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16/07/2021

Where have all the assets gone?

Couples hands with divorce agreement on the table

Whilst everyone hopes for an amicable divorce, such may not be the case as there may be more than what meets the eye, especially when dealing with financial matters. One example is how a husband or wife may dispose of assets (e.g. cash, shares, etc) to other family members to prevent it from being considered within divorce proceedings and possibly shared with their spouse. Driving factors for people doing this include having vast amounts of wealth (particularly pre-marital for which they do not want to share), not having had a prenuptial agreement in place, or quite simply to act in spite and make things difficult for the other party.

A recent example of how a party used a family member to dispose of assets is the highly publicised Russian billionaire case involving the Akhmedova family. The wife (Tatiana Akhmedova) was awarded a £453 million divorce settlement in 2017, however had only received £5 million. Having not received her initial settlement, The High Court ruled in 2021 that the husband (Farkad Akhmedov) had conspired with his son (Temur Akhmedov) to stop his wife from receiving the full divorce settlement by way of transferring large sums of money, assets, trust, and companies to his son.

Whilst it may seem that once an asset/s has been disposed of that it may never be seen again, the Court have certain powers under Section 37 of the Matrimonial Causes Act 1973 (MCA 1973) which can prevent the disposal of assets or, in effect, bring them back. These include the following:

Preventing disposals/ freezing orders – s37(2)(a) MA 1973

One option would be for the spouse to apply to the Court to prevent the other party disposing of an asset/s. For example, if the applicant becomes aware that the spouse is set to transfer large sums of money to their child/children.

For such a claim to succeed, the Court must be satisfied that the other party is about to dispose of an asset with the intention of defeating the claim for financial relief, or that the other party has the intention to frustrate its enforcement.

Setting asides37(2)(b) MCA 1973

This is where the spouse applies to the Court to set aside a disposal that has already been made. However, the applicant must show that the disposition was reviewable. This depends on whether the third-party a) acted in good faith, b) for valuable consideration, and c) without notice of any intention.

For example, if the spouse gives their Rolex to their brother, for which the brother gives no money for, and is aware that the husband is in divorce proceedings with his wife, the Court may set aside the disposal.

However, this area can get complicated in that the applicant has to show that the third-party had notice of intention, and the fact something was not given for money does not mean it should be set aside.

Avoiding enforcement – s37(2)(c) MCA 1973

This is where the Court will set aside a disposal where an asset is disposed of after financial proceedings have been determined.

For example, the wife may be ordered to pay a £50,000 lump sum to the husband. To frustrate proceedings, the wife transfers her entire investments (e.g. shares, bonds, etc) to her mother. The Court can enforce the order by ordering a sale against the investments.

Whilst such proceedings are rare, it does not mean that caution should not be taken when dealing with the financial side of divorce. It can often be difficult to spot the signs that an asset/s may have been disposed of or is likely to be disposed of at a future date. Even if such is apparent, the law surrounding this area can become complex and difficult to navigate through. As such, if someone is worried that their spouse may be doing any of the above or would like more information relating to the powers of the Court, legal advice should be sought as soon as possible.

For advice please contact our Family Law team on 0345 20 73 72 8 or email info@thursfields.co.uk

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