One law for the rich: the millionaires defence
By:2 commentsFebruary 28, 2017
The law, or so I was always told, applies equally to all, irrespective of their means. It’s a laudable notion, but one that is true more in theory than in practice.
At the bottom end of the scale we have seen the idea of ‘equality of arms’ utterly destroyed by the removal of legal aid, and thus the possibility of proper legal representation for the less well off. At the top end of the scale we have something that has always made me feel uneasy: the so-called ‘millionaire’s defence’, whereby the wealthy litigant excuses him or herself from the requirement to make full disclosure of their means in financial proceedings, on the basis that they can afford to meet any reasonable order that the court is likely to make.
And that defence was raised by the father in the Schedule 1 Children Act case G v S, heard recently by Mr Justice Hayden in the High Court. (For the benefit of non-lawyers Schedule 1 of the Children Act gives the court power to make financial provision orders for children – it is primarily used in cases where the parties have not married.)
The basic facts in G v S were that the parties met in 2013 and the following year the mother gave birth to a daughter, ‘L’. The relationship ended in 2015 and L resides with the mother.
The circumstances of the parties were as follows. The mother is a Swedish national, presently living in London, working part-time as a pilot for British Airways. Her Form E financial statement indicated that she earns £35,000 per annum. The father is a US national, also of Swedish origin, who lives in Switzerland. He is described by the mother’s counsel as a ‘scion of one of the best-known and wealthiest families in Sweden’. He raised the ‘millionaire’s defence’, and therefore provided minimal disclosure of his means. However, the following points give a flavour:
- He does not work – he spends much of his time pursuing his interest in competitive sailing.
- He is the sole beneficiary of two very substantial trusts, having received income distributions from them amounting to approximately £2.75 million in the year to April 2015.
- The mother asserted that the father and his siblings also received a substantial inheritance from their late father. The mother considers this to be in the region of £350 million.
- The father is said to enjoy a ‘jet-set lifestyle’.
I think you get the idea: the father was fabulously wealthy, and didn’t need to trouble the court with such unseemly details as the value of his assets, income and outgoings. The court, rightly or wrongly, accepted the defence, and did not therefore require the father to do what all litigants of more modest means are required to do, i.e. make full disclosure of their means.
Of course, there are arguments for and against the ‘millionaire’s defence’. On the one hand there is much to be said for the principle that all people who go before the courts should be treated equally, and subject to the same rules. On the other hand, why should the court go to the trouble, time and expense of investigating the millionaire’s means, when it is clear that he/she can meet whatever reasonable order the court is likely to make?
As for myself, even taking that latter point into account I still feel a little uneasy. Call me old-fashioned, but I still cling to the notion of equality, albeit I must admit that the events of recent years have made me realise that the idea of a legal system that is equal for all is an increasingly forlorn hope.
Going back to G v S I don’t really need to say much more, as the case was essentially settled, with the father providing, amongst other things, a ‘housing fund’ for L of £2.1 million, and maintenance of £160,000 per annum, index-linked.
There is one other point, though. The ‘millionaire’s defence’ can work against the party raising it. In the case there was a disagreement over who should pay for the costs associated with the mother moving home. This was quickly dealt with by Mr Justice Hayden:
“The dominant feature here is the scale of the father’s assets and his lifestyle generally. In my judgement, where the ‘millionaire’s defence’ is relied upon, this feature inevitably becomes the lode star in such disputes. I can see no reason for depleting the funds to provide alternative accommodation for L where the father has assets on this scale.”
Perhaps this assuages my unease a little…
The full report of G v S can be found here.
Photo by Brent 2.0 via Flickr under a Creative Commons licence.
February 28, 2017
Categories: Family Life