McCartney case could alter legal landscape

McCartney case could alter legal landscape

By Megan Murphy, Law Courts Correspondent

Published: February 8 2008 19:34 | Last updated: February 8 2008 19:34

After 18 months of legal wrangling, tabloid leaks and increasingly rancorous mudslinging, Sir Paul McCartney’s divorce from Heather Mills seems set for a final court hearing next week.

At stake, however, may be much more than how the ex-Beatle’s rumoured £800m fortune should be carved up.

The case, along with two other high-profile divorce battles, may reshape the legal landscape in “big-money’’ splits.

During the coming weeks, courts are set to consider key issues such as how assets should be divided in a short marriage and whether spouses can tap offshore trusts to enforce UK divorce settlements.

A recent ruling backing the enforceability of pre­nuptial agreements will also have a significant impact on how courts approach high net-worth couples.

Looking beyond tabloid headlines, lawyers say the McCartney divorce may establish new guidelines on how settlement awards should be calculated when most of one spouse’s assets were accumulated before marriage.

Sir Paul and Ms Mills, an ex-model and animal rights activist, split in May 2006 after four years.

In determining a settlement, the court is likely to focus on the financial needs of their daughter, Beatrice, and the expenses associated with the lifestyle to which she and Ms Mills have grown accustomed, experts say.

The House of Lords has already laid out some principles for how assets should be divided in a short, big-money marriage, in a 2006 case involving Alan Miller, a former fund manager at New Star Asset Management. Yet in contrast to Sir Paul, Mr Miller made most of a £30m fortune after his marriage.

Ms Mills may instead look to target any music royalties or investment income Sir Paul earned during their time together in the closed-door hearing, says Pauline Fowler, a divorce lawyer at Hughes Fowler Carruthers.

Ms Mills may also argue that she should be compensated for contributions in less tangible areas, such as maintaining their household.

Interestingly, given a recent court ruling, the couple may have been able to circumvent such acrimonious negotiations, had they signed a prenuptial agreement. While still not legally binding in the UK, the Court of Appeal in December backed efforts by Stuart Crossley, a wealthy property developer, to hold his wife to the terms of an expansive pre-marital agreement.

Susan Crossley, who has amassed £18m through three previous divorce settlements – most notably from racing magnate Robert Sangster – had been attempting to void the deal on the grounds of non-disclosure. Barring a settlement, the case is tentatively scheduled to return to court next week.

“Given the recent decisions, I think making pre­nuptial agreements legally binding is likely to be the next big change in law,’’ says Ms Fowler.

Divorce lawyers are also watching closely for developments in a long-running battle between insurance multimillionaire John Charman and his ex-wife Beverley.

Mr Charman, the founder of the Axis insurance group, was ordered to pay his former spouse £48m in 2007 in the largest contested divorce settlement in English legal history.

Beverley Charman is seeking to enforce that order against a Bermuda-based trust. Mr Charman, who has already paid his ex-wife £20m, has claimed consistently that he set up the offshore trust to provide exclusively for successive generations of his family.

The Court of Appeal, however, ruled last March that the £68m trust must be included in the marital pool of assets to be divided.

His lawyers are set to contest efforts to enforce the £48m payout in Bermuda, in a case that has wide-ranging implications for both international trust and family law.

Perhaps the only certainty is that wealthy business people, and their lawyers, will soon have a much better sense of where they stand in the big-money divorce stakes.