Collyer Bristow partner Philippa Dolan, family and divorce expert, explores the circumstances surrounding the court’s decision in Mei-Lin v Gudmundsson, and explains why the timing of messages, not the means of communication, was central to the outcome.
A decision was reported last month in a case that has been in and out of the courts for a few years (nothing new there). It raises interesting issues for family lawyers, and also for lawyers generally, since part of the story concerned how the courts are grappling with the 21st century equivalent of putting pen to paper to record a binding contract.
The case straddled the worlds of family law and insolvency. Unsurprisingly, divorce and insolvency come together not infrequently. Financial problems in a family put enormous strain on relationships. At the same time, emotions such as anger, grief and rejection (commonly observed by family lawyers advising on divorce) do little to promote the financial health of a family, particularly when one or both of the couple are engaged in running a business.
Undisputed allegations
So the case of Mei-Lin v. Gudmundsson struck a chord with lots of us. They were an international couple who had settled in London. Hsiao Mei-Lin was an artist and Audun Mar Gudmundsson ran a mezzanine finance business. They had a relatively short marriage, marrying in 2009 and separating in 2016. They have two children, a son now aged 15 and a daughter now aged 11. There were allegations concerning Mr Gudmundsson’s behaviour caused by drug use, not disputed, and Ms Mei-Lin remained with the children in the property that they had bought jointly the year they married. Mr Gudmundsson came unstuck running his business and got into financial difficulties.
The couple had exchanged a series of WhatsApp messages and emails whereby Mr Gudmundsson appeared to say that he would transfer the family home to his wife in settlement of all her financial claims arising from the divorce. There doesn’t seem to be a clear agreement in those exchanges.
For example, one proposal from Mr Gudmundsson was that his wife should keep the house in London and the children should move with him to Iceland. If nothing else, that was not an agreement that would have been countenanced by the family court.
Creating a binding contract
For some reason the judge who heard the case in 2024 concluded that these exchanges did create a binding contract but, at the final appeal heard last month, the High Court judge was clear that it did not. There were interesting findings as to the approach that the court takes to establish what complies with the requirement that the contract has to be “in writing, signed by the person” as required by centuries of decided cases and going back to the Statute of Frauds 1677 (when Charles II was on the throne).
The parallels with our modern means of communication make a fascinating read. In essence, as long as the identities of the parties are clear and authentic then the emails and WhatsApps will be capable of creating a binding contract transferring property interests. Ms Mei-Lin didn’t succeed because the judge found that she had not satisfied all the requirements, including the need for certainty. So, the competing interests of Mr Gudmundsson’s creditors were successful.
Exceptional circumstances
The court also reduced the amount of time the family could stay in the house by five years, ending in July 2027. This was in recognition of the need to prioritise the claims of the creditors, even when the court found there to be exceptional circumstances in the case. Those exceptional circumstances concerned the court’s unacceptable delay in giving judgment back in 2020 (causing the whole timing issue with the bankruptcy), and the fact that there were health issues relating to Ms Mei-Lin and one of the children.
There is often a race of sorts when acting for one of a couple where bankruptcy is looming. Usually this is a genuine tragedy for the family and the impending bankrupt wants to protect the rest of the family so far as they are able. Why should their partner and innocent children lose their home just because they have failed them?
In this case, it seems that no one had told the wife, or the family court, of Mr Gudmundsson’s impending bankruptcy. Mr Gudmundsson had offered Ms Mei-Lin all the equity in the house in WhatsApp and email exchanges. However, as a result of the judge’s delay, caused in part by pressure arising from his judicial workload, and other problems arising from Mr Gudmundsson’s complicated financial life, the final order made in the financial proceedings was predated by the bankruptcy order.
The family case was heard back in February 2019 but judgment was not given until 4 March 2020. A week earlier, on 26 February 2020, Mr Gudmundsson had been made bankrupt. Despite the best efforts of Ms Mei-Lin’s legal team, this fact was indisputable and could not be reversed by the court.
Timing is everything
Hence the importance of timing.
On divorce, the starting point is that the couple have an entitlement to share equally in the capital that has accumulated during the relationship, and the family home usually comprises the bulk of that wealth. And if the house is in the husband’s name (still not that unusual) then the family court will usually take the view that the wife has an equal claim.
Here, the couple already owned the house equally and it was the failed attempt to argue that Mr Gudmundsson had transferred his interest in the property to Ms Mei-Lin that was of such interest.
Generally, couples reach agreement away from the court and then lodge the formal document for approval. Often they declare in the order that they are solvent. Occasionally, if a couple wants to evade the creditors of one of them, they can collude in a sham divorce and sham financial agreement. Or one may declare that they are bankrupt in order to evade the legitimate claims of their divorcing partner. The family court has seen everything and is rarely surprised.
Mr Gudmundsson and Ms Mei-Lin’s case is unusual but not unique, and tragic in its outcome. The court found no villains, only victims of timing and financial mismanagement.
About the author
Philippa Dolan is a partner in the family department at Collyer Bristow. She was formerly head of the family department at Rochman Landau and then head of the London family team at Ashfords, following the merger of the two firms in 2012. Philippa has a well-deserved reputation as an experienced family lawyer and she is also a respected mediator and collaborative lawyer. She is a fellow of the IAML, reflecting the significant international element of her caseload, particularly in relation to high value financial claims.
