The tangled web of family law

Family Law|November 27th 2014

Over a lengthy career as a family lawyer one comes across many different scenarios, some common, some quite rare. It’s strange how sometimes one of the rare scenarios can repeat itself in quick succession.

Just last week someone found their way to my blog asking a question about enforcing a financial consent order after the other party had died. I therefore had a sense of déjà vu when, a few days later, I came across a report of a case involving just that scenario.

In X v Y the husband and the wife entered into a consent order in early 2012 under which the husband agreed to sell or cause to have sold a valuable villa abroad and to apportion the proceeds between himself as to ‘a substantial fixed sum’ and the balance to the wife. Unfortunately, the husband died in 2013, before the order was implemented. The wife then sought to enforce the order against the husband’s estate.

Now the story gets a little complicated. The ownership of the villa was one of those wonderfully complex affairs that one often comes across in big money cases. Please concentrate while I explain: the villa was owned by a foreign company, which itself was owned by three UK companies, which in turn were apparently owned by a US company (‘USCO’), which in turn is owned by an offshore Trust ,which had had two beneficiaries, V, a son of the husband, and another person, now also deceased. Still with me? Good.

Now, before he died the husband left a letter of wishes asking the Trust to add further beneficiaries including the husband’s daughter, Z. Z therefore had a potential interest in the wife’s enforcement proceedings. Accordingly, she applied to intervene in those proceedings. That application was refused and the judgment in the report relates to Z’s application for permission to appeal against that refusal.

The application was heard by Lord Justice Briggs in the Court of Appeal. After considering the grounds of appeal he concluded that Z had not shown that she had a real prospect of succeeding in her appeal. He said that: “her interest in this litigation, or the proceeds of sale of this villa, is so tenuous and precarious depending only on the enforcement of the letter of wishes”. The tenuousness of her interest was all the more so because others with a much more direct interest (the trustees and USCO) had, despite an invitation to apply to join the proceedings, decided not to do so. Accordingly, Z’s application for permission to appeal was dismissed.

In the circumstances this left the wife’s application undefended. That does not, however, guarantee her success. Does anyone remember the Prest case? As Lord Justice Briggs pointed out, the wife’s task in getting a share of the proceeds of sale of the villa is by no means straightforward, unless it can be said that the entire corporate trust structure was a sham.

X v Y is another example of the tangled web that must sometimes be unwoven by divorce lawyers. All I can say to a party faced with such a web is: make sure you instruct a good lawyer, and all the better if they have access to an in-house forensic accountancy team!

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