Divorce cases where large sums are involved are tense enough but the difficulties can be magnified if the precise assets in dispute aren't known. This article examines what sort of advice is worthwhile.

One of the most vexatious aspects of divorce proceedings is working out what is the net value of the assets at the centre of any dispute, once unpaid debts and other outgoings are stripped out. Needless to say, when high net worth individuals are concerned, the stakes can be large, as recent court cases illustrate. In this article, Graham Coy, partner at the family department of law firm [|tag|Mundays">Mundays, discusses the kind of advice clients need when the sums under dispute are hard to pin down. The editors of this news service are pleased at this contribution to debate and invite further feedback.

What advice can be given to a client in divorce proceedings when it is not known what the net assets actually amount to?

This is a question which frequently troubles divorce lawyers and which has been given new life recently by divorce proceedings that are currently before the courts between Andy Ruhan and his wife Tanya. Andy Ruhan is said to be worth more than £200 million ($303 million). It is also said that he has become one of Britain’s most successful property investors having founded and then selling Global Switch, which provides data centres for investment banks, and then going on to own Cannizaro House Hotel in Wimbledon, a South African game reserve and Global Marine Systems, which lays cables on the ocean floor.

Mr Ruhan joined the board of the Lotus Formula 1 team in 2013 before taking control for the following season and is himself a keen and successful motor racer, winning the GT Cup Championship at Brands Hatch in 2011. This could be one of the largest divorce cases to be dealt with in this country.

Andy and Tanya Ruhan have been married for 18 years.  Given that the average length of a marriage in this country is about 11 years, this has been a relatively long marriage. Accordingly, it may be that Tanya Ruhan will be advised to be expecting something in the region of one half of the total net assets.

On the other hand, Andy Ruhan may argue that he has made a “stellar contribution” by virtue of his financial acumen and success that he should receive the larger part of the total net assets. However, there is a problem. It is reported that Andy Ruhan is currently involved in separate legal proceedings with former business partners concerning the profits made after the sale of thirty Thistle Hotels. There is no indication as to what Andy Ruhan’s liability may be, if any, as a result of these proceedings. 

How does one advise clients in such circumstances?

Advising any client in relation to financial matters following separation and divorce is always a two-stage process. The first stage is finding out exactly what there is in the way of assets, liabilities, pension funds and income; the second is dividing them fairly between the couple taking into account particular circumstances. These include not only the financial circumstances but also the length of the marriage, whether there are any children and if so how many and old they are, and the contributions which each of the couple has made, both financially and otherwise, throughout the relationship.

Sometimes the first stage becomes more complicated than it needs to be, for example where there are assets that are difficult to value. For this reason, Mr and Mrs Ruhan find themselves in a particularly difficult situation. Anyone in divorce proceedings has to be completely open and frank with each other about their finances - an obligation which continues until the financial matters are resolved. Therefore, all of the detail about the claims against Andy Ruhan have to be disclosed both to his wife and to the court.

At first sight, that could lead to the conclusion that no agreement could be reached and no final decision could be made by a court until the extent of the liability is known. Almost inevitably, this could mean a delay of a year or more, together with further expense in the way of legal fees. 

Does that mean, therefore, that both Mr and Mrs Ruhan have to wait until that litigation is over?  This might be the safest way to proceed, but there are more practical approaches which could be adopted.

A wife in circumstances like these may prefer not to wait for a resolution and see the size of the assets diminish before her very eyes. Depending upon the extent of the net assets and whether they are liquid or not, it could be perfectly possible for at least an interim agreement to be reached; for example, providing enough in the way of capital for Mrs Ruhan to rehouse herself and for Mr Ruhan to do the same and if necessary for there to be sufficient funds to provide an income for Mrs Ruhan until matters are finally resolved.

Equally, a sum could be set aside to cover the likely claim if it is successful.  If the claim fails, that fund can be distributed. If it succeeds, any excess that remains can equally be distributed between the couple. A problem might arise if the fund is not sufficient to cover the eventual claim in which case both parties will need, in all probability, to make a contribution. It could be argued that the entirety of the claim should be the responsibility of Mr Ruhan, though all the facts are not yet known. If the “fruits of the marriage” are to be divided fairly, possibly equally, then would it be fair for one person to accept responsibility for all of the liabilities rather than for them to be shared as well?