The High Court found that a respondent had the impending family law proceedings in contemplation when transferring two properties to a limited partnership and then to his daughter. It said the value of those transactions could be attributed to him at the substantive hearing, rather than formally setting the transfers aside at this stage.
The judgment by Mr Justice Michael White, delivered on 7 June 2012, concerned an application under section 35 of the Family Law Act 1995. The applicant sought to set aside dispositions made from 10 March 2007. The motion was heard separately from the substantive family law action.
The parties married in Country A in 2006 and have two children. Their accounts of the relationship differed sharply. The applicant described a long-term committed relationship; the respondent said the marriage lacked warmth and intimacy and that they led separate lives. The judgment did not resolve those disputes in this motion.
The first group of transactions involved Property A in Country A and Property B in Country B. Property B was transferred to a company controlled by the respondent in January 2010 and later to a limited partnership. Property A was transferred to that partnership in July 2010. The respondent then assigned his interest in the partnership to his daughter, J, who created an irrevocable trust for her benefit during her lifetime and for descendants of the respondent thereafter. The transfers were without consideration.
The court said the transfers took place after family law proceedings had begun and the respondent knew of them. It accepted that the primary purpose of the arrangement was to benefit J in a tax-efficient way, but was satisfied that the respondent also had the impending proceedings in mind. It noted that the applicant had sought a property adjustment order concerning property beyond the family home. The court stressed that proceedings do not impose a blanket ban on all transfers, but that great care is required when transferring assets that may be claimed.
The court chose to attribute the value of the two property transactions to the respondent, with the value either to be agreed or fixed at the substantive hearing. It did not formally set the transactions aside at this stage.
A separate group involved transfers to a friend, M, before the end of June 2008: the respondent’s interest in Property C, his half interest in Property D, and £750,000 sterling. The court described the transactions as unusual and the explanations as unpersuasive and unsupported by corroborating evidence. However, because they predated the proceedings by a substantial period, it found it difficult on the balance of probabilities to establish that they were intended to defeat the applicant’s claim. It said it would be speculation to infer such an intention, given that the applicant considered the marriage stable in 2008.
The excerpt provided does not set out the eventual property values or the outcome of the substantive hearing.