During 2021, no doubt to some extent because of the pandemic and the pressures that has brought to bear on the court system, I am sure I am not the only person who has found an increasing willingness on the part of the judiciary to look at other ways to resolve disputes outside the formal court process.

Negotiating a financial settlement on divorce can be complicated when one of the assets includes a business. There is usually a need for significant disclosure, expert valuation evidence and tax advice. Thought needs to be given to what documents need to be provided, whether these should be front loaded to enable parties to take early advice and the appropriate expert to provide the parties and the court with a valuation upon which negotiations and decisions can be made.

In the last 18 months, the Royal Court of Jersey has handed down two important judgments in relation to asset protection on divorce. In both cases, settlorfriendly, asset-protection decisions made by trustees, which might once have been considered reasonable, were either set aside or not blessed. Here, we look at the relevant cases and consider what this emerging trend might mean for settlors and trustees going forward.

Some things in life are easy to put a price on; others are not so straight-forward, leading to differences of opinion and, sometimes, disputes. International businesses can be tricky to value at the best of times, not least in the wake of a global pandemic that has wreaked havoc on certain industries.The good news is that when valuing an international business (for the purposes of this article, defined as one operating largely or completely outside the UK), the same tried and trusted methods of business valuation apply as when looking at those closer to home. And our approach remains the same today as it was at the beginning of 2020; we always come back to the same core principles. The International Valuation Standards serve as a useful and widely respected reference. However, there are some areas that require careful consideration when valuing an international business.

A major life event such a divorce is often the catalyst for re-evaluation of future financial needs, and cashflow forecasts are undoubtedly one of the more valuable tools to do this. When well executed, they can offer reassurance about sustainable levels of spending and that someone is unlikely to run out of money, but inaccurate forecasts can lull someone into a false sense of security leading to complacency and overspending. Planning your financial future can be a daunting task at the best of times- but especially when many areas of your life will have changed and you are unsure of future spending patterns and lifestyle costs.

English proceedings which follow in the wake of foreign divorces entail complex rules and procedures which many practitioners may be unfamiliar with unless they regularly deal with international divorces. Several reported cases this year have served as a reminder of the complexities of determining whether a foreign divorce will be recognised under English law and the procedure to be followed in relation to any Part III claim which may follow. The following provides a summary of the key points to take away from those cases.

Disproportionate costs, all too prevalent in financial remedy cases, make it increasingly challenging either to settle cases or to achieve an outcome that is either fair to both parties or meets their respective needs. Judicial frustration at this is common. As observed recently by Peel J in Crowther v Crowther [2021] EWFC 88 “The only beneficiaries of this nihilistic litigation have been the specialist and high-quality lawyers.”

A major life event such a divorce is often the catalyst for re-evaluation of future financial needs, and cashflow forecasts are undoubtedly one of the more valuable tools to do this. When well executed, they can offer reassurance about sustainable levels of spending and that someone is unlikely to run out of money, but inaccurate forecasts can lull someone into a false sense of security leading to complacency and overspending. Planning your financial future can be a daunting task at the best of times- but especially when many areas of your life will have changed and you are unsure of future spending patterns and lifestyle costs.

The year 2021 began with the country being in its third national lockdown and trying to navigate its way through the Covid-19 pandemic. In his ‘Road Ahead’ article of 10 January, Sir Andrew McFarlane, President of the Family Division, noted footfall in court buildings would be kept to a minimum, courts would facilitate remote attendance of all or some of those involved in hearings as the default position. Mass vaccinations were a most welcome light at the end of the tunnel, although the return to anything like the normal working of a family court may not be achieved for some time. The President predicted that beyond the relaxation of the rules, there would still be a significant proportion of remote and hybrid hearings as the country got back to normality. The ‘Road Ahead’ guidance given in June 2020 would continue to apply, with the key concerns being the significantly high volume of work remaining with an expectation of limited facilities to conduct face-to-face hearings. It was accepted that any delay in cases would prejudice the welfare of children; adjourning cases for many months would not be an option. By July 2021, the President continued to be profoundly impressed by the delivery of family justice in navigating a complicated system so different from the norm. 

The year 2021 began with the country being in its third national lockdown and trying to navigate its way through the Covid-19 pandemic. In his ‘Road Ahead’ article of 10 January, Sir Andrew McFarlane, President of the Family Division, noted footfall in court buildings would be kept to a minimum, courts would facilitate remote attendance of all or some of those involved in hearings as the default position. Mass vaccinations were a most welcome light at the end of the tunnel, although the return to anything like the normal working of a family court may not be achieved for some time.  The President predicted that beyond the relaxation of the rules, there would still be a significant proportion of remote and hybrid hearings as the country got back to normality.  The ‘Road Ahead’ guidance given in June 2020 would continue to apply, with the key concerns being the significantly high volume of work remaining with an expectation of limited facilities to conduct face-to-face hearings. It was accepted that any delay in cases would prejudice the welfare of children; adjourning cases for many months would not be an option. By July 2021, the President continued to be profoundly impressed by the delivery of family justice in navigating a complicated system so different from the norm.

The recent judgment of Mostyn J in the matter of E v L [2021] EWFC 60 (Fam) again raises the question of the challenge and use of retrospective valuations in matrimonial disputes. The approach of Mostyn J over the years clearly demonstrates that he, and other Judges, are not afraid to adjust expert valuations in order to achieve a fair result for the parties. In our experience, and put simply, retrospective valuations are required to understand the value of assets brought into the marriage and assess the extent to which the current value may be split between matrimonial and nonmatrimonial assets.

The courts continue to struggle with a lack of resources, an overload of work and the after-effects of the pandemic. Regularly, hearings for which the parties have waited months and in respect of which they have incurred significant costs are being vacated by courts with little or no notice. Increasing, parties and advisors are looking for other options to court-based resolution of issues such as alternative dispute resolution (‘ADR’).

This phrase is used by court offices across the country as the explanation for adjourning hearings, usually with about 24 hours’ notice. Final hearings seem to be the worst affected and an analysis of my own diary over the last year suggests that (in finance at least) such hearings are more likely than not to be adjourned at least once. I have a couple of matters which have been adjourned twice and have heard of cases going through their fourth attempt to find a judge. Delays of 6 months or so between each listing are not uncommon and applications for financial remedies seem to be the worst affected, presumably because matters involving children are given priority. In each case these adjournments lead to unnecessary costs; not just wasted brief fees but inevitably extra correspondence, ongoing interim maintenance and mortgage payments and, in one of my cases, the need (following each of two adjournments so far) to update a chartered surveyor’s valuation of various commercial premises and an accountant’s valuation of a business. That’s a total of four experts’ reports placed in the shredder (or at least deleted).