Spouse Compelled to Shell Out Millions for Deceptive Trust in Intense Matrimonial Dispute
News Article: Offshore Trusts and Divorce: The Stalo Michael Case
In a landmark decision, the Family Court in London has awarded a wife GBP 15 million in a highly complicated divorce case, highlighting the severe legal consequences of using offshore trusts to conceal matrimonial assets.
The case, Mrs Stalo Michael (applicant) v Mr Mario Michael (respondent), has been ongoing for over three years, arising from a 22-year marriage. The proceedings involved extensive contested litigation and a refusal by the husband to comply with court orders, totaling GBP 1.3 million plus interest.
The court described the husband as "a fundamentally dishonest man" who is "quite prepared to be wholly and deliberately dishonest" and has a "willingness, indeed tendency, dishonestly to create documents, and/or dishonestly forge signatures." In August 2024, the court found that the husband had conducted his shareholding in a dishonest manner and that the offshore trust was a sham.
Mario Michael, a prolific property investor and developer in North London, with interests in over 200 properties, was found to have a "deliberate intention" to leave his wife "homeless and in a financially parlous situation." The judge saw "nothing [...] to believe that the husband will comply with my orders without the force of the involvement of a Receiver."
The court's publication of the judgments, delayed until this week, revealed that efforts to secure the GBP 15 million award and other sums are "active and ongoing" according to the wife's legal team. In May 2025 (updated June 2025), the court ordered a structure of staged lump-sum payments totalling GBP 15 million between September 2025 and September 2026, plus judgment interest for default. The order included a reverse contingent lump sum to address uncertain HMRC position, allowing the husband to recover up to GBP 7.5 million from the wife if a tax bill materializes and is paid.
The case serves as a warning to others tempted by creating a false trail designed to thwart the lawful interests of a former partner. Jane Keir, leading the wife's legal team, stated that the court's decision provides clarity on sham trusts in a family law context and no one should be aided in the concealment of funds that should properly be considered shared matrimonial assets.
Courts treat asset concealment very seriously, and spouses caught hiding assets via offshore trusts risk losing those assets entirely and facing contempt of court or perjury charges. The husband has applied for permission to appeal several rulings in the case, with one ruling already refused by Lord Justice Moylan, and others pending decision.
In matrimonial disputes, attempts to use offshore trusts to shield assets may be scrutinized to determine whether the assets have been "matrimonialized," i.e., transformed into shared marital property subject to division. Although some tax-motivated transfers to trusts may not change the non-matrimonial nature of assets without clear evidence of shared use or marital intent, courts examine whether trusts are genuine or sham structures designed to defeat asset sharing.
Key legal implications include judicial scrutiny of offshore trusts, obligations for full disclosure, cross-jurisdictional enforcement challenges, and potential criminal consequences like fraud or contempt of court. The case underscores the importance of courts distinguishing bona fide offshore arrangements from sham trusts used for asset concealment, with courts willing to look beyond formal structures to substance and intent in matrimonial asset division disputes.
- Despite his extensive business interests in finance and property, Mario Michael's dishonest use of an offshore trust in his divorce case resulted in a court-ordered staged payment of GBP 15 million.
- In light of the Stalo Michael case, it is crucial for individuals to understand that courts treat asset concealment through offshore trusts in matrimonial disputes very seriously, as sham trusts may lead to the loss of assets and potential legal repercussions.
