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Family Law

The leading authority on all aspects of family law

19 MAY 2017

Could the UK’s largest divorce award have been bigger?

Could the UK’s largest divorce award have been bigger?
Henry Hood, Partner and Head of the Family Law Department
Hunters Solicitors

The case last week of AAZ v BBZ, C Ltd & P Ltd represents the largest award ever made by the divorce court (although it has approved larger settlements reached through agreement). Although the applicant wife won on every point in issue, and despite the husband failing to appear or be represented at the trial, she did not receive a full 50% of the marital assets. Does the judgment reveal why?

Before he left the field, the husband had filed evidence that identified defences to the claim. The lawyers acting for the wife also reviewed points that C Ltd and P Ltd (who played no part in the litigation at all) could have made had they been present. Accordingly, with the exception of conduct, the case constitutes a veritable checklist of the factors that can be reasons for departure from equality of division.

Variously, the judge (Haddon-Cave J, not a regular in the Family Division) found that none of the wealth was created before the marriage in 1993, and none made after separation in 2013. Despite the size of the fortune, the judge did not consider H had made a stellar contribution towards its creation, and that his efforts in conducting business in Russia had been matched by the wife in caring for the children of the marriage (and of the husband's earlier marriage), while he was doing so.

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The husband made somewhat stereotypical attempts to minimise the extent of the marital assets. According to him, none of the money was his, but owned by Panamanian, Cypriot and Manx companies within a Bermudan Discretionary Trust structure, and accordingly was not susceptible to the Court's dispositive powers.

The evidence did not remotely bear this out. The trust documentation showed the trust to be the barest of bare trusts, involving H applying to himself for a distribution and asking himself (as Protector) whether such a distribution should be made. The evidence showed him transferring assets into (in particular) P Ltd (the Panamanian company within the trust which was one of the defendants and the legal owner of the bulk of the assets in the case) for no payment, with nothing to rebut the presumption that the company therefore held it as his nominee, which was anyway borne out by the extent to which vast sums were paid out to him on his bidding.

Accordingly, the judge was able to hold (a la Prest) that while P Ltd was the legal owner of the assets, beneficial ownership of them remained with H and was available for division, with no need to pierce the corporate veil, which remains sacrosanct.

Even if that had not been the case, the judge considered that the facts that the Trust was only created, and the vast assets transferred to it, during the proceedings and after H had failed to have them stayed in favour of proceedings in Russia, together with its evident motivation, were grounds for the wholesale setting aside of the asset transfers under MCA 1937, s 37, with an equivalent order (for good measure and if needed for enforcement overseas) made under Insolvency Act 1986, s 423.

Accordingly, the judge found the marital assets available for division to be £1,092,334,626 and that the wife was, in principle, entitled to half of it. The eventual award, however, was only 41.5% of the total.

The only explanation for this discount is that the wife did not ask for it. Earlier in the proceedings, the wife had made an offer to accept £350m (around 33% of the assets) in full settlement. It having not been accepted, the wife was not held to it, and it was ignored. However, the wife only sought the specific additional amount of £93,060,990, which, when added to the sums already in her possession, made a total of £453,576,152. It seems that had she asked for the full half she would have got it.

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