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ThoughtLeaders4 HNW Divorce • December 2020
MAGAZINE ISSUE 4
LOADING...
2020 2021
THE HNW DIVORCE COMMUNITY IN A YEAR LIKE NO OTHER
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
INTRODUCTION CONTENTS
“An optimist stays up until midnight to Separation and divorce: tax considerations
for income and businesses ........................... 3
see the new year in. A pessimist stays
up to make sure the old year leaves.” Dealing with hindsight
in business valuation ..................................... 6
Bill Vaughan
A new dawn: the end of
the blame game? ............................................. 9
As this “unprecedented” year draws to a close and we
prepare for a new year that hopefully promises a whole Ending your marriage but not your visa:
new world, we invite our readers to wrap up 2020 with the the impact of divorce on your
4th Edition of our HNW Divorce Magazine.
uk immigration status .................................... 12
We would like to thank our authors, members, readers and War stories on pre and
Community Partners for their contributions and support.
postnuptial agreements ................................. 15
Whether you enter the new year as an optimist or a
pessimist we look forward hearing from you all in 2021,
Hot topics in proceedings
with to more captivating content and industry insight.
for financial provision after
a foreign divorce (part III) .............................. 17
The ThoughtLeaders4 HNW Divorce Team
Nuptial agreements: the crusade
for a protocol/ code of conduct/guidance ... 18
Johnny depp, amber heard, and the
ongoing fallout out of a ‘bad’ divorce ........... 21
What about me? Children in the UK
Paul Barford Chris Leese Danushka De Alwis caught in the middle of the tug of love ......... 26
Founder / Director Founder / Director Founder / Director
020 7101 4155 020 7101 4151 020 7101 4191 The impact on divorcing couples when
email Paul email Chris email Danushka
family and immigration laws collide ............. 29
ABOUT CONTRIBUTORS
Hannah Braisted, Irwin Mitchell
Through our members’ focused community, both physical
Kathryn Evans, Irwin Mitchell
and digital, we assist in personal and firm wide growth.
Sandra Mossios, Grant Thornton
Working in close partnership with the industry rather than
Fred Brown, Grant Thornton
as a seller to it, we focus on delivering technical knowledge
and practical insights. We are proud of our deep industry Connie Atkinson, Kingsley Napley
knowledge and the quality of work demonstrated in all our Katie Newbury, Kingsley Napley
events and services. Alexandra Mann, Irwin Mitchell
Become a member of HNW Divorce and... Ben Xu, Irwin Mitchell
• Join a community of experts, referrers and peers Lucy Greenwood, The International Family Law Group LLP
Michael Allum, The International Family Law Group LLP
• Attend events in all formats
Teena Dhanota-Jones, Simons Muirhead & Burton LLP
• Immediately benefit from our Virtual Forward of events
Jeremy Clarke-Williams, Penningtons Manches Cooper
• Interact using our digital Knowledge Hub
Charlotte Purves, Penningtons Manches Cooper
• Learn and share expertise through the Community Magazine Grace Lymer-Sullivan, Penningtons Manches Cooper
• Grow your network and business Jennifer Dickson, Withers Worldwide
• Build relationships through a facilitated Membership directory Emily Foy, Payne Hicks Beach
2
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
SEPARATION
AND DIVORCE
TAX CONSIDERATIONS
FOR INCOME
AND BUSINESSES
Authored by: Hannah Braisted and Kathryn Evans - Irwin Mitchell
It is not uncommon for spouses or civil Contrary to popular belief, there is no Business assets can potentially be
partners to be involved in business general tax exemption for a couple used to fund a financial settlement upon
together, whether both are in active when they get divorced. However, the divorce. Where both parties are directly
roles or where one spouse or partner date that an asset is deemed to have linked to the business, whether as
has a more passive role in the business, been transferred can have an impact, owners and/or as employees, it’s often
perhaps for tax reasons. Civil partners so the timeline of divorce petition, the case that following the breakdown
are treated the same as a married financial order (and the drafting thereof) of their relationship, there’s a desire at
couple for tax purposes and therefore and Decree Absolute will be relevant. least on the part of one of the pair for
reference to a spouse or spouses in this How business interests are dealt with themselves or the other to be extricated
article should also be taken to include prior to, upon and following a separation from the business, leaving the
civil partners and reference to a divorce can have a significant impact on the remaining individual to move forward
to also cover a dissolution of a civil individuals’ and a company’s tax independently with the business.
partnership. positions.
As Family Law advisors, it would
be prudent to advise clients to
also seek tax advice (and possibly
employment law advice) prior to and
alongside negotiations in respect of
the financial settlement pursuant to
the parties’ separation so that those
negotiations can be fully informed as
to all the foreseeable consequences
of settlement options. This is likely
to include: looking to maximise
the availability of reliefs such as
Entrepreneurs’ Relief; choosing what’s
to be liquidated; and when.
Options such as a director taking a loan
from the company, or a shareholder
taking a dividend, may be considered,
where those funds are to be applied
to pay, for example, a lump sum to
a spouse as part of a wider financial
settlement. Yet the tax implications
can be considerable. For example,
3
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
corporation tax paid on an overdue Where shares are to be sold or Section 165 of the Taxation of
director’s loan repayment is 32.5% at transferred, CGT liabilities should be Chargeable Gains Act 1992 means that
present, so a director may choose to considered. Whether the transferor a transfer of shares from one spouse
borrow a significant amount from the was employed by the subject company, to another, not in exchange for money,
company in the short term but should and the size of the transferor’s could be covered by gift (holdover)
be confident of being able to repay it shareholding, will be key to whether or relief, as long as the gift is made
quickly and within the terms of the loan. not Entrepreneurs’ Relief will be of use. pursuant to a court order. Once again,
Ensuring the criteria for Entrepreneurs’ the transferor wouldn’t be liable to any
If retained profit is to be used for funding Relief remain in place at the relevant CGT on the transfer, but the transferee
a settlement then the favourability of time should not be forgotten. For would receive the shares pregnant with
how best to apply that retained profit example, a disposing spouse shouldn’t any gain.
should be considered. For example, quit as an officer or employee of the
if it’s paid out as salary or dividend company before the transfer takes Sometimes, ‘family’ assets, such as the
then it reduces the taxable profit of the place. family home, are owned by the family
business, but increases the income tax company. It’s possible for assets, rather
liability of the individual. Perhaps of most pressing and than just cash, to be transferred out of
significant concern in relation to CGT is the company as a dividend. The tax
If sufficient cash is available to be paid the fact that current regulations provide consequences of such a transfer should
over at completion of a share transfer, for disposals between spouses that are also be considered.
it may be worth considering extracting made in the tax year of separation to
capital from a trading company (or be treated as made at neither a gain If there are different businesses/ trades
holding company of a trading company) or a loss – therefore no CGT is due. under one company’s/ companies’
by way of a company purchase of own This provides for a potential tax saving umbrella, and each spouse wishes to
shares. As an alternative, extraction of and therefore retention of what may be continue with their area, demerger may
funds in capital form by using a new very much needed family capital that be an option. However, this can be
company could be an option – i.e. the can be applied to the parties to help complex from a tax perspective, and
new company purchases both spouses fund their respective new lives. The generally reorganisation requires a high
shares. The spouse who is to continue date of separation (and the evidence level of co-operation between spouses.
in the business gets shares in the of this) is very important. The relevant
new company in return and the exiting The way business interests are dealt
assets would be transferred pregnant
spouse gets cash/ loan notes. There with prior to, or upon separation,
with the gain, but the aim would be to
are disadvantages to this option, which can have a significant impact on the
look at that as part of later settlement
include stamp duty. individuals’ and the company’s tax
discussions.
positions, therefore it is important to
be alive to these issues and consider
seeking expert advice where necessary.
4
High net worth
divorces and
family disputes
Our aim is to work collaboratively and strategically with legal teams to achieve the
best possible outcome for clients.
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and sometimes extremely acrimonious. But we also know that • Intelligence and research
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even well-hidden assets recovered, so enabling your client to • Valuations
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ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
DEALING
WITH
HINDSIGHT
IN BUSINESS VALUATION
Authored by: Sandra Mossios and Fred Brown - Grant Thornton
Valuations in divorce cases often
feature values at a number of different
“With the light before him why should he
dates pertinent to the case, including
the date of marriage, the date of shut his eyes and grope in the dark?”
separation and the current date. It is
therefore important for those seeking a Lord Macnaghten1
valuation to understand the information
that would or should be taken into
account in preparing valuations at each When it comes to valuing a business at Actual transactions in the
of those dates, and how that might an historical date, the prima facie rule shares of the business after
impact on the business value. In this is that only information likely to have
been known at that date should be
the valuation date
article, we explore case law around
the use of hindsight, and also touch taken into consideration. On the face From our review of case law, and our
upon how hindsight may be relevant in of it, it’s a straightforward rule, and there experience, a court will on occasion
relation to the impact of Covid-19 on are many examples in UK case law render hindsight admissible to guide
valuations. where hindsight has been rejected. But its view. We have seen this in US and
is it so unambiguous in practice? Australian tax-related cases, as well
One of the few joys of reading case law as our case alluded to above presided
is revelling in some of the more flowery There are two important caveats to
over by Lord Macnaghten. In these
and evocative language of judges. As consider regarding events after the
instances, transactions subsequent
accountants embroiled in the numbers valuation date:
to the valuation date have been taken
of valuation and the even-handed into account, provided that they are
• The first relates to subsequent Actual
presentation of expert views, it’s a rare sufficiently comparable.
transactions in the shares; and
treat. But what do the words of Lord
Macnaghten here refer to and what • The second relates to subsequent So, just as prior transactions will
can they teach us about hindsight in Actual performance of the business often be given a strong weighting
business valuation? in business valuation, subsequent
transactions must also be
considered and may bear weight if
nothing significant has changed in
the business and its market.
1 Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426
6
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
If the business has moved on, or the Actual performance of the As experts in contentious business
subsequent transaction involved a business after the valuation valuation, we often find that we
special condition or special buyer, are asked to develop valuations in
hindsight is unlikely to be accepted,
date situations where there is meagre
as in the case of Foulser and Foulser Hindsight based on actual performance information. Usually there is something
v HMRC [2015]2. Here a subsequent after the valuation date may be that can shine a light on the situation,
transaction in the shares of the permissible in order to confirm but we may have to dig a little deeper
business in question was deemed ‘not what forecasts could have been to find it.
to reflect a warm light back’ onto the reasonably made at the valuation
earlier date, as it involved a special date. As stated in Buckingham v Hindsight and Covid-19
purchaser. Francis [1986]3 “regard may be had
Covid-19 adds a particular significance
to later events for the purpose of
to the application of hindsight for
deciding what forecast for the future
historical valuations with a valuation
could reasonably have been made” but
date in late 2019 and the early months
indeed the devil is in the detail as can
of 2020, when it may be necessary
been seen in Joiner v George [2002]4,
to understand whether the onset of
where the Court of Appeal rejected the
Covid-19 was known or knowable.
proposition that trading results after the
valuation date should be preferred to its There are high level indicators which
trading results actually achieved. can provide some tangible evidence
– for example the reaction to the
It may also be permissible where scant
pandemic of stock markets in the UK
information is available regarding
in the last week of February 2020, and
expectations for the business at
the sharp decline of FTSE indices from
that time. In certain circumstances,
Monday 24 February, which show that
subsequent actual performance might
the UK market had started to respond
be considered but this should really be
to the actual and potential impact of
a last resort.
the pandemic and the measures put
Where subsequent actual performance in place to deal with it. The market
is the only possible proxy for reaction timing was similar in the US,
expectations of the business at the but earlier in China, therefore if the
historical date, here are a few important company being valued is exposed to
factors to consider: different countries, the impact may
have been known at different times, for
• What was the distribution of possible different aspects of the business.
outcomes at the time? When The implications of this knowledge are to inform
valuing start-up companies, or a valuer as to whether incorporating the impact of
pharma companies with products in Covid-19 on the business (either positive or negative)
potentially involves using hindsight, or whether it
development, there is a huge range could reasonably have been anticipated at a historical
of possible outcomes. The probability valuation date and thus should be factored into the
business valuation. It will inevitably not be a ‘one size
of success or failure of the business
fits all’ approach, with differences likely depending on
is almost binary. It would be all the sector and geographical spread of the business in
but impossible to predict the actual question. However, it is potentially an important factor
where there is a relevant valuation date which falls in
performance outcome. Here applying early 2020 and should be carefully considered.
actual performance as a proxy for
forecasts at the time is likely to be
inadmissible.
• Has anything fundamental changed
in the business and its market
between the valuation date and the
subsequent actual performance?
Any fundamental changes are likely
to render subsequent performance
irrelevant.
2 Brian Foulser and Doreen Foulser v The Commissioners for HM Revenue and Customs: [2013] UKUT 038 (TCC)
3 Buckingham v Francis Douglas Thomson [1986] 2 AER 738
4 Joiner & Anor v George & Ors, Court of Appeal - Civil Division, March 27, 2002, [2002] EWCA Civ 160
7
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ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
A NEW DAWN:
THE END OF THE BLAME GAME?
Authored by: Connie Atkinson and Katie Newbury - Kingsley Napley
The much heralded Divorce, Dissolution Justice Secretary and Lord Chancellor the Rt Hon Robert Buckland QC MP summed up
and Separation Act received Royal the sentiments of many legal practitioners when he commented:
Assent on 25 June 2020.
Until 1969 a person could only petition
the Court for divorce on the basis that
their spouse had in some way been at
“These new laws will stop separating
fault for the breakdown of the marriage
due to their adultery, cruelty, desertion,
couples having to make needless
or incurable insanity. Following a push
for reform in the 1950’s and 1960’s
allegations against one another, and
the Matrimonial Causes Act 1973 was
created, now approaching its half instead help them focus on resolving
centenary, which remains the basis of
the laws governing divorce to this day. their issues amicably. By sparing them
The current divorce system in England the need to play the “blame game”,
and Wales has undoubtedly been a
major topic of discussion for many
years. Whilst potential reform of the
we are removing the antagonism that
current divorce laws and a push for
‘no fault’ divorce is nothing new, it was
this creates so families can better
the highly publicised Judgment of the
Supreme Court in the case of Owens v
move on with their lives.”
Owens [ 2018] UKSC 41 that re-ignited
major discussion.
But will this come to pass and does the new legislation go far enough?
9
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
The new laws seek to encourage a or children. Family lawyers have long bemoaned
non-confrontational approach, reducing the current laws and the hostility that
conflict and its damaging effect on • It will no longer be necessary for the is too often unavoidable as a result of
family relationships, particularly where parties to incur costs agreeing who the “blame” culture encouraged and
there are children of the family. The key will prepare the Petition and what required by the current system. Parties
provisions can be summarised thus:- the particulars of behaviour will be, too, many of whom are agreed that
meaning that they can immediately the marriage has broken down, are
focus on more important discussions surprised and disappointed to find that
regarding children and finances. they are then pitted against each other
1. P
arties can now apply either together
from the outset. The upcoming changes
or individually, removing the need for • Parties may be more likely to enter
are intended to encourage (and, indeed,
there to be a “Petitioner” or aggrieved into mediation or other forms of
require) a more conciliatory and less
party. collaborative practice as conflict will
combative approach to proceedings
be minimised from the outset. It is
2. There is no longer the requirement and this can only be encouraged.
hoped that this will lead to an overall
to establish one of the statutory facts Let’s hope that the new legislation can
reduction in court applications.
in support of irretrievable breakdown persuade not only the divorcing couples
of the marriage, thus introducing • The process will be simplified and but also the practitioners they instruct to
the long awaited ‘no fault’ divorce. streamlined, improving access for take a less combative approach and to
The Petitioner can simply state the individuals acting in person. join the drive to “be kind”.
irretrievable breakdown as a fact.
• Couples who wish to consensually
3. It will no longer be possible to contest divorce will no longer have to wait for
the basis of divorce as the statement 2 years after their separation to do
of irretrievable breakdown will be so. This will eliminate the financial
taken as determinative. burden on spouses and the potential
negative impact on the children of the
4. C
ontesting the petition will only be couple who are separated but forced
possible on the basis of jurisdiction, to remain married for 2 years.
the legal validity of the marriage,
fraud, coercion and/or procedural • It will no longer to be possible for an
compliance. Owens type scenario to arise whereby
one party defends the Petition and
5. It introduces an overall minimum keeps the other locked in a marriage
period of 20 weeks from petition until 5 years from separation.
to Decree Nisi and maintains the 6
weeks from Decree Nisi to Decree
Absolute.
6. There has been a shift towards more
modern terminology, making the
process more accessible for Court
users. A Petition will become an
Application for Divorce Order, Decree
Absolute will be known as the Final
Divorce Order and Decree Nisi is
to be rebranded as the Conditional
Order. The previous terms will
remain in use whilst Petitions issued
prior to the commencement date of
the Act remain in proceedings.
7. The Act will apply to both divorce and
civil partnerships.
Undoubtedly, the new law
will bring about a number of
positive changes:-
• Reducing the hostility between the
parties as the requirement for one
spouse to blame the other will be
dispensed with. This amendment is
likely to be particularly pronounced
with the removal of so called
“behaviour” Petitions, where
antagonistic particulars of divorce can
so often cause increased hostility and
conflict from the outset, which may
then set the tone for negotiations or
court proceedings regarding finances
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ENDING YOUR MARRIAGE
BUT NOT YOUR VISA:
THE IMPACT OF
DIVORCE ON YOUR UK
IMMIGRATION STATUS
Authored by: Alexandra Mann and Ben Xu – Irwin Mitchell
Marriage Separation review the petition to make sure it fulfils
the legal criteria for a divorce/dissolution
Marriage is the lawful union of two To start divorce or dissolution and if satisfied that the marriage or
persons to the exclusion of all others. proceedings in England and Wales one partnership has irretrievably broken
You can get married or form a civil party to the marriage or civil partnership down, it will pronounce Decree Nisi or
partnership in England and Wales if must file a divorce petition with the the Conditional Order.
you are (i) 16 (with parental consent) or court. This is a form that gives the court
over; (ii) not already married or in a civil information about both spouses and
partnership; or (iii) not closely related. informs the court that the marriage or
Same-sex couples can convert a civil civil partnership has irretrievably broken
partnership into a legal marriage. down. The party filing the petition
(known as the petitioner) must briefly
Immigration considerations will always set out evidence that the marriage or
arise when two people are looking to civil partnership has broken down by
get married in a foreign land. Getting providing details in relation to one of
married in the UK requires “blessing” the following five grounds for divorce
from the Home Office. Only once or dissolution: (1) Unreasonable
you have proven that you will not be behaviour; (2) Desertion; (3) Two years
a burden on the UK’s social welfare separation with consent; (4) Five years
system will you be given the permission separation without consent; or (5)
to remain in the UK and granted a Adultery (applicable to divorce only).
spouse visa. This special permit to a
certain extent gives the holder two and Once the divorce petition has been
half years certainty as far as residence issued the court will send a document
in the UK is concerned which can be called the Acknowledgment of Service
extended for another two and half to the respondent; to confirm whether
years. After five years with a spouse or not the petitioner wishes to defend
visa, the non-British spouse would have the divorce/dissolution. Upon receipt
earned their rights to remain in the UK of the completed Acknowledgment of
permanently, subject of course to still Service, the petitioner is then able to
being married to their British spouse apply for Decree Nisi or Conditional
and being able to maintain themselves Order, that being the ‘interim’ stage of
financially. the divorce/dissolution. The judge will
12ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
At any time after Decree Nisi or Visa considerations Getting the right legal representation is
the Conditional Order has been only the very first step to a successful
pronounced, the court has the power to So what happens to one’s spouse visa application, not only because UK
make a legally binding financial order when the love fades and marriage immigration law is a minefield, but also
setting out one’s arrangements for ends? Sadly, the Home Office would the process of acquiring a UK visa can
finances and property upon divorce/ want their “blessing” back and have be long and emotionally draining. The
dissolution. Until a financial order has the non-British spouse’s visa curtailed, suitability of certain visa categories
been approved and sealed by the court, meaning they would have to leave the is completely dependent upon your
financial claims as spouses will remain country unless they are able to switch personal circumstances. The more ties
open even if the divorce/dissolution is to a different visa category that would you have to the UK the more options
finalised. It is therefore crucial to obtain allow them to continue their life in the may be available to you. Having a
a sealed financial order from the court UK. minor child who is a British citizen, for
setting out the agreement reached example, may increase your chance of
and where applicable, dismissing Even with the most amicable divorce getting a visa to remain in the UK after
one’s financial claims against the other there are undoubtedly a multitude of divorce; so would receiving a sizable
spouse in respect of capital, income matters that need to be discussed divorce settlement which may give
and pensions. If you do not obtain this and agreed before a divorce is you the option of applying for a Tier 1
order, either party to the marriage or finalised. The last thing you want to be Investor visa.
partnership could seek further financial concerned about is your visa issues.
provision from the other spouse in the But the clock starts ticking as soon For those who have a successful
future. as your relationship has broken down career, you might want to consider
permanently as you are under an taking advantage of the Global Talent
Six weeks and one day after the obligation to report your break-up to visa or a Tier 2 visa (work permit in
pronouncement of Decree Nisi or the Home Office. This would inevitably other words). These are only some
the Conditional Order, the petitioner trigger the process of curtailment of of the visa categories which might be
to the divorce can apply for Decree your spouse visa. Therefore, if the available to someone who is going
Absolute, that being the ‘final’ stage of intention is to stay in the UK after the through divorce proceedings. Choosing
divorce upon which your marriage or divorce, you must summon the courage the most suitable visa is therefore the
partnership legally comes to an end. to seek legal advice on your visa very foundation of your future residence
It is advisable not to apply for Decree options immediately when you have in the UK.
Absolute until such time that an agreed reached the point of no return.
financial order has been approved If you are going through a separation
by the court, given that the way in and require advice from a matrimonial
which assets are held changes upon or immigration lawyer, please do get in
divorce. Therefore in reality, there is touch with one of our experts to discuss
often a much larger gap between the this further.
pronouncement of Decree Nisi and
Decree Absolute to give parties time to
resolve their financial matters.
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www.iflg.uk.com Follow us: ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
WAR STORIES
ON PRE -
AND POST-
NUPTIAL
AGREEMENTS
Authored by: Lucy Greenwood - International Family Law Group LLP
Marital agreements are becoming • Where there has been a change have factual origins, whilst others are
increasingly popular in England & Wales during marriage, to a couple’s completely fictional.
as more couples seek greater certainty circumstances or legal rights
of financial outcomes in the event Clients facing a divorce in England, with
they divorce. The increasing number Whilst marital agreements are not marital or civil partnership agreements
of international couples (who may be legally binding in England and Wales, drafted abroad, can find the advice they
more used to such agreements) has they hold considerable weight provided receive to be in stark contrast to the
also made marital and civil partnership they are entered into freely, with full advice they expected to receive.
agreements more popular and culturally information, independent legal advice
and without any undue pressure. There are also many additional
acceptable in England & Wales.
However, they are highly contentious considerations for legal practitioners
Common reasons to have them documents as they seek to reduce when drafting marital agreements for
include: the legal financial responsibilities of international couples:
the wealthier party and limit the legal
• Couples wanting to avoid repetition of • England’s current approach to pre-
rights of the weaker financial party
an acrimonious divorce and post-marital agreements
and sometimes that disparity can be
considerable. • Common myths about international
• Families who do not want their
extended family’s wealth diluted pre- and post-marital agreements
As every couple’s situation is unique,
owing to the divorce of a family it is essential that marital agreements • Additional considerations for
member are drafted to match the specific practitioners drafting pre- and post-
requirements of each party marital agreements where there is an
• Business owners who want to avoid
the forced sale of shares through the international dimension and
If a marital agreement involves a couple
divorce of a business partner/owner; who have international connections, the • Some of the common threads for
or advice required before entering into that challenging the validity of marital
agreement may become increasingly agreements in recent case law.
• The partner with disproportionately
complex. There are also many myths
greater wealth who wants to ringfence
surrounding the enforceability of marital
their pre-marriage assets
agreements worldwide, some may
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HOT TOPICS IN PROCEEDINGS
FOR FINANCIAL PROVISION
AFTER A
FOREIGN
DIVORCE
(PART III)
Authored by: Michael Allum - The International Family Law Group LLP
Proceedings for financial claims after a divorce has already taken place in another
country (known in England and Wales as Part III applications) are politically, legally,
and culturally sensitive. These applications enable a court in one country to
determine whether a financial outcome made in another country is fair and adequate
and if not, additional financial relief can be secured. This can sometimes lead to
very large financial settlements. This talk deals with the most relevant cases in the
last 12 months and discusses some current thorny issues including the difficulty in
sharing English pensions after a foreign divorce post 31 December 2020.
One of the most significant recent It is understood this decision is being However the former husband
Part III cases is the matter of Potanin. appealed with the appeal hearing responded by successfully applying to
This case involved estimated wealth scheduled to take place in early 2021. set aside that leave on the basis Part III
of $20 billion of which the former wife Given the scale of the wealth involved it is only available following a divorce from
had already received between $41.5 has the potential to be one of the largest an ‘overseas country’ which is defined
million and $84 million in Russia. In ever Part III settlements if allowed to as meaning a country outside the British
January 2019 Mr Justice Cohen proceed. Islands and did not, therefore, include
granted the former wife (who was Jersey which is a British Island.
represented by specialist family law Another late 2019 decision of MHW v
solicitors and counsel) leave to bring GSH highlighted the inability to bring In addition to covering recent case law
her Part III application. However, at a Part III claims after a divorce in a this talk will also discuss the difficulties
the next hearing in November 2019 country within the British Isles such as facing those divorcing abroad but
Cohen J held that the leave had Jersey. In that case the former wife had wanting to share an English pension
been given based on three grounds been given permission by Mr Justice will face from 1 January 2021 onwards.
of misrepresentation including Cobb to apply for a pension sharing At the moment it is possible to use the
misrepresentation as to the law which order under Part III following a divorce residual power in the EU Maintenance
should be applied. This resulted in the in Jersey (where pension sharing orders Regulation to make needs-based
grant of leave being set aside with the are not available). orders, pension sharing, on an
judge holding as follows (para 59): exceptional basis provided the courts
of no other EU Member State have
jurisdiction. However, from 1 January
“I am in no doubt that if I had had the full picture 2021 this basis of jurisdiction will no
longer be available so couples with an
before me on 25th January 2019, I would not have English pension, living and domiciled
abroad will be unable to obtain a
granted W leave to make her application. I am pension sharing order.
further satisfied therefore that the grant of leave
was given as a result of material misleading of the
court, however unintentional that might have been.”
17ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
NUPTIAL AGREEMENTS:
THE CRUSADE FOR A PROTOCOL/
CODE OF CONDUCT/GUIDANCE
Authored by: Teena Dhanota-Jones – Simons Muirhead & Burton LLP
Blame Culture Further, many family lawyers are been dictated the terms and generally
presented with a nuptial agreement the advice is further negotiations are
From my experience the lack of protocol that has already been drafted by necessary to achieve an agreement that
in relation to nuptial agreements the wealthier parties’ solicitor. The is fair.
crecates a blame culture. Family financially weaker party is expected
lawyers are placed in a very unusual to take legal advice on a document I am confident, that most family
position when advising on nuptial that they were not directly involved lawyers have had the experience of the
agreements. We are not dealing with in negotiating. Invariably, this can acrimony that a nuptial agreement can
warring parties, but quite the reverse, leave a client feeling that they have create between the parties who were
the parties are very much in love and not in a dispute in the first place.
they are about to embark on a marriage.
They each instruct their solicitor to
reach an agreement on the terms
that they have usually agreed. Such
an immediate consensus is rare with
separating parties. Unsurprisingly, I
will always advise that there are some
aspects of the agreement that are
simply unreasonable and/or unfair.
Relaying this to a client who has
discussed the terms usually at length
with their prospective spouse/civil
partner can actually lead to conflict
between the lawyer and the client,
and worryingly between the parties
themselves. A client can view their
own solicitor as the obstacle in the
negotiations. Importantly, the advice
that each client receives can lead to
unintentional acrimony between the
parties.
18ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
Inflated Legal Fees The Benefit of a Protocol
The absence of a protocol increases I am confident that the existence of a
legal fees. protocol would undoubtedly iron out
the issues that I have outlined above.
Firstly, every solicitor has their own Hopefully, many other issues that family
procedure, sometimes an agreement lawyers are confronted with when
has been drafted, but the weaker party addressing nuptial instructions could
is unaware of the terms. On occasion also be addressed by the use of a
an agreement may have been reached protocol.
between the parties prior to instructing
their respective solicitors; when The procedure provides a very clear
reviewing the terms with their solicitor, structure and enables parties to be in
the agreement does not reflect the control and in charge of the terms from
agreement they reached. Further the an early stage prior to setting anything
parties reach a decision, which they feel down on paper. This should reduce
is satisfactory only to be told by a family the conflict that can lead to the blame
lawyer that the agreement is unfair. culture in these matters. Following the
steps above before preparing the first
Finally, the nuptial agreement can be draft, should in mind save the ultimate
drafted as a bespoke document or using cost of numerous amendments.
one of a number of precedents, whether
that be Practical Law, Lexis Nexis or I sincerely hope that my personal
the numerous other options available opinion expressed in this article creates
online. For lawyers, to always be the traction for change in this every
reviewing agreements that vary in style increasingly busier area of law. I hope
and content is time consuming. that the powers that be, will look at
the drafting of a protocol, a code of
conduct or even some guidance in this
much needed area of law. We do not
want clients that are about to marry to
become entrenched and ostracised
during this process.
I have some ideas for a sensible and seemingly logical procedure. The first and most obvious, the
nuptial agreement should not be drafted until:
1. The parties have discussed the terms directly.
2. The parties have exchanged financial disclosure.
3. The parties have taken legal advice.
4. The respective solicitors then collaborate to agree who will prepare the first draft and if
appropriate agree the precedent to be used.
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JOHNNY DEPP, AMBER HEARD,
AND THE ONGOING FALLOUT
OUT OF A ‘BAD’ DIVORCE
Authored by: Jeremy Clarke-Williams, Charlotte Purves & Grace Lymer-Sullivan – Penningtons Manches Cooper
As readers of any newspaper in recent victims of domestic abuse, and provides The article contained serious allegations
weeks will know, the American actor, some useful tips to practitioners as to that Depp, was excessively controlling
producer and musician, Johnny Depp, how to assist clients who are suffering throughout his relationship with his
lost a high profile libel action against from, or at risk of suffering from, harm. former wife, and was both verbally
The Sun newspaper. As a result, Mr and physically abusive towards her,
Depp will now forever be associated Libel case - Depp v News in particular when he was under the
with the term ‘wife beater’ which is influence of substances.
already having consequences for his Group Newspapers Ltd
career and his former wife, Amber Depp strongly denied these allegations
Heard, will have to continue to live with On 27 April 2018, The Sun published and issued libel proceedings against
the impact of past domestic abuse. an article on its website, written by its News Group Newspapers, the
executive editor, Dan Wootton, with publisher, and Dan Wootton on 1 June
Partner Jeremy Clarke-Williams, and the headline “GONE POTTY: How 2018 in relation to each of the articles.
Grace Lymer-Sullivan, trainee in our can JK Rowling be “genuinely happy”
reputation management and privacy casting wife beater Mr Depp in the new The action was defended, and the
team take a look at the reported Fantastic Beasts film?” The headline Defendants pleaded the defence of truth
judgment to outline what lessons can be to the article was altered the next day (section 2 of the Defamation Act 2013)
learnt before making such a claim, and so that the phrase “wife beater” was in relation to the following meaning
Charlotte Purves, associate in our family removed, but the rest of the content which they contended the articles bore
team, looks at the remedies available to remained the same. An article in (and which the trial judge accepted):
substantially the same form was then
published in the print edition of the
paper on 28 April 2018.
“the Claimant beat his wife Amber Heard causing her
to suffer significant injury and on occasion leading her
to her fearing for her life.”
21ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
The Sun relied on 14 alleged incidents There are currently further libel contested action and trial are also
between 2013 and 2016 that had proceedings brought by Depp pending substantial and the general rule is that
occurred all across the world (from in the United States – this time against the loser pays the winner’s costs (in
LA to the Bahamas, from Hicksville to Heard personally, so the drama may addition to their own). However, in this
Tokyo and from Australia to south east not be over just yet. The UK judgment case, the Defendants were a wealthy
Asia), when it said Depp had physically will be a helpful one for Ms Heard (as newspaper group and so they could
assaulted his then wife, causing her no doubt will be the transcript of the bear the cost. In addition, the fact of
serious injury. evidence which Depp gave on oath in the litigation itself provided its own
the witness box) in the US proceedings compelling ongoing media story to
The enmity between Depp and Heard but it does not of itself carry any report and (as mentioned) the outcome
had been extensively reported since evidential weight. All the witness of the case was largely going to rest on
their marriage ended. The case was evidence will have to be given again. whose evidence the judge preferred.
never likely to settle and so the outcome As a result, The Sun will have felt that
of the trial was going to be determined
on whose evidence the judge preferred
What to take away from defending the claim was a risk worth
taking.
– Johnny Depp’s or Amber Heard’s. the case?
The trial took place over 16 days in July Depp, decided that libel proceedings
and was extensively and breathlessly The fact that the action even reached were the most effective way to try and
followed by the world’s media. trial is rather rare, as the vast majority vindicate his reputation. As a seasoned
Hollywood glamour may have come of libel cases are settled before trial. star, he must have anticipated the
to the Royal Courts of Justice – but However, when a case depends almost media storm that such proceedings
the allegations at the heart of the case entirely on whose oral witness evidence would bring. For other, less wealthy
were extremely serious and decidedly is believed, and the accounts differ so parties, the sheer cost of contested
unsavoury. The stakes were incredibly markedly between the Claimant and the litigation is another important factor
high for the parties. Defendant, settlement becomes much in deciding whether to litigate, but the
more difficult. (Another example was wealth of these parties made it a less
The judgment in the case was ultimately the ‘Plebgate’ trial between PC Toby crucial consideration. However, in the
handed down on 2 November 2020 Rowland v Andrew Mitchell in 2014. In aftermath of the judgment, Depp must
with Mr Justice Nicol dismissing Depp’s that case PC Rowland’s evidence was be wondering whether ignoring the story
claim. He found that the allegations preferred and he won the case). would have had a lesser impact on his
against Depp that he was a “wife career; he has already lost the part of
beater” were substantially true, and held Other than being a case in the public Gellert Grindelwald in the Fantastic
the following: eye, there is a lot to take away from the Beasts franchise. Round two of the libel
interplay between legal elements and battle now shifts across the Atlantic to
1. T
he meaning of the articles was as real-life scenarios in this case. the US courts.
the Defendants had pleaded.
Throughout this case, the media
2. T
he imputation of this meaning was has largely focused on the graphic Domestic abuse – a
“substantially true”. The Judge found
that 12 of the 14 incidents outlined
evidence given on both sides about
the allegations which has perhaps left
family law perspective
above were true. The Judge also some confusion regarding what exactly Though the case itself was a libel
concluded that on 3 of these 12 a libel Defendant must establish when action, it was allegations of domestic
occasions, Ms Heard had indeed they seek to prove that the words abuse that lay at the centre of this
been in fear for her life. complained of are “true”. matter. Some readers may be surprised
to learn that there is presently no
The judgment was met with horror by Legally, a Defendant does not have
definition of domestic abuse enshrined
legions of Depp fans. Inevitably (and to prove the truth of every single
in legislation. There is a bill in
depressingly) many surfaced on social imputation so it was not necessary in
Parliament for this purpose awaiting
media defending him and making this case for the Defendants to prove
its second reading. This bill, if passed,
concerning and threatening comments that every single allegation of domestic
will provide a definition of domestic
about the judge. abuse alleged by Heard occurred. It
abuse, and will seek to ensure that
was enough to establish that 12 out of
Depp’s legal team called the judgment the offence is better understood,
the 14 incidents relied on by The Sun
“perverse and bewildering” and so as to encourage more victims to
were substantially true, and that Depp
suggested it was “so flawed it would be come forward (The Domestic Abuse
had been violent towards Heard during
ridiculous for Mr Depp not to appeal this Bill). For further information, see this
their marriage.
decision”. Government factsheet.
It is of course always a risk for a
Despite this reaction, this looks like Defendant (here the newspaper group)
a difficult judgment to appeal. The who seeks to defend a libel claim by
trial judge listened to, and saw, all the pleading that the words complained of
witnesses and reached his conclusions. are true, because the burden of proof is
On the basis of the evidence presented on them. If they are unsuccessful, they
to him, he found that the Defendants are likely to be liable for a significantly
had proved the substantial truth of their increased level of damages because
allegations. Unless his conclusions the judge will take into account the fact
were ones that no reasonable judge the defendant has never apologised,
could have reached, it is difficult to see and the enormous additional stress to
the Court of Appeal interfering with the the Claimant caused by the litigation
judgment. and trial process. The costs of a fully
22ThoughtLeaders4 HNW Divorce Magazine • ISSUE 4
There is, however, a cross-government This is particularly so for coercive and Non-molestation order
definition, which was extended in 2012: controlling behaviour, which is now an
offence in its own right (s76 Serious A non-molestation order can protect an
[Domestic abuse refers to] Crime Act 2015). It is expected that individual against violence, threats of
‘any incident or pattern of lawyers will have seen a growing violence, harassment and controlling
number of such allegations within their or coercive behaviour. The Orders
incidents of controlling, generally last a year, and a breach of
own caseload.
coercive or threatening the Order can result in the perpetrator
behaviour, violence or abuse What to do when a being imprisoned (for two to five years)
between those aged 16 or or fined. The Order will come into effect
over who are or have been
client discloses once it is served upon the perpetrator,
intimate partners or family domestic abuse and it is often wise, therefore, to
arrange personal service.
members regardless of It is not uncommon for clients to
gender or sexuality. This Orders can only be obtained against
disclose that they have suffered from
certain individuals, such as:
can encompass, but is not a form of abuse. Sometimes, the
limited to, the following types separation itself solves the issue, • a current/former cohabitee
but there are circumstances in which
of abuse: • psychological • there is a threat of, or there remains, • a fiancé/fiancée (or equivalent, an
physical • sexual • financial • continuing abuse. intended civil partner)
emotional.’
Involve the police • a relative
‘Controlling behaviour is: a
In such circumstances, the first • someone with whom the victim
range of acts designed to has had an intimate relationship of
consideration for any lawyer must
make a person subordinate be reporting the matter to the police, significant duration
and/or dependent by isolating particularly if it appears that the
them from sources of support, behaviour complained of is escalating. To apply for a non-molestation order,
The police can issue a Domestic you must generally be over 16 years
exploiting their resources and old (if younger, the court’s permission
Violence Protection Notice or apply for
capacities for personal gain, an Order on the victim’s behalf. Many is required first). These orders are not
depriving them of the means individuals are, however, reluctant to made freely, and the court will expect to
needed for independence, inform the authorities, and if that is the see evidence of the abuse complained
of. The Court will need to be persuaded
resistance and escape and case, there are other avenues which
can be investigated which will provide that protection, by way of an order, is
regulating their everyday required. As such, a full and detailed
the necessary protection.
behaviour. statement should accompany the
Use the family courts to application, along with photographic or
Coercive behaviour is: an act documentary evidence in support.
provide protection
or a pattern of acts of assault,
Do not, however, think that physical
threats, humiliation and If the decision is taken to avoid police
violence needs to have occurred for an
intimidation or other abuse involvement, then consideration should
order to be made. As outlined above,
be given to making an application to the
that is used to harm, punish, Family Court for a protective order. The
the legislative definition of domestic
or frighten their victim.’ abuse encompasses harassment and
first, and most common type of order
controlling behaviour.
that can be obtained, is known as a
The definition rightly encompasses
non-molestation order.
many forms of abuse, which historically,
had not been widely acknowledged.
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