the millionaire defence

The Millionaire’s Defence

What Is The “Millionaire’s Defence”?

When a couple get divorced they are both obliged to provided full financial disclosure. The “millionaire’s defence” was a term created following the divorce case of Mr and Mrs Thyssen-Bornemisza in 1985, when the very wealthy husband said that he did not need to provide full financial disclosure in his divorce proceedings as he had sufficient wealth to pay any reasonable sum that a judge ordered him to pay to his wife.

Partner Fiona Wood, who is particularly accomplished at dealing with divorce cases where there are substantial and complex assets, explains further.

What is the benefit of running this defence?

Many wealthy people would prefer not to provide full details of their wealth, which may include significant business assets and interests under family trusts. Successfully running this defence means that these details do not have to be provided. Furthermore, formal valuations are often obtained of business assets in divorce proceedings and not having to provide sufficient information to facilitate this and not having values attributed to these assets in court proceedings, which can be attended by the press, can have its attractions.

In what circumstances can I run this defence?

Firstly, you need to be very wealthy. Secondly, the sharing principle should not apply to your divorce. Since 2000, assets that have been acquired during a marriage are usually subject to the sharing principle when a couple divorce, provided both their needs can be met by doing this. Therefore if you are very wealthy, but much of your wealth was accumulated during the marriage, the Judge will want you and your spouse to provide full disclosure of all your assets and may also want experts to value these assets, if their values cannot be agreed by you and your spouse, as the judge’s starting point, when considering a fair settlement, will be an equal division of these assets.

In the 2013 divorce case of AH v PH, the husband stated that he had assets worth £76 million, which had been gifted to the husband by his very wealthy family before the couple married. The husband’s assets were considered non-matrimonial and therefore not subject to the sharing principle. The judge accepted that full financial disclosure was not required from the husband as the wife should receive a needs based divorce settlement, based upon what she needed to fund the purchase of suitable house and a capital sum to meet her income needs. The wife received £7.775 million.

Is the Millionaire’s Defence relevant to other relationship claims?

If an unmarried couple separate and they have children who are under the age of 18, the parent that the children live with can make a financial claim against the other parent for the provision of a house, a car and other capital needs until the children finish school or university, plus child maintenance. These applications are made under Schedule 1 of the Children Act. Whilst financial disclosure usually has to be provided by both parents in these proceedings, if the paying parent is very wealthy they may be able to rely on the Millionaire’s Defence.

In the case of A (A Child) in 2014, the mother made a Schedule 1 application and the father ran the millionaire’s defence. The father was a member of wealthy ruling family from a middle eastern country. The mother appealed the court’s decision on the basis that the court did not make adequate financial provision because of the father’s failure to provide full financial disclosure. The Court of Appeal rejected the mother’s appeal and confirmed that where there is significant wealth there is no need to examine in close detail the father’s financial resources.

It is fair to say that the Millionaire’s Defence will only be run successfully in a limited number of cases. However, for the very wealthy, who are keen to keep details of their wealth private, it is a defence that they may want to consider using.

If you would like to know more about the issues raised here, please get in touch today. We are here to help.

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