Since insurance tycoon John Charman failed to stop his former wife receiving £48 million in the biggest divorce payment in British legal history, speculation is rife as to whether this case will now push the government into ordering an overhaul of divorce law. Both solicitors and judges alike are signalling support for legally binding prenuptial contracts that will allow couples to specify before marriage how their assets should be divided on divorce. Here Anne Broughton, divorce expert and family law solicitor at leading south Wales law firm Leo Abse & Cohen, shares her thoughts on the likely implications of this historical case.
"Over the past couple of years a number of high profile rulings have called into question the clarity of the law concerning divorce settlements. The courts currently have set guidelines from legislation which the Courts must consider but each case depends on its facts and the Judge exercises his discretion when coming to his conclusion. There are no hard and fast rules but in reality there cannot be hard and fast rules because there may be cases where the circumstances could not have been contemplated and the application of hard and fast rules could then lead to greater injustice being caused.
"In this case, John Charman, challenged the sum awarded by a High Court judge to his former wife, claiming his massive financial contribution to the family fortune meant he should receive a larger slice of the £131 million total assets. His argument for special contributions is a fairly limited and exceptional argument to use where someone tries to argue that the contribution that they have made to the home and the family assets is over and above the 'usual' contribution. It is true to say that in the majority of cases this argument would not be used, as to try to do so would run the risk of the Court literally opening a Pandora's Box. Everyone has a fairly strong opinion of who they believe has worked hardest in the marriage, but, at the end of the day, there are many types of contributions such as raising the family and looking after the home, as well as earning monies for the family and it is often very difficult to prove who has made the most contribution.
"Mr Charman's second argument centred on the fact that a £70m family trust should not have been taken into account in the assessment of the marriage assets. This is a fairly complex area of the law, but, in many cases, families set up trust funds to try and stop the family assets being lost through divorce. Fortunately, the Court is able to see behind these trusts in many circumstances, and in this case it appears to have decided that Mr. Charman was, to a large extent, in control of the fund and therefore that it would be unfair to deprive Mrs. Charman of her true share of all the assets.
"In rejecting Mr Charman's challenge, the Court considered an earlier case called White and Wife, where the Court highlighted the starting point being 50/50 for the division of parties' assets in a divorce. It is true to say that the case of White and White has had a substantial impact on the majority of family cases before the Courts. There was, therefore, little surprise to solicitors that after a long marriage the settlement would be substantial. It is interesting to note, however, that Mrs. Charman appears not to have received 50%.
"It is important to remember that it is often only these highly wealthy couples who are able to take these matters to appeal. I understand that the Charman case lasted a reported three and a half years with extensive legal fees. The impact of divorce cannot be under-estimated and the consequences are enormous for all parties involved, especially the children. While the financial aspect of divorce is undoubtedly important, the emotional drain is often more painful.
"Lawyers have raised the question as to whether or not prenuptial agreements should now become legally binding in this country. Prenuptial agreements are no longer just of interest to the rich and famous but they are becoming a consideration for many couples who have different amounts of assets at the commencement of the relationship and their appeal may stem from the sense of certainty that they can bring if things should go wrong.
"Even though at this point these agreements are influential rather than binding, their influence is already beginning to grow in courts and I suspect that the government may give closer consideration to whether or not they should become legally binding very shortly but you can be sure that it will be upon the basis of strict guidelines and that there will be exceptions.
"I find it surprising if proceedings are being commenced in this country to obtain what is regarded as the best option in high wealth cases. Presumably there has to be a legal basis for this country to be used as the country of jurisdiction over and above another country. It simply cannot be that one party demands that the case be heard here. Usually proceedings would be commenced in the country of habitual residence. It would be interesting to see whether there is any inquiry into the suggestion that the London Courts are being used for this purpose, and what can be done to ensure that our Courts are not overburdened by these large and lengthy 'big money' cases.
"It is difficult for all lawyers to advise in cases where there are exceptional circumstances such as pre-marital wealth, inheritances and special contributions. It will be certainly very interesting to see how this case develops in the event of an appeal being made to the House of Lords."
Leo Abse & Cohen employs 150 members of staff, including 13 partners, at its offices in Cardiff, Newport and Swansea and offers legal advice to a broad range of organisations and private clients. For more information contact the family law team on 02920 272057.