14 July 2025

Set Aside Under Pressure: When Billion-Pound Deals Unravel in Divorce

In PN v SA [2025] EWFC 141, the Family Court delivered a landmark judgment in what is believed to be the third-largest financial remedy case in English legal history. Behind the billion-pound headlines lies a powerful cautionary tale about pressure, emotional coercion, and the proper legal scrutiny of post-separation agreements.

The Case in Numbers

  • Estimated marital wealth at separation: over £1.5 billion
  • Legal costs spent: approximately £5.5 million
  • Final settlement: over £460 million in divisible assets
  • Payment made pre-judgment (to maximise tax advantages): $95 million offshore

But it wasn’t just the size of the estate that caught the court’s attention—it was the way the wife had been manoeuvred into signing a post-separation agreement under intense emotional and psychological pressure.

2023 Settlement Agreement: Fair Bargain or Coerced Consent?

The case turned on two agreements: a 2021 Post-Nuptial Agreement (PNA), which provided for equal division, and a 2023 Settlement Agreement signed after the parties separated. The husband argued the latter reflected a considered, updated agreement on asset division. The wife claimed she had signed under duress.

Mr Justice Cobb agreed with her.

Drawing on Edgar v Edgar [1980] 1 WLR 1410 and Radmacher v Granatino [2010] UKSC 42, the judge was clear: while separation agreements carry weight, they must be freely entered into. And here, the wife’s will had been “overborne”. The court accepted she had been subject to emotional, psychological, and financial pressure, including threats that the husband would “explode” the offshore trust structures and “destroy” their fortune through punitive tax events if she did not comply.

Legal Principles Reaffirmed

  • Undue Pressure: As per Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44, coercion need not amount to duress to be actionable. Persistent psychological pressure—especially in the context of an emotionally fraught divorce—may suffice.
  • Set Aside Jurisdiction: The court reiterated that even “signed” agreements may be displaced if enforcing them would result in injustice.
  • Edgar Factors: In weighing the agreement, the court considered knowledge, legal advice, bargaining position, and changes in circumstance.

High Value, Higher Scrutiny

The court was also unimpressed by the suggestion that fairness had been achieved simply because both parties would receive over £200 million each. Fairness is not just about quantum, but process—and whether each party freely and knowingly entered into the deal.

Lessons for Practitioners

  • Don’t Assume Size Shields: Even in ultra-high net worth (UHNW) cases, the basic principles of fairness and free will apply.
  • Be Alert to Emotional Dynamics: Particularly where one party is financially or emotionally vulnerable post-separation.
  • Process Matters: Attempts to short-circuit independent legal advice or use pressure tactics—even subtly—can invalidate agreements.
  • Beware “Exploding Trust” Threats: This modern metaphor for financial destruction was critical to the court’s finding of pressure.

Final Thought

This case is a timely reminder that even where couples share phenomenal wealth, the emotional currents of divorce can distort negotiations. Agreements reached under pressure—however cleverly disguised—will not be rubber-stamped by the court. Family law’s guiding principle remains the same: fairness, not force.

30 June 2025

When Trusts Become Trouble: Family Business, Dispositions, and the Cost of Conflict

In BM v MB & Ors [2025] EWFC 129, Fiona Hay (sitting as a Deputy High Court Judge) presided over a case that had it all: dynastic business assets, disputed share transfers, intergenerational family conflict—and over £1.1 million in legal fees.

It is a masterclass in how financial remedy litigation can escalate dangerously when asset protection measures intersect with family breakdown.

The Setup: Complex Structures and S.37 MCA 1973

The case centred around a longstanding family business, held by the husband (H) and various family members. Crucially, just months before the parties separated, H moved:

  • 25% of his shares in the business into a discretionary trust for the benefit of the children;
  • Multiple parcels of land into a Limited Liability Partnership (LLP) structure.

The wife (W) argued these were calculated attempts to defeat her financial claims, and sought to set aside the transactions under section 37 of the Matrimonial Causes Act 1973—a provision empowering the court to unwind dispositions made to frustrate financial relief.

What the Court Found

Judge Hay found that although the trust and LLP structures had been under discussion for some time, their implementation closely aligned with the breakdown of the marriage. Crucially:

  • The wife was not fully informed of the transfers;
  • The husband failed to demonstrate that the transactions weren’t motivated by a desire to reduce W’s claim;
  • While pitched as inheritance tax planning, the timing and secrecy raised red flags.

The court set aside both the share transfer to the trust and the transfer of land to the LLP under s.37.

The Cost of Litigation

One of the most sobering aspects of the case was the scale of legal costs:

  • W: £480,248
  • H: £392,642
  • H’s mother and others: over £237,000 combined

As the judge noted, the dispute “could and should have been resolved” without this financial destruction. She quoted Baroness Hale in Sharland v Sharland [2015] UKSC 60, who emphasised that adversarial financial disputes are corrosive not only to wealth but to the family itself.

The damage here extended beyond finances: the adult children were drawn into the litigation, cross-examined against their parents, and the family fabric unravelled.

Lessons for Practitioners

  1. Disclosure still rules: Attempts to ring-fence assets before or during divorce must be transparent. Even long-considered tax plans will be scrutinised if implemented around separation.
  2. Timing matters: The court will look closely at when and why transactions occurred. Close proximity to marital breakdown may indicate intention to defeat financial relief.
  3. Litigation restraint is key: The case is a warning against unbridled adversarialism, especially when adult children are involved.
  4. Proper planning requires proper process: H's failure to inform or include W, even nominally, undermined his case. Asset protection strategies must anticipate future scrutiny.
  5. Section 37 remains potent: Though rarely invoked, s.37 can unravel sophisticated structures where they frustrate fairness.

Final Thoughts

BM v MB is not just about trusts and land transfers. It’s about what happens when private family succession planning collides with public duties of disclosure and fairness. While the structures were technically competent, they failed on transparency and timing.

For family lawyers, the case is a reminder: substance, not just form, governs outcomes—and that litigation, left unchecked, can cost more than it’s worth.

28 April 2025

Setting Aside to Set Things Right: Lessons from AB v CD

In the financial remedy case of AB v CD & Ors [2025] EWFC 958, His Honour Judge Richard Williams provides a detailed, forensic examination of when and how a financial remedy applicant can succeed in setting aside transactions designed to defeat their claim. The judgment is a masterclass in navigating section 37 of the Matrimonial Causes Act 1973 (MCA 1973)—and a warning about the complexity of proving your case when the evidence is murky.

The Basics: What is a Section 37 Application?

Section 37 MCA 1973 allows a party to apply to set aside transactions made by their spouse if they were done with the intention of defeating a financial remedy claim.
The court must consider three key questions:

  1. Was there a disposition?
  2. Was it made with the intention of defeating the applicant’s claim?
  3. Would different (or greater) financial relief have been possible without the disposition?

If a transaction took place within three years of the application, the burden shifts to the transferring party to prove they did not intend to defeat the claim.

The Facts: Family Fallout and a Share Transfer

Following their separation in 2019, CD transferred his shares in a family-run caravan park business (Guthrum Ltd) equally to his mother (EF) and brother (GH). His estranged wife (AB) alleged that the transfer was a deliberate ploy to defeat her financial claims on divorce.

Initially, CD agreed with AB’s case—but on the morning of the trial, he switched sides, supporting his mother’s claim that he had always held the shares on trust for her. The judge was unimpressed, noting deep family divisions and “shifting sands” in the parties’ evidence.

The Court’s Approach

Judge Williams meticulously applied the section 37 framework:

  • Disposition: The share transfers were clearly a disposition.
  • Intention: Despite CD’s last-minute volte-face, the judge found sufficient evidence to infer that the transfers were intended to defeat AB’s claim, particularly given the timing (shortly after separation) and surrounding circumstances.
  • Consequences: Crucially, even if the transferred shares had no significant value at the time (based on expert valuation), the court could still find that AB’s potential award was frustrated.

The judgment emphasised that “defeating” a claim isn’t limited to hiding valuable assets; it includes making enforcement harder or reducing the resources available for distribution.

Practical Lessons for Family Law Practitioners

  • Timing is Critical: Dispositions made within three years of an application automatically trigger a rebuttable presumption of wrongful intent.
  • Burden of Proof: The party seeking to defend the transaction must present a convincing, coherent explanation backed by evidence—shifting stories damage credibility.
  • Valuation Battles: Valuing family businesses is notoriously fragile. Courts prefer solid, contemporaneous documents over fallible human memory.
  • Parallel Litigation Risk: Efforts to game insolvency or corporate structures in parallel proceedings may unravel under scrutiny in family courts.

Final Thought

AB v CD shows that setting aside dodgy transactions is far from straightforward. Courts will apply a fact-sensitive and forensic analysis, and applicants need to present clear evidence of motive, effect, and loss. Tactical share transfers or “paper moves” shortly after separation may not be enough to defeat a determined applicant—or a sceptical judge.

In short: trying to outsmart the family court with clever asset shuffling rarely ends well.

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