Frances Hughes
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Every divorce lawyer in London knew what the outcome of today’s decision in the Charman case would be: John Charman was bound to lose. The question is, has the Court of Appeal's ruling brought the much-needed clarity to our divorce laws that we were all hoping for? What impact will it have on future big money cases – and on divorces involving everyone else?
In terms of the big issues, the court found against Mr Charman in his attempt to ring-fence the assets in his dynastic trust. This is not surprising, as this part of his claim was unlikely to succeed. All husbands who set up trust funds as part of tax planning already know that they are not ring-fenced, a view the judges clearly endorsed today.
Mr Charman’s second argument was that his financial contribution to the marriage was so stellar that his wife should have received much less, according only to her needs, which he reckoned to be £20 million. The judges not only upheld the High Court’s earlier award of 36.5 per cent of the marital assets to Mrs Charman, but said that in cases where one spouse has made a disproportionate financial contribution to the relationship the spouse who has contributed less should receive between 33.3 per cent and 45 per cent of the assets. That is hugely significant when one considers how vast a figure one-third of the fortune of, for example, Roman Abramovich could represent. Given that pre-nuptial agreements are not legally binding, it means London remains the worst jurisdiction in the world for the super-rich to get divorced.
There were other aspects of divorce law that many were hoping the court would clarify, but it fudged the argument over whether post-separation accruals – wealth accumulated after a couple has split – should be up for grabs in the same way that pre-separation assets are. The court merely said the issue needed clarification and that Charman was not the case in which to clarify it.
Finally, the judges made a plea for a change in the law.
This ruling has not significantly clarified the law and the judges effectively acknowledged that. The uncertainty of the discretionary system for the super-rich is highly unsatisfactory. The judges acknowledged that the House of Lords judgment in Miller and Macfarlane has done nothing but obfuscate the law and they included a heartfelt plea for there to be an urgent review to look at legislative reform.
Will that happen? It is likely to be the view of Gordon Brown that the problems of the super-rich in divorce proceedings should not be a priority for any legislative reform, but divorce lawyers generally consider the Government’s views blinkered in this respect.
When a significant House of Lords or Court of Appeal judgment is delivered, even if the facts don’t fit middle or low money cases there is always a period of confusion while judges and lawyers throughout the country try desperately to apply whatever new principles they can glean from it to all cases. This causes uncertainty and unnecessary legal costs for everyone. It is not just in the interests of the super-rich for divorce law to be settled. Charman continues the uncertainty and Gordon Brown must take all this more seriously.
The author is senior partner at the family law firm Hughes Fowler Carruthers and governor at large of the International Academy of Matrimonial Lawyers
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