AG v VD [2021] EWFC 9

Substantial Connections and Inadequate Provision: AG v VD [2021] EWFC 9

Facts

AG ("W") and VD ("H") began cohabiting in 2009 before marrying in Russia in August 2010. W (51) had a daughter, aged 17, and H (56) had four children from previous relationships.

The parties moved to London in 2010 after W obtained a Tier 1 investor visa, having been loaned £1m by H. However, H continued to spend long periods in Russia until he fell out with the Russian government in 2014 and had to leave the country on short notice.

H made his career in construction and property development, accruing significant wealth prior to meeting W and, shortly after they married, he took steps to reorganise his financial affairs. H entered into a Principal Party Agreement with a trust company in November 2010, giving the trust company control over 16 of his companies. The trust acted as director of a private foundation, which on H’s request made funds available to him.

A series of loans from the foundation were used to purchase the parties’ second family home in 2013, a property in Cyprus in the name of the foundation, and a property in Majorca in 2012. Funds were also made available for W to secure a commercial lease for a new business.

Following divorce and financial proceedings issued in Russia in 2017, W received a half share in the matrimonial home in London, worth circa. £2.5m, and no maintenance. In line with Russian practice, no account was taken of assets not owned by the parties, so H's business interests and foundation assets were not considered by the court.

W subsequently made an application pursuant to Part III of the Matrimonial and Family Proceedings Act 1984 for financial relief.

Issues

Held

H said the marriage came to an end in 2014, but W said it did not come to an end until 2017. Among other things, Cohen J considered messages exchanged between the parties, and the frequency with which the parties shared a bedroom and went on holiday together. Ultimately, he concluded that the marriage did not come to an end until 2017, commenting that ‘[t]o the outside world, there had been little if any change in their domestic arrangements or the time that they spent together’ [35].

Cohen J referred to Part III of the Matrimonial and Family Proceedings Act 1984 and case law including Agbaje v Agbaje [2010] UKSC 13 and Zimina v Zimin [2017] EWCA Civ 1429, which set out principles that apply to ‘the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where there were substantial connections with England’ [48].

Cohen J considered that there were ‘substantial connections’ to England in this instance because, amongst other reasons, the parties had moved to London in 2010 and taken British citizenship. He also held that the provision for W and her daughter under the Russian order ‘plainly [did] not permit [their] needs to be met’ [145].

W’s attempts to demonstrate that there had been a significant marital acquest through H's business activities were rejected. Cohen J set out the ‘fundamental difficulty’ with attempting to quantify a marital acquest where projects take many years to complete, and money is gradually reinvested in other ventures. As such, he ultimately concluded that 'the bedrock for any conclusion of a significant acquest is absent' [69] and that W was not entitled to a sharing award.

H pointed out that W had spent an enormous amount of money, and Cohen J agreed. This included £757k which W had received following the sale of the parties' first London home, £779k received on the redemption of government bonds, £3.18m from the proceeds of sale of the Majorca property, and very substantial transfers made by H to W's account.

However, in response to H’s request that he should add back a significant element of the money that W has received and spent, Cohen J explained that W’s expenditure may have been ‘irresponsible’ but that it did not amount to a ‘wanton dissipation of assets’ [112]. Cohen J also reminded H that ‘[b]ad investment decisions [were] not solely taken by W’ [113], using the fact that H had recently lost circa £2.6m on a Russian restaurant in London by way of example.

Cohen J found that H had personal assets of £3m and foundation assets to which he had access worth between £17m and £20m. H also held business interests; the value of which Cohen J was unable to determine. Cohen J was not satisfied, however, that he could ‘or should infer… that H is so wealthy that W's case as to her needs should be assessed at the upper end of the bracket’ [125].

Instead, Cohen J held that the sum for W’s housing needs was £3.4m, including stamp duty, purchase costs, and moving costs. Cohen J did not find that W had a significant earning capacity and considered that she required a maintenance provision of £100k per annum, which produced a capital sum of £2.06m on the Duxbury tables. With regards to the daughter’s needs, Cohen J ordered that H pay periodical payments of £24k per annum. H agreed to pay the daughter’s school fees and her tuition and living expenses at university.

Cohen J concluded by describing the conduct of the litigation as ‘self-indulgent’, with the case having ‘been conducted as if the rules for efficient conduct have never been devised’ [144]. Particular attention was drawn to non-compliance with FPR 2010, PD 27A.