In a case currently before the court in London, a Non-Executive Chairman of home furnishings company Laura Ashley, has been ordered to make his wife an open offer to settle their financial matters on divorce. This is an unprecedented direction to be made by the judge so early on in proceedings.
Spouses have claims against each other by virtue of their marriage. The extent of those claims will depend on a number of factors. The first stage is to work out what the assets are and what is there value.
In this case, the parties disagree completely about the value of the assets. The wife, Ms Chai contends that her husband is worth over £440m and earns approximately £5.4m a year. Dr Khoo disputes this assessment and places the couple’s wealth at a more modest £66m.
The parties have been unable to reach an agreement about how their assets should be divided. They have applied to the court for financial remedy proceedings. If they remain unable to agree at the end of the court process, a judge will make an order and impose it on the parties.
It would appear that there is little that this couple can agree on at the moment. They first had an argument about whether or not Ms Chai was entitled to issue proceedings in London, followed by arguments concerning not only the value of assets but whether or not Dr Khoo has given full details of all his assets. The parties’ combined legal costs are reported to stand at £6.1m and this figure will only continue to rise as proceedings go on.
In a move seemingly designed to short circuit the process, the High Court Judge dealing with the matter has ordered Dr Khoo to make a proposal to his wife to settle matters within 21 days. This offer must be on an open basis meaning that the court will be informed of its terms. As part of the court process, both parties are required to make offers to each other and inform the court of the terms of those offers. However, this is one of the first cases where a judge has taken it upon themselves to require one party to make an offer so early on in the case. The aim is to call a halt to the ever increasing legal costs and, if the parties can settle matters themselves, to avoid the need for a 15 day court hearing where both parties will be required to give evidence and will be cross-examined on that evidence.
For most couples, the prospect of facing a legal bill in the mounting millions seems galling but will not be a reality. However, it is not unusual for costs to run high when cases are not properly managed or couples cannot see the wood for the trees. The case also highlights the ways in which a court can intervene to try to help the parties settle their finances but requiring them to set out their positions clearly and openly.
Getting expert legal advice at an early stage can help couples to work their way through sorting out their financial matters on divorce. By far the best way for spouses to sort out their finances is to reach an agreement between themselves. If this is not possible and it is necessary to seek assistance from the court, then spouses need to be prepared for judges to actively manage the matters before them. Parties are required to put all their “cards on the table”. This recent case shows that the court may require a party to show their hand before they may feel all the cards have been dealt.