UK: High Court holds husband to separation agreement

In L v M [2014] EWHC 2220 (Fam), the High Court held a husband to the fundamental terms of a separation agreement despite his submissions of insufficient disclosure when the agreement was signed, lack of legal advice about the implications of the agreement and that he was no longer financially able to make the agreed payments.

Mauritius Foundation

A previous Trust E in the Channel Islands was wound up and its assets migrated to Foundation E in Mauritius. The wife made an application before Moor J for the Mauritian Foundation to be ordered to disclose the information she requested as husband said he had no control whatsoever over the Foundation which was analogous to a Liechtenstein Anstalt and claimed that he could not therefore obtain the information requested, even if he wished to do so. Moor J granted her application, and recited that it was likely that the judge hearing this case will draw adverse inferences against the husband as to his financial circumstances if this information was not provided.

Mr Bruce Blair QC (sitting as a Deputy High Court Judge):

I have said sufficient to demonstrate the fundamental duty of the Husband to assist the Court in giving chapter and verse about his precise status in and entitlement pursuant to Foundation E (previously trust) structure. It is an elementary principle of English law that the Court will look beneath and beyond the veneer and formality of trust (and analogous) structures so as to identify the extent to which their assets may properly and in reality be considered a marital financial resource. There is a plethora of authority for this proposition. It is, for example, neatly put by Lewison J in Whaley v Whaley [2012] 1 FLR 735 at 761:-

"[113] As I have said, a discretionary beneficiary has no proprietary interest in the fund. But under s 25 of the 1973 Act the court looks at resources; not just at ownership. Thus whether a beneficiary under a discretionary trust has a proprietary interest is not relevant. The resource must be one that is 'likely' to be available. This is the origin of the 'likelihood' test. No judge can make a positive finding about the future: the best that can be done is to assess likelihood. What is relevant is the likelihood of the trust fund or part of it being made available to him, either by income or capital distribution. If the husband were to ask the trustees to advance him capital, would the trustees be likely to do so: Charman v Charman [2005] EWCA Civ 1606, [2006] 2 FLR 422; A v A [2007] EWHC 99 (Fam), [2007] 2 FLR 467?. The question is not one of control of resources: it is one of access to them.

[114] In deciding that question the court must look at the facts realistically. The court will not put 'undue pressure' on trustees to exercise their discretion in a particular way, but may frame an order which affords 'judicious encouragement' to provide one spouse with the means to comply with the court's view of the justice of the case: Thomas v Thomas [1995] 2 FLR 668. The cases do not say what amounts to 'undue pressure'. But in Thomas Glidewell LJ said what would not be undue pressure (viz if:

(a) the interests of other beneficiaries would not be appreciably damaged; and

(b) the court decides that it would be reasonable for the husband to seek to persuade trustees to release more capital to enable him to make proper financial provision for his former wife).

Even if the court makes such an order the trustees are not bound to comply with the husband's request; but it is 'plainly proper for the trustees to take it into account … and commonly it will be decisive': Lewin onTrusts (Sweet & Maxwell, 18th rev edn, 2007), at para 29¬157."

As I have said, the Council of Foundation E consists of the Husband's mother and a person who may well be a figurehead Council member without a true decision-making function. The Husband could clarify such matters if he wished to do so. As Appendix A demonstrates, the Wife asserts that Foundation E holds assets possibly exceeding £20,000,000. The Husband's failure to assist the Court with regard to E is a grave omission, as Moor J. predicted it may prove to be.