Disputes about the categorisation and treatment of funds advanced by family members to a spouse arise often in financial remedy proceedings.
In P v Q (Financial Remedies) [2022] EWFC B9 His Honour Judge Hess provided guidance to distinguish between gifts and loans. To qualify as a gift, the advance of money generally requires the animus donandi (intention to give). If the advance of money is better characterised as a loan (i.e. a contractually binding obligation to repay a third party), its inclusion or exclusion within an asset schedule in a financial remedy case depends on whether it is ‘hard’ or ‘soft’. If ‘hard’ it should feature as a liability in the judge’s computation exercise. If it is ‘soft’ then it is ultimately a matter of discretion for the judge as to whether or not it features, and if so how. There is no set rule as to when a loan will qualify as ‘hard’ or ‘soft’ but whether there is a realistic likelihood of enforcement is important. At paragraph 19(x) of the judgment is a list of various considerations to assist with the distinction.
In Copinger-Symes v Copinger-Symes & Anor [2024] EWFC 415 the wife had become estranged from her family (the wealthy Australian De La Sala shipping magnates) during her marriage to Mr Copinger-Symes. This made the 1989 hit “Never tear us apart” of the Australian rock band INXS for whom she previously worked rather unfortunately titled… When the wife’s father died in 2022 she was excluded from the funeral (the wife’s mother was sole beneficiary of the estate). Crucially Mr Copinger-Symes remained on good terms with the wife’s relatives.
Following their decision to divorce, the financial remedy proceedings between Mr and Mrs Copinger-Symes were settled in 2021. The net effect was estimated to be 67/33 (worst case scenario) or 81/19 (best case scenario) in the wife’s favour, dependent on whether various loans were called in. The finalisation of the consent order took time and necessitated a hearing but it was ultimately sealed on 18 March 2022.
The consent order was not implemented and the parties cross-applied for enforcement. During the ensuing disclosure exercise it transpired that the husband had received payments totalling US$34,777,180 from the wife’s mother/parents in July and August 2022.
The wife applied for the consent order to be set aside. His Honour Judge Hess, sitting as a Deputy High Court Judge, granted the application on the ground of the husband’s material non-disclosure. The husband’s contention that he acquired knowledge of the gifts only after his duty of disclosure ended was rejected, as was his claim that disclosure of the advances would have made no difference to the outcome. The court did not need to consider the wife’s alternative basis for set aside, namely a Barder event, but noted that the application of the principle might have been problematic because it was both foreseen and foreseeable that the wife’s parents might make gifts to the husband.
The wife’s mother was an intervenor, claiming that if her daughter’s set aside application succeeded, the gifted funds should be returned to her due to ‘failure of basis’ or mistake. This claim for restitution failed.
The financial remedy proceedings were not restarted from scratch, despite the set aside succeeding. His Honour Judge Hess adopted a more proportionate and focussed approach to listing, but also set out some provisional thoughts about the sensible parameters of a future order. It is understood that the decision is subject to an appeal scheduled to be heard in December 2025.
On any analysis the dispute is set to induce further substantial expenditure on legal costs for this warring family. As observed by His Honour Judge Hess, the case certainly exemplifies an exception to the rule that ‘blood is thicker than water’.
