This article was first published in Solicitors Journal on 25 July 2016 and is reproduced by kind permission.
Mainstream media reports of ‘big money’ divorces are riddled with inaccuracies, writes Pippa Allsop
The media has been a buzz of late with news that ex-supermodel, Christina Estrada, had received a settlement of £53m following her divorce from Sheikh Walid Juffalli, a Saudi oil baron whose net worth was purported to be circa £8bn.
The parties met in 2000 and married in 2001. The relationship hit the rocks when Juffali married another woman in 2012, without Estrada’s knowledge, before then proceeding to divorce her under Islamic law in 2014, again without her knowledge. Estrada, who has lived in the UK for nearly 30 years, applied for financial relief through the English courts as she was not able to pursue this route in Saudi Arabia. Her ex-husband sought to avoid divorce proceedings by relying on his diplomatic status, a defence which was rejected by the High Court.
Much of the media reporting of the case made inaccurate references to the financial settlement: for example, that Estrada was ‘suing’ her ex-husband for ‘compensation’. The reality of the situation is that, on divorce, Estrada was entitled to a share of the matrimonial assets taking into account that the parties have a teenage daughter whose needs must also be met and prioritised.
There is no standard legal formula for working out how assets and income should be distributed between spouses when they divorce. The court has a duty to take all the circumstances of the case into consideration. This includes the financial resources available to the parties, their contributions to the marriage (financial and otherwise), and details of their financial needs. The primary consideration for the court must be the welfare of any children of the family under the age of 18.
Understandably, this was the theme that was latched onto by reporters, namely the fact that the £75m settlement was arrived at in order to meet Estrada’s ‘reasonable needs’. This focussed primarily on her assertions that these needs would be met by two homes totalling £64.4m and provision for other expenses, such as £1m per annum for clothes and jewellery or £600,000 for private jet charters. Her initial approximation of a suitable sum was £250m and she had turned down an offer of a £17m lump sum plus the former matrimonial home and associated costs for a limited period.
It is indisputable that a total of £75m (taking into account her own resources) would be enough to meet anyone’s capital and income needs. However, this is without acknowledging how UK matrimonial law operates within the context of ‘big money’ cases.
Where the parties’ resources exceed their financial needs, very broadly, the application of the ‘sharing principle’ generally leads to an equal division of the assets that the parties have accrued during the marriage, i.e. matrimonial assets. However, the sharing principle does not apply to property inherited or introduced by only one party during the marriage, unless it can be argued that such property has become part of the matrimonial assets, i.e. the family home.
Where assets are mainly non-matrimonial, it is possible that a claim will be determined only with reference to needs, and these are generously interpreted in the context of the parties’ standard of living during the marriage, their respective ages, and the length of the marriage.
It is inevitable that these are the types of cases which will continue to make headlines, given the way they capture public imagination. They are, however, certainly not representative of what happens day-to-day in matrimonial disputes, where needs claims might include £12.12 per calendar month for the TV licence, as opposed to £12,120 to cover entertainment expenses while on holiday.