Navigating Property Rights in Divorce: Yacht vs. House
Yael Selig
Table of Contents
A Yacht, A House, and Terminating Matrimonial Home Rights
The family court has ruled in the latest instalment of a very high value financial remedies dispute. The husband wanted the £42m family home sold, while the wife wanted the £35.5m yacht sold. In such a high-stakes environment, how does the court reach a fair decision?
The specialist divorce team at Osbornes Law regularly work with international & high net worth clients in complex divorces, representing their interests at every stage. In this case, the wife’s family home rights were also at risk.
What’s the background?
The parties were divorcing and involved in protracted financial remedy proceedings. H had built significant wealth through various businesses in his home country. His businesses interests alone were purportedly worth in excess of £565m when the parties started cohabiting in 2007.
He now claimed his financial position has been “ravaged by war”, a claim supported by the report of a single joint expert who took the view that (taking into account cross-indemnities) his business interests were now worth minus £32m.
This latest ruling followed cross-applications by the parties:
H applied for an order terminating W’s home rights under s33(3)(e) Family Law Act 1996 with the aim of a sale of the family home. Note that a spouse’s matrimonial home rights can only be terminated under s33 if they have no beneficial interest in the property.
W cross-applied for an order for sale of a motor yacht under s17 Married Woman’s Property Act 1882 (MWPA) and FPR 2010 R20.2(1)(c), together with control of the sale; and that the proceeds of sale could be used to discharge the mortgage on the matrimonial home.
The Matrimonial Home
W and the parties’ three children lived in the matrimonial house, which was owned by a company of which H owned a 85.1% share. Pursuant to an agreement with the company, H was sole beneficiary of the property. It was subject to a £27m mortgage which had been renewed, but he anticipated problems obtaining a further renewal – partly because of the impact of the war on his finances.
W had not, in her financial statement (Form E) laid claim to any interest in the matrimonial home. However, following H’s application she claimed to have a beneficial interest by way of constructive trust or proprietary estoppel.
H countered that she had concocted her claim to frustrate his own application.
In court, she blamed the inconsistency on her poor English and said the significance and meaning of ‘beneficial interest’ had not been explained to her. On the evidence the judge rejected her claim to a beneficial interest in the property.
He then had to consider how to exercise his discretion under s33 FLA to terminate her home rights. The court is required to consider all the circumstances of the case as well as specific factors, particularly:
- the housing needs, the housing resources of the parties and any relevant child; and
- the parties’ respective financial resources.
In the circumstances, the judge ordered that the property be marketed and sold. Pending a sale, W and the children could remain in the property. This meant her family home rights could continue for now and (subject to securing rental accommodation) terminate on the completion of a sale.
The Yacht
H did not own the yacht. Rather, he owned a 90% shareholding of a company (AB) which was the legal and beneficial owner of the yacht (the expenses for which were funded by a separate company loan).
H said the yacht was being sold (which W disputed) and that W was seeking to take it over and use the sale proceeds to pay off the mortgage on the property.
The problem for W was, AB was not party to the proceedings and H did not own the yacht. This proved terminal to W’s claim over the yacht, given that the MWPA is concerned with issues between spouses. The court could not therefore consider her claim as it stood.
Although her claim was rejected, the judge took the view that H intended a sale of the yacht to pay off the mortgage on the property; that AB was making genuine attempts to sell the yacht; and H was keen to get a good price for it.
Both parties were required to keep the other fully informed of all material developments as to the respective sales of the matrimonial and the yacht. This would provide important clarity going forward.
1 IN v CH [2024] EWFC 233
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