Key Facts
- •Financial remedy proceedings between ES (Applicant Wife) and SS (Respondent Husband) following a previous judgment awarding the wife £18m and the husband £25.3m, excluding the M Trust.
- •The M Trust, settled by the wife at the husband's instigation, contained assets considered entirely matrimonial with equal entitlement for both parties.
- •Valuation difficulties arose due to complex tax liabilities across multiple jurisdictions and the value of L Co, a non-financial investment (NFI) within the trust.
- •The trust deed allowed the wife to revoke or alter the settlement, with the husband as the first protector and beneficiaries being the wife, children, and remoter issue.
- •The letter of wishes suggested a ⅓ division between each party and ⅓ for the children in case of divorce.
- •The initial judgment intended to retain the trust structure for the children's benefit, with tax liabilities borne by the trust assets or shared by the parties.
- •Subsequent disagreements led to a further hearing to determine the trust's fate.
- •The husband initially proposed retaining the trust, while the wife wanted it wound up and assets divided equally.
- •The husband later proposed dissolving the trust, with proceeds for the children's sole benefit, while the wife still desired an equal division.
- •Various options were explored including bare trusts, new settlements, and distribution to parents with undertakings to the children. These were rejected due to tax implications and practical issues.
- •The court considered the costs (£300k+) spent arguing over approximately £2.4m net of tax and the high expenditure already planned for the children's education.
- •Two NFIs within the trust were attributed to the husband.
Legal Principles
Equitable division of matrimonial assets.
Family law principles in financial remedy proceedings.
Interpretation of trust deeds and letters of wishes.
Trust law.
Court's discretion in financial remedy cases.
Family law.
Tax implications of trust structures and settlements.
Tax law.
Outcomes
The M Trust is to be wound up.
Simplicity and avoidance of protracted tax disputes. The court deemed this necessary even though it is a departure from the original intent. The husband changed his position and the wife’s request was considered practical.
Net proceeds of the trust are to be divided equally between the parties.
Reflects the parties' equal entitlement to the matrimonial assets. This approach was deemed to be the most straightforward way to resolve the dispute.
Two NFIs within the trust are assigned to the husband.
These were his ventures, and the wife did not wish to be involved.
No order made as to costs.
To avoid further argument and given the overall context of the case.