Our articles are written by experts in their field and include barristers, solicitors, judges, mediators, academics and professionals from a range of related disciplines. Family Law provides a platform for debate for all the important topics, from divorce and care proceedings to transparency and access to justice. If you would like to contribute please email editor@familylaw.co.uk.
A day in the life Of...
Read on

NR v AB [2016] EWHC 277 (Fam): A licence made sense

Date:14 MAR 2017
Third slide
If a matrimonial home is owned by a limited company, shares in which are held - and financing for which was provided - by a spouse together with his wider family, can the ownership of such a matrimonial home (and of other property similarly held) be construed as a nuptial settlement capable of variation under s 24(1)(c), Matrimonial Causes Act 1973?

If so, is that still the case even if the matrimonial home was occupied pursuant to an informal licence?

Does the court have the powers to vary the settlement so as to alter the beneficial interest in the property, so long as the third parties have been joined to the proceedings?

Will a court order a formal lifelong licence to occupy a matrimonial home as a way of resolving a dispute where the home is already held pursuant to the other spouse's family arrangement?

In NR v AB, BCO Ltd, MB and LB [2016] EWHC 277 (Fam), Roberts J considered NR's (W's) application for a financial order with respect to the dissolution of her marriage to AB (H).


H was aged 45 and W aged 37. Both parties were from wealthy Saudi families, H having dual Saudi and British nationality. The parties became engaged in April 1999, marrying in London in May 1999. They moved into a leasehold property, 18 SP Mansions ('18SPM'), in Kensington, London, in the summer of 1999. They had three children, aged 15, 12 and 7. H worked as an international banker, whilst W devoted her time and energies to the care of the family and children. An adjacent flat in the same mansion block was purchased in 2008 ('18A'), and used by the parties, and by the husband's mother (MB) and sister (LB), as a place where nannies and relatives could stay. Legal title to both properties was held by a company, BCO Ltd ('BCO') in which H, through two Jersey nominee companies, had an interest (quantum being in dispute). Both MB and LB also asserted an interest in the shares held in BCO. BCO was itself an offshore property-holding company incorporated in St VIncent and the Grenadines.

H had further property interests in the form of a share in his mother's Kensington flat ('19LTC') a share in a villa in BB Road, Jeddah, and a share in a beach-front villa in Jeddah, each share being with various family members in various different ways.

The parties had finally separated circa August 2012 and decree absolute had been pronounced in July 2014.

The task for the court was to determine:-

i) the beneficial ownership of the various properties; 
ii) whether there was a nuptial settlement capable of variation; and 
iii) the wife’s substantive application for ancillary relief.

Wider family background

W’s father was a Saudi national, 'by all accounts a man of very significant wealth' (para [5]). He had paid c. £1m towards W’s legal fees, the parties having incurred costs of circa £2m between them.

H’s father, who died intestate in 1991, had set out his testamentary intentions in a formal letter of wishes. The court was 'left in no doubt that [H’s family] are a close, tight and loving family unit who have supported each other over the years' (para [3]). The letter of wishes had stated, in short, that H’s mother and sister would 'share equally in the assets of BCO and in any assets which fell into his estate upon his death' (para [31]).

The parties had spent two years in New York in 2004, and had moved to Saudi Arabia in 2009 following some tensions in their relationship, living separately for a while before a temporary rapprochement. H had been surprised that W had suddenly in August 2012 moved with the children back to London, issuing her Form A a year to the day thereafter.

In the ensuing litigation, W had 'plainly been at a significant disadvantage' in that she had borne 'the burden of unravelling a complex financial structure without the benefit of a full narrative explanation which was not advanced until this hearing' (para [42]). Somewhat 'late in the day' (para [76]) H had disclosed an interest in two French apartments and two (further) properties in Jeddah which had been MB’s homes. On 21 May 2014, Sir Peter Singer had ordered the joinder of BCO, H’s mother (MB) and his sister (LB), each of the latter, and a director of the former, giving oral evidence at the final hearing.

What caused the parties and family members to adopt such 'polarised positions' (para [5])?

W’s case – H not being truthful as to property ownership

In short, W’s case was that 'the picture which was presented to her during the marriage in terms of the ownership of various assets is wholly inconsistent with the financial presentation which H now asks the court to accept as reflecting the underlying reality' (para [3]).

W asserted that under Saudi law H would have a fixed entitlement to 58.33% of the BCO shares, and that he in fact held the entirety of the beneficial interest in the two adjacent properties in Kensington. Furthermore, H had always told her that he was the owner of the flats, and MB and LB were – in reality – in full agreement that the entirety of the beneficial interest in these properties belonged to H. W contended that H had an asset base of £17.4m (para [36]).

W sought a clean break in the form of a lump sum of £7.5m. In default of payment, she sought a transfer into her sole name of the two properties in SPM in part satisfaction of that sum. The sum comprised a housing fund of £5.5m and an income fund of £2m. In addition, she sought costs of c. £1.2m and £25,000 for a new car. W sought child support maintenance of £15,000 per annum per child together with school fees (para [37]).

W’s suggested income fund was not a full Duxbury fund but was informed by the principles in Fournier v Fournier [1998] 2 FLR 990, and based upon 14 years of support, W being a relatively young woman. The court noted that under the Saudi 'forced heirship' law, W would in any event inherit 'a substantial fortune' on the death of her father (para [65]).

In W’s view H’s family arrangement was effectively a 'family store room' into which H can dip at will, and she therefore required the court to determine the extent of H’s interest in pooled funds, and the true position of the ownership of the two adjacent Kensington Flats (para [68]).

The case advanced by H, MB and LB

H’s case was that the power of attorney given to him by MB and LB to deal with his father’s estate was subject to an 'express agreement between them that the estate would be held by the three of them in equal shares' (para [31]), and superceded any legal entitlement under Saudi law. The entire legal and beneficial interest in the adjacent Kensington flats belonged to the company, and said H he had never represented otherwise to W.

MB and LB supported H’s contentions, and stated that any money he had spent on the adjacent flats was 'a reflection of his occupation' (para [32]).

H disputed W’s computation of his asset base, and stated that a figure of £1.75m was more accurate (para [36]).

H’s proposal 'which appeared to carry the imprimatur of consent from his mother and sister as the other beneficial owners of BCO' was on the basis of payment to W of £2.5m, with W and the children remaining in sole occupation of the adjacent Kensington flats until their eldest son reached the age of 18 years. W would be expected to relocate thereafter. H implied that W should look to her father for any unmet needs. He offered child maintenance at the rate of £12,000 pa.
During the hearing H offered to meet the income fund sought by W in full (para [67]) – such offer requiring some borrowing from his family, but the concession was predicated on 'allowing [W] to retain exclusive occupation (but not ownership) of the family home at 18SPM and 18A, albeit on terms as to her remarriage and/or inheritance' but not just, now, until the eldest child attained the age of 18.

Needs not Sharing – agreement as to approach

In spite of the acrimony, the parties 'accepted … that this is a case which falls to be determined on the basis of an overall assessment of W's needs. Because the provenance of most of the available wealth in this case is inherited funds, it is common ground that this is not a sharing case' (para [64]).


The court described that much of the oral evidence – from the parties, MB, LB, a conveyancing solicitor and a director of BCO – was adduced 'in the context of an OS v DS (Oral Disclosure: Preliminary Hearing) [2004] EWHC 2376 (Fam) type of hearing', it not being until Day 4 that 'the full picture in relation to the family arrangement and the funds held within it began to emerge with any degree of clarity' (para [39]).

Having heard the evidence, the court was 'entirely persuaded' that H had renounced his formal entitlement under Saudi law to his father’s estate (para [69]): 'following his death, I am entirely persuaded that there was a specific agreement between the three surviving family members to hold what he left to them on an equal basis. That was the clear import of the letter of wishes' (para [69]). The evidence of H’s family, and of the professional witnesses supported this.

The court noted the 'strong feeling which H's family members hold that W's father should be sharing in the responsibility for providing for his daughter, particularly in circumstances where the scale of his personal wealth is said to eclipse whatever resources are available to [H’s] family'.

Article continues below...

Trusts of Land: Constructive and Resulting Trusts Arguments

The court was satisfied that BCO did not hold the adjacent Kensington properties on resulting or constructive trust for H.

The court considered the law with respect to 'common intention' constructive trusts: '[a]ll those involved in the agreement, arrangement or understanding must have the same intention. What is abundantly clear from the evidence is that none of the company, H, his mother and/or his sister intended that 100% of the beneficial interest (or any other percentage) should enure for his exclusive benefit' (para [92]).

Secondly, there was no detrimental reliance by H. The fact that H was the point of contact for the purchase of the properties did not constitute detrimental reliance. Neither did the payment by H, with his own funds, of utility bills, service charges or costs of alterations. For 13 or 14 years the family had occupied the property rent-free, and this 'in all probability conferred on H and W a benefit rather than a detriment'. BCO benefited from the capital appreciation.

The problem with the resulting trust argument was that the funds made available to the company were in the form of formal loans from pooled funds in which H had only a one third share. The fact that the loans were unsecured and interest-free did not point towards a sham arrangement and in any event were W to be alleging this, it should have been pleaded formally, pursuant to the guidance from Munby J (as he then was) in A v A [2007] EWHC 99 (Fam), [2007] 2 FLR 467 (paras [93] and [94]). Various contemporaneous documents, including minutes from board meetings and a letter from a trust, supported the loans as being genuine. 

Furthermore, 'That [BCO] was intended to hold the legal title and the beneficial interest in the properties which it acquired is also apparent not least because, if it did not, its (entirely legitimate) tax avoiding and tax saving purpose would fail' (para [95]). The court considered Lord Sumption’s judgment at para [52] of Prest v Petrodel Resources Ltd & Others [2013] UKSC 34, [2013] 2 FLR 732, and stated that the 'principle obstacle in W’s path … is that … H neither owned nor controlled the company' (para [97]).

Nuptial settlement arguments

H bemoaned the fact that W’s application formally to amend Form A came more than a year and a half after the application had been issued (para [108]).

Nonetheless, the court considered the seminal authority of Lord Nicholls judgment in Brookes v Brookes [1995] 2 FLR 13, and cited with approval the road-map which appears at para [290] of Ben Hashem v Al Shayif [2008] EWHC 2380 (Fam), [2009] 1 FLR 115.

The court agreed with W that the nuptial element for 18SPM '[arose] from the common intention to live there after marriage' (para [105]). But, 'the 'nuptial settlement' is … the grant of the licence itself at the time when the parties took up occupation of the property'. It 'made some form of continuing provision for both or either of the parties to the marriage, with or without provision for their children' (para [115]).

As for 18A, according to W this 'became part of our family arrangements and was an overspill property for Flat 18, with staff, family members and the children spending time there both during the day and overnight. It was never formally rented out to anybody else'. That statement, agreed the court, 'appears to impress upon the arrangement a sufficiently nuptial element to bring it within the scope of s 24(1)(c)' (para [106]).

The court concluded that as 18A was acquired by BCO 'during the marriage', and was 'acquired precisely because of its proximity to 18SPM and the opportunity it provided the family to 'expand', those factors alone provided the nuptial element' (para [116]). The granting of the licence to the family to occupy 18A was therefore a further nuptial settlement capable of variation.

'Having found that the legal and beneficial interests in both 18SPM and 18A lie with the company, it must follow that the subject matter of both settlements is a licence to occupy the properties.' (para [120])


The court devoted some considerable time to quantification of the assets, arriving at a figure of c. £8.9m (or between £12.4 and £15.7m if H’s one third interest in the beach villa in Jeddah was included) as representing H’s one third share in H’s wider 'family arrangement', H holding a further sum of £1.6m liquid capital. Joint liquid funds of £40,000 also existed.

The court 'left him to negotiate his own arrangements in relation to the liabilities he claims to owe to his brother-in-law … and [to] a close friend' (para [190]).

Why precise quantification did not matter

Despite provision some months prior to the hearing for an updating valuation of the BB Road property and beach villa in Jeddah, neither party had expedited this. An 11th hour valuation was deficient, and based upon 'a selection of Google earth images rather than a personal visit' (para [147]). 

The court was less concerned about the BB Road valuation as 'the difference which separates the parties is unlikely to impact materially on an overall assessment of H's resources in a non-sharing case' (para [147]).

As for the beach villa, the valuation report itself stated that it was 'not a self-contained comprehensive valuation report to estimate the fair market value' (para [148]). Matters were further complicated when the court, whilst finalising judgment, was informed by the valuer via H’s solicitors that a 'significant mistake' had been made as to the size of the plot being valued (para [152]).

The court concluded that: '[t]he reality is that it is just not possible at the present time to settle upon any reliable figure … and this is not a failing which can be laid solely at H's door' (para [153]).

Furthermore this was 'inherited wealth', it was 'an illiquid share in a property which is not going to be sold', and, 'W's case is advanced squarely on the basis of need', so the court’s lack of confidence in any of the valuation figures 'does not change [the court’s] view whatsoever about the appropriate outcome' (para [155]).


The court stated that it was 'entirely persuaded' that H’s revised offer was 'the right answer' (para [187]): ie W and the children could continue to occupy the adjacent Kensington apartments on a rent-free basis. The court would ensure that the legal documentation which would be needed to be put in place was 'sufficiently tightly drawn to reflect the underlying intention which underpins these orders' (para [193]).

The outcome 'carries the full support of H's mother and sister. It represents a significant detriment to their personal financial interests. Absent W's occupation, the two apartments would attract a significant rental return in the central London market which would provide BCO with a valuable income stream. That, in turn, would ultimately benefit the shareholders. Their support for the current proposal effectively blocks any future income yield from these corporate assets'. (para [187])

The payment of the lump sum of £2m to W (the income fund) would 'effectively exhaust [H’s] own capital resources' (para [190]). However, H 'himself accepts that, once this litigation is over, he is likely to earn sums equivalent to his former income in excess of £300,000 per annum' (para [192]). 

The court agreed with W that child maintenance of £15,000 per child per annum was appropriate, and H had by the end of the trial agreed to meet school fees.
The court envisaged that counsel would agree the arrears of maintenance which W claimed (para [194]).


The parties were granted an 'opportunity to consider and reflect', and were invited to agree costs (para [195]).


The key points that arise from this judgment are as follows:

(1) A party – the husband – who had advanced little documentary evidence prior to the hearing to support his contention as to the structure of a family financial arrangement was able to succeed, by virtue of the persuasiveness of his witnesses’ oral evidence, on what at first blush would have appeared to be an ambitious and tricky argument.

(2) The court will respect legitimate third party interests in property, despite one spouse arguing that the ownership of various assets by the other is in reality not as has been presented to the court.

(3) The ownership of property - particularly the matrimonial home - by a company should not automatically be assumed to be a device to undermine a claim for a financial order: such arrangements can have entirely legitimate tax-avoidance purposes, or investment purposes for a spouse’s wider family.

(4) The case is a reminder that the court will apply the same trust principles as the civil courts in determining beneficial interests in allegedly matrimonial property, and it is only through joinder of third parties that such a determination is (usually) possible.

(5) The nuptial settlement argument enabled W and the children, on terms, to remain in the matrimonial home, in circumstances where W had been unable to establish that H had a beneficial interest in the matrimonial home, which was owned by a company which itself was neither owned nor controlled by H.

(6) The court will permit an amendment to Form A if fairness and necessity so dictate some considerable time after issue.

(7) In a situation where there is not enough liquid capital to rehouse a spouse in a manner which reflects the standard of living during the marriage, the court may be able to find an alternative solution to the liquidity problem – through use of a formal licence.

(8) Where the provenance of most of the available wealth is inherited funds, the court will readily accede to arguments that the outcome should be decided on a needs, rather than a sharing basis.

(9) The court will take account of wider family wealth to meet elements of a spouse’s stated requirements, if these are beyond the spouses’ needs: here the court assumed that W’s wealthy father may 'step into the breach' to provide a second property for W (paras [173], [189]).

(10) Where a spouse, in this case H, is required to look to third parties for provision of funds to pay the other spouse, if the court is persuaded upon hearing evidence from those third parties that they will assist, then 'judicious encouragement' (as described in Thomas v Thomas [1995] 2 FLR 668) will be unnecessary.

(11) This case turned on the impression made on the court by the family and professional witnesses. If a party is running an argument that there is a secret agreement to defeat her claim, then there is always a risk that it will not be established following cross-examination of the alleged parties to the agreement.

(12) If you are alleging a 'sham' then you need to plead it formally!

Gwyn Evans is a barrister at Tanfield Chambers. Follow him on Twitter @GwynforLaw.