A cat and mouse game
The Young divorce case was one of the UK's most controversial ever. Catherine Thomas, who represented Michelle Young, sees similar cases on the horizon.
Last Friday saw the conclusion of the final hearing in the matter of Young v Young, a landmark seven year wrangling in the matrimonial courts between Michelle Young and her estranged husband, Scot. Michelle was awarded a £20m lump sum payout by Mr Justice Moor at the High Court with an additional £5m in costs – a British record.
I have been representing Michelle over the last two months in what has been an incredibly complex and emotional case for all parties involved. Vardags also represented Michelle at various stages during the trial, and called into play draconian measures to make Mr Young engage with the case, from having his passport taken away to committing him to prison for non-disclosure.
Scot Young claimed to have lost his multimillion pound fortune leaving him bankrupt and with debts of £28 million but it was ruled that this was not the case during the final four week hearing. The judge found that Mr Young had £45m of hidden assets, with £5m of debts, resulting in a net worth of £40m of which Michelle Young was entitled to half.
This case has been amongst the most complex in English divorce law history, in which a number of high profile witnesses were called, including Sir Philip Green and Richard Caring. There were 10,000 pages of court documents, 24 witnesses and assets spanning three continents.The City has been captivated by the story of this man who was raised in a Dundee council flat and went on to become a fixer to the super-rich, with a property and telecoms empire allegedly worth hundreds of millions of pounds.
The proceedings centred on Scot’s insolvency, the whereabouts of his assets and his repeated non-disclosure. As has been much publicised, earlier this year Scot was jailed for three months for “flagrant and deliberate” contempt of court. It has been reported that he has repeatedly failed to provide documentation in respect of the loss of his assets and he has failed to comply with a 2009 maintenance order, with arrears now amounting to approximately £1 million.
The case has put into the public eye issues of non-disclosure and asset hiding in large-scale divorce cases. Awards on divorce have become so high – on the basis of a 50-50 split of the matrimonial assets - that there’s a huge incentive for the spouse with greater personal wealth to try to keep it under wraps.
When tens or even hundreds of millions are at stake, the temptation to lie to spouse and Court can be intense. In consequence, divorce law has become a highly sophisticated corporate and financial discipline as lawyers and experts employ financial forensics to try to crack their way through to the truth – in a complex game of hide and seek.
A cat and mouse game
People are becoming increasingly savvy to ways in which they can reduce their spouse’s settlement in a divorce case. There is a constant game of cat and mouse going on in which avoidance techniques become more and more sophisticated. This mirrors the situation in tax avoidance/mitigation. Often the wealthy will originally hide their wealth in order to avoid paying all their taxes, but this then provides a convenient way to hide their assets during a divorce.
In my experience to date, most instances of hiding assets have their origins in cutting edge tax planning which have soared in the past decade. Many of those involved in such schemes will inevitably suffer relationship breakdown in the coming years and I believe we will see a sharp increase in the number of cases involving non-disclosure and asset hiding.
The Young verdict sends a strong message to those across the world seeking to hide their true wealth from their spouse – even the most intricate of financial arrangements can be exposed by specialist law firms.
Final judgment was handed down by Mr Justice Moor at the High Court on Friday 22nd November.