The High Court has delivered a significant ruling in a complex financial remedy case, declaring that a purported £1.6m debt was a fraudulent fabrication intended to strip a matrimonial home of its equity and defeat a spouse’s legitimate claims for financial relief.
Facts:
The husband and wife, who have four children and are both Nigerian nationals, married in 2004 and moved to the UK in 2009. Shortly before this move, the husband and his brother purportedly entered into a loan agreement for £1.6m in favour of his brother’s company Linkserve, which the husband claimed was intended for a hotel business but was instead used to purchase the family’s matrimonial home in Hendon for £1.35m. The wife maintained that she was never informed of any such loan and was led to believe that the house was purchased using the husband’s existing wealth from his successful guesthouses in Nigeria. The family house in question was purchased in the husband’s sole name. The wife subsequently issued divorce proceedings in the UK in 2017.
The legal history of the case was described by the Judge as labyrinthine, involving multiple proceedings across two jurisdictions. After the parties separated in 2015, Linkserve initiated enforcement proceedings in Nigeria against the husband and his company. In 2019, a Nigerian court entered a consent judgement for £1.6m in favour of Linkserve based on terms of settlement agreed upon by the two brothers. Crucially, the wife was not a party to these proceedings and was not informed of them. The husband then registered this Nigerian order in the English High Court and executed a legal charge over the matrimonial home in favour of his brother’s company, followed by the obtaining of a final charging order. The impact of these manoeuvres was that the matrimonial home, the only significant asset in the UK, with an estimated worth of £2m, appeared to have no remaining equity for distribution to the wife. A previous ruling by a lower court had accepted the debt as genuine, resulting in Linkserve entering a notice at HM Land Registry in respect of the final charging order in January 2023. The wife appealed the decision.
Decision:
The High Court ruled entirely in favour of the wife, finding that the alleged £1.6m debt was a fabrication created through collusion between the husband and his brother. The Judge found that the husband had the personal means to purchase the matrimonial home in 2009 and that the documentation produced to support the loan was inconsistent, uncorroborated by bank records, and was created solely to defeat the wife’s financial claims.
The Court took the significant step of setting aside the registration of the Nigerian Court order that had been obtained by Linkserve in 2019, based on the fact that allowing a judgement based on a “false presentation” to be enforced in England would be manifestly contrary to public policy.
The husband was strictly injuncted from selling, charging, or disposing of his interest in the matrimonial home until the conclusion of the financial remedy proceedings.
Implications:
The most significant implication of this case is a warning to spouses who attempt to “denude” the matrimonial pot by creating artificial debts to family members. The Court signalled that it will no longer take loan agreements at face value, even if they seem “official”. Without a contemporary paper trail of bank statements, emails, and company ledgers, inter alia, the Court is highly likely to treat such debts as fabrications. This case reinforces that, when a debt looks suspicious, the onus is on the husband and the creditor to prove the money actually changed hands.
Ordinarily, English courts respect foreign judgements. However, this case proves that the Family Division will use “public policy” to set aside the registration of a foreign order if it was obtained through collusion or without notice to the other spouse.
The Court showed it is willing to “reach back” and unwind legal charges and mortgages, even those backed by court orders, if the primary intent was to defeat a spouse’s claim. The judgement demonstrates the effectiveness of the “teeth” provided by Section 23 of the Matrimonial and Family Proceedings Act (MFPA) 1984.
