Family Law Hub

G v B (Rev 1) [2013] EWHC 3414 (Fam)

A financial provision case where the principal issues for decision were the quantum of W's housing fund, the quantum of periodical payments for her and the child of the marriage, and the duration of the spousal maintenance component.

  • In brief: Here, the wife, a Russian-born Swedish national, ("W") was aged 46 and the husband, who had also been born outside the UK, ("H") was aged 62. They had one child, a boy, who was aged nine years old by the time of the hearing; there were also three children from H's previous marriage who were all over 18. W had also been married once before.  

    The couple had met in 1999, with W moving to the UK a year later from Sweden. They had married in 2004

    The striking feature of this case was that H had effectively been financed by his father throughout his entire life via a Lichenstein "foundation". H and his father were extremely close and, it appeared, that their relationship went much deeper than mere "financial support". H's father had been a successful businessman who had lived out the last years of his life in Monte Carlo.  

    With H's father's support, the couple too had been able to enjoy a very good standard of living although there was an issue as to the extravagance of their lifestyle. It had been apparently suggested at an earlier hearing that they had lived a "sub-oligarch" lifestyle; Mr Justice Blair concluded that the evidence simply did not support such an exaggerated claim. 

    By 2004, the H's father was very poorly. He died on 27 January 2005. Over the period 2004 to 2005, a Liechtenstein foundation called the S Foundation was formed, and H's father's assets were transferred into it. There was considerable dispute at the hearing as to the timing of this process. In short, H said that the foundation was formed and the assets transferred prior to his father's death. W said that the assets were transferred after the father's death, and though the foundation had been formed in 2004, it was acquired posthumously as a vehicle "off the shelf" at the suggestion of the father's advisers.

    However, H "fully acknowledged " that the assets of the foundation were "financial resources" within the meaning of MCA s. 25(2)(a); rather the issue W raised went to H's credibility - her case effectively being that H had been lying about the foundation and had failed to fully disclose his assets. In particular, W alleged that on the death of his father H had inherited more money than he disclosed, and that his undisclosed assets were in the order of £1.5million to £2.5million. 

    W's open proposals sought:

    • a £2.1m housing fund, 
    • periodical payments for herself during joint lives at the rate of £78,000 a year. (RPI linked) and for the benefit of their child at the rate of £20,000 a year until the end of secondary education (a total of £98,000 per year) and at the rate the rate of £10,000 a year thereafter until the end of tertiary education; 
    • H was also to guarantee payment of the school fees insofar as they were not paid by the  foundation; and
    • a fund as security of the balance of the proceeds of sale of the former family home or £1,000,000 (whichever was the less).

    H offered:

    • a housing fund of £1million; 
    • periodical payments for W until their child reached 18 at the rate of £36,000 a year with a bar on any application to extend the term (s.28(1A) Matrimonial Causes Act 1973) and for the benefit of their child at the rate of £12,000 a year until he reached 18 (a total of £48,000 a year); and 
    • to pay school fees and agreed extras.

    By the time of this hearing, H had already admitted not disclosing certain assets, and had disclosed further bank accounts and investments subsequent to the filing of his Form E. Adopting the approach set out by Mostyn J in NG v SG (Appeal: Non-Disclosure) [2011] EWHC 3270 (Fam) in respect of adverse inferences, Blair J reviewed the history of H's disclosure and found that the disclosure history in itself did not lead to the conclusion that there were further assets which had still not been disclosed. Further, having heard the parties and reviewed the evidence, he concluded that extensive cross-examination of H had not produced material sufficient for the court to make findings of further non-disclosure, or to be able to draw adverse inferences. 

    The unusual feature of the case was that (leaving aside W's own limited financial resources) the entirety of the resources in the marriage emanated from H's father either directly while he lived, or the assets he left after his death. In his assessment of the assets, Blair J found that H did not have any appreciable earning capacity of his own - this was not a case of someone amassing large amounts of money personally. The finite amount of money that existed all came from the H's late father. He concluded that the pot of assets totalled some £6.15million taking into account a potential tax liability of £425,000.  

    H's case was that although inherited assets could be made available to meet a needs claim, their derivation was nevertheless a consideration in determining both needs and overall fairness. Whilst W acknowledged the derivation from H's father as a fact, Blair J found that she did not reflect it in her proposals: 

    "I take as my starting point the fact that assets of Mr MB were clearly intended to benefit not only his son (that is, the husband/respondent in these proceedings), but also his three grandchildren from his son's previous marriage, as well as M, his grandchild from this marriage.  There are therefore two distinct issues to take into account.  One is the derivation of the financial resources, and the other is the call that the other grandchildren may fairly be seen to have on those resources.

    In White v White [2000] 2 FLR 981 at 994C-G, Lord Nicholls discussed the difference between what might loosely be described as "matrimonial property" and money inherited by one of the parties. He said that, when present, the fact that inherited property comes from a source wholly external to the marriage is one of the circumstances of the case, which the judge should take into account, deciding how important it is in the particular case. In the ordinary course, this factor can be expected to carry little weight, if any, where the claimant's financial needs cannot be met without recourse to the property. In the context of much greater amounts than in the present case, the subsequent authorities were summarised by Baron J in Y v Y (Financial orders: Inherited Wealth) [2013] 2 FLR 924 at [28] and following.

    The husband places reliance on B v B (Assessment of Assets: Pre-Marital Property) [2012] 2 FLR 22 at [89] (applying N v F (Financial Orders: Pre-acquired Wealth) [2011] EWHC 586).  It is submitted that assessment of need is not an insulated metric, and the presence of pre-marital property may lead to a more conservative assessment of need.  Essentially, the approach on behalf of the husband was to take the derivation of the funds and the position of the other beneficiaries together, and propose, as it was put, a modest housing allowance for both husband and wife (£1m each).   Another approach, though not one which the parties argued for, would be to take a percentage of the assets as matrimonial property (DR v GR [2013] EWHC 1196 (Fam) at [47]).  

    Applying the authorities, I consider that that the derivation of the funds is a factor to be given some but not great weight.  However, I consider that in achieving an outcome that is fair to both parties, recognition has to be given to the position of the other grandchildren as beneficiaries of the foundation.  It would not be fair to adopt the proposal advanced by the wife, which would in effect apply the foundation assets in a way which excluded them.  The question is how to achieve a fair overall outcome. " 

    The following order was made:

    • W to receive £1.6million from the sale of the former family home as a housing fund and H to receive the balance of the net sale proceeds (and to be responsible for paying any tax due on the sale of the property); 
    • periodical payments of £65,000 a year split £10,000 a year for the child (until end of secondary education or reaches 18) and £55,000 a year for W (to be met from the principal and income of the foundation assets as well as the proceeds of sale of the former family home); 
    • H to pick up the balance of any school fees not paid for by the foundation;
    • no order for security given that the sum sought would mean 1/6th of the available assets being tied up on an indefinite basis and would make the other financial provisions unaffordable; and
    • a deferred clean break was also found to be inappropriate.

Case note, published: 13/01/2014


See also

  • A financial provision case where the principal issues for decision were the quantum of W's housing fund, the quantum of periodical payments for her and the child of the marriage, and the duration of the spousal maintenance component. The main factual dispute was as to the extent of the husband's resources, the wife's case being that he had failed fully to disclose his assets. Judgment, 21/11/2013, free

Published: 13/01/2014


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