Chai v Peng & Ors

In financial remedy proceedings, the court will normally apply English law despite foreign connections. A limited sideways consideration of foreign law may be appropriate only in an exceptional case where the English connections are substantially weaker and fairness requires it. A long marriage with substantial wealth ordinarily attracts the sharing principle. Departure from equality for special contribution requires wholly exceptional circumstances, and pre-marital assets may lose their separate character when used as the matrimonial home or mingled with family finances. Corporate ownership does not prevent a resulting trust where the evidence shows that the spouse provided the purchase money and the companies fail to explain the transactions. Possible enforcement difficulties do not justify making an award that is otherwise fair and just.

The applicant sought financial remedies following a 42-year marriage. Parallel divorce and financial proceedings had taken place in Malaysia, while the applicant established jurisdiction in England. The respondents included companies said to hold the Rossway Estate, the parties’ former family home.

The principal issues were whether Malaysian law should influence the award; whether the case was one of needs or sharing; whether the husband’s business interests, including Fresh Approach, had been fully disclosed; whether Rossway was held on resulting trust or constituted a post-nuptial settlement; and the appropriate form and amount of relief.

1. Foreign law and forum-shopping. The court normally applies English law when exercising its jurisdiction for financial relief, irrespective of foreign connections. A sideways look at foreign law may be appropriate only in a very exceptional case. This was not such a case: the wife had no meaningful continuing connection with Malaysia, and the expert evidence did not establish that Malaysian law would produce a materially lower award. The earlier jurisdiction findings were not reopened.
2. Basis of award. This was a sharing case, given the length of the marriage, the five children and the resources accumulated during it. The husband’s business success did not amount to a wholly exceptional special contribution. The matrimonial home and unquantified pre-marital assets had become part of, or been mingled with, the family economy. Equality was therefore the starting point.
3. Valuation and disclosure. On the balance of probabilities, the husband owned or controlled Fresh Approach and thereby held a majority interest in MUI. The court accepted the updated valuation evidence, subject to discounts for caveated valuations, illiquidity and realisation difficulties. The resulting kitty was assessed broadly at £161,153,571.
4. Rossway. The companies’ failure to produce evidence explaining the purchase funding justified the inference that the husband had provided the money personally, rather than by way of a loan. Central Point and Dunross therefore held the Rossway properties on resulting trusts for him. This respected the companies’ separate legal personality and did not involve lifting the corporate veil. The alternative post-nuptial settlement analysis was addressed only if that conclusion were wrong.
5. Orders. The wife was awarded 40% of the adjusted kitty. The husband’s beneficial interest in Rossway was to be transferred to her, together with specified Canadian and Australian properties, and a lump sum of £40,663,303 after credit for interim payments. Interim provision continued on a reducing basis. There was no order as to costs, subject to existing orders.