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  1. Law
June 1, 2007

Game of Two Halves

By Spear's

Britain is now the divorce destination of choice for gold-diggers looking for a 50-50 split, says Joshua Rozenberg.

London is said to be ‘the divorce capital of the world for aspiring wives’, three appeal judges observed in May. Little wonder, since the judges had just dismissed an appeal by John Charman, an insurance broker, against a ruling that he should pay his ex-wife, Beverley, a record divorce settlement of £48 million.

The main change signalled by the Charman judgment is that the courts will start from the presumption that the marital assets are to be divided equally, says Jeremy Posnansky QC, a barrister who is now with the Queen’s solicitors, Farrer & Co.: ‘Previously, there was no such starting-point or presumption. Instead, the law lords had said in the case of White v White, in 2000, that equality was only a “yardstick” against which a judge’s tentative award was to be measured in order to see if it was fair.’ As Posnansky explains, ‘the yardstick, always a bit of an illusion, has now been discarded. Fifty-fifty is now the presumption.’

Julian Lipson, a partner in the City firm Withers, agrees. ‘The Charman decision means that there is indeed a presumption of equal division of marital assets, failing good reasons to the contrary. The judicial pussy-footing of calling the presumption a “yardstick” or “cross-check” is over.’

David Salter, of Addleshaw Goddard, thinks that wives have now reached the ‘high point’ of what they can expect the courts to award them. ‘That said, wives should guard against simply reading newspaper headlines and assuming they will automatically receive half.’

Ann Northover, a family law partner at the Mayfair firm Forsters, says it is harder to calculate the matrimonial ‘pot’ than one might think. Working out what goes in and what should be left out may depend on whether assets were inherited or acquired before the marriage. And there may always be cases where one spouse — often, though not always, the husband — has made what the courts regard as a ‘special contribution’ to the family funds.

Mrs Charman conceded that her husband had made an exceptional contribution to the couple’s 30-year marriage through his success in the insurance industry. She therefore claimed 45 per cent of the couple’s assets. But Mr Charman argued that his former wife should have just the £20 million he had paid her already — little more than 15 per cent, according to her calculations.

How can wives maximise their settlements in ‘big-money’ cases? ‘Marry a rich husband,’ suggests Northover. And don’t forget that misconduct — which spouse had the affair, for example — is generally disregarded.

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It may also help to be a high spender. Julian Lipson says that if the claimant has become accustomed to an extravagant lifestyle, the courts may help her to maintain it. ‘Claimants who have given up careers or become financially dependent generally do much better than those who have kept their careers going,’ he explains.

Jeremy Posnansky, an experienced advocate, says the key is to present a clear and compelling case. ‘Quantifying the assets is crucial: the higher the assets, the higher the award — so long as the values are realistic and demonstrably correct. The wife’s solicitors may advise bringing in a forensic accountant, especially if it is thought that the husband is hiding his assets. But are there any legitimate ways in which husbands can minimise the amounts they have to pay? Short of not getting married in the first place, there is not much they can do to keep their money to themselves: the courts can set aside transactions that were designed to defeat or reduce an award. Even so, says Posnansky, ‘a husband who is prepared to divest himself of his wealth years before any marriage breakdown — for example, by putting assets in a trust for his children from which he is excluded — would probably be able to avoid them being taken into account on divorce’.

All the lawyers agreed that husbands — and wealthy wives — should make pre-nuptial agreements. Judges are increasingly willing to respect the parties’ wishes as to how their assets should be divided on a future divorce. But, says Posnansky, if pre-nups are to be given any weight they must be reached fairly, with full disclosure of assets and independent legal advice.

Margaret Hatwood, of the leading southeast England firm Thomas Eggar, suggests they should be signed at least 21 days before the wedding and should take into account the arrival of children. Mr Lipson says that the number of pre-nups he has drawn up has ‘easily trebled’ over the past three or four years. He regards a pre-nup as ‘the absolute golden rule’ for the richer party.

Surely a pre-nup suggests that one spouse, at least, is not expecting the marriage to last? David Salter, who is also European president of the International Academy of Matrimonial Lawyers, notes that more and more individuals are signing up to them and there is therefore less of a stigma than before. In his view, ‘it is now seen as sensible, practical and acceptable to want to protect yourself against the potential downside of a marriage.’

If the parties are already married, Salter adds, there is a lot to be said for a ‘mid-nuptial agreement’. But he accepts that these will not be binding if they are not seen as fair. If the marriage is already under strain, Jeremy Posnansky observes, ‘few wives would want to have an agreement which limits what they are entitled to, and few lawyers would advise them to have one’.

With wealthy couples increasingly leading an international lifestyle, the pre-nuptial agreement should specify the country in which any divorce proceedings should be brought. A wealthy husband will choose any jurisdiction but England and Wales.

From the wife’s point of view, though, it makes sense to begin proceedings first and issue them in London. Mrs Charman served an English divorce petition on her husband in Bermuda without any advance warning. He responded by issuing proceedings in Bermuda six weeks later, but the High Court judge in London later concluded that the ‘case is as English as Tunbridge Wells’.

How can the wife make sure that her divorce petition will be decided under English law? ‘Live here, educate your children here, have the family home and assets here so that the greater links between this country and the family make it more convenient for divorce proceedings to be heard within this jurisdiction,’ says David Salter.

Husbands, by contrast, should stay in hotels when visiting London and avoid buying even a pied-à-terre there, Julian Lipson adds. ‘At the first hint of marital problems, take urgent advice and consider your options. If husbands are pipped at the post in filing for divorce, it can often be fatal to their case.’

All these principles apply, with appropriate modifications, to marriages in which the wife is the wealthier party. But Jeremy Posnansky points out that we shall soon start to see cases involving the breakdown of a civil partnership between two people of the same sex.

‘We shall have to wait and see the extent to which such awards mimic those in cases where the parties were husband and wife, or whether the different factual position will lead to very different results,’ he says. ‘For example, there will rarely be any children of the family, and both parties may have maintained their own independent careers and independent finances.’

Less than a decade ago, recalls Margaret Hatwood, even the wife of a very wealthy man would receive only enough for her ‘reasonable requirements’. That would have left Mrs Charman with just the £20 million originally offered by her ex-husband. Subject to anything the House of Lords may decide, she now has more than double. Today, more than ever, what you need most of all is a good lawyer.

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