When couples divorce, disputes will often arise around the current ownership of assets and which of the parties should retain them, but what happens when extended family members stake a claim to an asset or assets the court is considering?

Such issues can include where there are informal or fluid arrangements in respect of family-owned assets such as properties and businesses, as well as where funds are provided to either or both of the spouses by extended family (often for the purchase of a property or investment in a business) and whether these funds were intended to be a gift or a loan. Conversely, parties to a divorce can also face difficulties where assets in which one of them has a beneficial interest is held in the name of a third party.

Despite it being fundamental that the judge in any case clearly understands the extent of parties’ interests in their assets, they can be left having to determine this with little or no documentary evidence.

An additional complication is that, generally, a decision in the family court will only be binding on the parties to the divorce, unless the relevant third parties are joined to the proceedings, meaning one party may be left with a decision that they could find difficult to enforce.

What is intervening?

Where a third party is claiming an interest in property that is the subject of financial remedy proceedings, or where one of the parties has an alleged interest in property owned by the third party, intervening in the financial application will formally add the third party to the proceedings. This gives them the opportunity to be heard in respect of their interest as well as binding them by the court’s decision.

While the court has the power to join or remove parties at it sees fit, often an application for a joinder will be made by one of the existing parties or the third party themselves. Such an application should be made at the earliest possible opportunity, on notice to the other parties.

The test that the court applies when considering whether to join a third party is namely whether:

a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or

b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.

While the threshold for joinder is not particularly onerous, the parties must consider whether it is proportionate to do so, taking into account that intervening is likely to result in additional hearings, further witness evidence and pleadings.

Intervening also comes with a costs risk as the ‘no order as to costs’ approach within financial remedy proceedings, does not apply in intervenor cases. Instead, they are considered a ‘clean sheet’ case in which the court can make whatever costs orders it sees as fair. While costs orders are still discretionary and not automatic, an unsuccessful party (including intervenors) is at risk of being ordered to pay the legal costs of the successful party, as well as paying their own fees.

If intervening may not be worthwhile, a party can apply to for their extended family members to be heard as witnesses giving written and/ or oral evidence in respect of the arrangements in place. Where it is one of the parties asserting that the other has an interest in assets held by a third party, they may look into issuing a witness summons, which is a document requiring a witness either to attend court to give evidence or disclose documents in order to assist the court.

Each case is different, and arrangements in place can vary drastically, so it is vital that specialist family law advice is sought in respect of the strength of your case and the cost and risks that could be involved with intervening before any such application is made.

How to protect your assets for the future

Many families are now looking into how they can best protect their interests should divorce or another dispute as to ownership arise. Judges in the family court have a wide discretion to make findings based on the evidence before them, so iron clad protection is never guaranteed. That said, loan agreements and other contemporaneous documentation and written correspondence (including emails and text messages) can represent strong evidence of each party’s intention in giving or receiving gifts or loans.

A pre-nuptial agreement properly entered into can also be a useful tool in protecting family-owned assets and defining an extended family’s interest in individual assets at the outset of a marriage. While family law judges still retain an overall discretion in cases involving pre-nuptial agreements, such an agreement can provide a judge with evidence that each party to the marriage understood the wider family’s intentions and the arrangements in place.

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 or post-nuptial agreements, please phone +44 (0)20 3983 1818 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.

If you are an unmarried parent seeking child maintenance from the non-resident parent, your first recourse is likely to be the Child Maintenance Service (CMS). However, the CMS’s jurisdiction is limited to cases where the non-resident parent earns less than £156,000 gross per annum and is based in the UK. If you are seeking child maintenance from a high earner and/ or someone based outside of the UK, you may be able to apply to the court for additional financial provision for your child’s benefit.

Schedule 1 of the Children Act 1989 (Schedule 1) provides provisions to protect and provide for financial support for a child in a situation where the parents are unmarried or have not entered into a civil partnership. Unfortunately, due to most of the existing case law featuring high-net-worth couples, the option of a Schedule 1 application can often be overlooked. In fact, the provisions are in no way limited to ‘big money’ cases, it can be used by any parent who falls outside of the CMS jurisdiction and requires financial support for their child.

The court’s powers in a Schedule 1 case can include:

top-up maintenance (you must have a maximum maintenance assessment completed by the CMS first);

payment of school fees;

lump sum(s);

a “carer’s allowance” – this may be used to cover paying for childcare, petrol for taking the children to school and extra-curricular activities etc.; and

the purchase or transfer of a property to the parent who cares for the child, which will be returned to the non-resident parent when the child completes their education or turns 18.

In situations where a child has a disability or exceptional circumstances apply, the Court can make orders for periodical payments and lump sums.

It is important to note that parents can make Schedule 1 arrangements between themselves with the help of a Family Law Solicitor and/or a Mediator.

What will the Court consider when deciding on a Schedule 1 application?

When the Court is asked to consider a Schedule 1 application, it will examine:

The financial resources available to both parents;

Additional responsibilities, for example, other children outside the relationship; Any disabilities of the subject child;

The financial needs of the child;

The standard of living and original choices that were made for the subject child – for example, private school, a large extra-curricular schedule, overseas excursions etc.

Both parents must provide full and frank financial disclosure.

The Court’s overriding consideration is ‘are the needs of the child being met?’ rather than what is necessarily fair or equal.

Can a Schedule 1 application extend to other maintenance provisions that do not concern the child?

In the recent case of CA v DR [2021] EWFC 21, 2021 WL 00878551] the Family Court held that a Schedule 1 claim for child maintenance by an unmarried mother could not extend to funding a personal pension for the mother or funding the build-up of savings from child maintenance payments to provide for the mother’s ongoing needs after the child’s financial support ended. Mrs Justice Roberts quoted Lord Justice Macur in Re A (a child) [2014] EWCA Civ 1577 at paragraph 19:

“The literal or purposive interpretation of Schedule 1 does not permit [..] by the back door, financial provision and compensation for the carer beyond that element attributable to the care of the child during his minority, or other determined duration of dependency. There is no established authority to the contrary. The judgment of Lady Hale in Gow v Grant [2012] UKSC 29, [2012] 3 FCR 73, at paragraphs 44 – 56 which urges reform of the law to re- balance the financial consequences of relationship breakdown in cohabitation, makes this clear, as does the prevailing case law on this point…”

Final words

Schedule 1 provides an alternative route for unmarried parents seeking additional child maintenance payments where the non-resident parent’s income exceeds the CMS jurisdiction, and/ or where they are based outside of the UK. Instructing an experienced Family Law Solicitor will ensure your interests are protected and you achieve your objectives when making the application.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about child maintenance orders and Schedule 1 claims, please phone +44 (0)20 3983 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.

Most of the high-net-worth (HNW) clients advised and represented by us are relieved when the Court finally grants a divorce-related Financial Order and they can finally put the legal aspects of their divorce behind them. However, although a clean break is highly desirable, the Court can vary Financial Orders sometime in the future if certain circumstances arise.

The Coronavirus pandemic has resulted in requests for the Court to vary Financial Orders relating to nominal periodic payments. For example, in the recent case of AJC v PJP [2021] EWFC B25, the Applicant was an airline pilot who lost her job due to the ramifications of the pandemic. She asked the Court to temporarily convert a previously granted Nominal Periodical Payments Order into a Substantive Maintenance Order until the airline industry started employing people again. However, the Applicant’s former husband argued that he too had suffered financially because of the Covid-19 pandemic.

In rejecting the application, the Court held that varying a nominal order upwards is different to varying a substantive periodical payment where the payee receiving maintenance of a prescribed amount understands that it may decrease if their income increases and may increase if the payer earns more and they can demonstrate need. It was held to be unreasonable to convert the Order as the Applicant had been financially self-sufficient at the time it was made, eight years had passed, and the parties’ youngest child was now 14 years old. Furthermore, the change in circumstance resulted from the economic impact of a pandemic affecting billions, not from a disadvantage generated by the relationship between the parties.

AJC v PJP illustrates that the Courts will not vary a Financial Order without good cause. However, in certain circumstances, changes are justified. But before we examine how a Financial Order can be varied, let’s briefly recap what they are.

What is a Financial Order?

There are several types of Financial Orders provided by the Court to ensure the financial settlement you have agreed in negotiation and/or mediation (a Consent Order) or a decision by the Court is wrapped up in a legally binding directive.

Common Financial Orders include: Clean Break Orders

Pension Sharing Orders Property Adjustment Orders Maintenance Orders
Lump Sum Orders

Can I appeal a Financial Order?

If you believe the Judge has made a mistake in applying the law to your case, you can apply for permission to appeal the Financial Order issued by the Court. When considering whether to grant permission to appeal, the Court will consider:

a)  Whether your appeal has a realistic chance of success, and

b)  Is there a convincing reason for the appeal to go ahead?

The Court has several remedies it can grant if your appeal is successful, including:

Affirming the Order.
Setting aside the Financial Oder.
Varying the Order.
Directing the lower Court to consider a specific aspect of the Order again.

What Financial Orders can be varied by the Court?

Under certain circumstances (see below) an application can be made to vary a Financial Order related to the following:

Maintenance pending suit.
Periodical payments and secured periodical payments. Lump sums by instalments.
Provision for children.
Deferred lump sums.

Settlement orders.
Sale of property.
Pension sharing orders (before the decree absolute is granted).

What type of Financial Order cannot be varied?

The Court cannot vary the following type of Financial Orders:

An order for a lump sum or sums under section 23 of the Matrimonial Causes Act 1973, not payable by instalments.

Property adjustment orders (except if they relate to the sale of the property concerned). A pension sharing order after the decree absolute has been granted.

How do I apply to vary or appeal a Financial Order?

The first step to take in applying to vary a Financial Order is to speak to an experienced Family Law Solicitor. They will examine your situation and establish if your existing Order can be varied.

There are several situations in which the Courts will consent to vary a Financial Order, including where one party to the Order:

Exerted undue influence over the other.
Misrepresented their financial situation or committed fraud to achieve the Order they wanted. Misrepresented other facts required to ensure the Order was just and fair.

Financial Orders can also be varied if it is shown that an event has occurred which obliterates the fundamental elements of the original agreement. This is known as a “Barder” event. The Courts have not ruled out the impact of the Coronavirus pandemic as sufficient grounds to qualify as a “Barder” event that could trigger an application to vary a Financial Order however generally these applications are limited in scope and things such as house prices falling or shares in a company being worth more or less is not going to be sufficient to vary an order.

In summary

Applications to vary existing Financial Orders can be made for all sorts of reasons, including ending ongoing spousal maintenance payments to achieve a clean break to a change in financial circumstances due to Covid-19. Our Solicitors specialise in dealing with HNW divorce and financial settlements. We act for both sides, having successfully applied for and defended many cases involving the variation of Financial Orders.

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 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.

It is often assumed that mediation is too ‘soft’ an approach for working out a financial settlement in high-net- worth (HNW) divorce and is primarily a mechanism for establishing arrangements for children. However, such an assumption can deny couples the opportunity to take control of the financial settlement process and reach an agreement in a calm, non-confrontational manner.

There are several advantages of mediation in HNW divorce, including:

Confidentiality – the British tabloids are famous for their love of scandal and will viciously latch on to HNW divorce cases that end up in Court. Mediation is a completely confidential process, allowing you to

work through your divorce without the stress of publicity (which can become cruel) and details of your marriage becoming media fodder that could one day be read by your children.

Win-win solutions – unlike formal litigation, mediation is not a win-lose process. The Mediator, who will be experienced in family law matters, will work with you and your spouse to help you reach a fair agreement and allows you both to move on to positive futures.

Mediation is voluntary – no one can force you to attend mediation, unlike Court where one party can issue proceedings. This alone provides a platform where communication is based on mutual co-operation and respect, providing a robust foundation for a positive outcome.

Choosing mediation does not mean you will lack legal support. Your Divorce Solicitor will advise and represent you throughout the mediation process, ensuring your interests are protected.

However, because the mediation process is designed to be used by people who may not have legal representation, it is free from the legalese and procedures found in Court, allowing you greater control over how things are run.

The cost of going to Court

Even people with significant assets and plenty of money to fund ongoing divorce litigation may baulk at the true cost of going to Court. Legal bills of hundreds of thousands of pounds are easy to achieve. But the cost of litigation is not just financial. Going to Court is stressful and can be time consuming. Furthermore, as it is by nature adversarial, it does little in the way of helping parties learn to put aside their differences and communicate compassionately, something that will be essential going forward if children are involved.

Mediation on the other hand is a great deal cheaper than going to Court. It is also quicker and deliberately designed to make parties feel safe and confident in expressing their needs and opinions. And if matters cannot be resolved by mediation, the option to file Court proceedings remains available.

The process of mediation

A MIAM is the first stage in the mediation process whereby a trained mediator explains the process and the benefits to each party. Not all cases are suitable for mediation, including those in which one party is bankrupt, there is evidence of domestic violence, there are child protection concerns, both have already attended a MIAM in the last four months, or there is a significant risk of harm or hardship. It is also important to understand that mediation is not mandatory, but the attendance of the MIAM is (except in the situations listed above) if you wish to apply for a Family Court Order.

You can choose to attend a MIAM on your own, or with the other party. During the first session, the Mediator will gather information to determine if mediation is a suitable way to resolve your dispute.

If, after the MIAM, you decide mediation is not the right process for you, or the Mediator deems it to be inappropriate, then you will be given a form that proves to the Court you have considered mediation.

If both parties agree to mediation, what happens next?

If both parties and the mediator agree mediation is appropriate, then you will be informed of the next steps. Mediation is a purely voluntary process in which two people can seek to resolve a dispute with the assistance of a trained mediator. It is highly effective in situations in which both parties are open to resolving the dispute at hand, and for any financial matters, there must full financial disclosure.

Mediation is also useful where there has been a previous arrangement, which needs to be updated (perhaps as children get older).

The discussion can be undertaken face to face, but it is possible to use separate rooms; this is sometimes referred to as ‘shuttled mediation’.

During the session, your Mediator will:

Listen to both parties to determine what needs to be worked through
Ensure that both people are heard equally – this is important to ensure a fair process and outcome Offer any guidance or information relevant to the discussion
Advise you if it will be necessary to seek input from other services or specialists

Work towards an agreement which is fair to both parties, always considering the needs of any children involved

It might be necessary during the process to consult with a Solicitor to validate the legality of what is being agreed or discussed – your Mediator will advise how this can be done.

It is important to understand any agreement during mediation is not legally binding, but it can be made legal by drawing up a consent order (drafted by your Solicitor), which must be approved by a Judge. This is essential. To find out more read our blog post on consent orders here.

Final words

Mediation is truly effective as a method of resolving HNW divorce disputes. Many people who initially believe it will not be effective for their situation change their perspective during the MIAM process, realising that it is highly preferable to the cost and stress of going through the Court process. For the long-term benefit of all involved, especially for children, it is important to consider the merits of a non-confrontational method of resolving family disputes. Of course, there will always be contexts in which the Courts must be involved, and it might be that mediation achieves only a partial agreement, leaving a final point to be decided by a Judge – but as they say, you will not know until you try.

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 and the benefits of mediation (and whether it is appropriate in your case) please phone +44 (0)20 3983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

There is a saying that all psychopaths are narcissists but not all narcissists are psychopaths. For anyone who has been in a relationship with a narcissist and is attempting to divorce them, this fact may seem a small mercy. Unfortunately, many successful people have significant narcissistic traits, therefore, we often deal with spouses in high-net-worth and international divorce who are trying to escape a narcissist.

The term narcissist is used a great deal these days. However, someone with Narcissistic Personality Disorder (NPD) is very different from a person who enjoys posting selfies. Often charming and personable in public (including the courtroom), someone with NPD can be controlling, superficial, manipulative, and downright dangerous. Although the English family law system is geared towards encouraging couples to work out financial settlements and arrangements for children between themselves or through mediation rather than going to Court, a narcissist will thrive on dragging out proceedings as long as possible. Furthermore, someone with NPD is unlikely to ever admit they did anything wrong and will blame you for the relationship breaking down. This can often lead someone to question their sanity and start to believe they are wrong – this is known as “gaslighting”.

To stay strong and sane, you need to instruct an experienced, tough Divorce Solicitor who will refuse to engage with your spouse’s gameplaying and will tenaciously fight to ensure you and your children’s best interests are protected, especially concerning the financial settlement.

What is Narcissistic Personality Disorder?

NPD is a recognised mental illness. According to the Diagnostic and Statistical Manual of Mental Disorders (DSM), a guidebook used by mental health professionals, people with NPD have five or more of the below traits:

A grandiose sense of self-importance
Preoccupation with fantasies of unlimited success, power, brilliance, beauty, or ideal love

A belief that one is special and can only be understood by or associate with special people or institutions A need for excessive admiration
A sense of entitlement (to special treatment)
Exploitation of others

A lack of empathy

Envy of others or the belief that one is the object of envy Arrogant, haughty behaviour, or attitudes

Like all mental health issues, narcissism is a spectrum. People such as Bill Gates, Kayne West, Donald Trump, and Mariah Carey have all been accused of displaying narcissistic traits which may make them difficult to be married to. However, this does not necessarily mean they have full-blown NPD.

Regardless, the more narcissistic characteristics a person has, the more difficult it will be to divorce them.

Negotiating financial settlements with a narcissist

It is extremely difficult to negotiate the terms of a financial settlement with someone with NPD. Because they lack empathy, they can’t consider the needs of you and any children as they are fixated on their desires. Although Family Law Solicitors, especially those who are members of Resolution, try to help couples settle without going to Court, such an aim is often impossible if one spouse is a narcissist.

Because someone with NPD or significant narcissistic traits will never admit they are in the wrong, you may think it is simply easier to let them have what they want in terms of the financial settlement so you and your children can get out of the situation and find some peace. Rather than jeopardise your right to a fair financial settlement, in so far as possible, have all communications regarding your divorce go through your Solicitor. A Divorce Lawyer experienced in HNW divorce will undoubtedly have come across narcissists many times and will have the emotional detachment and the strategies to sort out the financial settlement efficiently and effectively, regardless of any game-playing by your spouse.

Arrangements for children

Studies show that growing up with a narcissistic parent is incredibly damaging for a child. One group of scholars have stated:

“Narcissistic parents cause attachment injuries to their children through the frequent abdication of their parental role. Such parents view their children as a natural extension of themselves. Thus, the child’s shortcomings are met with greater intensity, as they are perceived by the parent as their own failure. In an attempt of self-protection and to recover their sense of self-worth, parents distance themselves from the children, leaving them confused and emotionally abandoned. At the same time, parents may psychologically merge with their children, whereby, the children are narcissistic extensions of their parents; their children’s achievements and successes are presented as their own.”

Although a narcissist is focused on themselves, they may not hesitate to fight for your children to primarily reside with them in order to exert control or hurt you. Any attempt by you to protect your children from the narcissistic parent is likely to result in accusations of parental alienation.

An experienced Family Solicitor will be well versed in such tactics and will, if required, organise for expert witness reports setting out the impact of the narcissistic parent’s behaviour on your children, especially if it tips over into abuse in terms of coercive and controlling behaviour.

In summary

Divorcing a narcissist is difficult for everyone involved. More than ever, it is vital that you instruct a Solicitor who is not only experienced in HNW divorce but also in managing cases where one spouse exhibits narcissistic traits.

“You will never get the truth out of a Narcissist. The closest you will ever come is a story that either makes them the victim or the hero, but never the villain.”

― Shannon L. Alder

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 3983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

The average age for getting divorced in England and Wales is 46.9 years for men and 44.5 years for women, and on average, those that do divorce do so after 12.5 years of marriage. These statistics make sense – it is now well-recognised that happiness dips in our mid-40s , only to rise again in our fifth decade. The mid-40s is also when many people are juggling children, elderly parents, and work, leaving little time for nurturing a marriage. But if a couple moves past these difficult years and remains together, we assume they have made it and can look forward to a happy retirement in wedded bliss.

Unfortunately, couples can and do divorce later in life. The recent shock announcement that Bill and Melinda Gates have decided to divorce after 27 years of marriage is a recent example. And when people divorce later in life, the financial settlement aspect of the process can prove highly complex, as there has been time to build wealth and there are the inheritances of adult children to consider. Divorce after 60 often involves dividing a greater amount of assets — such as the family home, overseas property, family businesses, pensions, maintenance, and tax planning.

For those divorcing after 60, below are some of the main things to consider.

Pensions

If you are approaching retirement, dividing your pension will be your top consideration. In July 2019, the Pension Advisory Group (PAG) released a report entitled, A guide to the treatment of pensions on divorce . The paper was endorsed by Sir Andrew McFarlane, President of the Family Division and the contained guidance is considered best practice when it comes to dividing pensions.

There are three main ways pensions are allocated in the event of a divorce:

· Offsetting – the value of pension assets is offset against other assets such as property. A common solution is one partner takes a lesser share of any pensions in favour of staying in the family home.

· Pension Sharing Orders – the clean break solution. Pension assets are divided (not necessarily equally) at the time of divorce.

· Pension Attachment Orders (formally known as earmarking) – the Court will make a Pension Attachment Order providing for a portion of one party’s pension to be set aside for their ex-spouse. The ex-spouse will receive their percentage when the pension starts being paid out. This option comes with risks as the receiving spouse will get nothing if the pension owner dies before the date the pension assets start to be paid.

There are other options such as deferred pension sharing or lump sum payments that may also be considered. Your Family Law Solicitor will go through all the possibilities and advise which one is best for your circumstances.

Tax

Dividing a lifetime worth of assets that have had ample time to mature will likely result in tax implications such as Capital Gains Tax on buy to let properties and/or investments. Another consideration is the impact of dividing property and assets on any Inheritance Tax planning you have in place.

Beware of financial hardship

Divorcing later in life can dramatically affect your wealth at a time when financial security is needed most. When negotiating your financial settlement, you need to think about your future health needs, the lifestyle you plan to enjoy in retirement, and the possibility of meeting a new partner.

Women need to take particular care when choosing a Family Lawyer as research by the Pensions Policy Institute found the average divorced woman has less than a third of the pension wealth of the average divorced man. This is because a greater percentage of women take breaks in their careers to look after children and elderly parents. Even when they return to employment, women are more likely than men to work part-time.

In summary

The financial implications of divorcing later in life are usually greater than that of someone in their 30s or even 40s as younger people still have time to re-build wealth. The key to ensuring you retain, at least to some extent, your pre-divorce standard of living, is to speak with an experienced divorce lawyer who understands how to negotiate financial settlements consisting of considerable assets and property.

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 3983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.