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Finance & Divorce Update, April 2016

Edward Heaton, Principal Associate and Jane Booth, Associate, both of Mills & Reeve LLP analyse the news and case law relating to financial remedies and divorce during March 2016













Edward Heaton, Principal Associate and Jane Booth,  Associate, both of Mills & Reeve LLP

This month's update is divided into two parts:
A.  News in brief and
B.  Case law update on the key cases that were published last month
.

A. News in brief

The Pension Sharing (Miscellaneous Amendments) Regulations 2016
Whilst full details do not fall within the scope of this update, in short, the Regulations introduce amendments to secondary legislation relating to pension sharing flowing from the greater access to pension rights as a result of the Taxation of Pensions Act 2014 and the Pension Schemes Act 2015.

The Regulations also see both technical amendments to the way in which rights under an occupational pension scheme are valued for the purposes of pension sharing and the exclusion of certain rights from the scope of a pension sharing order.

The Regulations, which can be found here came into force on 6 April 2016.


Hike in divorce fee
The fee for filing for divorce increased from £410 to £550 with effect from 21 March 2016.  The Government has been criticised by Resolution Chair, Jo Edwards, for the "stealthy" manner in which the hike has been introduced, with family lawyers having only found out about it a matter of days before its introduction.  Commenting on the increase, Ms Edwards pointed out that divorce is not a "choice to litigate", and she referred to the actual costs of the divorce being £270 and to the "profit" therefore being made as, in effect, a "divorce tax".    


The Family Procedure (Amendment) Rules 2016/355
The Rules came into force on 6 April amending the strike-out provision in Rule 4.4 FPR 2010 to provide that the Court, when considering a strike-out application, must take into account any written evidence that has been filed either in respect of the application or answer. 

The Rules also see the introduction of new Parts 39 and 40 (relating to applications for attachment of earnings and charging or stop orders respectively).

The Rules can be found here


B. Case law update

Maya Kanev-Lipinski v (1) Shahar Aharon Lipinski, (2) Megaclose Limited, (3) Megaclose (Leicester) Limited, (4) Byron Works Ltd, (5) East Midlands Technical Limited [2016] EWHC 475 (QB)
 
This was a substantive hearing relating to freezing and asset preservation orders that the former wife ("the wife") had obtained, without notice, in December 2015.  The wife sought a continuation of relief but in a slightly different form.

The wife and her former husband ("the husband") had divorced in Israel in August 2012, after 17 years of marriage, and the divorce agreement that they had entered into had made provision for the division of assets, the most valuable of which were shares that the husband owned in a number of UK property companies, in relation to which he was the sole director and shareholder.  The divorce agreement obliged the husband and the wife to cooperate with the management of the companies pending a final division of the assets.

The anticipated cooperation did not materialise and, as Mrs Justice May observed, the agreement appears "to have been honoured more in the breach than in the observance".  In the end, however, the Israeli Court ordered that KPMG be instructed to value the companies (as at the date of the divorce) with a view to judgment then being given for the payment of a balancing payment by the husband to the wife.

The orders that had been made at the without notice hearing had been a worldwide freezing injunction and an asset preservation order retraining the husband from disposing of assets up to the value of £12m and being sufficiently widely drafted to catch all of the assets held by the companies.

By the time of the return date, the wife was seeking the relief to be "specifically tailored" to protect her pending the payment of the balancing sum to be determined by the Israeli Court upon receipt of the valuations prepared by KPMG.  The wife sought:

• An order restraining the companies from entering into any transaction greater than £50,000 without her consent;

• An order restraining the husband from withdrawing monies against the company loan account in excess of £25,000 per month;

• An order restraining the husband from disposing of or dealing with his shares in the company. 

The wife also sought orders relating to access to and the provision of information.

The husband and the companies opposed the wife's claim primarily on the basis that there had been "deliberate and material nondisclosures" that were "so egregious as to preclude any further relief being granted, irrespective of any underlying merit".

Reference is made in the judgment to the principles relating to non-disclosure in Arean Corporation Limited (in Provisional Liquidation) v Peter Shroeder [2013] EWHC 1089, which included reference to freezing orders being "nuclear weapons… necessitating the fullest and frankest disclosure".  Ultimately, however, the Judge concluded that there had been no non-disclosure by the wife of material facts at the without prejudice hearing.

Reference is then made to the principles set out in Credit Suisse v Cuoghi [1998] QB 818 in relation to relief sought under section 25 of the Civil Jurisdiction and Judgments Act 1982.  It was agreed that, for relief to be granted, the court had to be satisfied of two things:

"(1) If the main proceedings were taking place here and not in Israel, would the English court grant relief?

(2) Is it nonetheless inexpedient to grant the relief?"

However, the usual principles applying to the granting of freezing orders were also engaged and the Judge also, therefore, had to consider whether there was "a real risk of dissipation such as to require the financial restraints" sought by the wife.  Ultimately, the judge was not satisfied that there was such a risk grounded in fact as opposed to "fear or suspicion or dislike".  The wife's second witness statement had, furthermore, effectively accepted that there was no such risk.  Accordingly, the wife had failed to establish any entitlement to freezing relief.


W (Appellant) v H (Respondent) and Secretary of State for Foreign and Commonwealth Affairs (Intervener) [2016] EWCA Civ 176 
This was an appeal by the husband in relation to an order made by Mr Justice Hayden on 8 February 2016 dismissing the husband's application to strike out the wife's application for financial relief pursuant to Part III of the Matrimonial and the Family Proceedings Act 1984.  The husband's application had been made on the basis that he was entitled to immunity as Permanent Representative of St Lucia to the International Maritime Organisation (the "IMO").  Hayden J had held, however, that the husband was not entitled "in principle" to immunity because he had not discharged any functions and his appointment had been an "'artificial construct' designed to defeat the jurisdiction of the court" and that, in any event, as the husband was "permanently resident" in the UK, any immunity would only be in respect of the performance of his functions.  The husband appealed both findings.

By way of brief factual background, the husband was a Saudi national with substantial business interests, mostly in Saudi Arabia.  He had never sought or been granted "extended or permanent rights to remain in the UK".  The marriage had broken down in 2012.

The husband's entitlement "in principle" to immunity
Whilst a detailed legal analysis falls outside the scope of this summary, the source of immunity claimed by the husband was the Headquarters Agreement between the UK and the IMO, as amended in November 2001 by the insertion of Article 13 bis (2A):

"In addition to the immunities and privileges specified in paragraphs (1) and (2) of this Article, the Permanent Representative and acting Permanent Representative shall enjoy, in respect of themselves and members of their families forming part of their households, for the term of their businesses with the Organisation, the privileges and immunities, exemptions and facilities accorded to diplomatic envoys, in accordance with international law."

In his judgment, the Master of the Rolls focussed on a certificate that had been provided by the Foreign & Commonwealth Office (the "FCO") under section 8 of the International Organisations Act 1968.  The document certified that notification had been given of the husband's appointment and "arrival date" and that no subsequent notification had been received of the termination of the husband's diplomatic functions.

Under section 8, "...a certificate issued by or under the authority of the Secretary of State stating any fact relating to that question shall be conclusive evidence of that fact".

Whilst Hayden J had accepted the certificate as conclusive evidence of the husband's appointment, he had erred in then going on to consider whether, as a matter of fact, the husband had "taken up his appointment".  It was clear from Article 39 of  Vienna Convention on Diplomatic Relations 1961 (the "VCDR") that immunity starts when the diplomat in question enters the receiving state, before he or she performs any functions, and it was not for the judiciary to "conduct a functional review".  Accordingly, Hayden J had been wrong to hold that the husband had not "in principle" been entitled to immunity.

The permanent residence issue
Under Article 38 of VCDR, "Except insofar as additional privileges and immunities may be granted by the receiving State, a diplomatic agent who is a national of or permanently resident in that State shall enjoy only immunity from jurisdiction, and inviolability, in respect of official acts performed in the exercise of his functions".  Whilst Hayden J should, in fact, have had reference to Article 13 bis of the Headquarters Agreement and Article 15 of the International Maritime Organisation (Immunities and Privileges) Order 2002 (SI 2002/1826), there were no material differences.

The Master of the Rolls considered, at some length, the interpretation that has developed over the years of the term "permanent resident", with reference to the "so-called 'but for test'" and the subsequently developed general rules and guidance.  In particular, reference was made to a 1969 FCO circular which provided that "the test should normally be whether or not [an individual] would be in the United Kingdom but for the requirements of the sending State".  Further considerations included the intention of the individual (with the individual being regarded as permanently resident if he did not intend to return home upon the termination of the position), the prospect of the individual being posted elsewhere, whether the individual was recruited locally (and should therefore be presumed to be permanently resident) and the marital status of an individual (whether they are married to a national of the UK).

In his judgment, Hayden J had considered the husband's circumstances, both historic and current, and had identified a number of key features as being relevant.  These included the facts that, whilst the husband was an international businessman and a Saudi national, he had been married 3 times and, in each case, the family home had been in the UK and his children had been brought up and educated in the UK.  This, the Judge found, was "magnetic" in its attraction – where a man chose to live with his family was indicative of where he intended his home to be and the fact that the husband had set up 3 family homes in the UK suggested an intention to remain in the UK indefinitely. 

The Master of the Rolls indicated that, in his view, Hayden J had not "misdirected" himself in law, directing himself in accordance with the FCO circular.  The question, therefore, was the extent to which Hayden J had reached conclusions on the facts that were not open to him, the husband having to establish that he had exceeded "the generous ambit within which reasonable disagreement about the conclusion to be drawn from the evidence [was] possible" (per Lord Justice Ward in Assicurazioni Generali SpA v Arab Insurance Group [2002] EWCA Civ 1642), a test that applies to all findings of fact.  There had been "ample material" from which to conclude that the husband had chosen to maintain his family base in the UK and that conclusion could properly have provided an "important part of the factual background against which the judge would consider whether [he] was or was not a permanent resident…".  Hayden J had, therefore, been entitled to conclude that the husband was permanently resident in the UK and, since the wife's Part III claim did not relate to any official acts performed by the husband, the husband's appeal was dismissed.


BD v FD [2016] EWHC 594 (Fam) 
This was a financial remedy case before Mr Justice Moylan.  The wife sought £29m and the husband proposed just over £8m.

The focus of the dispute was the assessment of the wife's future financial needs (in respect of both annual expenditure and housing).  The wife submitted that the court should take into account the wealth that had been accumulated during the marriage and that her needs "should not be viewed through the prism of spending during the marriage".

The parties had married in 2002, and the marriage had subsequently come to an end in 2013.  The husband was 49 and the wife was 41.  There were 4 children between the ages of 5 and 10.

Before the marriage, the wife had lived and worked in London.  Following the marriage, however, she had left her employment and had not worked in paid employment since.  She had sold her property in London and had given the (modest) net proceeds of sale to her siblings.

The husband's wealth substantially reflected and/or represented resources that he had inherited.  He owned (whether outright or on bare trust) assets valued at £58m and had a life interest in trust assets valued at £105m (he had an absolute entitlement to the income, and the trustees also had the power to appoint capital).  These are referred to, in the judgment, as non-trust and trust assets respectively.  The origin of the wealth dated back to the 17th century and reflected the endeavours of the husband's family over many generations.  Moylan J said that he had "no doubt that the husband's own wealth and the wealth in the three trusts [had] been managed with the intention of seeking to ensure that it [was] preserved for the children of the family and future generations.  In this context, [he considered] it unlikely that the husband [would] personally receive any significant benefit from, in particular, the three trusts other than his income entitlement".

During the marriage, the husband had worked on "trust affairs".  Moylan J observed that "he had clearly worked hard… but all the trusts… [had] active boards of trustees with specific management teams".

The matrimonial home was in the centre of an estate owned by the husband.  The house itself was valued at between £2.25m and £3m, depending on how much additional land and how many ancillary buildings were included.

When the marriage had broken down, the wife had moved into a property near the matrimonial home which was purchased for £2.5m.  The wife had subsequently said that she was not happy at that home and that she wanted to move.  That remained her position at the hearing before Moylan J.

Moylan J made observations about the parties.  He said the wife had "very strong views about her position and the scope of her claims", her evidence coming through and being distorted by "a highly charged emotionally jaundiced prism".  Whilst he did not believe that she had deliberately lied or exaggerated, she had not been "a reliable witness".  Conversely, Moylan J "found the husband to be a generally reliable witness".

In an earlier hearing, the husband had been ordered to pay maintenance pending suit of £200,000 to the wife (although the wife in fact spent approximately £865,000, excluding legal costs, which significantly exceeded even her own maintenance pending suit claim).  Moylan J considered what the monies had been spent on (£365,000 on "capital expenses", including a number of vehicles at a total cost of £215,000, and £500,000 on "living expenses (including the children)") and concluded that £300,000 should be added back to the wife's resources.

Moylan J assessed the husband's income over the final few years of the marriage at approximately £600,000 (with the trust working capital, insurance premiums and professional fees in relation to the trusts being deducted).

Moylan J concluded that the average total family expenditure had been approximately £250,000 (excluding school fees). Of this, the wife had received an annual average of approximately £110,000.

Moylan J detailed at length his assessment of the parties' capital and income needs.  In terms of capital, the wife sought (i) a principal home in the country (£6m), (ii) a London property (£3.6m), (iii) the sum required to enable her to purchase the home currently occupied by her parents (£1.1m), (iv) a sum for furniture, furnishings and redecoration (£950,000) and (v) a sum to cover likely future Children Act costs (£170,000).

In terms of income needs, Moylan J commented that it had been clear, from the wife's oral evidence, that she had sought a "very different lifestyle and one which, in her view, [was] justified because the husband [could] afford it".  He further commented that it had felt to him that she had been seeking "recompense based on her case that the husband [had been] unduly mean during the marriage".

The parties' combined legal costs were a total of £1.4m, which Moylan J considered to be disproportionate.

Moylan J said that he could see "no justification for the application of the sharing principle to the non-marital property".  As such, he considered that the determinative principle in the case was need.  He referred to the standard of living during the marriage as the starting point for the assessment of needs.

Moylan J saw no justification for the wife being awarded a sum with which to purchase a London property.  Nor could he see any justification for the wife to be awarded a sum to enable her to purchase her parents' home.  Moylan J said "the occasional use by the parties of other (holiday) properties and the limited use made by the family of properties (including a home of the husband's parents) in London do not make it a significant part of that standard [of living]. In addition, the desire to have a home in London, based on future claimed lifestyle needs and/or the children, provides a wholly insufficient justification for an award to include such a need".

Moylan J considered the wife's housing need to be in the region of £3.6m (based on a purchase price of approximately £3.25m).  Moylan J awarded an additional sum of £500,000 for the purchase of furniture, refurbishment/improvements or other associated costs.

In terms of income, Moylan J held that the fair annual sum for the wife for the purposes of calculating a capitalised income fund was £175,000.  This equated to £5m on a Duxbury basis.

Accordingly, the wife was awarded £8.8m (£9.1m less the £300,000 add-back).  Child maintenance had already been agreed between the parties.


Robertson v Robertson [2016] EWHC 613 (Fam) 
The parties' marriage, including cohabitation, had lasted for eleven years.  There were two children, aged 7 and 8.  The husband was the co-founder of ASOS (the online fashion company).  ASOS had been launched prior to the commencement of the relationship, in 2000.  When the parties had subsequently begun their relationship, the shares had been trading at around 12p to 8p.  By the time that the parties separated, the shares were trading at £67 each.  The agreed market price of the shares for the purpose of the hearing and judgment was £29.09. The wife was a home-maker and, when the children were born, a stay-at-home mother.

The primary issues for Holman J to determine were in respect of the husband's shareholding in ASOS, how the value of those shares should be treated and the extent to which the wife should share in their value. 

A slightly complicating feature was that, since separation, the husband had sold some of the shares and invested the proceeds in three properties in Wimbledon, purchased in his sole name, with an aggregate net value of approximately £20.1m.

In terms of the husband's remuneration, "the husband suggested during his oral evidence that, very roughly, the averaged annualised aggregate net value of share options and grants received and realised by him (but excluding pre-existing shares) plus his net salary, was not less than about £6million per annum during the period of cohabitation and marriage".

In short, the assets were as follows:

• the matrimonial home in Greater London, which the wife was to receive, worth approximately £12.4m;

• a house in Oxfordshire, which the wife was also to receive, worth approximately £3.2m;

• a chalet in Chamonix, which the husband was to receive, worth about £1.5m;

• other investment properties, which were to be apportioned between them, worth approximately £21.6m;

• the three investment properties in Wimbledon, worth approximately £20.1m;

• sums in the bank (and similar accounts or portfolios) totalling approximately £11.3m;

• amounts owed to the parties totalling approximately £6.45m;

• valuables totalling £1.25m;

• a number of vehicles and boats worth approximately £2m;

• the husband's business interests, other than in ASOS, worth approximately £2.45m; and

• the husband's ASOS shares valued at £140.8m (net of CGT). 

Taking into account liabilities assessed at £3.73m, the assets totalled over £219m.

The wife conceded that the actual value of the shares, as at the date when the parties had begun to cohabit, uprated by an assessment of so-called passive growth, should be carved out as a non-matrimonial asset and ascribed to the husband (following the line of reasoning in Jones v Jones [2011] EWCA Civ 41).  However, the wife submitted that the value of the so-called active growth during marriage (including the period of cohabitation) should be regarded as a matrimonial asset and be divided equally on the basis of the sharing principle.
The husband argued non-matrimonial property and special contribution as reasons for a departure from equality. 

In broad terms, the wife contended that she should retain or receive assets of a total value of £107m, being half of £219m less £5m (her assessment of the net value of the shares from the point the parties had begun to cohabit uprated for passive growth) . The husband contended that the wife should retain or receive assets of a total value of £29m, being half of £219m less £141m (the net value of his ASOS shares) and £20m (the value of the three Wimbledon properties), although he subsequently increased his offer to just over £30m.

Holman J reviewed the comments of Lord Nicholls and Baroness Hale in Miller; McFarlane [2006] UKHL 24 on matrimonial and non-matrimonial property, and observed that the methodology in Jones was "a tool and not a rule". 

Holman J considered the fact that the husband had already owned the ASOS shares before the marriage, but also acknowledged and took into account the fact that those shares had greatly increased in value during the marriage.  He found that much greater allowance must be made for the husband's work and business than the wife's open position, but that to ring-fence the pre-matrimonial shares entirely would not be fair to the wife as they had formed part of the "family economy".

Holman J concluded that the fair way to treat the shares was to treat half of them as non-matrimonial property (to be retained by the husband) and the other half as matrimonial property (to be shared equally).  On that basis, the wife was awarded £69m, the equivalent of 31% of the total assets.

The parties had already agreed that, in part-satisfaction of her entitlement, the wife would retain various properties and assets worth just over £30m.  The balance was to be paid by way of a lump sum.

In relation to the special contribution arguments, Holman J did not consider that the husband's founding of and entrepreneurial skill at ASOS amounted to a special contribution.  He repeated Counsel's submissions on the role the husband had had at ASOS and acknowledged that he was "talented, hard-working and astute", but felt that the husband he was not "notably innovative [or] revolutionary".  Holman J drew a distinction between someone who invented the internet or internet shopping and someone who spotted the direction in which the internet might travel and successfully exploited it. Further, Holman J commented that the wife had been an excellent home-maker and to treat special contribution as "unmatched" would be "highly discriminatory".


Sands v Singh & Ors [2016] EWHC 636 (Ch)
This case is very fact specific and this summary is, accordingly, limited in scope. 

In short, the husband's trustee in bankruptcy claimed that two charges against the former matrimonial home were a sham and that a trust deed and a consent order should be set aside as (i) constituting a transaction defrauding creditors under section 423 of the Insolvency Act 1986, or (ii) a transaction at an undervalue for the purposes of section 339 of the Insolvency Act 1986.

The consent order provided that the former matrimonial home be transferred to the wife.

Mr Justice Newey found that there was no direct evidence of collusion between the husband and the wife, and that the circumstantial matters on which the trustee in bankruptcy relied did not persuade him otherwise.  Newey J said that, on the basis that the amount that the wife and the children were to receive under the consent order was, on the face of it, far from overly generous to them, he did not consider it to be a transaction at an undervalue.

Newey J was not persuaded to set aside the trust deed or the consent order under either section 339 or section 423 of the Insolvency Act 1986.


Re: V (European Maintenance Regulation) [2016] EWHC 668 (Fam)
This case related to an application made by a wife under section 27 of the Matrimonial Causes Act 1973 (the section dealing with financial provision in cases of neglect by one party to a marriage to maintain the other party or children of the family).

The parties had married in 1994 and had, the following year, moved to Scotland, where they had spent the remainder of their marriage.  Following their separation in 2012, however, the wife had moved back to England with the parties' daughter.  The husband issued a writ for divorce in Dumbarton Sheriff Court in October 2014 and the wife subsequently issued her application under section 27 in January 2015.

The husband's case was that the wife's application should be stayed or dismissed on the basis that it was second in time, the European Maintenance Regulation having been engaged by the writ of divorce that he had filed in Scotland. 

The wife's case, however, was that the husband's writ of divorce had not contained any application for maintenance and that, accordingly, the Regulation had not been engaged and she had been free to file her application under section 27 on the basis of her habitual residence in England and Wales for the preceding 12 months.

The husband maintained that the lodging of his writ had meant that the issue of maintenance (or "aliment", in Scotland) was before the court since Scottish courts were unable to pronounce a divorce whilst financial issues remained outstanding.

Whilst there were issues over the extent to which the husband, who was a litigant in person, should be permitted to adduce further evidence, Mrs Justice Parker felt that the Court had the information that it needed.  She was satisfied that the Scottish court had not been seised of maintenance at the date upon which the wife's application under section 27 had been issued and that, accordingly, the English Court was seised of the maintenance issue.

Parker J summarised the clear evidence as follows:

• unless a financial claim was made in Scotland prior to the grant of divorce, the opportunity to make such a claim was lost;

• this was "a quite different issue" from whether the writ included a financial claim either "impliedly or inherently", which it did not;

• a financial claim needed to be made in the writ or in a subsequent claim governed by the writ in order to "engage the financial jurisdiction";

• the fact that a decree could not be made whilst a financial claim remained yet to be resolved did not mean that a decree could not be granted in circumstances in which no financial claim had been made.

Parker J went on to make orders (i) dismissing the husband's application to stay or dismiss, (ii) for costs against the husband, (iii) for interim maintenance and (iv) that the husband make monthly payments for the wife's legal funding until the next hearing.


Besharova v Berezovsky [2016] EWCA Civ 161 
This case concerned the interpretation of a consent order that had been perfected in February 2012 in relation to the wife's application for a financial remedy. 

In brief, the order provided that:

• the wife was to receive the net proceeds of the sale of a house, subject to the husband receiving the first £16m of the gross sale proceeds; and

• the wife was to receive 20% of any sum or sums that the husband received from specific items of on-going litigation, subject to the following:

o there was to be an offset in respect of any amount that she received in relation to net proceeds of sale of the house;

o the wife's claims were subject to a total cap of £200m; and

o payment was to be made to the wife within 10 days of the husband receiving such sum or sums.

The matter had been heard, at first instance, by Mrs Justice Roberts.  By the time of the hearing, the husband had died (and his interest had been represented by the general administrators of his estate) and his estate had received significant sums in relation to the litigation.  However, the house had not yet been sold (nor had it been by the time of the appeal), and it did not appear that it was likely to be sold in the near future. No payments had been made to the wife under the relevant provisions of the consent order.

Roberts J had found that the husband had not had to make any payment of the monies received from the litigation to the wife until such time as the house had been sold.  The wife had appealed this finding.

The appeal revolved around the construction of the consent order and, specifically, the extent to which the offsetting provision applied to funds that the wife was to receive from the proceeds of the litigation in the circumstances where she received them before she received the net proceeds of sale of the house.

The wife submitted that, where monies were received prior to the sale of the house, there should be no offsetting. The husband submitted that the offsetting should be applied as and when any payments were due from the net proceeds of sale.

It was agreed that principles of construction in relation to commercial contracts apply to consent orders, in accordance with Sirius International Insurance Company v FAI General Insurance Limited [2004] UKHL 54.  The question was "what a reasonable person, circumstanced as the actual parties were, would have understood the parties to have meant by the use of specific language; the answer to that question is to be gathered from the text under consideration and its relevant contextual scene".

Roberts J had found that it had been the intention of the parties that the entitlement to the proceeds of sale of the house was qualified by a mechanism for offset.  The Court of Appeal agreed.

However, the Court of Appeal held that the litigation monies were payable before the sale of the house.  They were due within 10 days of receipt by the husband, and such payment should be made without deduction.  The amount would be subject to accounting later, on the sale of the house.  To put it another way, the Court of Appeal held that the fact that the sale of the house lay in the future did not prevent litigation monies from being payable out to the wife, from time to time, in accordance with the consent order. 

The impact of the insolvency of the estate on the making of the actual payments to the wife under that provision was a different matter, which the Court of Appeal was not asked to address in the appeal. 

Work v Gray (Phase II : Computation and Distribution) [2016] EWHC 562 (Fam)

This was a hearing before Mrs Justice Roberts and concrned the computation and extraction of the half share of the assets that the wife had been ordered to receive in a judgment handed down by Mr Justice Holman on 10 March 2015 (which was covered in the April 2015 Finance & Divorce and Update, citation Gray v Work [2015] EWHC 834 (Fam)).  Practitioners will recall that permission to appeal has been granted in relation to that judgment.

Of the gross available wealth (approximately $240m, as at 31 December 2014), some $180m (about 75%) was invested in property or liquid cash deposits.  In broad terms, the remaining $60m was invested in 36 individual securities, hedge funds, private equity investments and venture capital partnerships. Thus, in terms of the underlying composition of the asset base, some 25% was tied up in assets which, by their nature, were risk laden and partially illiquid.

The mechanism in Holman J's order was for the husband to make payment of the 50% to the wife through a series of lump sums.  As such, the wife would receive the sums in cash.

The hearing before Roberts J was to determine the specific discounts to be applied to the assets and the total amount that the husband was to pay to the wife to discharge his obligations.  In other words, the hearing was to determine "the means of delivering full value to the wife in terms of her 50% share of the available net wealth so as to produce a fair outcome for both parties".

A detailed analysis of the evidence falls outside the scope of this summary, as the particular investments involved and discounts sought were very fact specific.  The arguments, however, centred around the wife's contention that a payment in cash was not the same as the direct transfer of the investment.  She was being deprived of value on the amounts that had been and were being transferred and, as such, she was not receiving an equal share. If the investments were transferred to her outright, whilst she would receive them "pregnant with whatever risks they attracted, she would have… complete control of the timing of any future realisations and could thereby [manage] those risks on the basis of whatever investment strategy she chose as being in her best interests".

Roberts J found that the wife was due a further sum of just under $5.5m, in addition to the lump sums paid and payable under Holman J's order.  Roberts J found that this represented "an entirely fair result" to both parties.

Dated:  7 April 2016