It's an unfortunate fact in divorce cases that even after hard-fought proceedings, getting a court order doesn't guarantee a happy ending.
In the vast majority of cases when financial orders have been made following divorce, the parties respect and comply with the court’s orders. However, sometimes they do not – and some parties will go to extraordinary lengths to avoid their former spouse receiving the money or assets awarded by the court. In such cases there will need to be further court proceedings to enforce the orders.
The widely reported case of Akhmedov v Akhmedova saw Mrs Akhmedova awarded a £453m lump sum together with the transfer of properties, as part of a financial remedy settlement in 2016. However, in January 2018, it was reported in the press that Mrs Akhmedova was ‘yet to receive a penny’ from her ex-husband.
Mr Akhmedov held two corporate entities that were being used to shield his true wealth from the English courts, including a Liechtenstein entity which held his EUR260m yacht located in Dubai.
Unusually, in a judgment given on 19 April 2018, the Family Court ‘pierced the corporate veil’ in response to Mr Akhmedov’s attempts to conceal his wealth through complex offshore asset structures. New orders were made to aid Mrs Akhmedov’s enforcement of the Judgment against Mr Akhmedov in the Isle of Man and Dubai, in respect of the yacht, a helicopter and a private jet.
It is extremely rare that the Family Court will make orders against companies which are separate legal personalities from the individuals involved, however in cases where companies are used improperly to put assets beyond the reach of the other party the court will intervene to ensure justice.
During the case, the judge concluded that ‘[Mr Akhmedov] is acting with real impropriety and deliberately seeking to evade his legal obligations.’
The case highlights how difficult it can be to enforce decisions made by English courts when there are international assets involved.
Carmel Brown, senior associate and international family law expert at Irwin Mitchell Private Wealth said: “Piercing the corporate veil is an unusual and powerful move but it becomes necessary to give spouses - often wives - the justice they deserve.
“We’ve seen an increasing number of cases that involve one party diverting assets through corporate or offshore entities and we expect to see more in the future. Thankfully, the English courts have far wider powers than many other jurisdictions when it comes to obtaining transparent disclosure which assists when it comes to enforcement.”
Enforcement issues also arise in a domestic context. Irwin Mitchell has recently represented Mrs Hart in proceedings for the committal of her former husband for contempt of court. After financial proceedings on divorce lasting several years, Mr Hart was ordered to transfer company shares to Mrs Hart and to provide her with such information and documents that would enable her to run the company effectively. He repeatedly failed to comply with the orders of the court and ultimately the judge ordered that he be sent to prison for a term of 14 months.
Mr Hart appealed and on 11 May 2018 the Court of Appeal upheld the judge’s decision and said the jail term was not excessive. This demonstrates the court’s willingness to consider prison as an option for those who persistently breach court orders – even when as in Mr Hart’s case the person responsible is 83 years old.
It also highlights the importance of considering how difficult it may be to enforce a settlement or an order, and whether any protective action can be taken at an early stage.
Sarah Balfour, partner and specialist family and divorce lawyer at Irwin Mitchell Private Wealth representing Mrs Hart, said:
“In his sentencing, His Honour Judge Wildblood QC set out a clear message that orders made by the court must be respected. The judgment was fair, balanced and set out the many opportunities that Mr Hart had been given by Mrs Hart to comply with the court’s orders and enable her to manage her company effectively and efficiently.”
Published: 23 May 2018
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