Court sets aside sham tenancy in high-profile divorce case

Introduction

The Family Court, presided over by Mr Justice Poole, delivered a significant ruling in the case of Collardeau vs Fuchs and LJ Hooker Projects FZ-LLC. The case revolved around the enforcement of a financial remedy order in a high-profile divorce, where the court was asked to set aside a purported assured shorthold tenancy (AST) over a valuable property in the Cotswolds.

Background

The Applicant, Alvina Collardeau, was awarded a substantial financial remedy in her divorce from Michael Fuchs, the First Respondent. The financial order included a lump sum payment of £18.964 million. However, the First Respondent failed to comply with the order, leading to a series of enforcement actions, including the sale of several properties.

The Disputed Tenancy

The application before the court was to set aside an AST over the Cotswolds Property, which was disclosed by the First Respondent only after a cash buyer had made an offer. The AST, dated 5 September 2023, was purportedly between the First and Second Respondents, with the tenancy not commencing until 1 June 2024. The court was tasked with determining whether this tenancy was a genuine disposition or a sham intended to frustrate the enforcement of the financial order.

Evidence and Testimonies

During the hearing, evidence was presented from various parties, including Ms Wilde from Lakes By Yoo, who managed the estate where the property was located. She testified that there was no record of the Second Respondent or the purported tenancy. Mr Hooker, representing the Second Respondent, claimed that the AST was a legitimate business arrangement for sub-letting the property.

Legal Framework

The court examined the application under the Matrimonial Causes Act 1973, which allows for the setting aside of transactions intended to defeat financial relief orders. The court considered whether the AST was a 'disposition' under the Act and whether it was made with the intent to impede the enforcement of the financial order.

Analysis and Decision

Mr Justice Poole found that the AST was a sham, orchestrated by the First Respondent to frustrate the enforcement of the financial remedy order. The court noted the lack of genuine commercial substance behind the tenancy, the close personal and business relationship between the Respondents, and the First Respondent's pattern of non-compliance with court orders.

Conclusion

The court set aside the AST, allowing the enforcement proceedings to continue unimpeded. This decision underscores the court's commitment to upholding financial remedy orders and preventing parties from using sham transactions to evade their obligations.

Learn More

For more information on housing law, see BeCivil's guide to UK Housing Law.