The trickery of hiding assets while paying millions in legal fees emphasises the case for a solid pre-nup says Vanessa Friend
A High Court judge has penalised a husband for his 'blatant dishonesty' by ordering him to pay all of his wife's divorce costs of ’344,000. Sir Peter Singer said aviation tycoon Mr Joy-Morancho had deliberately tried to obscure the true picture of his finances to defeat Nichola Joy's financial claims.
The couple, who have three children, enjoyed a lavish lifestyle during their marriage, living in a ’2.5 million French chateau. The main source of the family's wealth was a ’50 million offshore trust which the husband set up prior to the marriage. The trust included a ’20 million collection of vintage cars and land in Switzerland.
On the breakdown of the five-year marriage, the wife sought a lump sum of ’27 million or a share of the trust. Mr Joy-Morancho argued that he was no longer entitled to the proceeds of the trust and was only able to provide limited maintenance and no capital lump sum.
The judge reluctantly concluded that the trust was not a nuptial settlement capable of being varied by the court, as it had not been created in contemplation of the parties' marriage. However, he said it was likely the trustees would provide the husband with access to the funds in the future. The husband's evidence in relation to the trust was deemed to be a 'rotten edifice founded on concealment and misrepresentation'.
In a highly unusual step, the court declined to dismiss the wife's capital claims, preferring to adjourn them. The judge also imposed a supervisory regime on the husband's assets. In addition to the wife's costs, Mr Joy-Morancho was ordered to pay maintenance of ’120,000 per annum.
Although the husband may have escaped the true costs of divorce for now, as the judge said, 'Neither party can be said to have won.'
The case highlights the difficulties for individuals in divorce where one party is determined to place funds beyond the reach of the court. Even if the wife's claims are revived she is likely to find enforcement an expensive and protracted process.
Although many couples regard it as unromantic, it is always advisable to seek legal advice prior to marriage to ensure that each party is clear about their financial entitlement should the marriage breakdown. A well prepared prenuptial agreement and relevant trust structures can help avoid expensive litigation. Mrs Joy and Mr Joy-Morancho are estimated to have spent ’2 million on legal fees, which is a heavy price to pay for on-going uncertainty.
Vanessa Friend is an associate at Hunters, incorporating May, May & Merrimans