A recent High Court divorce financial settlement case, OG v AG [2020] EWFC 52, was notable in a number of ways that may prove instructive to family lawyers and their divorce clients in similar cases in the future. Some of the most enlightening points considered by Mostyn J, Francis J and Cohen J in their commentary on the divorce financial settlement case include the following:

• The disruptive effect of COVID-19.
• The disruptive effect of a no-deal Brexit.
• The husband’s decision to set up a rival company.
• The impact of failing to negotiate reasonably in light of the revised Family Procedure Rules.

The background

The case was held over Zoom because of the impact of COVID-19 on face-to-face proceedings in the court system. It concerned two anonymised individuals who had previously been married for nearly 26 years, during which time they had two children together, with one now an adult in their twenties and the other of late primary school age.

The former couple had been divorced for more than a year at the time of their hearing, having received their Decree Absolute in the summer of 2019. As part of the divorce financial settlement proceedings, the court was asked to consider the fair division of the marital assets, which included a £13.8 million family business operating in both the UK and another EU country as well as a UK-based and international property portfolio, which included properties in London, Dubai and Gibraltar.

The court heard that the family business had established much of its success on the basis of being able to operate from another EU country on a tariff-free basis – a benefit that will likely disappear if the UK leaves the EU without a Brexit deal.

It was also heard that the husband had resigned from the family company and set up a new one in its place, but providing exactly the same services. Furthermore, he had used proceeds from the sale of properties in Dubai to provide capital to start this new company and had made efforts to conceal this fact from his wife.

The ruling

Mr Justice Mostyn made a number of interesting rulings in his judgement, not least his decision to reduce the trading value of the family company by 10% on the basis that Brexit and COVID-19 will have had an adverse impact. He further applied a 30% discount to the value on the basis that the husband had created a rival company.

The court dismissed the wife’s attempts to take the husband’s personal misconduct into account, concluding that there is precedent to do this only in cases where such misconduct has had a clear financial impact.

However, it did take into account the husband’s litigation misconduct – i.e. the husband’s failure to provide full and frank disclosure of his finances – and therefore penalised him with a costs order of £278,020. The joint assets were divided 55.3% to 44.7%, with the wife receiving the larger share, while pension assets were divided on a 50/50 basis on the understanding that the marriage had been long and that the two parties had played equivalent parts in the establishment and running of the family business.

The clean break financial settlement saw the wife receive £9.055 million of the total assets and the husband received £7.316 million. This represented a sum of £869,741 as a departure from a 50/50 split, which, Mostyn J concluded, was the price the husband would have to pay for “setting up a competitive business and conducting the litigation so abysmally”.

Mostyn J hoped the costs ruling would serve as a lesson to any future litigant who was tempted to behave in a similarly cynical and unreasonable way.