Michael Prest divorce case could lead to even more acrimony
The Supreme Court has recently ruled in favour of the English estranged wife of a Nigerian oil tycoon Michael Prest, in a case lawyers say could have implications for other wealthy divorcing couples.
Some might be surprised that only now that the courts are taking this action to help people to be more open and transparent about where they keep their money, when one would have thought these ‘loopholes’ would have been filled in long ago. How, I wonder, will this effect the forensic accountants and those lawyers’ firms who clock up thousands in fees as the hide-and-seek game is played out, if now more transparency could be legally required? Or will this change in legal precedent make divorce an even greater financial bonanza for those whose job it is to search for the truth?
Is it not an inditement on the whole divorce industry, that we are celebrating (well, some of us) that it is not legally acceptable to hide funds from a spouse you are divorcing – in other words, lie and cheat (well that’s what it is, in effect)? Our society seems to expect this kind of lack of full and frank disclosure as par for the course – sometimes encouraged by the very legal profession we are supposed to trust to have fairness at the core of their training, because it seems that’s just the way the game is played, when you enter the adversarial arena?
I have already heard of wives starting law suits against their ex-husbands saying that wealth that was hidden away in foreign bank accounts during the divorce, and has since come to light, must now be the catalyst for a further divorce action. It’s bad enough that they were dragged through an adversarial divorce the first time – will dragging up the past and re-igniting the flame of resentment and anger not only be in some cases counterproductive, if most of the financial gains are to disappear in legal fees?
But also – potentially – will it be that the legacy of the divorce could be such insupportable stress upon the new families of those husbands being dragged back into court, that their new marriage breaks down because of the ongoing battle with the old?
“The ruling doesn’t support a non adversarial approach, it probably does the opposite” suggests Divorce Mediator Vasili Kapetanakis, who has a background in Social Work. “My impression is that the general population are struggling to make ends meet and on the surface the judgement does appear that this would really only apply to the very rich. However, it probably has implications to anyone who is able (and lucky enough) to have money saved within or properties bought by companies they own in that these have to be considered as part of the pot to be divided out. In terms of the impact, well I think I would leave the financial and legal implications of this for lawyers and financial advisors to try to decipher, because to tell you the truth the details of what I read are very confusing.”
Anthony Gold Solicitors – whose London divorce lawyers include mediators and collaborative lawyers focused on non-adversarial routes through divorce – also see the recent ruling as being potentially opening the doors to more forensic investigations rather than less:
“The Supreme Court’s decision in Petrodel v Prest clarifies that there are certain circumstances where it will not be possible for assets to be hidden behind the corporate veil in an attempt to evade a fair settlement on divorce. It confirms that assets held in the name of a company but which in reality are owned beneficially by an individual can be accessed by the family court. Hopefully the court’s robust approach to the facts of this case will encourage couples getting divorced to readily provide full and frank financial disclosure. On the other hand, the decision may well lead to more forensic analysis of company structures in the future.”
What I feel is important to keep in focus, is that rather than just quicker and fairer divorce settlements, this new ruling could equally be leading us into a situation of even longer forensic investigations, possibly using private detectives – and this would be an unfortunate side-effect.
Why is it that people with the most money, are often prepared to waste thousands in legal and accountancy fees in order to not be totally honest and transparent about what should be included in the marital pot? If people are going to go to such lengths, then would it not be more sensible for them to have a pre-nup created well in advance of the wedding and have it regularly updated?
If couple’s could have healthier financial relationships when married, they would find that financial separation through divorce would be so much less traumatic – and much less expensive.