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In circumstances where a husband claimed he had no funds available to him for two years and had a net worth of minus £50 million at the time of the hearing, Mostyn J ordered him to pay over £647,000 within three weeks of the judgment date and £5.18 million upon expiry of the two year breathing period.

Preston Haskell (“the husband”) was 53 and was born in the USA. Alesia Haskell (“the wife”) was 39 and was born in Belarus. The parties met in Moscow in 2003. They began to live together in 2005, became engaged in 2007, and, after a brief separation, reconciled and married in Moscow in 2008. They then moved to Sweden in 2009, and to London in 2013.

The parties had three children, two of whom (A and C) were at private schools in London. Their middle child, B, was severely brain damaged and lived in Belarus with her maternal grandmother, supported by 24-hour professional care. The parties lived in high-quality rented accommodation in London. However, the marriage was blighted by the husband’s serial infidelity and abuse of cocaine and alcohol, and the wife eventually issued a divorce petition and claim for financial remedies in 2016. It was therefore an 11 year cohabitative relationship.

Mostyn J heard the wife’s claim for financial remedies over six days. He had previously heard the wife’s application to enforce arrears arising under an order for interim payments, and the husband’s cross-application for a variation of that order (judgment reported at [2019] EWHC 3434 (Fam)). Then and at this hearing, the husband’s stance was that he was not a man of poverty, but was suffering liquidity and cash flow problems while he was moving between two different phases of his business life. He said that there were no further funds available at the time of this hearing, and that he thought he needed two to three years to revive his fortunes.

Mostyn J therefore took the view that a snapshot of the husband’s financial position at the time of this hearing would not be a realistic way of looking at his resources, particularly not those resources he was likely to have in the foreseeable future. It was noted that although the husband claimed he was at his ‘economic nadir’ (his schedule of assets proclaimed his net worth (excluding his trust interests) was minus £50 million), he had not disposed of any of the building blocks of his commercial empire. This was presumably because he was confident that they would ultimately come to fruition in the foreseeable future.

The wife based her claim upon the needs principle only, framed in the context of the parties’ standard of living and the likely upturn in the husband’s fortunes. The sharing principle was not engaged because there was no marital acquest given the downturn in the husband’s net worth, and, furthermore, in 2009 the parties had signed a Russian post-nuptial agreement providing for separation of property.

Neither party argued that the claim should be adjourned to be revived in the future, although Mostyn J felt this would have been an intellectually pure way of dealing with the situation (although he knew of no reported case of a claimant successfully later reviving capital claims that were adjourned at the final hearing).

Throughout 2017 and 2018, the husband continued to support the wife and the parties’ children, and the wife’s claim for financial remedies was adjourned on the basis that the parties were exploring a reconciliation. The husband lived a high lifestyle himself, spending nearly $189,000 on his Amex card between May and December 2018. He was also able to lend $300,000 to an individual to curry political favours in the Democratic Republic of the Congo. The picture that emerged was that money was readily available and readily dispersed. During this time, the husband did not assert that his business was in decline. Indeed, he only began to assert that when it became clear to him, in January 2019, that the reconciliation was not going to take place.

At that point, the husband’s attitude towards the wife became ‘unremittingly punitive’ (paragraph 19). He denounced her as a gold-digger and began a process of financial attrition which led to the wife and children, at the time of the hearing, being scheduled to be evicted from their rented home in London and made homeless.

Mostyn J considered that the picture that emerged was one of ‘insidious coercive control’ (paragraph 22), where the wife and children would only get money and be supported by the husband if they bent to his will. For example, the husband told the wife that he would agree to keep the family home until the summer of 2019 if she allowed him to stay there when he was in London, and said he would not agree to the release of her car (on which he had paid the deposit) until and unless she agreed a budget with him. In the same month as he terminated the tenancy of the family home, he spent nearly $19,000 on his Amex card.

The wife therefore applied for maintenance pending suit and a costs allowance, realising that she would need the assistance of the court in fixing her interim maintenance.

At the hearing of the wife’s application, Lieven J made an order which in total came to circa £45,700 per month, exclusive of school fees. The husband refused to pay what had been ordered and unilaterally decided to pay what he felt was reasonable. Arrears quickly built up and in June 2019 the matter came before Roberts J, who quantified the arrears in the sum of £102,489.

The husband did not pay that sum and in August 2019 the wife issued a judgment summons, by which point possession proceedings on the family home had commenced because the husband had stopped paying the rent. By the time the judgment summons and the husband’s cross-application to vary came before Mostyn J, the total arrears under the interim order exceeded £310,000.

However, the husband had not sold any of his assets during the time he had failed to pay interim maintenance to the wife. In fact, he had continued to enjoy his high lifestyle. His social media documented trips to South Africa in April, to Turkey in May, to St Tropez in June, to Ibiza and Switzerland in July, and to Cape Town in December.

He continued to abuse the wife, threatening to file an application in Belarus for B’s custody. This was despite the fact that he did not even visit B until she was four and did not reveal her existence to his parents and sisters until recently. He then texted the wife to say that ‘B will be ur responsibility when we divorce.’ The husband in cross-examination admitted that this was ‘mean and spiteful’, but Mostyn J did not think this really captured ‘the depths of malignity’ to which the husband had sunk (paragraph 34).

The husband had also suggested that B should be cared for in Moscow so that he could visit her regularly. His true motive was to free up the capital value of the apartment in Belarus in which B lived, to put it towards the wife’s needs. The apartment was worth a mere $70,000. Mostyn J found the husband’s attitude towards his disabled daughter to be ‘inexplicable’ (paragraph 35).

Mostyn J expressed further shock at the way B’s acute needs were treated. The husband asserted that B was not a beneficiary of a trust that existed for his father’s grandchildren, which had over $19 million in it. He said that B had specifically not been made a beneficiary because in her condition she had lesser needs than the able-bodied grandchildren. Mostyn J considered that B was as much a beneficiary of the trust as her siblings and cousins.

In terms of the husband’s financial position, Mostyn J was satisfied that the husband, as he had stated in evidence, needed about two years to bring his ventures to profitability and liquidity, and the award was built on that foundation.

The husband had multiple interests in Africa, Russia, the Ukraine, Romania, and Sweden, including in property, land and in various businesses. Mostyn J noted that the husband had taken no steps to dispose of any of his interests in what he said was a time of financial crisis for him.

In terms of the husband’s liabilities, Mostyn J placed no weight on the debts the husband said he owed to his father and to the grandchildren’s trust, on the basis that these were extremely soft debts. Similarly, although the Swedish tax authorities were claiming £22 million from the husband, Mostyn J did not treat this as a hard debt which was immediately repayable, because there were numerous avenues of appeal still open to the husband and because Sweden may struggle to enforce the debt even if the husband lost on appeal.

Overall, Mostyn J was satisfied that it was more likely than not that the husband would have ‘very substantial resources’ available to him in the reasonably foreseeable future, and that even at the present time he had funds available to keep the wife and children afloat for two years, at which point he would likely have sufficient funds to make a clean break settlement in the wife’s favour (paragraphs 57 and 58).

Mostyn J therefore made an order in the following terms:

     i. The husband was to transfer his 10% interest in his apartment in Moscow, his interest in its contents, and his 100% interest in parking spaces in Moscow to the wife. The husband was to remove any charges on these.

    ii. The wife was to keep her 100% interest in her apartment in Moscow, which had an aggregate value of £1.019m. Mostyn J attributed a 4% net rental value to these properties, giving an annual yield of £40,760.

   iii. The wife’s reasonable needs for the next two years came to £212,000 a year (including a reasonable rental figure of £6000 per month). From this, Mostyn J subtracted the wife’s rental yield and reasonable earnings of £20,000 per annum net, which he considered to be the minimum earning capacity to attribute to a woman of the wife’s age with her skills and attributes. This left a shortfall of £151,240 per year, which Mostyn J ordered the husband to pay upfront in view of his ‘shocking delinquency’ in relation to the interim order (paragraph 62).

    iv. On top of this immediate need of £302,480, Mostyn J added the wife’s net indebtedness of £395,252, which was mainly made up of costs which he judged had been reasonably incurred.

     v. Subtracting £50,000 which was held in an account and was intended to cover some of the wife’s rental costs, this amounted to a total figure of £647,732. Mostyn J had no doubt this ‘relatively modest sum’ was readily available to the husband and ordered it to be paid within three weeks of the judgment date (paragraph 62).

    vi. The husband was to indemnify the wife in respect of any liability she may have under the judgment for possession and arrears of rent obtained by the landlord of the family home in London.

   vii. All arrears under the interim order were to be remitted.

   viii. No account was to be taken of the value of the wife’s engagement ring, despite the husband’s expectation for the wife to liquidate it, which was ‘bordering on the grotesque’ (paragraph 65).

   ix. Child support was to be paid by the husband at £20,000 per annum for each of the three children, and in addition the school fees for A and C. This would be more than covered by the $150,000 a year the husband would receive from the grandchildren’s trust.

   x. The husband was to pay the wife £3.5 million for her housing, on a clean break basis in two years’ time.

   xi. The relative youth of the wife and the medium length of the marriage meant it was not reasonable for there to be a full Duxbury fund. There should be a Duxbury award on a stepped basis with the need falling by 50% at age 60. The Duxbury sum needed for a woman aged nearly 42 of £140,000 per annum, falling by 50% at age 60, is £2.7 million.

   xii.  Adding the wife’s housing and Duxbury needs together and subtracting the value of the Moscow properties, which it would be reasonable for the wife to liquidate at that point, gave a net figure for the wife’s needs of £5.181 million which the husband was to pay in two years’ time.

This case should therefore sound as a warning bell to those hoping to reduce the amount they will have to pay their ex-spouse by persuading a court that they are in dire financial straits. Although the husband claimed he was in a financial crisis and that his net worth was minus £50 million, Mostyn J found that he would be able to find nearly £650,000 within three weeks of the judgment date. Furthermore, although Mostyn J could not put ‘even an imprecise figure on the husband’s likely future wealth after the expiry of the two-year breathing period’ (paragraph 57), he was nonetheless satisfied that the husband would likely have sufficient funds available to him at that point to make a clean break settlement in the sum of £5.18 million.

 By Henrietta Boyle, Pupil, 1 Hare Court

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