uk.
All enquiries are treated in the strictest confidence.

In all divorces, but especially in high-net-worth (HNW) divorces, the financial settlement is one of the most contested issues. The greater the income and assets, the higher the stakes.

Understanding how the Court reaches a financial settlement will give you the knowledge you need to build a robust case in your favour. Even if the matter does not go to Court and an agreement is reached through negotiation and/or mediation, the below principles will still apply.

Section 25 of the Matrimonial Causes Act (MCA) 1973 lists factors that the Court must consider when making provisions for a financial settlement in a divorce. However, the Court has full discretion on the weight given to each factor. The first consideration of the Court is to any minor children of the relationship; however, this is not the courts only consideration.

The Court will first look at what resources are available to the parties and then decide how to distribute them. Equality and fairness are the two principles that will guide the Court in any decisions concerning the distribution of wealth and assets.

What are the section 25 factors which the Court must consider?

The Court will consider the following section 25 factors when making a financial order in a divorce case:

• The resources available to the parties, both capital and income and extant or reasonably foreseeable.
• The financial needs of each party, considering the needs of dependent children and any disabilities.
• The duration of the marriage and the age of the parties.
• The conduct of the parties (but only in exceptional circumstances).
• The standard of living enjoyed by the parties.
• Any benefit either party will lose as a result of the divorce.
• The contributions of each party to the marriage (both financial and non-financial).

How have the Courts interpreted the section 25 provisions?

The House of Lords in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 identified three principles that justified the making of financial orders:

• Needs
• Sharing
• Compensation

Of the three principles, only needs features in section 25 of the MCA 1973. The other section 25 factors (as listed above) must always be considered by the Court when deciding on a financial settlement.

The ultimate objective of the three principles is to achieve a fair outcome.

Needs

No statute sets out the meaning of needs and case law gives it a wide definition. It refers to the income and asset (for example property, vehicles etc) requirements of the parties. In 2014, the Law Commission published a report, Matrimonial Property, Needs and Agreements. The report highlighted that a lack of statutory definition of ‘needs’ in a financial settlement context led to a lack of transparency and regional differences in settlements awarded. To rectify this, the Family Justice Council published a Guidance on Financial Needs on Divorce and Sorting out Finances on Divorce. These include examples of different types of need and highlights key principles about the duration of any financial provision and the transition towards financial independence (the latter is something that the Courts have placed particular emphasis on in recent years).

Sharing

In the landmark case of White v White, Lord Nicholls laid the groundwork for London becoming the ‘divorce capital of the world ’ when he stated:

“…there is one principle of universal application which can be stated with confidence. In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles. Typically, a husband and wife share the activities of earning money, running their home and caring for their children. Traditionally, the husband earned the money, and the wife looked after the home and the children. This traditional division of labour is no longer the order of the day. Frequently both parents work. Sometimes it is the wife who is the money-earner, and the husband runs the home and cares for the children during the day. But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering paragraph (f) [of section 25(2)], relating to the parties’ contributions … If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the home-maker and the child-carer.”

The sharing principle was then set out:

“A practical consideration follows from this. Sometimes, having carried out the statutory exercise, the judge’s conclusion involves a more or less equal division of the available assets. More often, this is not so. More often, having looked at all the circumstances, the judge’s decision means that one party will receive a bigger share than the other. Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so [Emphasis added].”

Although there is no defined good ‘reason’ for departing from equality, the most common situation is where one party has stepped back from their career and therefore has limited earning potential when compared with the spouse who continued to work. If the children of the marriage are to predominantly live with the financially weaker spouse, then it is likely that a fair settlement will require him or her to be awarded a greater share of the matrimonial assets.

Compensation

In cases where there is a “almost near certainty” that one spouse gave up a lucrative vocation that would have otherwise seen them enjoy an income similar to the party who continued with their career, compensation may be needed to achieve fairness.

Compensation awards are exceptional and will only occur in cases where:

• There are sufficient assets to fund the claim once a sharing award has been made and needs met.
• The claiming spouse has provided evidence of a lucrative career and that high levels of remuneration were likely.
• Documentary evidence supports the arguments made about the Claimant’s abilities and future career prospects.

Final words

The Courts have made clear that in matters concerning financial orders, the legislation must be paramount over case law. The Court of Appeal and House of Lords decisions relate to the process of reasoning when applying the section 25 factors to reach a fair settlement.

Lord Justice Thorpe made this clear in Lawrence v Gallagher [2012] EWCA Civ 394, 2012 WL 1015830 when he stated:

“Since the decision of the House of Lords in White v White the specialist judges have developed new approaches often expressed in newly minted phrases. I have myself contributed to this process to a limited degree. All this erudition is designed to guide the search for the fair outcome or to safeguard against the unfair outcome. But we must never forget the legislated check list which is designed to achieve the same ends. [Emphasis added]”

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about financial orders, please phone +44 (0)20 3 983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

One of the factors set out under section 25 of the Matrimonial Causes Act 1973 that the Court must consider when deciding on financial settlement matters is the duration of the marriage. In the recent case of E v L [2021] EWFC 60, The Hon. Mr Justice Mostyn considered an application for financial remedies in a short marriage where the parties had no children. The matrimonial property was valued at around £9.2 million.

Background to the decision

The husband and wife were both in their early 60s. They had begun their relationship in 2015, married in 2017, and separated in 2019. The husband was a highly successful production manager for live music events and had an interest in six businesses. The wife looked after the home and received income from her London buy-to-let property. A dispute arose regarding the value of one of the husband’s companies. The wife sought a financial settlement of £5.5 million.

Her husband offered £600,000.

The husband argued that because the marriage was of short duration and there were no children, there was no case for the equal sharing principle.

The Judge’s decision

When setting out his decision, Mr Justice Mostyn made it clear, childlessness was irrelevant to whether there should be a departure from the application of the equal sharing principle.

He put it to the husband’s Counsel:

“The sharing principle looks at the value accrued during the span of the marital relationship and, deeming the parties’ incommensurable contributions to that accrual to be of equal worth, divides that value equally. Why should the presence of a child make a difference?”

The husband responded that the “having of children denotes a completely different category of commitment.”

Mr Justice Mostyn stated that he “fundamentally disagreed” with the above reasoning and then stated:

“In applying the sharing principle it is not merely invidious, but extremely dangerous, for the court to attempt an evaluation of the quality of a marriage or of the arrangements made within it, as to do so will almost inevitably trigger subconscious discriminatory practices. It is for this reason that the doctrine of special contribution has to all intents and purposes been consigned to history.”

This judgment (thankfully) reinforces that it is not the court’s place to delve into the minutiae of a divorcing couple’s private life. Not only would this be contrary to public policy but the sheer time it would take to address such matters would overwhelm a system that is already bursting at the seams. The choice to have children is highly personal and sometimes beyond a person’s control for medical reasons or otherwise. Given the huge fertility struggles that many couples face, it would be entirely unfair to compound that struggle by deeming a marriage somewhat ‘lesser’ in the event of a divorce. That aside, in the present case, children were presumably not something that would have been on the horizon given the parties ages and thus is of little relevance to their supposed commitment to one another.

It may be the case that a ‘childless’ marriage leads to the application of the sharing principle because there are sufficient resources to meet the parties’ individual needs. However, as is often the case, the presence of dependent children will often transform the case into a needs one.

Therefore, the court does make an indirect consideration of whether there are children (albeit only dependent ones) when deciding which of the principles from White v White is to be applied.
Regarding the short duration of the marriage, Mr Justice Mostyn concluded that the short-marriage exception was only likely to apply where both parties were financially active and independently so. There was no logical reason to draw a distinction between accrual of assets over a short period and an accrual over a long period.

“For my part I would say (as I have said before when talking about the rarity of sharing of non-matrimonial property) that a case where there can be a legitimate non-discriminatory unequal sharing of matrimonial property earned in a short marriage will be as rare as a white leopard. “

Mr Justice Mostyn explained that the reason for the rarity was making any exception in relation to money earned during the marriage means placing a higher value on financial contributions than those of other contributions. This would result in discrimination and go against the key decisions of White v White [2001] 1 A,C. 596 and Miller v Miller McFarlane v McFarlane [2006] UKHL 24 which established that the concept of equal sharing was the starting point in financial settlement cases irrespective of one party’s role as the breadwinner and the other party’s role as the homemaker.

What does this case mean for wealthy divorcing couples?

This case provides clarification for two issues relating to the marriage of short duration consideration under

section 25 of the Matrimonial Causes Act 1973:

a) The fact that the marriage was childless has no bearing whatsoever on the parties’ commitment to the marriage and should not be included in the Court’s considerations, and

b) The Court should not distinguish between wealth accrued over a short time and that over a long period.

It is important to note that the Court may still choose to depart from the equal sharing principle when considering property and assets accrued before the nuptials in the case of a short marriage.

The wife in E v L eventually received £1.5 million which equalled half of the equity value of the husband’s business during the period between January 2016 to the date of trial). This was significantly less than the £5.5 originally sought but clearly an improvement on the husbands offer. The husband still walked away with 79% of the £9.2 million disclosed at trial.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about financial orders on divorce, please phone +44 (0)20 3983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

In the landmark case of Radmacher v Granatino [2010] UKSC 42, the Supreme Court stated that:
“The Court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation

of its implications unless in the circumstances prevailing it would not be fair to hold the parties to the agreement.”

In the recent case of WC v HC (Financial Remedies Agreements) (Rev1) [2022] EWFC 22, the Honourable Mr Justice Peel, sitting in the Family Court was asked to decide whether an unsigned post-nuptial agreement fell under Radmacher, in that it would be upheld unless doing so would result in unfairness, or disregarded altogether.

The conclusion was somewhere in the middle of the aforementioned extremes.

The wife felt under pressure during negotiations

The couple concerned were living in Switzerland when the husband (H) said he wanted a post-nuptial agreement as the wife (W) wanted the family to return to England for the children’s schooling. H told W he would not allow

her to move with the children without a post nuptial agreement being drafted and signed.

During the 2017 negotiations, W messaged a friend saying she felt “blackmailed…powerless…cornered … abused”.

On 22 August, W’s solicitors approved the post-nuptial agreement and the next day, H’s solicitors did likewise. The parties were due to sign the documents six days later, however, on the day, a doctor certified W was showing “true mental distress”, unconducive to “calm decision making”. W emailed H explaining she was worried about signing previously unseen Swiss documents. She said she would sign the English agreement but never did.

W subsequently moved to England with the children. The relationship broke down and divorce proceedings began.

Was the unsigned post-nuptial agreement enforceable?

Mr Justice Peel concluded that although W had been under pressure to sign the post-nuptial agreement there was no undue pressure.

“I am satisfied that although W and H were under pressure, W was not under undue pressure to enter into it. In almost every Pre or Post Marital Agreement one or other, or both, parties are under a degree of pressure, and emotions may run high. The collision of the excitement engendered by prospective marriage, and the hard realities of negotiating for the breakdown of such a marriage, can be acutely difficult for parties. Tension and disagreement may ensue. If, as here, one side of the family is applying pressure, the difficulties are accentuated. But in the end, each party has to make a choice and unless undue pressure can be demonstrated, the court will ordinarily uphold the agreement. In my judgment, W cannot so demonstrate here.”

Furthermore, W had received independent legal advice, therefore, the agreement could not be simply ignored. Indeed to do so would be contravening section 25 of the Matrimonial Causes Act 1973 as the court would not be considering the full circumstances of the case.

“Although not a strict Radmacher agreement, this was an agreement reached by the parties, with the benefit of legal advice, and upon full disclosure. Even though W did not sign it, in my judgment I am entitled to take it into account and attach such weight to it as I think fit. It is one of the factors, to be considered in the mix. The terms agreed … are relevant, albeit not determinative.”

Mr Justice Peel subsequently awarded W £7.45 million, which was about 60% of the total assets of £12.47 million which “approximates to that which was contained within the Post-Marital Agreement but goes beyond it so as to meet what I consider to be W’s needs judged against all the relevant factors.”

Concluding comments

This case illustrates two points:

a) The court sets the bar for undue influence relatively high. In cases involving significant wealth, especially family wealth on one side, a certain amount of pressure is to be expected. In fact, all negotiations involve pressure which is why it is vital to have independent legal advice from an experienced family law solicitor who can provide the pragmatic guidance required to protect their client’s best interests.

b) If the nuptial agreement satisfies the three-part test in Radmacher, namely that it was:

1. freely entered into,
2. both parties understood the agreement, and
3. it is reasonable to hold both parties to the agreement

then it will be considered as forming part of the circumstances of the case, even if one party failed to sign the document.

This case does turn on certain specific facts, for example, Mr Justice Peel noted that W did not attempt to renegotiate the agreement and her solicitor had signed the document. The case may have been decided differently if these factors had not been present. However, for the agreement to fall completely outside Radmacher, W would have had to prove, on the balance of probabilities, that it was either not freely entered into, she did not understand the terms, or it was completely unfair to uphold the agreement.

Edwards Family Law is a niche London-based firm that deal with complex, high value and international family law. To find out more about financial dispute resolution, please phone +44 (0)20 3983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

Akhmedova v Akhmedov & Ors. [2021] EWHC 545

When a judgement opens with the following line from Leo Tolstoy’s novel ‘Anna Karenina’: “All happy families are alike, each unhappy family is unhappy in its own way”, it is fair to assume that the particular dispute is particularly bitter. In Akhmedova v Akhmedov & Ors, Mrs Justice Knowles remarked that while the family before her had access to wealth of which most can only dream, it was one of the unhappiest families to have ever appeared in her courtroom. The judgment tells of a wife fighting to enforce a Financial Order made by a London Court and a Russian oligarch who “would rather have seen the money burnt than for the Wife to receive a penny of it.” Whilst the English family law system provided a kinder outcome for Ms Akhmedova than Tolstoy did for his heroine it was not easy or straightforward with her embarking on a five-year fight that spanned multiple jurisdictions.

The highest settlement awarded by an English Court

In 2013, Ms Akhmedova petitioned an English Court for a financial settlement. Her husband, a Russian oligarch provided a schedule of assets to the Court which totalled £1,092,334,626. In December 2016, Mr Akhmedov was ordered to pay over £450 million to his wife, an amount which represented over 41.5% of his assets. The Order also set aside transactions that had shifted assets into trusts as these allocations were found by the court to have been designed to deprive Ms Akhmedova of the resources. Shortly after, a worldwide freezing order against Mr Akhmedov was applied and he was told to pay a lump sum of £350 million and certain property to his ex-wife.

Mr Akhmedov failed to comply with the Order, thus setting the stage for a multi-jurisdictional battle aimed at piercing various corporate veils to see behind offshore intermediaries that he and his associates used to ensure his wife was never paid her settlement.

Particular focus fell on a superyacht named ‘Luna’. Officially owned by a Liechtenstein company, an English Court later determined that it was beneficially owned by Mr Akhmedov. In February 2018, Ms Akhmedova obtained a freezing injunction in the Dubai International Financial Centre against Mr Akhmedov and a related company named Straight, to stop them from disposing of or dealing with Luna.

Granting relief

Ms Akhmedova sought relief under section 423 of the Insolvency Act 1986 and/or under section 37 of the Matrimonial Causes Act 1973. Specifically, she asked the Court to set aside the transfers her husband had made

to the other Respondents and a Court Order stating that assets must be returned to her or alternatively, the other Respondents must pay her compensation to reflect the value of the assets transferred to them. After examining both forms of relief, the Court found that Mr Akhmedov, along with his son, had deliberately arranged matters to ensure Ms Akhmedova could never access any of the funds she was awarded. This was done by moving assets into trusts and corporate entities beyond the reach of the Financial Order laid down by the English Court in 2016.

Mrs Justice Knowles also admonished the parties’ son for repeatedly lying to the Court and called him his “father’s lieutenant”. She went on to say:

“I find that he is a dishonest individual who will do anything to assist his father, no doubt because he is utterly dependent on his father for financial support.”

Ms Akhmedova was granted relief with various Respondents being ordered to pay sums to the value of the assets they had received.

Whilst it might seem that this should be the end of the story, not long after this judgement it was reported that Ms Akhmedova accepted a settlement from the husband of £150m. Many would question why but after 5 years chasing the settlement around different jurisdictions the adage “a bird in the hand is worth two in the bush” comes to mind. Whilst £150m is still a huge sum of money, Ms Akhemdova also had to pay Burford Capital, her financial backers funding the litigation a hefty success fee.

Comment

This case illustrates the practical and flexible approach of the English Court system and its ability to freeze assets worldwide to ensure the enforcement of a Financial Order. The decision also shows that the English Family Courts will not hesitate in piercing corporate veils when it is clear that one party to a divorce has deliberately moved assets into offshore trusts and companies to deprive their ex-spouse of a fair financial settlement. However, it also demonstrates that despite the plethora of powers available, enforcement is still laced with difficulty when particularly obstructive individuals and jurisdictions are involved.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about divorce and financial settlements, please phone +44 (0)20 3 983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

This year has brought more change to our lives than any of us could have ever anticipated. Previously stable industries like travel and hospitality have almost collapsed whilst other businesses have seen record levels of profit amidst increased demand for their services. If you have ongoing financial obligations to your ex and have suffered financially as a result of the pandemic then you may wonder if there is anything that you can do to alleviate the pressure in these times. If you want to discuss this with one of our lawyers, please get in touch today.

If you previously reached a clean break with your former spouse then in all likelihood there is very little that you can do to change the agreement that was reached. However, if an element of that agreement involves spousal maintenance, it is open to you to make an application to the court for this to be varied downwards to reflect the change in your financial circumstances.

This is not a step to be taken lightly and there is no guarantee that you will be successful just because your income has dropped. The court will consider all the circumstances of the case, including both parties’ financial circumstances and needs. Therefore, if your ex has also been impacted financially by the pandemic, this will be taken into account. The court’s first consideration will be for the welfare of any child who is under 18.

It is of course always best to avoid litigation if at all possible and therefore parties should try to come to an agreement directly. However, it should always be borne in mind that if an agreement cannot be reached then court proceedings may be necessary. There are a number of things that you can and should do to protect your position from the outset;

Communicate and keep a record (but keep it cordial)

Whilst direct communication can be fraught, and even impossible in some circumstances, it is important to try and start a dialogue directly if you can. This can help avoid the need to make a court application and incur the costs associated with this. However, if you are met with a wall of silence, the existence of this correspondence (and the lack of any response) evidences a willingness on your part to try to resolve matters at the earliest juncture. This may be of assistance if you are forced to issue proceedings. Judges are slowly becoming more willing to recognise parties acting in an unreasonable manner and making costs awards that reflect this.

However, if you want to show that you have been cooperative, ensure that your correspondence is polite. If you produce correspondence to the judge that is littered with petty comments and profanities, any good favour that you may have gained will likely disappear. A good rule to live by is to imagine that a judge is reading your email

Covid-19 and what to do when considering Variation of Maintenance payments 5.10.2023, 19.13

back to you in the cold light of the court room, if the thought makes you cringe, it’s probably best not to hit send.

It may be that you are able to come to a compromise and if so, you should ensure that there is a written record of this, whether that be in a letter signed by both parties or a side agreement. Get in touch today if you would like us to assist you with this.

Provide evidence

If you are the paying party and have been made redundant or suffered a pay cut then it makes sense to provide your ex-partner with the documentation in support as soon as possible. If they can see the drop in your income in black and white, the change of circumstances should be obvious. This will help to speed up the process if they chose to obtain legal advice because these are the first documents that their lawyer will request.

If things progress to court, you will be required to provide your recent payslips and P60 so there is no harm in producing this at the earliest opportunity to set out your position to contrast against your financial circumstances within the original proceedings.

Be flexible

The regulations and therefore, the associated government support, are changing frequently. Businesses will be responding to changes as and when they are implemented and so if your hours are increased or your pay is reinstated, you should be prepared for maintenance to increase in line with that.

Equally, if you are the payee, whilst you are under no obligation to agree to a reduction in your maintenance, it is much better to take a constructive approach, particularly if the difference in maintenance is likely to cost you less than the associated legal proceedings.

Get legal advice

If you are not able to progress matters by communicating directly, then it is sensible to get some initial advice on the prospects of success of a variation application. It may be that sending a letter from a solicitor forces the other party to take matters more seriously. However, instructing lawyers does not have to mean fully contested court proceedings but sometimes is the necessary catalyst to encourage sensible and constructive discussion. Get in touch today to speak to us.

Do not stop payments

Finally, it is important to note that your initial court order remains in effect until either an agreement to vary is reached, or the court makes a determination. Therefore, if you do not make payments in line with the order you will be in breach and your ex could choose to commence enforcement proceedings. You must comply with the order but if this is impossible because your income has reduced so considerably, then you should raise this issue

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with your ex at the earliest opportunity so that they do not get a surprise when they check their bank account… The court can order that you pay these arrears so it is not as simple as saying that you cannot afford payments and that is the end of the matter, you will need to be able to demonstrate this.

Whether you would like some initial advice, assistance with a court application or formalising an agreement to vary an existing order we can help – get in touch to set up an initial, no obligation, consultation today.