Within this blog we will discuss the case of AB v CD and Ors [2025] EWFC 958 – AB v CD & Ors – Find Case Law – The National Archives
Background
In this case we acted for the Wife in respect of her divorce from the Husband.
The parties were married for some 20 years and there were two children of the marriage. The parties separated on 19 April 2019.
Due to the nature of the assets involved in the case family members of the Husband were invited to join the proceedings so they could provide the court with information about the various family assets which the court were being asked to consider as part of the divorce.
The main asset with which the court was concerned was a family business (Guthrum). Guthrum was established in 2014 and the Husband was the sole shareholder of the company. Guthrum also owned the land from which the company operated. The Husband and his Mother were joint directors of the company. The land held by the company was also purchased with the assistance of intercompany loans from various family businesses.
On 30 April 2019, some 11 days following the separation of the parties, the Husband transferred his shareholding in Guthrum to his Mother and Brother for nil consideration.
To complicate matters further, due to the loans advanced to Guthrum by other family companies to assist with the purchase of the land, the Husband’s Mother issued statutory demands in January 2022 for the funds to be repaid to the various companies. As Guthrum did not have the liquid capital at the time the demands were issued, the company was placed into administration. As a result, the financial remedy proceedings were paused until the administration proceedings had concluded.
The focus of this blog will be the financial remedy proceedings.
Within the financial remedy proceedings, the key question for the court was:
Had the shares been transferred with the intention of defeating the Wife’s claims in financial remedy proceedings and, if so, should the shares be taken into account within the overall division of the assets between the Husband and Wife?
To answer this question, the court had to consider Section 37 of the Matrimonial Causes Act 1973.
So, what is section 37 of the Matrimonial Causes Act 1973?
Broadly speaking Section 37 of the Matrimonial Causes Act 1973 can either:
- Prevent parties from dealing with their assets to the disadvantage of another party during the course of financial remedy proceedings or;
- If a party has already transferred assets relevant to the proceedings, seek to set aside that transaction and bring the assets “back into the pot”.
When an application is made under Section 37 in the context of setting aside a transaction which has already taken place, the court needs to be satisfied that:
- A “reviewable disposition” had been made;
- The transaction had been made with the intention of defeating the applicant’s claims; and
- A different financial relief would have been made had the transaction not taken place.
A transaction will be reviewable, unless it has been made for valuable consideration to a person (not a party to the marriage) and, at the time of the transaction, the person acted in good faith and without notice of any intention on the part of the other party to defeat the applicant’s claims for financial relief. In simple terms, if you transfer shares in a company at a significant undervalue and the person to whom you transferred the shares knew that you were getting divorced, the court can look to set this transaction aside.
Valuation of the shares
The primary consideration for the court when considering if the shares had been transferred for valuable consideration is whether a value could be attributed to the shares.
It was the Wife’s position that Guthrum was a successful business and therefore had a value, meaning it was a reviewable disposition for the purpose of Section 37.
It was the position of the Husband’s Mother that as Guthrum had been placed into administration in 2022, it had no value at the date of transfer and therefore could not be considered a reviewable disposition under Section 37 – the share transfer was legitimate and should not be set aside. The Husband’s Mother also argued that she had not been given notice of the separation and likely divorce between the parties and therefore had acted in good faith when the shares were transferred by the Husband to her and her other son.
Evidence
The judge in this case had to grapple with conflicting evidence from all parties regarding the circumstances of the share transfer and also regarding the value of the shares.
The evidence of the parties was inconsistent and changed throughout the course of the proceedings. For example, the Husband’s case throughout the proceedings was that he was made to transfer the shares to his Mother and Brother to ensure the company remained within the family and was not impacted by the divorce. During the preliminary issue hearing, the Husband changed his position to agree with his Mother in that she was always the true owner of the business and the share transfer was to regulate the position.
Inconsistencies arose within the evidence given by the Husband’s Mother in numerous witness statements filed in both the financial remedy proceedings and also the parallel administration proceedings concerning Guthrum.
In addition, the judge criticised the Wife in this case for not fully pleading her case within her Form E (which prepared prior to our instruction) and in particular for not including evidence which she then later sought to rely upon during her oral evidence. A Form E the form which must be completed at the very beginning of you case to set out he financial position of both you and your ex-spouse.
The judge did not place much weight on the evidence given by the parties during the preliminary issue hearing.
Whilst most people may consider the Form E to be just another task to complete without too much thought given to the content, this case serves as a reminder that the Form E is a crucial and key document. It is therefore critical to ensure that all evidence which you wish to rely upon is included within the Form E and your case is properly and fully pleaded.
In addition, this case serves as a reminder that, where multiple statements are prepared and filed, care must be taken in the drafting process to ensure no inaccuracies are present which may undermine your case. If such inaccuracies are present, for example due to the passage of time which has elapsed, they must be explained or corrected at the earliest opportunity.
A court may be critical of changing your case at the eleventh hour. The court can draw adverse inferences in such situations which may be detrimental to your case.
Outcome
Ultimately, after consideration of the expert evidence within the financial remedy proceedings and evidence filed within the parallel administration proceedings, the judge found that Guthrum did have a significant value which would materially impact upon the outcome of any financial remedy application.
The Judge was not persuaded by evidence from the Husband and the Husband’s Mother that she was always the true owner of Guthrum.
The Judge therefore determined that the shares were transferred with the intention of defeating the Wife’s claims in financial remedy proceedings and that the share transfer should be set aside.
Key points to take away from this case
The key points which to take away from this case are:
- Consistency in evidence is key. If evidence is not provided from the outset, or if there are material inconsistencies in the evidence which you provide to the court, this can be detrimental to your case.
- Seeking legal advice at an early juncture will ensure your case is presented properly and accurately to the court and to the other party. It also ensures that essential evidence to support the case can be obtained at an early juncture.
Rayden Solicitors are specialists in family law and therefore if you have any issues with your ex-spouse transferring assets to third parties, please contact one of our solicitors who can advise you in relation to your specific circumstances.
