When a third party claims an interest in a matrimonial asset
A financial settlement on divorce obviously involves the division of the matrimonial assets.
But what if a third party claims to own a share of a matrimonial asset? How does the court deal with that?
The situation is not uncommon, and occurred recently in a financial remedies case taking place before Mr Justice Francis in the Family Court in London.
In the case the husband’s parents made the following claims:
1. That the husband owed them the sum of £826,392 for a one third share of a company called ‘X Ltd’;
2. That another company, ‘Y Ltd’, owned by the husband, was actually held by him on trust for himself and his parents, in equal shares;
3. That the husband owed them £37,866 for a one third share in Y Ltd; and
4. That the husband owed them £989,076 for a one third share in the former matrimonial home.
The wife opposed the claims, asserting that they were a sham, intended to defeat her claims against the husband.
The court fixed a preliminary hearing to determine the claims.
Before deciding the claims Mr Justice Francis explained in his judgment that his findings would be based primarily upon the documentary evidence (if there was any) and known or probable facts, rather than upon the recollections of witnesses, which could be unreliable due to the passage of time. (It should be pointed out that the husband’s parents claimed that the sums owed to them had been due since 2004, long before the husband and wife were married, although seemingly not demanded by them until after the husband and wife separated.)
The value of witness testimony, Mr Justice Francis said, lay largely in the opportunity that cross-examination provided to gauge the personality and motivations of the witnesses.
It is not necessary for the purposes of this post to go into the details of each of the parents’ claims, or of the evidence considered by Mr Justice Francis. Suffice to say that he found that there was real resentment on the part of the husband’s father that the wife was seeking capital that he considered to be “family money”, and that the parents had “closed ranks” with their son to defeat, or certainly substantially curtail, the wife’s claims.
Further, the parents’ claims were not supported by the documentary evidence.
Accordingly, Mr Justice Francis firmly concluded that the parents had failed to prove their claims, and the claims were therefore dismissed.
The financial remedy application will now proceed to a final hearing, obviously on the basis that the husband does not owe the alleged sums to his parents, and that Y Ltd is owned solely by him.
You can read the full report of the case here.
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