Family Businesses And Divorce

• Published date: 12 August 2020
• Subject Matter: Corporate/Commercial Law, Family and Matrimonial, Corporate and Company Law, Family Law, Divorce
• Law Firm: Rollits LLP
• Author: Mr Sheridan Ball, Karen Myles and Alison Benson

A recent case demonstrates how intermingling business arrangements within families can create a further layer of difficulty when marriages breakdown and emotions run high.

The case of Mr and Mrs M ( M v M [2020] EWFC 41) underlines the dire consequences of losing perspective, sense and reason when litigating family disputes.

After 13 Face to Face Hearings, the financial disputes between Mr and Mrs M were determined by Mr Robert Peel QC on 6 May 2020 following a 5 day Remote Final Hearing in the High Court

Mr and Mrs M were married for almost 22 years; they are both in their early 50s and have 3 children - the youngest being 14. During the marriage they lived a comfortable lifestyle; living in a 5 bedroomed property in London, enjoying regular holidays, eating out frequently and their children attended private school. Throughout the marriage their lifestyle had been subsidised by the Wife's parents who paid the majority of the children's school fees.

The family finances were intertwined with the Wife's family's businesses - the Wife's parents had set up two Companies and they had gifted the Wife shareholdings in those businesses. At the time of separation (June 2018), the Husband was employed as Managing Director of one of the Companies - having worked for the family business since 2005.

The Husband resigned as Managing Director towards the end of July 2018 and in the October of that year, he was accused by the Wife and her family of alleged financial misfeasance whilst running the Family Company - this lead to his arrest. By the time of the Final Hearing in May 2020, the Husband still had not been charged with any offence.

It is easy to surmise that there was heightened emotion and anxiety for everyone involved when the marital problems arose - the Wife, the Husband, the Children, the Wife's parents, the Wife's brother were all financially and emotionally affected by the separation.

By the time the Final Hearing began on 1 May 2020, the Wife had spent and owed '214,830 in legal fees whilst the Husband had spent and owed '251,000. The eye watering level of costs in this case underlines the extent of the disputes that were being raised and the level of anger brimming below the surface. After dismissing the Husband's arguments in relation to the Wife's jewellery and car registration plate; the Judge concluded that the only substantial liquid asset was the proceeds of sale of the matrimonial home ('630,500).

Both parties raised arguments about additional...