High Net Worth Financial Orders

1) How HNW cases differ to

a general financial order
case

1) Needs is not such an issue

2) There is more likely to be a distinction

between marital and non-marital assets

3) Pre-Nupital Agreements are used in HNW

4) Compensation

5) Contribution / Special Contribution

6) Clean break more likely to be achieved

7) Capitalisation of periodical payments to

achieve clean break

1) Compile a Schedule of
Assets and Liabilities

Where can the financial

information be found?

a) The scenario

b) The two parties Form Es

2) Compile a Schedule of
Income and Outgoings

Where can the financial

information be found?

a) The scenario

b) The two parties Form Es

3) The factors the court

will consider to decide
an appropriate package

1) All the circumstances

of the case

The court must have regard to all the circumstances of the

case s.25(1) MCA 1973

2) The first
consideration Welfare
of the child

The court will consider all the circumstances but the first
consideration should be the welfare of any child of the family
under the age of 18 s.25(1) MCA 1973

3) s.25(2) MCA 1973

Factors

1) Income, earning
capacity, property (assets)
and resources of both
parties s.25(2)(a) MCA
1973

a) Consider whether property will

be divided into matrimonial and
non-matrimonial property.
Miller / MacFarlane Established
three principles:

1) The principle of equal division of matrimonial property

may not apply to non-matrimonial property with the same
force, especially where needs have been met

2) When deciding whether

property falls into the
matrimonial pot the court
should consider these factors:

a) Needs of both parties

b) Duration of the marriage

c) Mingling of assets

d) Fairness

3) Divide the assets into matrimonial and non-matrimonial

assets

Non-matrimonial assets will either belong solely to the

owning party or the principle of equality will simply be
less vigorously applied

b) Potential non-marital property

can be divided into four categories

1) Pre-marital assets

2) Property acquired by gift or inheritance

3) Assets acquired post separation due to one partys efforts

4) Business or investment assets generated by one party

c) Inherited assets

Rossi v Rossi

Again duration of the marriage, mingling and needs are

relevant factors

KvL

Court awarded husband 5 million from shares of 59

million

Equality can be departed from given the exceptional

contribution in inherited wealth brought to the
marriage by the wife

d) Pre-marital assets

Jones v Jones

Court ascertained what the potential of a pre-martial

asset was before marriage Declared this non-martial
(8 million)

Took this figure off the value of the asset on divorce

(25 million 8 million = 16 million)

Awarded wife half of the value of the remainder (16

million x 0.5 = 8 million)

NvF

Mostyn J Will turn on the facts of each case

But will depend on duration or the marriage, mingling

and needs

e) Post separation assets

BvB

Husband acquired a substantial sum post-separation

Position is that sharing ends at the end of the

matrimonial partnership

f) Business or investment assets

generated solely by one party

g) Consider the whether a party

needs to be compensated for loss of
potential / work Miller /
MacFarlane

1) If a spouse has given up a successful and potentially

lucrative career in order to look after the family that spouse
has the right to be compensated for that loss, normally
through increased periodical payments

Depends entirely on the facts of the case

The timing of the acquiring of the assets is important
Again duration of the marriage, mingling and needs are
relevant

2) However the compensation is not a separate head of

claim and should be considered as part of fairness RP v
RP

3) A party with ordinary career prospects is likely to have

been compensated by an equal division of the assets in a
HNW case VB v JP

2) Needs, obligations and

responsibilities s.25(2)
(b) MCA 1973

a) Needs are likely to be much higher in HNW cases

b) However needs should easily be met by the marital assets

and will therefore will have less of an impact on the division
of assets compared to LNW cases

3) Standard of living prior

to the marriage
breakdown s.25(2)(c)
MCA 1973

Will be higher in HNW cases, but should be able to maintain

this standard of living after the division of assets unlike in a
LNW case

4) Age of the parties and

duration of the marriage
s.25(2)(d) MCA 1973

Impacts upon the factors in Miller / Macfarlane as to

whether non-marital assets will fall into the marital pot as the
older the parties are and the longer the duration of the
marriage, the more the assets will have mingled

5) Physical or mental
disability of either party
s.25(2)(e) MCA 1973

6) Past, present and future

contributions to the
welfare of the family
s.25(2)(f) MCA 1973

Consider whether there has

been a special contribution in
HNW cases

Lambert v Lambert
You require very limited and quite exceptional circumstances to
depart from equality of contribution (home maker / bread winner)

Sorrell v Sorrell
Court felt that the husbands business activities were akin to genius
and so his special contribution warranted a departure from equality

4) A Clean Break s.25A

5) The Yardstick of
Equality (fairness)
White v White

7) Conduct of the parties

s.25(2)(g) MCA 1973

Pre-Nuptial agreements fall into conduct that it would be

inequitable to disregard and therefore are mentioned here,
but discussed in full later / below

8) The value of any

benefit lost on the
dissolution of marriage
s.25(2)(h) MCA 1973

Pensions are likely to be much larger in HNW cases and

greater consideration should be given to the loss of such a
huge benefit

A clean break, in particular capital clean break, is far easier to

achieve in a HNW case due to the surplus of assets

An income clean break may also be achieved through the

capitalisation of payments (see 6 below)

4) Is there a Pre-nuptial
agreement and how will
it impact on the financial
package?

a) What approach can the court

can take to a Pre-nuptial
agreement

1) Fully enforce the PNA;

2) Disregard the PNA entirely; or

3) Be partially guided by the PNA so that some parts are

enforced and for other parts, additional provision is also made

b) What type of PNA will be

enforced by the court?

A PNA will be enforced that is freely entered into by each party

with a full appreciation of its implication unless in the
circumstances prevailing it would not be fair to hold the parties
ot the agreement Radmacher v Granatino

c) To assess the approach the

court will take, Lord Phillips in
Radmacher v Granatino laid
down a three step test:

1) Were there circumstances surrounding the making of the PNA

that should detract form the weight that should be accorded to it?

a) Was there the presence of any standard vitiation factors such as

duress, fraud and misrepresentation?

b) Was one party exploiting their dominant position to secure an

unfair advantage ?

c) Was there anything in the parties circumstances at the time

which would suggest unenforceability of the PNA such as:

Emotional state

Pressures they were under

Age

Maturity

Whether was married / in long relationships before

d) Was there appropriate legal advice and disclosure at the time the
PNA was entered into including:

Any material lack of disclosure of information or

advice e.g. in relation to assets

No legal advice given

However a lack of legal advice is ok if the party is

evidently fully aware of the implications of the PNA

2) Were there circumstances attending the making of the

agreement that should enhance its weight (the foreign element)?

If there is a foreign element to the PNA (nationality, residence or a

foreign law clause) it weights on whether the parties had intended
their agreement to be effective, as other jurisdictions approach
PNAs more favourably as more likely to be enforceable

2) Factors in relation to
marital and non-marital
assets
3) Do the circumstances now prevailing (i.e. at the time of
divorce) make it fair or just to depart from the agreement?

a) Whether the PNA prejudices the reasonable requirements of any

children of the family

b) Whether the court should respect the individual autonomy of the

parties and respect the decision of the couple as to how their
financial affairs should be regulated

c) Whether there is anything unfair in the agreement regarding

provisions for non-marital property acquired before the relationship
or that was anticipated as being received from a third party

d) Whether the PNA has failed to address changes in the parties

circumstances over the years which were not envisaged at the
signing of the PNA, which would now make it unfair to hold them
to their agreement

d) Consider recent (PostRadmacher) case law and its

approach to PNAs

Cases in which weight was

given to the PNA

ZvZ

French couple entered into PNA in France

Both had full understanding of implications although no formal

legal advice

Both parties aware of each others financial positions

Judge held the parties to the PNA but found that, as 85% of
capital went to husband, wifes needs were not catered for

Judge used the PNA to depart from 50-50 equality but didnt
give it full enforceability, awarding the wife 40% of capital
VvV

PNA was a good and powerful reason for departing form equal
50-50 division

Husband would keep all pre-owned assets under PNA however

again the result was the wifes needs would not be met

Again, judge gave weighting to the PNA but did not enforce it

Cases in which little or no

weight was given to the PNA

e) Consider the problems for

family lawyers with PNAs

Kremen v Agrest

Under PNA wife would get 1.5m out of 20-30m

No financial disclosure at the time of the agreement

Advice received was not independent

PNA given no weight whatsoever

1) No certainty in this area Opens up lawyers to litigation

2) PNAs are being decided on a case by case basis

3) Wealthier party more likely now to want a PNA to protect

themselves as the starting point for division of assets is now
equality following White v White to

5) Would it be possible
to and advisable to
capitalise income
payments?

1) Are there enough excess capital assets to

possible capitalise the spousal payments?

2) Workout the shortfall between the

receiving partys income and their needs (the
amount their maintenance payments will be)

3) Enter this figure into the Duxbury table to

work out the capitalisation of that shortfall

6) Finally look back over

the package and
consider its fairness

Is the proposed package fair

bearing in mind:

1) The s.25 Factors

2) Any PNA

3) The existence / division of non-marital and

marital property