By Julia Townend, Barrister at 4PB

 Advances of funds to a spouse by family members before, during or after separation habitually become a bone of contention during litigation in the Financial Remedies Court. Disputes may arise in relation to the provenance of funds, but more frequently about their categorisation (gift, hard loan or soft loan) because that often dictates the appropriate treatment of the funds upon divorce.

Recent jurisprudence was set out in P v Q (Financial Remedies) [2022] EWFC B9 in which His Honour Judge Hess reviewed the relevant authorities and summarised the key principles:

• To qualify as a gift, the advance of money generally requires the animus donandi (the intention to give).
• The inclusion or exclusion of a contractually binding obligation to repay a third party within an asset schedule depends on whether it is ‘hard’ (it should feature as a liability in the judge’s computation exercise) or is ‘soft’ (the judge would exercise their discretion as to whether or not, and if so how, it should feature). There is no hard or fast test as to when an obligation will fall into the soft or hard loan category. A common consideration is whether there is a realistic likelihood of enforcement. There is a list of considerations at paragraph 19(x) of the judgment.

The interplay between ‘gifts’ and ‘grudges’ arose in last year’s case at High Court level of Copinger-Symes v Copinger-Symes & Anor [2024] EWFC 415. Whilst understood to be subject to an appeal listed for December 2025, His Honour Judge Hess considered the treatment of a post-separation advance of substantial funds to the husband. The source was the wife’s family (from whom she was estranged). It was very much an exception to the normal rule that ‘blood is thicker than water’.

The wife had been born into the wealthy Australian De La Sala family who generated their fortune in Hong Kong and Singapore from their shipping business. In 2011 a business dispute arose between the wife’s late father, Bobby (alongside the wife, her brother and the husband) and Bobby’s brother, Ernest. Lengthy litigation in the High Court of Singapore ensued, with the former succeeding and receiving a settlement of hundreds of millions of Australian dollars. By the time of this outcome in 2020, the parties were divorcing and the wife was estranged from her family. When Bobby died in 2022 the wife was excluded from the funeral (they had not spoken for five years). The sole beneficiary of his estate was the wife’s mother, who intervened in the financial remedy proceedings. In 2023 the wife instigated an inheritance claim and a constructive trust claim in the Australian courts. Crucially, Mr Copinger-Symes remained on good terms with the wife’s mother and siblings.

The financial remedy proceedings between Mr and Mrs Copinger-Symes were settled following an April 2021 round table meeting and a subsequent exchange of solicitor correspondence. The agreement provided for the wife to pay a lump sum to the husband of £850,000 and all school fees, with other assets and liabilities remaining where they were and a clean break. Depending on whether various loans were called in, the percentage net effect of the division was estimated to be, in Mrs Copinger-Symes’ favour, 67/33 (worst case scenario) or 81/19 (best case scenario). The figures and percentages changed over time as there were substantial delays in finalising a consent order. The matter came before DDJ Nigel Smith in March 2022. In his role as ‘watchdog’ of fairness, he required persuasion that the draft consent order was fair (notably the wife contended she believed the husband would have access to funds from her family which would not be open to her). DDJ Nigel Smith raised other issues (for example, the unenforceable undertakings). However, the cosent order was ultimately sealed on 18 March 2022.

The wife paid neither the lump sum to the husband nor the school fees. Upon cross-applications for enforcement, Mr Copinger-Symes’ disclosure revealed that since the sealed consent order he had come into substantial wealth, receiving payments totalling US$34,777,180 from the wife’s mother/parents all within five months of the sealed consent order. The wife applied for set aside, citing this development as material non-disclosure and/or a Barder event. Her mother intervened, claiming that if the wife was successful in her set aside application, the funds she gifted to the husband should be returned to her based on ‘failure of basis’ or mistake.

The court set aside the consent order on the grounds of the husband’s material non-disclosure. The husband argued that he acquired knowledge of the gifts only after his duty of disclosure ended, but this was rejected, the court concluding that he knew that a large gift would be coming by late 2020/early 2021 and he likely knew the size of the first tranche at least by July 2021. The husband contended that disclosing the payments would have made no difference to the outcome, but this was rejected – they “would have made a significant difference” and are “a long way away from being de minimis”.

Whilst the Barder issue was not considered at length, the court observed that the application of the principle might have been problematic because it was both foreseen and foreseeable that the wife’s parents might make substantial gifts to the husband inter vivos or on death.

Mrs Copinger-Symes’ mother’s application (which the husband did not defend, despite applying the funds to the purchase of a property in Val D’Isere) was dismissed. Her ‘failure of basis’ argument (that her gifts to the husband were on the implied condition/common understanding that they were not to be shared with the wife) was rejected. Her alternative case of mistake did not get off the ground because she could not satisfy the court that it would be unconscionable for the husband to retain the gifts with the result that the wife may share in them – there was no rational adverse consequence for the intervenor. To the mind of the court, these were outright gifts from the wife’s mother/parents to the husband.

Notwithstanding the set aside of the consent order, the financial remedy proceedings were not restarted from scratch. The court proposed a more focussed approach “considering the extent to which it is appropriate for the wife to receive more as a consequence of the gifts made to the husband by the intervenor”. At the conclusion of his judgment, His Honour Judge Hess expressed some provisional thoughts as to the likely parameters of a future order in an attempt to induce an outbreak of common sense.

Regardless of what happens in any future appeal, there is an unfortunate irony in the wife’s previous role as European Manager of Australian rock superstars INXS. Some may perceive the family to have litigated excessively (legal costs were at almost £1.5m back in May 2024). Moreover, INEX’s 1989 hit “Never tear us apart” could not be less representative of the family circumstances.