The courts are alert to the risk of divorcing couples being less than honest about their assets and liabilities in financial remedy proceedings. Recently, the Family Court rejected a husband’s assertion that he owed £1.6 million to a company owned by his brother.
The husband and wife were both Nigerian and had met when she worked for his hotel business there. They had married in 2004 and moved to the UK in 2009. After they separated in 2015, the husband had moved back to Nigeria while the wife and the couple’s children continued to live in the former matrimonial home (FMH) in England. A decree nisi was pronounced in Nigeria in 2018. The wife was given permission to seek financial relief in England after an overseas divorce under Part III of the Matrimonial and Family Proceedings Act 1984.
The husband contended that in 2009 a company his brother owned had made a loan of £1.6 million to him and a company of his in Nigeria. No interest on the loan was provided for and no repayment date was specified. He claimed that he had used the funds to buy the FMH and that the debt remained owing. The wife disputed the existence of the debt, claiming that it was a concoction between the husband and his brother designed to defeat her financial remedy claims. The Court considered as a preliminary issue whether the debt was owing. The FMH was the only asset in England and, if the debt existed, there would be no assets available for distribution.
The Court accepted the wife’s evidence that the husband had not told her about the alleged loan and had said that the funds had come from his business wealth. In the Court’s judgment, he had not told her about the debt being used to buy the FMH because there was no such debt. It was a contrived explanation to fit a case that was designed to deprive the wife of a meaningful claim in respect of the FMH.
The Court found that the funds used to buy the FMH had come from the husband’s own resources and not from his brother’s company. The wife’s evidence about their lifestyle in Nigeria – living in a luxury apartment, owning four cars and holidaying in London and Dubai – seemed to the Court to be consistent with an overall picture of affluence at the time. No evidence of the brother’s company’s financial position had been provided, and there was no reason to assume that it had had the financial wherewithal to make a loan with no commercial purpose.
Neither the husband nor his brother’s company had produced a single document to demonstrate that the company had transferred funds to him. The Court observed that this was particularly odd given that both the husband and his brother were experienced businessmen. The brother had said that his company regularly made loans: the Court found it improbable that a company that had the capacity to make a loan of £1.6 million and made loans as part of its core business activities did not have scrupulous records to confirm the existence of a loan agreement and payment of the money. Overall, the Court was satisfied that the debt was not truly owing.