In family court proceedings, an exceptionally wealthy party may be able to argue the ‘millionaire’s defence’, which is to acknowledge that due to their wealth they could afford to pay any reasonable sum ordered by the court, and consequently they should not be required to provide financial disclosure as usual. 

In the recent case of Y v X [2024] EWFC 4, reviewed here by Hannah Boddy, the court considered the use of the millionaire’s defence in financial proceedings relating to child maintenance between unmarried partners. The case also provides useful guidance on the approach to quantifying the appropriate level of child maintenance.

Background

This case before Mr Justice Peel concerned proceedings under Schedule 1 of the Children Act 1989 in respect of two children, aged four and two. The mother (M), a US citizen, was a professional equestrian from the age of 18 onwards until shortly before the birth of the parties’ first child. The father (F) is a member of a Middle Eastern royal family. He had not lived in his country of birth since he was 17 years old and had never undertaken royal duties. They married in a Nikah ceremony only (ie an Islamic marriage, which does not constitute a valid marriage under English law) in London on 3 September 2018.

In 2018, M moved to south east England to live with F at his home (owned since 2011), worth approximately £2.3-£2.4m. This was the family home and was described as relatively modest, given F’s overall wealth. Both children were born in England in 2019 and 2021 respectively. The parties enjoyed an extravagant lifestyle (private jets, first-class commercial flights, staffing, high-end cars, etc. and travelling abroad at least once a month to glamourous destinations).

The parties separated in September 2021. M had negligible financial resources besides jewellery, and debts of about £211,000.

On 18 October 2022, and by consent, Mrs Justice Arbuthnot gave permission for M to relocate with the children to the USA.

M’s open position was that she required $780,000 per year child maintenance (later increased in oral evidence to $913,860 per year) and $5.5m by way of housing fund. In addition she sought a further c. $600,000 for furnishing, security and cars, and c. £600k for horses.

In contrast, F’s open offer provided for M to receive $480,000 per year for child maintenance and $4m for housing, with an additional $700,000 for capital items but no provision for horses.

Millionaire’s defence

Whilst Mr Justice Peel did not accept F’s millionaire’s defence in full (that he was sufficiently wealthy to be excused from providing any financial disclosure), he was willing to order that F need only provide limited financial disclosure. Specifically, F still had to complete the detailed court prescribed form for financial disclosure, but he did not need to provide any supporting documentation.

F disclosed assets of between £111m and £250m net (depending on whether or not a minority shareholding discount was applied) and estimated total net income of £5.155m per annum.

Mr Justice Peel’s judgment makes it clear that where the millionaire’s defence is relied upon, it is customary and necessary for at least some disclosure to be provided. This is to give the other party and the court some understanding of the scale of wealth and how it is structured, consistent with the court’s statutory duties. Limited disclosure also enables consideration of the structure and enforceability of any award, and it informs the reasonableness of the budgetary claims.

The judge noted that the only reported case (of which he was aware) where the millionaire’s defence had succeeded in full and no disclosure had been made at all was HRH Haya bint al Hussein v HH Mohammed bin Rashid Al Maktoum [2022]. However, Mr Justice Peel considered the facts and circumstances of that case to be so unique as not to dictate the general approach to be adopted when a party attempts to rely on the millionaire’s defence.

Judgment

Mr Justice Peel awarded M a housing provision of $5m together with costs of purchase and taxes, a £600,000 lump sum for capital needs including furnishing, security, debts and horses, and a further lump sum of $150,000 to cover cars for M and the children’s nanny. Mr Justice Peel ordered F to pay $500,000 per year in child maintenance, which was more or less in line with F’s open position.

Regarding M’s position that she required over $900,000 per year in child maintenance, Mr Justice Peel commented: “It is hard to resist the conclusion that M has projected some of her aspirations within the children’s stated needs.” He determined that many of M’s figures, as set out in her income needs schedule, were excessive and exaggerated.

Mr Justice Peel found that M’s claim seemed grounded in her wish for a high-end lifestyle reflecting her experience during her four year relationship with F. He commented: “I am clear that in reality this was a lifestyle enjoyed principally by M and F. It was not enjoyed by the children to anything like the same degree. When the parties separated in 2021, the children were respectively just under two years old, and just over four months old. They cannot have had any real appreciation of the lavish lifestyle around them, or, for that matter, any recollection of it.” Therefore, her claims made in this respect were found to be disproportionate.

Conclusion

Partner Matthew Humphries comments: “This case reminds us that even when using the millionaire’s defence, some form of disclosure will almost always be required by the court to allow it to assess what is a reasonable outcome, and to seek to avoid disclosure altogether is unrealistic. The judgment also provides interesting commentary on the assessment of child maintenance (in cases of unmarried parents) where there is a very high level of wealth and consequent standard of living.”