Category: Divorce

It is a common scenario that one of the main assets of a marriage is a business that was acquired or established by one of the parties prior to the marriage. When the marriage breaks down the court will often order that the value of the business that accumulated during the marriage should be shared between the parties. Accordingly, the court must decide two matters in relation to the business: how much is it worth, and what proportion of that sum accumulated prior to the marriage?

These were the central questions in the recent Court of Appeal case Martin v Martin.

Now, there is an awful lot going on in Martin v Martin (as is often the case in big money financial remedy cases, especially when they are concerned with business assets), and I am just going to scratch the surface here. If you want all the detail, you can read the full judgment, all 147 paragraphs of it, at the link below. I’m just going to concentrate on those two central questions, dealing with them as simply (and hopefully understandably!) as I can. I have also taken some small liberties with the case, for the sake of clarity.

Extremely briefly, the relevant facts in the case were that the husband started the business in 1978, the parties began living together in 1986, were married in 1989, separated in 2015, and divorce proceedings ensued. (I told you it would be brief!)

In 2017 the wife’s financial remedies application was determined by Mr Justice Mostyn. He awarded the wife a half share of the marital wealth, which included the value of the husband’s company (and other assets), less its value as at the date the parties started living together.

To value the company, Mr Justice Mostyn used its net value, which he considered was equivalent to cash, as “the only difference between it (i.e. the company) and its cash proceeds is … the sound of the auctioneer’s hammer”. In other words, the value of the company was “the estimate of what it will sell for now”.

To determine the value of the company as at the date that the parties began cohabiting Mr Justice Mostyn applied a ‘straight line apportionment’ to the present value of the company, from the date that it was first incorporated in 1978 to the date of the hearing. To understand this, I refer the reader to paragraph 19 of Mr Justice Mostyn’s judgment (which you can find here), which sets out the method in graphical form.

The wife appealed against the decision, to the Court of Appeal, and the husband cross-appealed. Both appeals were in relation to how Mr Justice Mostyn had approached those two central questions in relation to the company. The wife argued that he was wrong to use a straight line apportionment, and the husband argued that he had wrongly treated the value he ascribed to the company as equivalent to cash and, as a result, had awarded the wife an unfair proportion of the ‘non-risk’ assets.

The leading judgment of the Court of Appeal was given by Lord Justice Moylan.

As to the question of the valuation of the company, he found that the husband had not shown that Mr Justice Mostyn’s factual determination of the value of the company was wrong. However, Mr Justice Mostyn was wrong when he said that the “only difference between [the company] and its cash proceeds is … the sound of the auctioneer’s hammer”. As a result of this conclusion Mr Justice Mostyn failed to consider whether his proposed award achieved “a fair division of both the copper-bottomed assets and the illiquid and risk laden assets”. There was no evidence that the sum awarded to the wife could be extracted from the company within the timescale that Mr Justice Mostyn envisaged. Lord Justice Moylan therefore increased the period for the payment of that sum, from one year to four years.

As to the question of the value of the company as at the date that the parties began to cohabit, Lord Justice Moylan found that Mr Justice Mostyn was entitled to adopt the straight line apportionment approach. That approach may be ‘broad brush’, but it saved the time and expense of getting an accountancy valuation. He also found that it “resonates with fairness”, because it “takes an overarching view of the weight to be attributed to the husband’s contributions to the business throughout its existence.”

Accordingly, Lord Justice Moylan dismissed the wife’s appeal, and only allowed the husband’s appeal to the extent set out above.

Lords Justices Coulson and Simon gave concurring judgments.

If you wish to, you can read the full Court of Appeal judgment here.

The post Valuing a company established prior to the marriage appeared first on Stowe Family Law.

This is an unusual one, at least in terms of reported cases. As explained by Mr Justice Cohen in the first paragraph of his judgment, the case AR v JR concerned an application by the husband for the wife’s financial remedies application to be struck out on the basis that it was (a), vexatious, and/or duplicative and/or (b), on the basis there had been a prior compromise.

The relevant facts of the case were as follows:

1. The parties married in 1967 and are now in their late 70s.
2. All of their present assets, amounting to a “small fortune”, were accumulated during the marriage, the husband having established a very successful business which, by the end of 2015, had a net equity of just under one billion US dollars.
3. The marriage grew unhappy, and in 2010 the wife issued judicial separation proceedings, and made a financial remedies application within those proceedings.
4. A decree of judicial separation was pronounced in August 2010.
5. On the 14^th of October 2011 a consent financial order was made, setting out an agreed financial/property settlement between the parties. The order provided for the husband to pay to the wife a lump sum of some $16 million, in settlement of the wife’s claims within the judicial separation proceedings.
6. In August 2015 the husband filed a petition for divorce on the grounds of five years’ separation.
7. In October 2015 the wife issued a financial remedies application within the divorce proceedings.
8. The husband opposed the application, on the basis that it was an abuse of the court process, the wife having already received a financial settlement when the terms of the 2011 consent order were implemented. He therefore applied for the wife’s application to be struck out.

Mr Justice Cohen dismissed the husband’s application, for the following reasons.

Firstly, it was clear to him that the order of 2011, made in the judicial separation proceedings, was not intended to cover a subsequent divorce, and that neither party thought that it did cover a divorce.

Secondly, the argument put forward on behalf of the husband that the wife should in the judicial separation proceedings have made her full financial claim covering her entitlement in all respects arising from the marriage was unsustainable, because:

1. There was no obligation to do so. Indeed, as the husband accepted, the anticipation of the parties was that they were to remain married.
2. Divorce and judicial separation are not the same cause of action. Divorce terminates a marriage; judicial separation does not.
3. On the facts of the case, the wife did not have the material upon which she could assess the value of her claim for a full share of the assets in 2011. The husband knew that as much as the wife – he had not provided full disclosure of his means. It was true that the wife might have been able to obtain disclosure via court orders, but she was under no obligation to do so. She was entitled to say: “We are still married and I want to remain married to you for many years, perhaps the rest of my life, and for as long as that remains the case, I am content to have my claims dealt with on a needs only basis.”
4. Both parties were or must have been fully aware on the advice from their own lawyers that the wife’s entitlement claim had not been dealt with.
5. They must both have been aware that there were matters that still had not been dealt with.
6. There was no evidence that the wife misled the husband in any way at all.

In the circumstances the husband’s application failed. The wife’s financial remedies application must therefore proceed.

Mr Justice Cohen ended his judgment with this rather sad plea to the parties:

“They are now in their late 70s. It does not appear to me that either is in the best of health. This litigation has been going on for three years. They should not be spending time locked in litigation when there is plainly more than ample funds available in this case for it to be settled. I do urge them to consider mediation to try and bring matters to a closure.”

Let us hope they take heed.

You can read the full judgment here.

The post Husband fails to have wife’s financial remedies application struck out appeared first on Stowe Family Law.

Addicted to running, bullying or controlling behaviour, theme park rides, and the lack of a bathroom door for two years are just some of the recent reasons given in divorce for “unreasonable” behaviour that we have encountered at Stowe Family Law.

There is only one legal ground for divorce in England & Wales: that the marriage has irretrievably broken down. This contention must be supported by one of five reasons: adultery, behaviour, 2 years separation with consent, 5 years separation without consent and the very rarely used desertion.

With no-fault divorce yet to be an option in England & Wales, behaviour is becoming increasingly used as an umbrella term for a wide range of different reasons, often very unexpected ones.

So, we asked over 70 specialist Stowe family lawyers: What are the most common reasons behind unreasonable behaviour in divorce?

Here are the ones they hear the most:

• Addiction issues (alcohol, drugs or gambling)
• Suspicion of affairs (To cite adultery you need to prove that your spouse has had sex with a member of the opposite sex) or inappropriate relationships with other people.
• Interference from in-laws and a lack of support from the spouse
• Not helping with the children or running the home
• Sex – not enough, too much of or loss of interest
• Money issues

Sometimes illnesses are the cause of certain types of behaviour including:

• Post-natal depression
• Partner’s illness

Whilst it might be hard to see how the other spouse’s illness is unreasonable, it is often the consequential behaviour that comes with illness, when everything just becomes too much, that is the cause of the relationship breaking down.

And what about some of the more unusual reasons our lawyers have encountered:

• Unusual sexual practices/ fetishes
• Spying and tracking partner
• Spouse not completing DIY- no bathroom door for 2 years
• Being bullied into going on theme park rides
• Not buying a Christmas present
• Going to the gym too much
• Turning vegan
• Addicted to cycling/running etc

Camilla Burton-Baddeley, a Senior Solicitor from the Stowe Altrincham office explains:

“We are definitely seeing a trend in the more imaginative use of unreasonable behaviour as a reason for divorce.

Previously it was money problems or drinking that would be cited frequently but it can be anything that an individual considers to be unreasonable, even if others do not.”

The number of divorces being granted on the grounds of unreasonable behaviour is steadily increasing. In 2017, unreasonable behaviour was the most common reason for opposite-sex couples divorcing with 52% of wives and 37% of husbands petitioning on these grounds.

Camilla explains:

 “Most people are not prepared to wait two years to get divorced, which is the closest option we have for a no-fault divorce. They have made the decision to move on with their lives and citing unreasonable behaviour means they can start the process quickly.

Until we have the option of no-fault divorce, I believe we will continue to see the definition of unreasonable behaviour stretched even further.”

For advice on all aspects of divorce you contact Camilla at the details below or view her profile.

The post The common, unusual and downright bizarre reasons for divorce appeared first on Stowe Family Law.

So, the media went into a frenzy yesterday as the richest man in the world announced he was getting a divorced on Twitter.

Jeff Bezos and his wife, MacKenzie, are set to divorce after a 25-year marriage and the initial reports indicate that it is amicable. Let’s hope it stays that way. Keeping things civil ensures that you can complete the divorce with less stress and less time. Not to mention this is better for their four children.

Divorce in America has very different rules. If the divorce took place in England, the starting point would be 50:50 division of all the assets. As Amazon was built up during the marriage, and any other assets such as their substantial property portfolio would very likely be split 50:50.

After such a split will Jeff Bezos still be the richest man in the world?  And will MacKenzie become one of the richest women in the world?

Of course, any division will depend on how the companies and assets are structured, and what assets are in whose names.

High-net-worth divorces can be very complicated: Trusts could have been set up for their children, money gifted to charities, and there may be offshore interests.  In which case a court may struggle to enforce an order against those offshore assets.

Perhaps they had a pre or postnuptial agreement setting out what would happen to their finances upon a divorce?

It is not uncommon for high-profile people to have a non-disclosure agreement in place, so we may never know.

One thing, however, is certain, it will be a very complicated divorce.

Phoebe Turner

Managing Partner at London Victoria

The post The world’s richest man to divorce appeared first on Stowe Family Law.

It was widely reported the other day that, according to the Ministry of Justice (‘MoJ’), 455 people made an online divorce application in the period between Christmas Eve and New Year’s Day, with 13 applying on Christmas Day itself. The figure of 455 sounds quite shocking (as I suspect the newspaper headline writers meant it to be), but is it actually a lot?

To answer the question we need to look at a few more figures from the MoJ.

According to the latest Family Court Statistics Quarterly, for July to September 2018, 115,392 divorce petitions were filed during the period October 2017 to September 2018, the most recent full year for which figures are available. If that figure is divided by 52 weeks, we find that during that year an average of some 2,220 divorce petitions were filed each week.

On that basis, the figure of 455 seems quite low, representing roughly a fifth of the number of petitions filed in an ‘average’ week.

Now, of course there is an obvious problem with this: many divorce petitions are still filed by post (solicitors do not yet have access to the online portal), and so we are not comparing like with like.

OK, so it would be better to look at the figures for online applications. The MoJ has stated that “more than 23,000 applications for divorce have been made online since the service was launched last April”. Now, my rough calculation is that that equates to an average of about 700 online divorce applications per week.

So even on that basis 455 is quite low, representing only about two-thirds of the number of online applications made in an average week.

I suppose it might be said that 455 is still high, considering that people are supposed to be doing other things during the Xmas/New Year holiday. On the other hand, it could be said that as many people were off work during that week, more would have had time to file a divorce application, and therefore one might expect more applications to be filed.

Whatever, I don’t think too much can be read into these figures. It was certainly not an exceptional week for people making online divorce applications, or even for people seeking a divorce at all.

And what of those thirteen people who decided to apply for a divorce on Christmas Day?

Well, I can see that it is quite sad to think of people filing for a divorce on a day when most of us are celebrating with our families. But then it is a sad fact that not everyone enjoys a happy Christmas. In fact, for those who don’t, Christmas can be the most depressing time of the year. Thirteen people applying for a divorce is actually a tiny figure when one considers, for example, how many people spend Christmas alone.

It is also a tiny figure by reference to that figure of 700 online divorce applications per week mentioned above, which obviously represents an average of 100 per day. If anything one would expect considerably more than thirteen divorce applications to have been made on Christmas Day.

Why does all of this matter? Well, it feeds into the narrative that more people seek a divorce at this time of year than at any other time – the ‘Divorce Day’ myth. Even The Guardian, a ‘serious’ newspaper, told us in its story about the figures that:

“The first full week of the new year is one of the busiest periods for initiating divorce proceedings, as unhappy couples, having failed to resolve their differences over Christmas, resort to specialist lawyers.”

Of course, the lawyers are not the ‘villains’ when it comes to people applying for a divorce without a lawyer and from the comfort of their own homes, but that is a point that is conveniently ignored. The fact, however, is that these figures do not demonstrate that we are presently witnessing an epidemic of people seeking a divorce. On the contrary, they are substantially less than usual and, I think, nothing out of the ordinary.

The post Is 455 divorce petitions in a week a lot? appeared first on Stowe Family Law.