Joy v Joy -Morancho (Rev 1)

A settlement is nuptial only if, when created, it was made in contemplation of the marriage which is the subject of the proceedings. A settlement that was non-nuptial at creation does not become nuptial merely because benefits are later received, or because there is a later intention to benefit a spouse. Separate property acquired by a trust does not acquire a nuptial character without evidence of benefit to the parties as spouses. In financial remedy proceedings, capital claims may exceptionally be adjourned where the parties’ future financial circumstances cannot fairly be determined. The ordinary costs approach may be displaced by conduct. A deliberately deceptive and collusive presentation may justify an order for costs on the indemnity basis.

The wife’s long-running financial remedies application followed the breakdown of her marriage to the husband. She sought substantial capital provision, variation of the New Huerto Trust as a nuptial settlement, orders concerning trust-held properties and classic cars, and continuing maintenance. The husband maintained that he had been permanently excluded from the trust and had no capital or meaningful income. The central factual issue was whether that presentation was genuine or a contrived arrangement designed to defeat the wife’s claims. The court also considered whether the trust, or assets acquired within it, fell within the statutory jurisdiction to vary nuptial settlements, and what orders should be made concerning capital, maintenance and costs.

1. Nuptial settlement. The trust was created in December 2002, when marriage between the parties was not established to have been in contemplation. Applying Burnett v Burnett [1936] P 1, the statutory jurisdiction requires the settlement to have been made in contemplation of the marriage which is the subject of the divorce. The claim to vary the trust under section 24(1)(c) therefore failed.
2. The court rejected the suggested doctrine that a non-nuptial settlement could later become nuptial merely through a flow of benefits or an intention to benefit a spouse. The observations in Quan v Bray & Ors [2014] EWHC 3340 (Fam) were obiter and, respectfully, did not reflect the law. K v K [2007] EWHC 3485 (Fam) correctly treated Burnett v Burnett as establishing that a non-nuptial settlement cannot become nuptial.
3. The court did not need to decide whether company-held property could itself constitute a nuptial settlement after Prest v Petrodel Resources Ltd & Ors [2013] UKSC 34. The evidence did not establish any relevant spousal benefit from the London Properties. The court also found that the car portfolio was owned by the trust through Anthology, not by the husband.
4. On the evidence, the husband’s asserted permanent exclusion and impecuniosity were an elaborate charade. The court concluded that he was likely to regain substantial earning capacity through trust-related employment and bonuses. His capital claims were therefore adjourned, while periodical payments were fixed at £120,000 per year, subject to credit for relevant French maintenance payments.
5. Capital claims may exceptionally be adjourned where fairness requires future financial developments to be observed: see Hardy v Hardy [1981] 2 FLR 321 and MT v MT (Financial Provision: Lump Sum) [1992] 1 FLR 362. Any later application to capitalise maintenance under section 31(7A) was not to be constrained by the existing periodical payments order.
6. The husband’s conduct justified ordering him to pay the wife’s costs at large on the indemnity basis. He was ordered to pay £334,263 on account within 14 days, with the balance subject to detailed assessment.

First-instance determination in the High Court (Family Division). The court refused the husband permission to appeal against the periodical payments and costs orders.