More evidence that London is the divorce capital of the world

Another Russian divorce case.

London’s status as the divorce capital of the world was enhanced by the news in July this year that Alexei Golubovich and Olga Mirimskaya have apparently issued proceedings in London’s High Court to deal with their English property, following their divorce in Russia last year. 

They are reported to be the first foreign dynasty in which two consecutive generations have sought the aid of the English courts. Their son, in fact, tried to avoid the English courts and initially succeeded by winning the "race’" to issue divorce proceedings outside England and Wales. The Court of Appeal subsequently held that his wife was entitled to commence financial proceedings here because there was a connection to England (she was living here).  

She succeeded in winning an award of just over £2.8m following a marriage of just 18 months. Commentators were critical that the decision would encourage people to move here to take advantage of the more generous divorce legislation.   

At the centre of this latest row is a mansion on Upper Mall in Chiswick alleged to be worth £6.4m. Both claim it is theirs, although it is currently registered in Mr Golubovich’s name.

In English divorce cases, it does not normally matter in whose name a property is registered. The court has the power to transfer assets from one to the other and the recent Prest case confirmed that if a third party owns property on trust for one spouse, a transfer to the other can be ordered. 

In smaller money cases a court will not normally order a transfer to a spouse if it would financially prejudice the other (e.g. an order that means one party remains liable under the other’s mortgage indefinitely, since this affects their mortgage capacity and prejudices their own ability to rehouse!).  

In cases where the matrimonial home is the largest asset and it is required to meet the needs of the spouse caring for the children, it is common to have a "Mesher" Order so that the property is sold upon specified triggering events, such as when the children attain the age of 18 years or cease full-time education. Where both parties want to retain the matrimonial home and there is sufficient money for one of them to do so, emotions inevitably run high.  

In a divorce case, the judge has the option to order a sale of property and other assets. When a couple are arguing about contents, being told that they face receiving just half the proceeds of sale of their second-hand goods and then having to replace them often leads to a pragmatic approach being adopted by both.

With property, if a sale is ordered potentially either or both of the couple can make an offer. In some cases, the issue can go to sealed bids with both (and any interested third parties) having to make offers by a certain time deadline. This can, in practice, mean one pays significantly over the odds for a property he or she particularly wants. Arguably, if the other wanted it as well, it may make losing out less of a bitter pill to swallow.  

According to press reports, the arguments being run by Mr Golubovich and Mrs Mirimskaya are that each says that it was the intention that the property would be beneficially theirs.  

Documentation will apparently show that initially the house was bought by an offshore company in 2004 and then transferred to Mrs Mirimskaya’s name in 2005.  In 2008 the house was transferred into her husband’s name, but she says it remained the common intention of both of them that she would continue to be the 100 per cent beneficial owner of the property. 

The court will no doubt want to hear the circumstances in which this 2008 transfer took place. It may become relevant that in the latter years, according to media reports, the property was occupied by Mr Golubovich, the couple’s two younger children, niece and mother-in-law, while Mrs Mirimskaya spent most of her time outside the United Kingdom.  

He will apparently insist the 2008 transfer was part of the agreed division of their assets and if the documentation confirms this, it is hard to see on what basis the court would order a transfer back, particularly given the developments with prenuptial and postnuptial agreements.  

Until more information is available about both their cases, it is impossible to predict how this one will develop. In choosing to resolve matters through court as opposed to trying mediation or collaboration, what is certain is that both will spend significant sums on legal costs. Unlike most people, they can afford to do so.  

This piece first appeared on Spear's magazine.

Kirstie Law is a partner at Thomson Snell & Passmore

Another Russian divorce in London. Photograph: Getty Images

This is a story from the team at Spears magazine.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR