How trust assets should be treated in ancillary relief proceedings – Whaley v Whaley [2011] – 31st May 2011

This was a Husband’s appeal in ancillary relief proceedings focusing on the treatment of trust assets. The Court of Appeal determined that as the Husband clearly had access to a trust fund it was appropriate to take those assets into account.

The facts

The husband and wife married in 1987 after two years of cohabitation and separated in 2008.  The husband aged 60 and wife aged 47 have four children aged from 12 to 20.  The parties lived in England and in Spain.  While the wife and children spent considerable time in England for schooling, the husband joined them on a regular basis but maintained his long term residence and domicile in Spain, primarily for tax reasons.

At the final hearing, the cases the parties presented to the court as to the assets available for consideration differed widely.  The husband’s case was that the assets amounted to just over £3 million net after legal costs whereas the wife puts the assets at over £11 million net after legal costs.  The main reason for the difference was their treatment of trust assets in which the husband had an interest.

High Court

The judge found that just over £10 million was available to the parties.  Nearly £7 million was made up of assets in two trusts.  The judge accepted the wife’s case that the trust assets should be seen as resources likely to be available to the husband.  The assets which the parties had outside the trusts had a value of nearly £4 million net of debts.  In summary, the judge ordered the husband to pay the wife a lump sum of nearly £3 million by 10 months after the date of the order and, in the interim, spousal maintenance at £40,000 p.a.  Upon payment of the lump sum, the wife’s spousal maintenance was to cease and she was to transfer her shareholding in a golf club management company to the husband and thereafter there would be a clean break.  The husband was also required to pay child maintenance for the children and also to pay their school, college and university fees.  The judge calculated that the order would leave the wife with some 36% of the net assets, on top of which her debts, net of bank balances, in the sum of £331,000 would have to be met for her.  The judge’s departure from equality took account of the husband’s pre-marital wealth and wealth supplied by his parents via the trust funds.

The judge found that the husband had sought to conceal the truth behind the trust holdings and to have attempted to make less clear, the use to which he had been able to put the trust funds to in the past.  The judge found that the trustees and protectors of the trusts had given false information designed to defeat the wife’s claim.

Court of Appeal

The main part of the appeal by the husband, focused upon the judge’s treatment of the trust assets.

It was the husband’s case on appeal that the order that had been made could not be satisfied without the husband having recourse to trust assets in order to meet his most basic needs such as housing, for example.

Leading and junior counsel for the husband sought to persuade the Court of Appeal that the judge’s order put “improper pressure” on the trustees of the trust which would require them, against their stated intentions and ignoring their duties to other beneficiaries, to realise assets at a time that would be unpropitious commercially in order to make a payment to the wife, who was not a beneficiary of the trust, in a way that would represent a departure from the previous history of dealings between the trust and the husband, and in disregard of the fact that the husband was not himself the settlor of the trust.  It was also argued by the husband that it was wrong of the judge to take any account of a golf course (valued at £2.38 million) because it was held within a trust of which the husband was not a beneficiary.

The Court of Appeal rejected the Husband’s arguments and stated that the High Court judge had asked herself the proper questions and arrived at the answer that the trustees were likely to make available such resources as the husband requests.  Given that the husband had access to the trust funds, the arguments that there had not been a fair division of the assets failed.
If you would like advice in this area the please contact one of our family solicitors, Miss Vincent or Miss Booth on 01926 422 101.