Non-marital relationships can also give rise to wealth-protection issues, as this article explains. 

This publication writes regularly about divorce because any consideration about how to protect wealth must consider any complications which arise when couples split. But unmarried couples who break up face issues too, as this article demonstrates. This news service continues to track developments in divorce law as they affect high net worth individuals. See further articles here and here. 

The authors of this article are Henry Hood and Anna Roiser of Hunters Law LLP. The editors are grateful to the chance to share these insights and invite readers to respond. Email tom.burroughes@wealthbriefing.com and jackie.bennion@clearviewpublishing.com

Most wealth-protection advice given in the context of personal relationships centres on the financial implications of marriage. However, the press attention on the case of wealthy divorcée Mandy Gray and her ex-boyfriend Hamish Hurley has served as a reminder that non-marital relationships can also give rise to wealth-protection issues. 

Ms Gray herself is quite well known in the English divorce courts, having been the original applicant in the reported big money case of Work v Gray [2017] EWCA 270. In those proceedings, Ms Gray was awarded one half of her husband's $225 m fortune, all of which had been generated during the marriage. 

Press reports indicate that in the years since the end of her marriage, Ms Gray and her former personal trainer Mr Hurley have travelled the world together on a yacht, during which time Ms Gray used some of the proceeds of her divorce settlement to buy properties, cars and investments worth around £20m. Other reports put the expenditure far higher. 

Now that the relationship has come to an end, Mr Hurley seeks a share of those assets. From his perspective, Ms Gray is seeking to deny to him what she sought from her ex-husband: a fair share of what was acquired during their relationship. From an English law perspective, however, the fact that Mr Hurley and Ms Gray never married means that the rules that might operate on a divorce do not apply at all, and Mr Hurley would have very limited (if any) claims available to him, and none based upon the breakdown of the relationship.

However, the position is very different in Mr Hurley's home country of New Zealand, where he and Ms Gray own property. Under New Zealand law, the court can divide "relationship property" where a couple have been in a "de facto relationship" for more than three years. It is therefore not at all surprising that Mr Hurley has applied to the court in New Zealand to make decisions about the financial consequences of the break-up, whilst Ms Gray is seeking to have the issues resolved in England. 

In English law, when an unmarried couple separate, the court cannot transfer property between them to achieve a "fair" outcome as it can for married couples. All it can do is make a declaration as to who owns what. Such disputes most often arise in respect of the home in which a couple have been living, but can also apply to other assets, such as boats, cars and even, in one 1990 case, a dressing table (the judge held that although it had been purchased by the man for use by the woman, he had not intended it as a gift to her, but rather had anticipated that should the relationship end, it would be used by the woman's "successor" ). (1)

In order to determine who owns what, the court would have to look at the intentions of the parties at the time the assets were acquired. Whilst the court may look at contemporaneous background evidence such as messages between the parties, much will come down to whose account the court believes – which party comes across as the more credible witness.

The relative lack of formality needed to declare trusts over assets that are not real property can be a major factor in cases about personal belongings. Whilst making a promise to a partner along the lines that "this car/yacht/dressing table is as much mine as yours" may seem like a harmless reassurance, it may be an express declaration of trust which will be enforced in court. In the 1999 case of Rowe v Prance [1999] 2 FLR 787, a married man who repeatedly assured a woman with whom he had a 14 year relationship that he would leave his wife and live with her on "our boat" was found to have declared a trust under which the woman had a 50 per cent interest in. 

Anyone buying property will need to instruct a solicitor, and perhaps a financial advisor, and so should receive advice about property ownership and interests (although if Ms Gray had such advice, it does not seem she heeded it). It is much less likely that lawyers or financial advisers would be involved in the purchase of chattels (even for enormous sums such as the millions spent by Ms Gray on cars in this case), making it more likely that who owns the asset is left obscure.  What might Ms Gray not now give for a signed document confirming that she owned the £2 million Pagani Zonda R hypercar, or Michael Schumacher's Formula 1 Ferrari which is now in severe dispute. 

Mr Hurley may argue that some of the assets were purchased by Ms Gray as gifts for him. Generous gifts may often feature in romantic relationships entered into by wealthy individuals, and the end of a relationship doesn't come with any right to reclaim the gifts, no matter how generous (or misguided) they may have been

The press reports indicate that Ms Gray is arguing that Mr Hurley subjected her to emotional and mental abuse, and that his domineering conduct meant that a number of assets which she paid for were registered in his name. It may be that Ms Gray will seek to argue that Mr Hurley exerted "undue influence" over her, invalidating any gifts she made to him – but such claims are difficult to make out. 

Whatever the eventual outcome of this case, it is a timely reminder that wealthy individuals in unmarried relationships should exercise caution. Making generous gifts, or being unclear about the basis on which assets are being made available, can be costly and irreversible. The cost of professional guidance to such matters at the time, whose job it would have been to remind Ms Gray that love might not conquer all, would have been money very well spent, compared with what now faces her.

For couples moving in together, a cohabitation agreement can be an important way of ensuring that both parties are clear about where they stand financially. Unlike nuptial agreements, cohabitation agreements are contractually binding, and so offer certainty. 

Where a wealthy individual does want to provide expensive items for their partner, gifts can be made conditionally, or assets can be lent – though making such limitations clear may not suit the mood of the early days of a new relationship.  

The case of Ms Gray and Mr Hurley also illustrates that where a wealthy individual has a partner from a different jurisdiction, and the couple spend time there or have property there, it may be worth taking local advice to understand what may happen in the event of separation, even if the couple are not married and have no intention of marrying. 

If disputes do arise between a couple about their personal property, it should be possible to avoid court proceedings. Mediation may be a much more cost-effective way to resolve the dispute, and arbitration would offer speed and privacy where a negotiated settlement can't be reached. 

Reference: 

1, Windeler v Whitehall [1990] 2 FLR 505