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Finance & Divorce Update, May 2018

Sue Brookes, Principal Associate and Rose-Marie Drury, Senior Associate, both with Mills & Reeve LLP, analyse the news and case law relating to financial remedies and divorce during April 2018.



Sue Brookes, Principal Associate and Rose-Marie Drury, Senior Associate with Mills & Reeve LLP

This update is provided in two parts:

A. News in brief

B. Case Law Update

Part A: News in brief

Guidance on Financial Needs on Divorce updated
The Family Justice Council has published the second edition of Guidance on Financial Needs on Divorce. For the Guidance, click here.

New research adds weight to no fault divorce campaign

The research, published by the Nuffield Foundation, looks at why defended divorces occur and how they are dealt with by the courts.  It follows on from last year's Finding Fault report.  Three issues were identified in defended divorces:

• Few (less than 1% of the 1/3 of respondents who formally record their disagreement with the allegations in the petition) of those who want to defend a divorce actually do.  This is due to legal fees (c.£6,000 is needed to defend a divorce) as well as the process being technically and emotionally demanding.  Solicitors put-off clients who want to defend a divorce.

• The majority who defend don't want to stop the divorce but want to give their reason for why the marriage broke down.

• The court is focused on compromise meaning that very few cases result in a hearing (so the "truth" a respondent wants the court to establish doesn't happen) and those that do go to a hearing are likely to result in the divorce proceeding

For the No Contest report, click here. For Finding Fault, click here.

New President of the Family Division announced

Sir Andrew McFarlane has been appointed as the President of the Family Division from 28 July 2018. For the news item click here.

Family Relationships (Impact Assessment and Targets) Bill goes to third reading

The third reading in the House of Lords of the Family Relationships (Impact Assessment and Targets) Bill is due to take place on 26 April 2018. It is the last opportunity to amend the Bill in the House of Lords. 

The Bill requires public bodies to accompany any proposal for a change in public expenditure, administration or policy with a family impact assessment; and to require the Secretary of State to report on the costs and benefits of extending family impact assessments to local authorities and to establish and evaluate progress towards objectives and targets for family stability.

Pension Advisory Group publishes two draft reports for consultation

The Pension Advisory Group has published two draft reports.  The first report reviews various legal issues, including how s. 25 operates in this context and when to instruct an expert.  The second looks at the assumptions used by experts when valuing pensions for the purposes of sharing or offsetting, and the desirable qualifications and regulation of those experts.
The reports are now out for consultation, after which good practice guides will be published. 
The reports can be accessed here.

Updated legal aid documents

The Legal Aid Agency has published the following updated documents:

• Guide to determining financial eligibility for controlled work and family mediation

• Guide to determining financial eligibility for certificated work

• LAA civil legal aid eligibility key card.

For the updated documents, click here.

Part B: Case law update

Waggott v Waggott [2018] EWCA Civ 727
The husband ("H") who is in his mid-50s and the wife ("W") who is in her late 40s had lived together since 1991.  They married in 2000 and separated in 2012.  There was one child, who by the time of the appeal hearing was 13. 

At the start of their relationship, both H and W had been accountants.  Following a move to Manchester for H's job in 2001, W had left her own job and not really worked again. 

At the time of separation, the assets were c £16m. H's net income for 2013/2014 was c £3m per year and it was expected to increase to £3.7m in 2014/2015. The trial judge accepted that there was no guarantee that H would continue to earn at those levels given that a substantial proportion of H's income was by way of discretionary bonuses, a performance share plan and a matching share plan payment of which was deferred for three years and dependent on performance.

The couple agreed to split their capital resources equally. However, they disputed the extent to which W should receive spousal maintenance.  The two main areas of dispute were (a) whether W should be entitled to share in H's post-separation bonuses; and (b) whether W should be awarded open-ended maintenance or whether, as argued by H, she would be able to adjust without undue hardship to the dismissal of her claims at the end of a proposed five year term.
At first instance (in 2016):

• W received capital of £9.76m including an additional sum of c.£1.4million comprising differing percentages of deferred remuneration received by H post-separation. This was more than H but was intended to achieve overall equality as W had not yet incurred the cost of purchasing a new property. It broke down into:

o £2.5m – main home

o £750,000 – holiday home

o £1.27m – pension

o £5.2m – "free capital"

• H was also ordered to pay W joint lives maintenance of £115,000 per year because W was ascribed a net income of £60,000 from her "free capital" and her needs were £175,000 p.a. Although the trial judge expected W to be earning again after four or five years, no reduction was made for future earnings because of (a) the level of H's income and (b) the uncertainty of W's earning capacity.

H had offered W a share of his deferred remuneration received in 2014 and 2015 and spousal maintenance for five years (£80,000 for three years and £50,000 for two years) followed by a clean break.  He argued W could meet her own needs in part with an assumed income of £30,000 after three years. 

W had sought a share of H's bonuses – 50% of the deferred net sums received in the years to 2014 and 35% of the net bonuses awarded between 2014-2019 plus spousal maintenance at the rate of £190,000 a year on a joint lives basis. 

W argued that H's post-separation earnings were marital property which should be shared, as they were the product of an earning capacity which had been built up during the marriage.  She also argued that she was entitled to compensation by way of a share of H's income because Hs earnings represented an advantage accrued to him during the marriage. 

The trial judge decided that the sharing principle did not apply to H's post-separation earnings.  Sharing stopped "at or within a short time of the end of the relationship".  W could only establish a claim to a continuing share of those earnings if "necessary to meet her reasonable needs".  Further, the bonuses actually received by H were "entirely dependent on H's post-separation performance".  It was only the maximum amount of the potential award, deferred for three years, which had been determined by his performance during the marriage.  However, because of this latter factor and because "it is not unusual for assets to be assessed at the date of the hearing", the judge decided that W should receive a percentage of the amounts received by H in 2014 and 2015. 

The trial judge rejected W's case as to compensation.  W had suggested that, if she had continued with her career, she might have been earning at the rate of £100,000 gross a year.  The judge found that W would have had to be more determined to pursue a career and, in any event, his proposed award exceeded any financial loss she might have sustained.

Both parties appealed

W argued that:

• an earning capacity is capable of being a matrimonial asset to which the sharing principle should be applied: it is "an asset referable to or the product of marital endeavour and should, therefore, be divided between the parties by application of the sharing principle as with other marital assets".  A different outcome would be unfair due to its discriminatory nature, much like the cases determined before White v White [2001] 1 AC 596;

• a wife should not be required to use her capital award to meet her income needs when a husband would meet his needs from income and not need to tap into his capital award – income needs should be met purely by an award of periodical payments; and

• the compensation principle, properly understood, applied when a financial advantage (namely enhanced earnings) has accrued to the other spouse.

H contended that:

• an earning capacity was not an asset capable of being shared;

• the court only had to look at the capital award to realise there was sufficient here to justify a clean break; and

• compensation had already been rejected by the trial judge as W had not sustained a financial disadvantage greater than the sum awarded to her via the sharing principle. 

H's cross-appeal focussed on the trial judge giving insufficient weight to the need for a clean break resulting in a "clearly wrong" award.  H argued that a term maintenance should have been ordered and proposed a five year term to February 2021, with a s.28(1A) bar to take effect at the end of a five year term (when the child would be 16). 

The Court of Appeal had to decide:

(a) Is an earning capacity a matrimonial asset to which the sharing principle applies?

(b) How should the court assess whether an award determined by application of the sharing principle meets the party's needs and to what extent should a wife have to use her sharing award to meet income needs when the husband meets his needs from income?

Moylan LJ gave the lead judgment and concluded that:

• Any extension of the sharing principle to post-separation earnings would fundamentally undermine the court's ability to effect a clean break. The entitlement to share would continue until the payer ceased working, potentially a period of many years. Moylan LJ did not see how this could sit with the approach advocated in Jones v Jones.

• The principle would apply to every case where one spouse had earnings which were greater than the other's regardless of need.  Moylan LJ did not see how this could sit with Lady Hale's observation in Miller that "it can be assumed that the marital partnership does not stay alive for the purpose of sharing future resources unless this is justified by need or compensation" (para 144) or her observation as to the effect of too strict an adherence to equal sharing (para 142).

• It would require the court to assess the extent to which the earning capacity had accrued during the marriage.  Where would the court start and what factors would be considered?  Such an approach had been strongly objected to in Jones v Jones.  W's counsel was unable to articulate any principles by which the court should apply the sharing principle, thereby supporting the conclusion that applying it in this way would significantly undermine the need to achieve an "acceptable degree of consistency of decision". 

• Miller and the subsequent decisions (in particular Jones and Scatliffe), did not support the extension of the sharing principle to an earning capacity.  The sharing principle applies to marital assets being "the property of the parties generated during the marriage otherwise than by external donation" (Charman v Charman (No 4)).  An earning capacity is not property and, in the context advanced by W, resulted in the generation of property after the marriage.

• W's "more extreme" argument that her capital should be preserved and should not be used in any way to meet her income needs was rejected.  This conflicted with the clean break principle to such a significant extent as to undermine the statutory "steer" because, absent other resources, the applicant spouse would always have a claim for an additional award to meet his or her income needs.

• From Miller and Charman, as a matter of principle, the court applies the need principle when determining whether the sharing award is sufficient to meet that party's future needs.  There must be a means of determining whether, and if so how, the sharing award does or does not meet the applicant's needs.  There was no suggestion that the question of needs for these purposes was to be determined by reference to a different approach.  Any other approach is inconsistent with Lord Nicholls' and Lady Hale's observations that there is no rule about where the court starts the exercise, and with Charman where the sufficiency of the award by reference to the sharing principle is directly assessed by the award "suggested by the needs principle".

• However, this does not mean that the manner in which the need principle is applied to the sharing award is inflexible, no more that the application of the need principle is itself inflexible.  An earning capacity can be "relevant to a fair distribution of the assets pursuant to the sharing principle".  It can be taken into account when the court is deciding whether the capital should be amortised in full, in part or not at all and when deciding what assumed rate of return to apply.  However, as per Wilson LJ in Jones, "Even if, however, an earning capacity may also sometimes be relevant to a fair distribution of the assets pursuant to the sharing principle, it does not follow that the earning capacity should itself be treated as one of those assets, still less that an attempt should be made to capitalise it."

• If, in some circumstances, a wife can be expected to meet her income needs out of inherited capital, it is difficult to see why the same should not apply to a wife's share of marital wealth.

• Moylan LJ also agreed with the observation that it is "impossible to be categorical about what the law expects".  Given the range of options from full amortisation to an assumed rate of return and the range of potential circumstances (including all the section 25 factors) it was difficult to see how a definitive outcome could be mandated for all cases.  It would sometimes be fair for the part of the sharing award available to meet income needs to be fully amortised, for example, because neither party has any resources other than those being shared.  In other cases, the court might decide that the applicant should have a greater level of security than that provided by an amortised sum because of the respondent's earnings and apply only an assumed rate of return.  When determining this issue, the court needs to have regard to all the relevant circumstances, to the clean break principle and, as appropriate, the issue of undue hardship.

• W's appeal from the judge's decision not to award her more of H's post-separation income by application of the sharing principle failed.

• Moylan LJ did not accept W's argument about compensation. It was clear, he stated, from Miller "that compensation is for the disadvantage sustained by the party who has given up a career."

• The judge's finding that W would have been earning less than £100,000 gross a year (£64,000 net) was a finding which could not be, and had not been, challenged.  There was no basis for an award based on compensation because the amount awarded to W exceeded what she might have been entitled to under this principle.  In reaching this conclusion, Moylan LJ decided that the principle requires the applicant spouse to have sustained a financial disadvantage greater than the amount of the proposed award calculated by reference to the other principles.

In contrast, H's cross appeal was allowed.

• The trial judge had decided whether to impose a term maintenance order by reference only to whether W would be able to earn the shortfall between her income needs and the amount generated by her free capital, and as such she could not adjust without undue hardship.  This was too narrow an approach and the issue should have been addressed more broadly including by considering whether it would be fair for W to deploy part of her capital to meet her income needs: "This broader consideration was required both so as properly to address the question of undue hardship and also so as to give proper weight to the clean break principle".

• As the trial judge had taken too narrow an approach, the options open to the Court of Appeal were either to remit the issue or to take on the task.  Moylan LJ opted for the latter.  Having made it clear that it was not appropriate to simply look at the amount of W's award without any consideration of how it would have to be deployed to enable her to meet her income needs, he clarified that "The court needs to undertake that exercise to some level of specificity.  The degree of specificity required will vary according to the circumstances of the case and will be for the trial judge to determine.  However, it does not have to be more than would be conventionally required when the court is determining a claim by application of the need principle". 

• W's income needs had been assessed at £175,000 a year for life.  It was not for the Court of Appeal to determine the issue by reference to any lesser amount and so the issue was how would W be required to deploy her free capital in the absence of continuing maintenance and would it be fair her to have to use it in this way. 

• H had argued that, applying 2.25% net, W's free capital provided income of just over £100,000 a year. In 2020 (at age 60), W would be able to draw a pension of £76,000 (gross) a year.  Together, that's £150,000 net a year plus state pension.  The Duxbury sum needed to produce an annual income of £25,000 net from age 60 was £360,000. 

• H sought a term order expiring in February 2021 when W would be 52.  So, from 2021 until 2028, there would be a shortfall of £75,000 a year (a total of just under £600,000)

• Broadly, therefore the total shortfall was £950,000.  So that was the sum W would be expected to use of her sharing award to meet her income needs (21% of her "free capital" or 10% of her total award). 

• It was plain to Moylan LJ, despite H's ability to continue earning at a very substantial level, that W was able to adjust without undue hardship. To require her to use a proportion of her capital award was not unfair, having regard to all the s.25 factors.  She would still have "free capital" of £3.6million and a housing fund of £2.75million. 

A term order was imposed expiring on 1st March 2021 with a section 28(1A) bar.

S v S [2018] EWHC 627 (Fam) 
Mr Justice MacDonald heard the Husband (H)'s appeal against the two orders of His Honour Judge O'Dwyer (the judge).

The appeal followed lengthy litigation between the wife (W) from Belarus and H, a Cypriot who suffered from mental health difficulties.

The subject of the appeal £340,000 which had been withdrawn in cash from W's bank account. Both parties claimed that the other had the money. The judge had heard evidence at the final hearing, provided a draft judgment in December 2015 and finalised his judgment in April 2016. He concluded that W was telling the truth and that it had been H who had taken the money. H had sought permission to appeal this finding but this was not granted.

In May 2016, H filed an application to reopen the judge's findings on the basis of new evidence. He contended that new evidence demonstrated that his car had not been parked outside the bank at the time the money was withdrawn and that W had not had a Skype call with her sister on the same date, as she had asserted.  The judge allowed H's new evidence, considered it and declined to reopen his findings. He therefore made the final order based on his original findings in January 2017.

H appealed again in February 2017. His grounds of appeal were extensive but, having considered them all, Bodey J gave H permission to appeal purely on the ground that the specific evidence now produced by H regarding the Skype call and where the car was supposed to be parked meant that the judge may have erred in not re-opening his finding that it was W telling the truth. Permission to appeal the original findings were not the subject of the new appeal.

H had made 3 preliminary applications, all of which were dismissed by Mr Justice MacDonald.

• He was not allowed to amend the grounds of his appeal because his application was submitted well after the deadline for doing so, there was no reason why the new grounds he was asserting had not been originally raised and they were in any event ill-founded.

• His second application was to admit fresh evidence, which Mr Justice MacDonald allowed but solely for the purpose of assessing his well-being as a litigator and not for the wider purpose of the substance of the appeal.

• Thirdly, he applied to adjourn the appeal on the ground that he had taken an overdose of medication whilst he was in the courtroom, after his counsel had commenced making her concluding oral submissions. Mr Justice MacDonald declined to adjourn on the basis that it was H's own fault that he was absent from the court, he was represented by counsel who already had full instructions, he was not unduly prejudiced by the fact that he could not give her further instructions during her final submissions and the balance of any prejudice caused by adjournment would fall on W because she was waiting to be able to implement the original order for sale of the FMH.

In relation to the substantive appeal, Mr Justice MacDonald analysed the basis upon which the judge had reached his original conclusions.

Pursuant to FPR r 30.12(3), an appeal is allowed where the court considers the decision below was wrong or unjust because of serious procedural or other irregularity. The judge's task had been to decide whether he should re-open his findings in light of the new evidence he had allowed H to adduce. In this context, absent any allegation of fraud, mistake or misrepresentation or non-disclosure, the judge had to decide whether, having regard to the particular facts of the case, including the new evidence, it was appropriate to re-open his findings of fact. Notwithstanding that this was a financial remedy case, the law governing  re-opening of findings of fact is set out in Re Z (Children) (Care Proceedings: Review of Findings).

MacDonald J was entirely satisfied that the judge had understood the import of the new evidence and he had not been wrong when deciding not to re-open the original findings. The skype call did not feature prominently in the judge's conclusions which were primarily based on the third party evidence and the new evidence adduced did not prove H's case regarding the Skype call or the car and in some ways corroborated the judge's original findings. The judge was therefore well within the ambit of his discretion, having adopted a generous approach by agreeing to consider the new evidence, and then revaluating the totality of the evidence in that context.

Hermens v Hermens & Anor [2017] EWHC 3742 (Fam)

This was an application by the Queen's Proctor to dismiss a divorce petition and set aside a decree of divorce obtained on the petition of the husband (H) against the wife (W).

H is a Dutch national and W is Bulgarian. H asserted that he had been habitually resident here throughout the proceedings. The parties met in Greece in 2002 and had lived together since 2004 occupying two properties in Greece and a property in Bulgaria.

They had married in 2007 in England. The marriage certificate recorded H's address as Suite 107, 78 Marylebone High Street, London W1Y 5AP, which now appeared to be a mailbox rather than a residential address.

In 2011, H filed for divorce stating that the parties had last lived together at Suite 102, 19-21 Crawford Street, London W1H 1PJ and each party still lived in that address. This was given as W's address for service and H's address for service was Divorce Online in Swindon.

It was now accepted that Suite 102, 19-21 Crawford Street, London W1H 1PJ was in fact an address containing a mailbox, paid for and controlled by H. It was not residential accommodation at all.

H had applied for deemed service giving evidence that he was with W when she opened the papers. His application was granted and the divorce was therefore able to proceed by way of the special procedure on the basis that it was undefended. H had signed his affidavit in support of petition confirming all statements in his petition were true. Decree nisi was granted on 21 July 2011 and decree absolute was granted on 22 September 2011. Again H stated his address was "Suite 102".

The parties had not in fact separated in 2011 and had continued to live together until January 2015. W subsequently contacted the Queen's Proctor in May 2016, asserting that she had not been aware that they were divorced until after they had separated and she had not seen the decree nisi or the decree absolute until March 2016.

The Queen's Proctor filed a plea in the proceedings seeking that the decrees be set aside on the basis that they had been procured by fraud.

Baker J considered the President's conclusions in the case of Rapisarda v Colladon including that a decree will be void on the ground of fraud if the court has been materially deceived by perjury, forgery or otherwise into accepting that it has jurisdiction to entertain the petition and it may be void following serious procedural irregularity e.g. if the petitioner has concealed the proceedings from the respondent.

H argued that, although the petition contained false information, he had been habitually resident here at the time and, where it was clear the marriage had broken down, decrees should not be set aside on a technical objection. He also argued that the President had erred in his conclusion in Rapisarda that giving a false address in the divorce petition was a sufficiently material deception to justify setting aside the decrees.

Baker J concluded that the President's conclusions could not be challenged. As a matter of public policy, it is essential that the particulars in a divorce petition are true. This is why the court requires verification of the truth when the petitioner applies for decree nisi. It mattered not that H may have been entitled to a divorce on the basis that he was habitually resident in this country. The fact was that the court had been deceived by an affidavit which was, in fact and in law, a forgery and the decrees should be set aside for that reason.

Baker J did not deal in detail with W's assertions that she had not been properly served and knew nothing about the divorce because W was not in attendance at court.
H had argued that, even if the decrees were set aside, he should be
able to proceed on the original petition by making the necessary amendments. However, Baker J concluded that the right course was to dismiss the petition because it had been so tainted by material irregularity that it would be a travesty of public policy to leave it alive.

H could, of course, issue a new petition if he wanted to do so.

KA v MA (Pre-nuptial agreement: needs) [2018] EWHC 499 (Fam)
The marriage was a second marriage for both parties. W and H had been in a relationship together since 2000. In 2004 W had moved to live permanently with H in Property G. H's three children from his first marriage spent time with the parties at that property and W gave birth to the parties' son, M, in September 2004 at which point she gave up work and became a homemaker.

Following M's birth W pressed H to marry her. H, having been through a difficult first divorce, was against marriage. He made clear that if he were to marry again he would insist on a pre-nuptial agreement. By 2008 H agreed to marry on the condition that W signed a pre-nuptial agreement.

W accepted that she had intended to be bound by the pre-nuptial agreement when she signed it and she had been advised in relation to the rights she was potentially surrendering (subject to a caveat relating to disclosure of H's income). She also accepted she was fully aware her agreement to a pre-nuptial agreement was a condition precedent on any wedding and that she was aware H wished to safeguard his business interest for the benefit of his children and his wider family.

Robert J's judgment provides a very detailed analysis of the facts and circumstances in which the pre-nuptial agreement (signed 18 days before the parties' marriage) was entered into which is not repeated here.

Although W argued she was under undue pressure in entering into the agreement Roberts J ultimately found that she did not consider H's position that there would be no marriage absent a signed pre-nuptial agreement to be capable of constituting duress or exploitation in the context of the particular case and on consideration of the detailed facts the pre-nuptial agreement could not be disregarded on that basis.

At the time of the marriage H's assets consisted of:

i. 51% of T Ltd, valued at £30m;

ii. Property G valued at £5m subject to a mortgage of £2m;

iii. A classic car collection worth £750,000;

iv. Antiques valued between £50,000 and £100,000.

Although there was no disclosure regarding H's income and pensions W was presumed to be aware that H was in a financial position to spend more or less whatever he wished on the family's lifestyle (from 2009 onwards the family's budget was approximately £1m per annum including £250,000 per annum for holidays).

W's assets consisted of two rented properties with a combined equity of approximately £216,000.

Under the pre-nuptial agreement W was to receive:

1. A car;

2. £600,000 as a lump sum index-linked with a pro-rata percentage reduction in the even that H's disclosed capital wealth fell in value;

3. £2,000 pcm maintenance until remarriage/continuous cohabitation with a third party for 6 months index-linked with a pro-rata percentage reduction in the event that H's disclosed capital wealth fell in value;

4. M to be provided for separately.

The marriage subsequently broke down and divorce proceedings were commenced in 2016. Although there was a dispute between the parties as to whether they had separated in 2013 or 2015 Roberts J found that the difference in the length of the marriage was immaterial.

By the time of the divorce H's total assets were somewhere between £23-£33m (and so his global wealth was broadly similar to that at the time of the marriage). W's assets consisted of her two investment properties with combined equity of £468,500, 50% of the net equity in property PV after CGT (£166,000), a pension of £123,000. She had liabilities of approximately

The wife's position was that the pre-nuptial agreement was unfair. She sought a financial settlement based on her generously assessed needs of:

1. £2.35m to enable her to rehouse including SDLT, moving costs, legal costs and costs of furnishing;

2. £3.309 m (being capitalization on a Duxbury basis of £150k per annum). This was reduced to £3.22m in submissions as W conceded she could earn an income of £20k p/a until age 65;

3. £30,000 child maintenance index-linked for M until conclusion of his tertiary education.

H's open proposals were:

1. A lump sum of £750,000 (based on indexation of £600,000) to W in addition to the sum of £350,000 already paid for her litigation costs;

2. W to retain any other assets in her name;

3. A lump of £537,000 to W (being a straight-line Duxbury calculation of £24,000 index-linked to increase to £27,000);

4. £30,000 child maintenance index-linked for M until age 18/conclusion of his secondary education.

Roberts J found that whilst the pre-nuptial agreement was concluded before Radmacher v Granatino the principle of personal autonomy was still relevant in the court's overall assessment of fairness since it had been important to H to secure some concession from W prior to marrying that his pre-marital wealth should be protected subject only to his obligations to meet her financial needs in the event of a divorce. W had known a pre-nuptial agreement was a pre-condition of the marriage she had been advised by specialist lawyers that if she signed the agreement she might be bound by its terms to the detriment of any potential award and she accepted that his position in relation to his pre-marital assets was reasonable and he had been aware.

Roberts J considered that whilst the law had shifted since Radmacher this did not inure to W's disadvantage. W had been advised that her willingness to enter into the pre-nuptial agreement was one of the factors which a court would be likely to take into account, absent vitiating factors, she was told of the direction of travel in the jurisprudence and that she should assume that she might be bound and she acknowledged that she intended to be bound by its terms when she signed.

The issue then was whether the pre-nuptial agreement was fair and in considering fairness in the case this 'must reflect that this wife agreed to restrict the ambit of her financial claims should the marriage end in divorce'.

Roberts J considered W could rehouse for approximately £1m and as a global sum including stamp duty, conveyancing costs and a budget for redecoration assessed W's housing needs as £1.35m. Her income needs were assessed as £100k p/a (in context H's were put at £662k p/a) and taking into account her earning capacity and a reduction of 25% in expenditure after M had completed his tertiary education she found W required a Duxbury fund of just under £1.6m. Taking into account her own net assets of circa £220,000 Roberts J ordered H to pay a lump sum of £2.73m and child maintenance of £30,000 until conclusion of M's secondary education with that sum to reduce to 50% during tertiary education.

Akhmedova v Akhmedova [2018] EWFC 23 (Fam)
This is the latest judgment in the long-running Akhmedova case.
As part of the final financial remedy order in 2016 ("the main order") Haddon-Cave J ordered:

1) H to pay a lump sum of £350m to W and transfer certain properties to her.

2) Various Panama and Liechtenstein corporate entities (Cotor, Qubo 1 and Qubo 2 which the Court had found either to be a nominee and bare trustee or no more than ciphers of H) were made jointly and severally liable for payment of the lump sum.

3) Set aside of transfers of a modern art collection and cash from Cotor to Qubo 1 and/or Qubo 2 on the basis they were transfers undertaken at an undervalue. 
4) W's claims would only be dismissed when there had been "full and complete compliance with the order".

5) Liberty to apply to bring any other applications for enforcement purposes under s37 MCA 1973 and/or s423 Insolvency Act 1986.

After the main order was granted W pursued litigation in various jurisdictions to enforce the judgment. She succeeded in:

1) Obtaining orders in the Isle of Man in respect of H's helicopter and private jet. W intended to seek orders for the sale of the assets but H was arguing that the company which held the assets owed substantial debts to Avenger Assets Corporation ("Avenger"). W argued Avenger was a cipher for H.

2) Obtaining orders in the Dubai International Financial Centre in respect of H's yacht ("Luna"), the title of which was held by a Liechtenstein Anstalt, Straight Establishment ("Straight").

In March 2018 W issued an application to seek further orders to assist with the enforcement of the main order seeking

1) Avenger and Straight to be joined to the proceedings.
2) Declarations that Luna is beneficially owned by H.

3) Set aside of a cash transaction of €260 m which enabled Avenger to acquire Luna in 2014 after the end of the marriage.
4) An order piercing Straight's corporate veil.

5) An order Straight transfer Luna to W and in default an order that a) Straight pay the insurance value of the yacht (USD$487,278,000) or the capital value of the yacht (£346,600,841) to W and b) Avenger pays €260 million to W.  
6) Orders rendering Straight and Avenger jointly and severally liable with H to W. 
7) An extension of the freezing order.

H did not attend and was not represented at the hearing.

Haddon-Cave J found that it was desirable to add Straight and Avenger to the proceedings.

He found that Avenger and Straight were mere 'ciphers' designed by H to evade enforcement, that H had never intended to part with his beneficial ownership in assets transferred to Avenger and Straight and doing so was simply an attempt by H to change the label on the tin. By reason of H providing all the purchase monies for no apparent consideration there was also a presumption of a resulting trust which had not been rebutted.

Haddon-Cave J was satisfied that H was acting with real impropriety and seeking to evade his obligations by employing Avenger and Straight as obstacles in the way of enforcement. The 'evasion' principle from Prest could be applied to pierce the corporate veil of Straight since it was clear that at the time Luna had been transferred to Straight both the legal owner, Qubo 2, and the beneficial owner, H, were under an existing legal liability not to do so, in the circumstances the only sensible inference was that the sole purpose of the incorporation of Straight and transfer to it of Luna was to evade enforcement and it was necessary to pierce the corporate veil in the interests of justice.

He was further satisfied that parasitically Avenger and Straight had submitted to the Court's jurisdiction through H's earlier submission in the proceedings (which he participated in up until the month of the trial).
Haddon-Cave J found as Straight held Luna absolutely for H it was open for the court to transfer Luna into W's name and order all necessary steps be taken by H and Straight to vest the boat in W's name with W undertaking to give full credit for all the proceeds of sale of Luna against the lump sum order made in her favour.

Haddon-Cave J further set aside the transfer of Luna from Qubo 2 to Straight and the payment by H to Avenger of €260 m on the basis that the relevant transaction was for nil consideration (Avenger and Straight having no independent commercial existence of their own), he was satisfied that the real and substantial purpose of the transaction was to place assets beyond the reach of W's claims and neither transaction served any genuine commercial purpose. IN default of the transfer of Luna being satisfied within 7 days he ordered Avenger to pay W the sterling equivalent of €260 m and Straight to pay W the full value of the sum award up to the insurance value of Luna on the basis that the value of the assets placed beyond W's reach was greater than the total value of her claim.

Finally, the freezing injunction was extended to Avenger and Straight.