Analysis
The transcript of this judgment is reported in part from para 164 onwards and starts with a discussion of the law. No part of the report provides a factual narrative.
Held (allowing the wife’s claim for financial relief):
The court had power on divorce to order a party to the marriage to transfer to the other party such property as may be so specified to which that party was entitled, either in possession or reversion. In this case almost all the wealth created by the husband during the course of the marriage was held through offshore company structures and the question was whether, notwithstanding their legal ownership, the properties were held by those companies on resulting trust for the husband. There was no doubt that the husband had set up and used corporate structures in order to conceal and evade his obligation to the wife and frustrate the court from carrying out its statutory duty relating to distribution of assets upon the breakdown of their marriage. Consequently, having regard to the separate legal identify of the companies, it was neither necessary nor appropriate to seek to pierce the corporate veil in this case. All that was required, when considering the transfers of the properties to the companies, was to determine the subjective intention of the transferor which, in the absence of direct evidence, would depend on the application of a presumption of law. Such a presumption could easily be rebutted by evidence from the directors of the companies but none was given and, as a matter of fact, adverse inferences could be drawn (apart from his non-disclosure and repeated contempt) from the husband’s silence and failure to attend at the hearing or, as a shadow director, to require the directors to attend and give evidence. Not only was the husband found to be a shadow director, but also the directing mind and will of each of the companies. On the facts of this case, there was no need to rely on any presumption of law (and, therefore, no question of rebuttal arose) because, it not being disputed that the properties held by the companies were purchased with funds provided exclusively by the husband, there was direct evidence in the form of the husband’s affidavits which in effect admitted his beneficial ownership. Having regard to his subsequent silence and failure to attend the hearing or require the directors of the companies to give evidence, the only logical inference to be drawn was that the husband intended to retain the beneficial interest in those properties. The court could also properly infer on the facts of this case, given the finding that the husband was a shadow director and at all times the directing mind and will of each of the companies, that there was a common intention to retain the beneficial interest such as to justify the imposition of the constructive trust. Accordingly, there was a determination that the companies held the properties on resulting trust and constructive trust for the husband and, following an assessment of the matters that were required to be taken into account, it was ordered (inter alia) that the properties be transferred to the wife.
JUDGMENT MRS JUSTICE ELEANOR KING DBE The law [164] The starting point is s24 Matrimonial Causes Act 1973 (which is incorporated into Part III claims by virtue of Matrimonial Proceedings and Property Act 1984, s17(a)(ii)): 24 Property adjustment orders in connection with divorce proceedings, etc. (1) On granting a decree of divorce… the court may …Continue reading "M v M & ors [2013] EWHC 2534 (Fam)"