Abstract
On 7 March, Mr and Mrs John Charman's ‘huge money’ divorce reached the Court of Appeal. Last year insurance magnate John Charman was ordered by the High Court to pay his former wife £48 million in what is thought to be the biggest divorce award in legal history. (See Trusts & Trustees, Volume 12, Issue 9, November 2006, High-value divorces and trusts, p 22, by James Freeman of Speechly Bircham LLP). James Freeman, family law solicitor at City law firm Speechly Bircham LLP (tel. 020 7427 6584), commented on the case: The Court of Appeal will rule on how parties with unusually high wealth, including offshore trust assets, should be treated on divorce. Mr Charman was clearly aggrieved by the decision made by Mr Justice Coleridge at first instance and evinced his intention to appeal immediately. He was no doubt particularly sore that the very substantial assets of a trust settled during the marriage were carved up together with the other wealth. It may well be that the decision of the Lords Justice of Appeal centres on this trust and how it should be dealt with. On the facts, the sizeable trust assets sequestered in a Bermuda trust by the husband should not be excluded from the marital pot. This is because not only was there no accompanying letter of wishes to suggest ‘dynastic intent underlying the trust’ but, even if there had been, the trust is a conventional discretionary trust of which Mr Charman is a potential beneficiary, and the assets it contains should be treated as part of the pot, whatever the original intention underlying the trust. The High Court confirmed Mr Charman's claim that his ‘wholly exceptional’ and ‘remarkable abilities in the insurance world’ entitled him to a greater share of the marital assets than his wife. Ultimately, the court awarded him approximately 63% of the total assets. The High Court dismissed what it perceived as Mr Charman's attempts to introduce by the back door arguments relating to Mrs Charman's conduct. He had cited her failure to move to Bermuda with him and to support his business endeavours adequately. It was argued that were Mr Charman, as CEO and key man, to sell substantial stock in his business, the effect would be to depress the value of that stock. This, it was claimed, should be taken into account when valuing his business assets. The court rejected this contention and the judge took the view that markets are now accustomed to such situations and will not be influenced by them. Those with substantial shareholdings in businesses of which they form an integral part and who might find themselves within the provinces of the divorce courts might want to give this development some careful thought. This judgment reinforces the need for experts who give evidence in family cases to have available the necessary information to support their contentions as otherwise they run the risk, as was the case here, of judicial censure. The suggestion that payment of a large lump sum to his wife would infringe Mr Charman's human right to ‘peaceful enjoyment of his possessions’ was rejected out of hand.
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