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

https://www.edwardsfl.wpengine.com/post/how-princess-haya-s-554m-award-confirms-london-s-status-as-the-divorce-capital-of-the-world Page 1 of 3

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.

Arbitration offers significant advantages, and some downsides, in comparison to the England and Wales court system in family law matters, as Isobel Rarok of Edwards Family Law explains.

Many are aware of the significant presence of arbitration in the corporate and commercial spheres but may not appreciate that this form of alternative dispute resolution (ADR) is also available within the family law setting. Since 2012, arbitration has offered an alternative to court proceedings in financial remedy cases and, since 2016, has also been available in relation to child arrangements and relocation matters.

“Arbitration differs from other forms of ADR, which are designed to guide but not bind parties.”

Arbitration has increased in popularity due to the ongoing backlog faced by the court system; statistics released by the Law Society in December 2022 (covering the period from July to September 2022) show that the family courts continue to face significant delays and issues with judicial capacity. According to these statistics, all types of cases (save for consent order applications) are taking longer to dispose of than during the same period in 2021. These delays often lead to additional legal costs for both parties and can add to animosity. While many parties endeavour to resolve their cases voluntarily, this is not always possible, and many assume that there is no alternative to court proceedings. Could arbitration be the answer?

What is Arbitration?

 Arbitration is a form of ADR and takes place outside of court proceedings. Parties enter into an agreement to appoint an arbitrator, by whose determination (known as the “award”) they agree to be bound. The arbitrator will take the role of the “judge”, hearing and then determining the application. The arbitrator’s determination is equivalent to a final judgment and will be binding upon the parties. The arbitration award is then drafted into an order, which is sent to the court in the usual way to be approved and sealed by the court.

It is important to understand that arbitration differs from other forms of ADR, such as mediation and private financial dispute resolution hearings that are designed to guide parties, but not bind them.

The court will not vary the terms of the arbitrator’s determination when it makes the formal order, which means that the process effectively replaces court proceedings. The court retains a residual power to overturn or vary the arbitrator’s award if it is not deemed to accord with the relevant statutes, but given that family law is inherently discretionary, such a situation will be rare; only occurring in exceptional circumstances.

“Agreeing to arbitration can be very useful if one party is concerned about details of their financial and personal affairs ending up in the public domain.”

Further, following the case of Haley v Haley ([2020] EWCA Civ 1369), it is now possible to appeal an arbitral award. Again, this is likely to be the exception, rather than the rule.

Notwithstanding the above, arbitration is one of the most effective means to promote certainty and a swift resolution in family proceedings.

Advantages

Timing

One of the main advantages of proceeding by way of arbitration is timing. There are a number of arbitrators in England and Wales who are qualified and recognised to hear family law disputes. The arbitrators have control over their own workload and so typically do not have the significant backlogs faced by publicly funded courts and judges. Due to the number of practitioners qualified to arbitrate matters, there will almost always be someone available to take on the case, even at short notice.

Further, the arbitrator is privately funded, by the parties, which enables them to dedicate more time to considering the issues, the documentation and evidence placed before them, than a publicly funded court judge could. This can be particularly valuable to the parties if the case has additional complexities, such as international or offshore wealth structures. The costs of the arbitrator can be met by one or both of the parties, but the avoidance of the lengthy delays often faced in the public courts system means that the benefits often outweigh the costs of arbitration.

Flexibility/control

Parties also have additional control over the process. The parties will agree on which arbitrator to select, and can opt for an experienced family law practitioner, in many cases with expertise in the issues specific to their case. This is something that cannot be guaranteed in the court process, where parties have no influence or control over which judge will hear their case.

There can also be fewer procedural requirements. The parties and their solicitors can, in conjunction with the arbitrator, elect what directions they consider necessary to resolve the dispute, allowing them to build a more tailored approach. Timeframes can be led by the parties, subject to the arbitrator’s availability.

Confidentiality

The arbitration process, including the documents and evidence produced, remains confidential to the parties and their advisors. The same is not always true of family law cases; increasingly so as, while family law cases are heard in private, the family court “Transparency Pilot” launched in January 2023.

This Pilot has given rise to a presumption that accredited journalists and legal bloggers are permitted to attend family court hearings, report on what they see and hear, and are allowed access to certain documentation (see further details here). Whilst anyone reporting on a case must ensure children cannot be identified, more cases are likely to be reported and details made public, as a result of this new approach.

The guarantee of confidentiality within the arbitration process makes it an attractive alternative to court proceedings in many cases. This can also help to promote full transparency from parties to facilitate candid negotiations. Agreeing to arbitration can also be a good form of leverage if one party is particularly concerned about details of their financial and personal affairs ending up in the public domain.

Any appeal of an arbitration award would take place openly and removes this confidential protection, but as set out above, most awards will be made by experts in their field after significant consideration, so appeals are infrequent.

And the Downsides?

Parties should be aware that there are limitations to what arbitration can achieve, certain orders cannot be made by an arbitrator, such as third-party disclosure orders or certain interim orders, such as injunctions.

It is always best to seek specialist legal advice to ascertain whether a case is suitable for arbitration and what the options are more generally in relation to all the ADR processes potentially available.

One question we are routinely asked by our clients is whether nuptial agreements, either pre or post, carry any weight in Court. After all, after going to the effort of entering into an agreement to protect pre-marital assets, if this held no legal weight, what would be the point?

Take the recent high profile divorce case of Kirsty Bertarelli from Italian-born Swiss businessman Ernesto Bertarelli. As Tatler points out, “The former husband and wife were listed together at 14th place in this year’s Sunday Times Rich List, with a combined estimated fortune of £9.2 billion…” Whilst there is speculation as to the exact amount, it is believed that Ms Bertarelli received a divorce settlement of around £350m, in addition to a property on the shores of Lake Geneva worth £52m, and she retains ownership of an £8m ski chalet in the Swiss resort of Gstaad. This would make Ms Bertarelli the richest “British born divorcee in legal history.” In this case, the couple are believed to have entered into a pre-nuptial agreement when they married in 2000, and it is reported that they wanted to avoid a lengthy and drawn-out legal battle. The existence of the ‘pre-nup’ may have allowed the couple to focus on reaching such an agreement out of court. So just how legally enforceable are nuptial agreements in England and Wales?

Are nuptial agreements legally enforceable?

Contrary to what many people believe, nuptial agreements are not legally enforceable, and the Court has the final say when it comes to deciding how assets should be divided in an application for financial remedy following divorce. The Court will, however, take nuptial agreements into consideration by giving them appropriate weight.

The Court is required to take into account a range of factors when deciding on a financial order in accordance with the Matrimonial Causes Act 1973 (MCA 1973), Section 25; these include:

• the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future
• the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable 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 which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family
• the conduct of each of the parties.

Based on these factors, the nuptial agreement may be given a lesser or greater weight by the Court.

Nuptial agreements – a matter of fairness

It is important to understand that there is a difference between saying that a nuptial agreement is legally enforceable versus saying that a nuptial agreement carries weight when deciding a financial settlement. The principle that weight should be given to a nuptial agreement was established in the landmark case of Radmacher v Granatino [2010] UKSC 42. In Radmacher, the Supreme Court came to the conclusion that weight should be given by Courts to a nuptial agreement when exercising their discretion under section 25 of the MCA 1973; the judge stated, “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”.

All of this means that a nuptial agreement should be given due weight by the Court where it is fair to do so. The word ‘fair’ is key here. The supreme Court referred to other landmark cases, including McFarlane v McFarlane [2006] UKHL 24, in which it was established that fairness should be based on the principles of:

• need – i.e. it is fair to take into account the needs of both parties to a divorce;
• compensation – this means that if one person is left financially stronger once both parties’ needs are met, the Court may award some compensation to the other person, and;
• sharing – i.e. each party to a divorce is entitled to an equal share of their joint assets unless there is a good reason otherwise (i.e. if some assets were acquired before getting married).

The Court will apply a three-part fairness test when faced with a case in which there is a nuptial agreement:

1) That the agreement was freely entered into;

2) Both parties have a full appreciation of the implications of the agreement; and

3) it is fair to hold both parties to the agreement in the context of the circumstances prevailing.

In practical terms it is widely considered that a pre-nuptial agreement should be signed at least 28 days prior to the marriage, and indeed not less than 21 days prior.

The court will consider each agreement and case on the basis of its own context and facts so specialist family law advice is always required whether you are considering entering into a nuptial agreement, or have one and are looking to divorce.

International cases

Different jurisdictions have varying attitudes towards nuptial agreements, but in many cases where there is a nuptial agreement, there will be an international element. Regardless of whether the nuptial agreement was prepared and signed in England and Wales or in another jurisdiction, if the divorce is being heard in England and Wales, the court will apply English law to its assessment of the agreement.

The court will carry out the three stage assessment detailed above when considering the foreign nuptial agreement, in line with the other factors it must consider pursuant to the Matrimonial Causes Act. Where the nuptial agreement was prepared and signed in a jurisdiction in which nuptial agreements are enforceable, this can be good evidence that the parties intended to be bound by it.

Final words

When it comes to nuptial agreements, whether drawn up before or after marriage, as long as they are freely entered into in a fair and transparent manner by both parties who understand the full implications of the decisions made, case law requires that Courts give them appropriate weight. In addition, the existence of a nuptial agreement can help focus the parties’ minds during a divorce and can be a good starting point for negotiations to ensure an amicable and timely financial settlement is reached for the good of both parties and any children 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 pre or 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.

Forty percent of people are relying on potential inheritances to fund their retirement, according to research conducted for Hargreaves Lansdown. Although this is a risky strategy, the reality of the astronomical rise in property prices over the past 30-odd years has meant many of the baby boomer generation now have million-pound plus legacies to hand down to their children and grandchildren, who are struggling to put away money for retirement or purchase a home of their own.

Given the above reality, when it comes to negotiating a financial settlement following divorce, those who have or expect to inherit considerable wealth will naturally attempt to ensure that it is classed as non-matrimonial, and separated out of the asset pot to be divided.

Is an inheritance classed as matrimonial property?

In the absence of a Pre or Post-Nuptial Agreement, assets acquired during a marriage or civil partnership are likely to be considered matrimonial property and notionally added to the pot that will be divided up between a couple upon divorce or dissolution. However, inheritances are treated differently in that they are not automatically deemed matrimonial property, but this does not mean that they will not be included, if certain criteria are met.

The separation of inherited wealth from matrimonial property was confirmed in the landmark family law case of White v White [2000] UKHL 54; [2000] 3 WLR 1571. Lord Nicholls examined the issue of property acquired during the marriage by one spouse by gift or succession or as a beneficiary under a trust (which he deemed ‘inherited property’ for the sake of brevity).

“This distinction [between inherited property and property acquired before the marriage, and matrimonial property] is a recognition of the view, widely but not universally held, that property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property. According to this view, on a breakdown of the marriage these two classes of property should not necessarily be treated in the same way. Property acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it. Conversely, the other spouse has a weaker claim to such property than he or she may have regarding matrimonial property”.

Does that mean my inheritance is safe from the divorce financial settlement?

Not necessarily. The Court must consider all the factors under section 25 of the Matrimonial Causes Act 1973, namely:

• the income, earning capacity, property, and other financial resources each party has access to now and in the reasonably foreseeable future;
• the financial needs, obligations, and responsibilities of each of the parties now and in the reasonably foreseeable 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 reasonably foreseeable future concerning caring for any children of the marriage;
• the conduct of each of the parties, 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 will fail to acquire due to the divorce.

The brutal reality is that if the needs of both parties cannot be met by sharing the matrimonial resources available to them both, without recourse to all or part of the inheritance then it is likely that the inherited assets will be included in the matrimonial pot to be divided between the couple.

What other factors could lead to my inheritance becoming matrimonial property?

Several factors could lead to the Court finding that an inheritance is likely to be considered to be matrimonial property rather than separate property, including:

• The length of the marriage and intermingling of assets. The longer that you and your spouse have been together, the more likely the inheritance has intermingled with the matrimonial property, to the point where it is impossible to separate it out. For example, often an inheritance is used to make improvements to the family property, which is difficult to separate from the overall value of the home. However, if funds from the inheritance was used to purchase a buy-to-let property and only the inheriting spouse had their name on the title deeds, then it is much easier to declare that the buy-to-let sits outside the matrimonial property pot, if the matrimonial pot is sufficient when divided to meet their needs.
• Matrimonial home. If an inheritance is used to purchase the family home itself the Court is more likely to view it as matrimonial rather than separate property.

There are no overarching rules as to whether an inheritance will be treated differently to matrimonial property. Everything will depend on whether, after consideration of the section 25 factors, a fair settlement can be achieved without recourse to the inherited assets or funds. Fundamentally, if the needs of the parties cannot be met by dividing the matrimonial property and assets, then inheritance will almost certainly be added to the matrimonial pot, especially if there are young children involved whose needs will be considered a priority.

Final words

Drafting a Pre or Post Nuptial Agreement will provide an opportunity to protect your inheritance from becoming part of any financial settlement following a divorce. Although not legally binding, if certain safeguards are in place, the agreement is fair and reasonable, and both parties have had the opportunity to take full and independent legal advice involving disclosure on both sides, the Court will give the contents of a Nuptial Agreement considerable weight and are more than likely to uphold its content.

To discuss any points mentioned in this article, including Pre or Post Nuptial Agreements, please contact our office.

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 telephone +44 (0)20 3983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

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.