Reading of Ashley’s fame, I contacted him and he has kindly agreed to write a post for this blog about Jones v Jones. It will be a privilege to post his thoughts and I can’t wait to read them; his last post here, which was concerned with Radmacher v Granatino, remains popular.
In the meantime, let’s take a look at Jones v Jones. The case was heard in the Court of Appeal late last year, and the decision was taken to increase an award to Mrs Jones from £5.4 million to £8 million.
Coincidentally another judgement, Goldstone v Goldstone, was published at the same time. This case also featured a multi-million pound couple. The Goldstones enjoyed a very glamorous lifestyle, with properties in England, Switzerland and Monaco. This case was also heard in the Court of Appeal, with Mrs Goldstone arguing that she was entitled to a share of assets worth £7.5 million, allegedly deposited offshore by Mr Goldstone.
Judges, sitting and scratching their heads in the Court of Appeal, have criticised the amount of money being spent on the litigation.
“The bills incurred by the families mount to shocking summits”, notes Lord Justice Thorpe in the Goldstone case. Lord Justice Wall, President of the Family Division, comments: “whether a wife ultimately gets £5 million or £8 million she will still be a very rich woman”.
Cue the banging of the drums and perhaps the familiar refrain: gold digger wives at it again….
But I would like to pose a question, and a potentially controversial one at that:
How much is £5 million to a woman accustomed to a bottomless piggy bank?
Will she still be a very rich woman? Most of us would be able to answer that question straight away, without a second thought. “In my dreams! £5 million is more than enough for anyone to live on. I wouldn’t even know what to do with half of it!”
Sadly, unless a lottery win is forthcoming, most people can only dream about such a sum.
But let us draw some wavy lines, and suppose for a second that you are the wife of a multimillionaire. You have been married for many years, but a divorce has been demanded. Your divorce lawyer will advise you how best to adapt to the situation. Meeting reasonable needs applies to you, the very rich lady, too.
First thing to consider: where would you like to live?
Monaco? Switzerland? London?
All three? Well, that’s certainly what you’ve been used to.
And how much would homes in all three places cost? You could exhaust £5 million before you’ve even started – and that’s just property.
Hmmm. Perhaps you need to set your sights lower. Perhaps from now on, Monaco and Switzerland would suffice for – dare I say it – holiday destinations?
But where would you like to live in London? Don’t even think about one of those amazing houses in Chelsea or Belgravia, where prices start at more than £10 million. And as for an apartment overlooking Hyde Park… Well, your housing budget wouldn’t fetch a single room in one of those new builds, would it?
You must set your sights rather lower, a little further out. Hampstead? Primrose Hill? Or are these too highbrow, with all those socialists and politicians moving in? Certain streets are still out of reach, true, but some of the housing is more affordable. And on the plus side, Michael McIntyre and George Michael live in Hampstead… That could be quite fun!
So you plump for the Hampstead borders. Not exactly Hampstead but near enough to buy you a house within reach of trendy cosmopolitan eateries. That’s going to cost at least £2 million for a reasonably sized house. Then you have to add in the cost of the conveyancing, doing it up, furnishing and so on. And yes, it’s going to be smaller than any of your previous family homes. Not much change out of £2.5 million I’m afraid.
What income are you going to have?
What can you spend out of what’s left?
You begin to add up the monthly costs. Running your home. A sensible car for you and the children to run around in and maintain. A cleaner. A babysitter. The regular holidays to which you and your children have become accustomed. Medical bills. Dental bills. Clothing. Social events. Entertainment.
A rich woman’s budget can run to hundreds of thousands a year. As for you: your budget has been suddenly and severely downsized. Your lawyer reaches for the Duxbury tables, and points to the figure that applies to you. Now you are going to have to cut down dramatically, to – dare I say it – around £4000 a month.
Yes, £4000 is an awful lot of money to you and me. But consider how this wife has lived for decades. A new dress by her favourite designer might cost £1,000. Add in the coat, shoes, bag and the till is soon ringing up £2,000. That’s how this wife has always dressed.
She certainly doesn’t have to agree with a judge who describes her as a “very wealthy woman”. Her golden piggy bank has a new bottom, pushed firmly into place. There is no more to come.
She will have to manage, because she has no choice. However even if she walks away with £5 million, her lifestyle will not resemble the lifestyle she enjoyed as a wife. This is why divorcing wives will fight so hard for the difference between £5 million and £8 million. If they succeed, their lives will be transformed.
Meanwhile her husband still has his income stream from his businesses. He still enjoys the international lifestyle that they once shared. Life will improve for him, no matter how long and hard he complains during the divorce. His capital can be used to work for him, to invest and replenish his depleted asset base. His wife has no such opportunity. Her money has to be spent on housing and meeting her income needs. And as we all know, children cost a small fortune. Maintenance payments for children rarely meet all their needs.
Neither party will give up without a fight – and in my experience, many of these super-wealthy husbands are extremely good fighters. Indefatigable and armed with a phalanx of sophisticated financial advisers, they expect to outgun their wives financially, forcing them into as many pointless rounds of the most expensive litigation they can, as they fight to ring fence from a settlement the valuable assets they have transferred to secure offshore structures. They keep hoping their wives will surrender as legal bills mount as fast as a Swiss taxi meter, well into seven figures. And let’s not forget that legal bills are usually paid by each party. So the more the wife’s legal costs grow, the more her overall settlement will decrease. So the harder she has to fight.
Who is right and who is wrong? Different people have different opinions, and I will leave you to yours. But what is happening here is, in reality, no different to financial battles on a smaller, more familiar scale. All these wives know that in keeping up the fight to share in all the family wealth, they will make a real difference to the rest of their lives. I’m not so sure, therefore, that I would direct criticism to the wives who seek to make that difference.
Rather I would respectfully suggest that if these very wealthy husbands do not understand what a difference £3 million can make to a divorce settlement, it will have cost them very dear indeed when they eventually find out.