‘Worthless’ Shares Used to Undermine Divorce Claim
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Joanne Wescott
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‘Worthless’ share transfer found to undermine wife’s financial claim
The financial remedies team at Osbornes Law advise and represent applicants for financial relief in complex and high value divorces.
Financial disputes can escalate quickly on divorce, and we understand how tempting it can be to transfer or sell assets to avoid them being taken into account in a subsequent financial claim. In light of a recent decision, the parties are reminded to avoid any hasty action that could risk being reviewed and reversed by the court further down the line.
A party on divorce is entitled to ask the court, under s37 of the Matrimonial Causes Act 1973, to set aside a transaction made by the other spouse if it was done with intent to defeat a financial remedy claim.
What happened in this case?
The husband in AB v CD & Ors [2025] EWFC 958 (the parties have not been identified) was the sole registered shareholder of a caravan park company. Just days after the parties separated in April 2019, he transferred his shares equally to his mother (EF) and his brother.
In July 2020 the wife brought a s37 claim, arguing that the share transfers were made with the intention to defeat her financial claim and should be set aside.
The family caravan park business had previously been very successful, operating through many companies and partnerships. However, in July 2022 the company in question went into administration.
EF argued that the company had no value at the time of the share transfers so there was no intention to defeat the wife’s claim and no loss was suffered as a result. She also said the transfers were made to regularise the position that the husband had always held the shares on trust for his father (EF’s late husband). It was claimed that the accountant mistakenly drafted the transfers to both her and her son, instead of to her alone.
The parties gave varying accounts of what happened and why. The Judge noted that a “striking feature” of the case was that the witnesses were seeking to recall events and conversations from many years ago, which raised problems.
Even so, the judge found that much of their factual evidence was materially tainted. The husband and wife both, for instance, presented ‘shifting’, inconsistent and sometimes contradictory evidence. Moreover, all the family witnesses had a financial interest in the outcome.
The share transfers
The judge pointed out that expert valuations of private companies are notoriously fragile and, on the particular facts of this case, attached no weight to the expert valuations provided. In fact, he declined to fix any specific value for the shares at the time of the share transfers, but he concluded that they had substantial value.
For instance, the administrators had received an offer for one caravan park of £3.685m and the parties had spent substantial sums disputing control over it. The judge considered this indicative of their awareness of the company’s true commercial value and rejected any assertions that the shares were worthless.
The judge concluded that the share transfers had been intended to defeat the wife’s claim for financial relief; and neither the husband nor EF could rebut his conclusion. He also found that the share transfers were not made in good faith or for value.
The share transfers were to be set aside. Despite assertions that the company was commercially worthless, the administrators would be able to sell the business and its assets. As a result, the wife would be entitled to a share of the proceeds.
How can we help?
This case serves as a clear reminder of the court’s powers to scrutinise and reverse transactions intended to defeat financial claims on divorce. At Osbornes Law, our financial remedies team has extensive experience handling complex, high-value disputes involving family businesses, trusts, and asset transfers. We provide strategic, clear-sighted advice to protect our clients’ interests and ensure fair outcomes. If you are facing a financial dispute on divorce, our team is here to help.
For expert legal advice on financial matters and protecting your interests in all matrimonial assets, contact us by:
- Filling in our online enquiry form; or
- Calling us on 020 7485 8811
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