A sham trust hid significant assets a High Court ruling has found resulting in an award worth £15m being transferred from an ex husband to his wife. 

Mario Michael was a prolific property investor and developer in North London who had an interest in over 200 properties. Divorce proceedings against Mr Michael were commenced by his wife, Stalo Michael, in 2022 following a 22 year marriage.

The case has been running over the course of three years with a judgement published following the final hearing in May which found the true value of Mr Michael’s interests in his property investment and development businesses were much higher than he had claimed, ordering him to pay a series of lump sums totalling £15m to his former wife.

Describing the ruling as ‘rare Kingsley Napley, who represented Mrs Michael, said His Honour Judge Hess (sitting as a Deputy High Court Judge) determined the Trust set up by Mr Michael was indeed a sham and in fact he controlled the Trust assets at his sole discretion.

HHJ Hess found that Mr Michael was a ‘fundamentally dishonest man, quite prepared to be wholly and deliberately dishonest when it suits him to be’ who had a ‘deliberate intention’ to leave Mrs Michael ‘homeless and in a financially parlous situation.’ The Judge further commented that Mr Michael had ‘unfortunately done everything in his power’ to ensure that Mrs Michael ‘would not receive her fair share of the fruits of a long marriage.’

“Proving that a trust is a sham trust is a complex matter, particularly in circumstances where the party seeking to challenge the arrangement often does not have access to the key evidence. We are pleased the court has decided in our client’s favour and provided clarity on sham trusts in a family law context. No one should be aided in the concealment of funds that should properly be considered shared matrimonial assets.”

said Jane Keir, Family Law Partner at Kingsley Napley who leads Mrs Michael’s legal team.

“This has been a long and, at times, highly frustrating process for our client as she courageously fights to uphold her rights before the court. Her husband’s needless strategy of obfuscation has only served to worsen his position and increase costs.

“This case should act as a warning to others tempted by creating a false trail designed to thwart the lawful interests of a former partner. The family court has shown it has no hesitation in exposing such misleading conduct.”

In a separate judgment also made within these proceedings and now public, the Family Court acceded to a rare request to appoint receivers to help enforce orders relating to monies owed to Mrs Michael by Mr Michael in unpaid maintenance and legal fees ordered in December 2023 (reported under PS v NB [2023] EWHC 3485 (Fam)) and a payment of £850,000 towards the wife’s costs. HHJ Hess recognised that Mr Michael had shown ‘no wish to comply with my order in any sense and had no regard for the importance of his obligation to comply with that order’ and felt that his ‘very obvious refusal to cooperate in any way’ meant that such an order was appropriate in the circumstances.

Mr Michael has been ordered to pay numerous costs orders, the most significant of which was an order to pay 85% of Mrs Michael’s costs incurred up to shortly after the substantive hearing in August 2024 on the indemnity basis. Efforts to secure full recovery of all sums due to Mrs Michael, including her award of £15million are active and ongoing.

Mr Michael has made several applications for permission to appeal to the Court of Appeal, one of which was refused by Lord Justice Moylan and the remainder await a decision.