Judgments are normally published because there is some aspect of the case that is considered to be of interest to family lawyers and others concerned with family justice.

But sometimes a case may be of interest for a number of reasons.

And so it was with the judgment in the recent financial remedies case Baker v Baker.

The judgment is firstly notable for being the last case heard by Mr Justice Mostyn, who has sadly been forced into early retirement by ill health.

But it is also notable for reasons related to the case itself.

2015 Separation Agreement

The basic facts of the case were as follows. The parties were married in 1986. There were no children of the marriage. The parties separated and entered into a separation agreement in New York in 2015, which provided for capital and maintenance payments by the husband to the wife.

Divorce proceedings were issued in 2021 and the wife issued a financial remedies application.

Hearing the application, Mr Justice Mostyn found that the husband’s net assets were some £5.6 million, and the wife’s net assets were about £5.8 million.

The husband’s stance was that the parties’ mutual claims should all be dismissed.

The wife, however, argued that the terms of the separation agreement should be adhered to, and claimed that this entitled her to an award of £9.34 million.

On the face of it, this would leave the husband insolvent to the tune of £3.8 million.

However, the wife claimed that the husband had “secreted away” assets of £27.4 million. This was not, she argued, money that the husband had recklessly dissipated, which the husband should be “treated” as having (referred to by Mr Justice Mostyn as “pixie money”), but rather was money that actually existed.

If that was so, the total assets would be £39 million, and the award of £9.34 million to the wife would leave her with £15.2 million, or 39% of the total, which would be “fair enough”.

The court’s approach to the separation agreement

At this point we must pause to consider the approach of the courts in England and Wales to separation agreements.

The courts here are not bound by the terms of a separation agreement, but Mr Justice Mostyn took the view that they should be treated in much the same way as an agreement that had been made into a court order, i.e. a ‘consent order’.

This means that as far as the capital terms of the agreement are concerned, they should not be varied by the court unless they amounted to a lump sum payable by instalments, although the income (i.e. maintenance) terms could be varied, if the court found that there had been a change in circumstances.

An “inveterate liar”

So what of the wife’s claim that the husband had hidden away assets?

Well, despite finding the husband to be an “inveterate liar”, who had lied systematically to the court, and whose personality was “a toxic mixture of arrogance and dishonesty”, Mr Justice Mostyn did not find the wife’s claim that the husband had secreted away assets to be proven.

The judge had to look at the actual evidence and, in order to avoid the formation of bias, put his irritation, indeed affront, at the “shocking, grossly offensive way in which the husband gave his evidence” to one side.

He was not satisfied, on an assessment of the evidence, that the husband had hidden funds.

Accordingly, the assets were as Mr Justice Mostyn had found.

The question then was: exactly what was the wife entitled to under the separation agreement?

We need not go into details here, but suffice to say that Mr Justice Mostyn found that the terms of the agreement only required the husband to pay the sum of £1.4 million to the wife. The husband was essentially required to pay the capital payments under the agreement, but not all of the maintenance payments. In particular the Court found that wit would not be fair to require the husband to make any further payments of maintenance in the future, given the respective financial positions of the parties.

In addition, the husband should pay £200,000 costs to the wife.

The net effect of all of this was that that the husband’s deemed net worth reduced to £3,941,565 (or 35% of the assets), while the wife’s increased to £7,458,895 (or 65% of the assets).