What do the divorce courts think is an appropriate standard of living in a case where the wealth is “stratospheric?”

The courts had to grapple with this issue in the case of Juffali v Juffali [2016] EWHC1684 (FAM). The case is  interesting as the divorce took place in Saudi Arabia which meant wife therefore had to submit a claim not under the ordinary divorce law, but under Part III of the Matrimonial and Family Proceedings Act 1984 (“the 1984 Act”).

The wife applied to the English court for financial provision for herself and the parties’ 13-year-old daughter. Tragically the husband was suffering from terminal cancer at the time of the final hearing and has since died.

This is a case where the husband was fabulously wealthy. The wife’s case was that her husband had resources at least £650m. It was common ground that in 2013 he had “sold” the bulk of his Saudi assets to his three daughters for just over £512m. The wife had been a successful model. She had not, however, worked since the marriage.

The wife’s case was that she should have a global provision in the sum for £196.5m this comprised of a central London housing fund of £62.8m and a capitalised maintenance fund of £127m. That figure was calculated on the basis of an annual budget of around £6.37m. That factor had been calculated by the wife’s accountants, PWC.

The husband’s case was that £20m was sufficient to meet the needs of a 54-year-old woman. Particularly as he was meeting all the child of the family’s needs. The husband calculated the wife’s existing wealth to be £20.2m and offered a further £17m plus the use of a luxurious London property during his daughter’s minority.

The family had an enviable lifestyle. Their family home was Bishop’s Gate House, a vast property with 33 acres of land adjacent to Windsor Great Park. During the marriage, they had a valuable palazzo in Venice. That had since been sold for €22m. A year after the purchase of the palazzo the husband acquired land in Switzerland and built an “iceberg chalet”. It comprised of 6 – 7 floors and was described as having an interior of “sumptuous opulence”.

Because the wife had, throughout her marriage, been insulated from financial issues she had no independent means to ascertain what it would cost to maintain her lifestyle going forward at an equivalent level.  This was done by PWC. Her average monthly costs amounted to approximately £544,000 or £6.52m p.a. Her husband’s counsel said that her claims were “excessive and exaggerated”. For example, her claim for a housing fund of up to £68m for a London property was three times the value of her current home (valued at a mere £22.5m). Her annual travel budget was in excess of £2.1m p.a. including £600,000 p.a. for private jet charters. Her budget for clothing and jewellery was in excess of £1.02m p.a. including £80,000 for a special gown annually, and £58,000 for two luxury handbags. Under cross-examination, her annual budget was pruned to £2.5m. The judge, Roberts J, made it clear that the wife could not expect to replicate her previous standard of living going forward. There would be reductions in maintenance to £1.675m p.a. when her daughter completed her tertiary education and a further reduction to £1.256m p.a. on her 75th birthday. The sum required to support this standard of living was capitalised at £44.3m. It was held reasonable for the wife to contribute to her needs from her own resources.

Her needs were calculated as follows;

Housing Fund London – £18m

Capitalised maintenance “Duxbury” Fund – £43.3m

Sub Total – £62.3m

LESS

Contribution by W – £8.97m

Shortfall to be funded by Husband – £53.3m

The case is interesting in that is shows what sort of provision is appropriate in a case that is governed by the 1984 Act. The Judge distilled the following principles: –

1. The first consideration in any assessment of needs must be the welfare of any minor child…
2. After that the principal factors that are likely to impact on the court’s assessment of needs are

I.  The length of the marriage – here it was 12 years

II.  The length of the period following the end of the marriage during which the applicant will be  making contributions to the welfare of the family – here probably another 8 – 10 years

III.  The standard of living during the marriage – here “stratospheric”

IV.   The age of the applicant – 54

V.    The available resources

Of course, the suggestion is that if the wife had been applying under the Matrimonial Causes Act for a financial provision she would have had a still more generous settlement.