Our experienced Chartered Legal Executive and family law expert David Cobern takes a look at Cameron Diaz’ latest film, and the legal realities behind the story…
In the recently released film ‘The Other Woman’ Cameron Diaz finds herself the unwitting victim of her partner’s fraud. She discovers that her partner has been using her as the owner of the companies he defrauded, for which she could go to prison if the fraud is discovered.
Having watched this entertaining film, my thoughts turned to the very many people we advise who find themselves the ‘real life’ victims of such situations.
In the good times, we trust our partners implicitly to do the right thing by us. It is often only at the end of a relationship we find out this isn’t always wise.
Cameron Diaz turned the tables on her dishonest partner in spectacular style, but what happens back in reality? Is the position hopeless for us ordinary mortals?
There are almost endless examples of such behaviour. For the married partner, whilst these situations can create problems, the courts have broad powers of adjustment of property which can compensate (and indeed penalize the deceitful party) in most cases. For the unmarried couple, the situation is more problematic and it is necessary to unpick the transactions to restore fairness. Perhaps the most commonly encountered issues in the context of the unmarried couples’ dispute are:
- One partner takes a secured loan against jointly owned property without telling the other. Signatures are forged and witnesses either concocted, deceived themselves or a party to the deceit.
A crime of fraud has been committed, not only by the forger but also, potentially, by the witness. Either or both could be sent to prison. The partner’s conduct will be highly relevant in any civil proceedings concerning the relationship and they may be ordered to pay costs.
- One partner (who unbeknown to the other plans a separation) persuades the other that it is a good idea to transfer jointly owned property to them or to consent to a re-mortgage before pocketing the proceeds (e.g. ‘I understand more about this than you do. It’s best if we do it this way. Trust me and just sign here’).
Here, one partner is taking advantage of a position of trust and exercising what is known in law as ‘undue influence’ over their trusting partner. There is no crime, but there is a civil claim. The transaction (if caught before the property/money is gone) is capable of being set aside. In the meantime, the partner who has benefitted can be held to their promise to hold the property for both parties.
3) During happier times, one partner makes the other a Director and shareholder in a Limited Company (because it is tax efficient) and then arranges for them to ‘resign’ and transfer their shareholding when the writing is on the wall for the relationship thus taking control of the company and its assets.
It is important to remember that a Company Director can only be removed from office by;
- Formal notice following a meeting of the board and a resolution;
- If they are disqualified by some other legal provision (e.g. bankruptcy); or
- Due to ill health.
There will be a revealing paper trail of notices and signatures to check. If there isn’t, then the resignation is invalid. In relation to shareholdings, the transferring/selling party must sign what is known as a ‘stock transfer form’ unless the company is permitted under the terms of it’s incorporation to force a sale/transfer, in which case again, copy notices will be available.
- At a critical moment in the relationship, one partner pressurizes the other to sign an agreement restricting the other’s right to make a claim against them or their property (e.g.‘if you don’t sign this right now, our child won’t be able to start at the school we agreed tomorrow’ or ‘I know you’re expecting our child, but if you don’t sign here right now, we will have to separate’).
The party signing was given no real choice in the matter and no access to legal advice. They either signed or their life would change radically. This is known in law as placing a person under ‘duress’. As with scenario two above, the agreement is liable to be set aside.
There are many more examples of such behaviour. Cameron Diaz took the risky option of taking the law into her hands. Entertaining, but ill-advised (unless it succeeds of course). The law provides a remedy for most such situations.