In the latest stage of a long running financial dispute between a wealthy businessman and his estranged wife, the High Court has declared that he is not the true owner of a classic car collection.
The case, described by Judge Sir Peter Singer as “convoluted and complex”, centred around the husband’s claims that substantial assets had been tied up in a trust and he was unable to access these.
The couple originally met in 2001, not long after the husband’s first wife began divorce proceedings. At the time the husband was living on the Caribbean island of Bequia, “an idyllic island in the Grenadines”, to quote the Judge.
The couple began living together at a disputed point and eventually married in 2006. By 2011, however, the relationship had begun to break down and they had separated permanently by December that year. By then the couple had moved from a Caribbean island to a chateau in the south of France where the husband still resides.
In a lengthy High Court judgement, Sir Peter described this as “a sumptuous 6-bedroom luxury residence on which much has been expended since its purchase.”
The couple have three sons, ranging in age from nine to four years. Since the separation, these children spent time with both parents as litigation has continued. The mother lives near the chateau in rented accommodation.
Divorce proceedings between the pair began in London in July 2011, and to date, have only reached the penultimate decree nisi stage. Meanwhile, the wife also launched proceedings in the French courts, alleging that domestic violence had occurred and seeking an order that her husband leave the chateau. Sir Peter explained:
“[The wife] failed in this attempt and indeed (so I have been told) the French court determined that her allegations were unfounded and dismissed her application.”
Meanwhile, the husband initially challenged the jurisdiction of the English courts, insisting that he was in fact legally resident in Spain, but he later dropped this claim the Judge reports.
The wife sought a clean break lump sum payment of £27 million, arguing that the husband’s total assets totalled around £54 million.
The trust in question, the New Huerto Trust (NHT), was established in the British Virgin Islands in 2002. The husband’s children and descendants were established as beneficiaries, while the husband was paid a salary from the Trust’s assets.
According to the judge, the bulk of the husband’s assets had been generated during the couple’s time together, via an offshore firm called LCAL Ltd. The shares in this firm were registered with Hong Kong-based management firm the Royal Fiduciary Group, trustee until recently of the NHT, “and never in [the husband’] name”.
In his judgement, Sir Peter considered whether or not the trust had even been ‘nuptial’ property – ie marital property subject to division in a divorce – or had become so since. He concluded that neither situation was the case.
The extensive classic car collection was worth an estimated £20 million. The wife claimed the cars were owned by the husband, and therefore subject to inclusion in the settlement, while his lawyers insisted they were in fact the propery of LCAL Anthology Inc, a company wholly owned by the New Huerto Trust. The Judge concluded that the latter claim was in fact the case.
The husband stance was that “he is in truth and in fact able for the foreseeable future [was able] to pay only modest periodical payments to W and their three children, but nothing whatever by way of capital award.”
This was because, he said, faced “financial ruin” as a result of his ties to the New Huerto Trust.
Was this, asked the Judge, “genuine or a contrived façade”? Sir Peter declared:
“The determination with which NHT assets have been protected and the vigour with which TB has made clear that none will be either coerced or encouraged to go in [the wife]’s direction are undeniable. Were I in a position to make orders directly against NHT or its assets (which on the findings I have made I do not believe, as a matter of law, I could) it is clear W would face an uphill and most likely doomed and interminably Sisyphean struggle to collect.”
Sir Peter therefore decided to adjourn the wife’s application for a lump sum payment and an award of property “save that I will dismiss her claims to [declare that] NHT… is a nuptial trust, and for the transfer to her of cars from the Car Portfolio which I have found are not his.”
He ordered the husband to pay his estranged wife maintenance pending suit (temporary maintenance before the completion of their divorce proceedings), and said that payments after the final decree absolute should be £120,000 per year, “payable monthly in advance”, on a ‘joint lives’ basis – i.e. until the wife remarries or a further court order is made.
Joy v Joy-Morancho and others (No 3) is available to read in full here.
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