Charman v Charman

In a very high-value matrimonial case, the court must begin and end with the discretionary balancing exercise required by section 25 of the Matrimonial Causes Act 1973. Equality is a yardstick, not a rule. Exceptional wealth creation may justify departure from equality only where the contribution is wholly exceptional and it would plainly be unfair to disregard it. Assets held in a discretionary trust may constitute a resource even though they are not legally owned by the spouse. Informal intentions expressed through a letter of wishes cannot ordinarily remove assets accumulated during a long marriage from consideration. Conduct must satisfy the statutory threshold of seriousness and should be clearly pleaded at the outset. In valuing complex assets, the court should assess economic reality rather than adopt hypothetical tax or forced-sale valuations.

The wife sought financial provision following a marriage lasting approximately 27 years. The parties had begun with very little and accumulated assets exceeding £100 million, including substantial interests in a publicly quoted insurance company and assets held in the Dragon Holdings Trust.

The husband argued that the trust assets should be excluded, that the wife’s award should reflect her alleged failure to support his business activities and move to Bermuda, and that his exceptional contribution justified a substantial departure from equality. The wife sought approximately 45 per cent of the total resources. The central issues were the treatment of the trust assets, valuation discounts, conduct, exceptional contribution and the appropriate division under section 25 of the Matrimonial Causes Act 1973.

1. The court ordered the husband to transfer his interest in Dell House to the wife and to pay her a lump sum of £40 million. She was to leave the marriage with approximately £48 million, representing just under 37 per cent of the total resources. Provision was also made for adjustment if a further United Kingdom tax liability became payable.

2. The Dragon Holdings Trust assets were a relevant resource. The trust was discretionary, and the husband could potentially benefit from it without owning the assets. The alleged dynastic purpose was unsupported by the evidence. Even if such an intention had been established, an informal arrangement could not remove assets accumulated during a long marriage from the section 25 exercise.

3. Valuation had to reflect the commercial reality of the assets. The court rejected hypothetical immediate-sale and tax-based discounts, including large discounts for delay, CEO sale and key-man risk. The publicly quoted nature of the shares and the market’s reaction to the husband’s retirement announcement were material. The court preferred the valuation evidence that was specific to the facts of the case.

4. Conduct under section 25(2)(g) requires conduct of such seriousness that it would be inequitable to disregard it. Lesser misconduct must not seep into the assessment. If relied upon, conduct should be clearly asserted in the appropriate Form E. The wife’s approach to the husband’s work and to relocation to Bermuda did not meet that threshold and, on the facts, she had not refused ultimately to move.

5. Exceptional wealth creation may be relevant under the statutory balancing exercise. Following Miller/McFarlane [2006] UKHL 24 and Lambert v Lambert 2003 Fam 103, departure from equality was justified only because the husband’s talent, energy and wealth creation were wholly exceptional, gross and obvious. The adjustment had to be meaningful but not so large as to undermine the wife’s standard of living.

6. The court rejected the argument that the lump-sum order breached the husband’s right to peaceful enjoyment of his possessions under article 1 of the First Protocol.

The judgment records that the husband’s appeal against an earlier order for letters of request was dismissed by the Court of Appeal, but no citation for that decision is stated. The present judgment determined the substantive financial provision application.