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9 June 2015

Divorcee Michelle Young to be sued over financing of bitter legal battle

Saga of divorce battle takes extraordinary new twist as financial backers plan to sue her for breach of contract, reports The Telegraph.

She has become a figurehead for women who feel the courts have short-changed them in their attempts to win a fair divorce settlement from their wealthy husbands.

But now Michelle Young – who was embroiled in a lengthy court battle with her estranged husband Scott over what she claimed was his huge fortune – faces being sued for millions herself.

The 50-year-old mother of two could be taken to court by the same investors who funded her case against Mr Young, who was killed in a fall from his London penthouse in December last year.

In an astonishing twist to the long-running saga of Mrs Young’s divorce, her investors are demanding she pay back £11.2 million they claim she owes them and are this week set to send a ‘pre-action’ letter giving notice of their intention to sue.

Mrs Young denies the claims and says she will fight them in court.

The group, called TIFF, say that instead of using their funds exclusively to pay for the costs of her litigation against Mr Young, she appears to have used some of the money for what they described as her “champagne lifestyle”.

They say that she has repeatedly turned down the opportunity to take a divorce settlement of £26m awarded by the High Court from which she could have repaid her investors.

And instead of doing so they say Mrs Young has run up further costs pursuing the millions she claims her estranged husband squirrelled away in offshore trusts and accounts before his death.

Mrs Young has joined forces with other divorcees to set up a foundation, named after her, to make sure that other women do not suffer in their fight to win just divorce settlements. The group is currently appealing for funding and has asked supporters to make donations.

But Ash Edwards, a businessman who lent Mrs Young more than £100,000 to pursue her case against Mr Young, said some of the investors felt let down by her behaviour and that she is doing other women no favours.

Mr Edwards, 45, said: “Michelle Young portrayed herself as a victim and to me it felt like an investment opportunity to help someone who had been deceived by a rich man using the failings of the British justice system to get away with it.

“She needed money to prove what Scott Young had done and we funded her to do that, with the obvious anticipation of getting a return on our investment. But as the years have gone by we have seen no progress made on getting back our investment.”

He added: “We had reached the position where we could enforce the divorce settlement against Scott Young’s assets, but she refused to do that. We’ve even offered her a settlement, reducing the amount she owes us, but she has refused.”

Mr Edwards, a former City banker who now runs a property business in Thailand, said some of his fellow investors had been left in financial difficulties because of Mrs Young’s refusal to pay them back.

“I’m very disappointed that having presented herself as a victim she now seems to be as manipulative as she claims Scott Young was,” said Mr Edwards, who is married with two young sons. “The money I lent her was for my family and for my life.”

Despite the court judgement that he should pay his former wife £26m, Mr Young maintained right up until his death that he had lost the vast bulk of his fortune. For her part Mrs Young continued to assert that he had managed to conceal his assets in overseas accounts and properties and hired teams of forensic accountants to trace it - although it is unclear whether she is still actively pursuing the money.

The TIFF group is made up of 100 investors who each contributed sums ranging from tens to hundreds of thousands of pounds towards the cost of Mrs Young's litigation and search for her husband's assets.

The case is thought to be one of the first in which investors paid for divorce litigation in the hope of profiting from the resulting judgement.

TIFF instructed forensic analyst Simon Sutton and his London-based firm Nevyan Intelligence - who specialise in recovering assets hidden overseas and had previously been hired by Mrs Young - to trace the millions she claimed her husband had hidden.

Estimates of Mr Scott’s wealth varied, with some putting it as high as £400m, and Mrs Young was adamant he was hiding his money to avoid giving her a fair share.

But friends of the tycoon claimed he owed millions of pounds to the Russian and Turkish mafias after the failure of a property venture called Project Moscow, a £65 million redevelopment of a former paint factory.

Mr Young, who owned a string of expensive properties – including a £14 million Palladian mansion in Oxfordshire and a £6 million beachfront house in Florida – went so far as to refuse to cooperate with a court order to reveal the extent of his assets. As a result he was sentenced for six months in prison for contempt of court.

In November 2013, after a protracted legal battle, Mrs Young was awarded £20m – half of what Mr Justice Moor decided her husband was worth – plus £6m legal costs.

In his judgment Mr Justice Moor described the case as “extraordinary”, saying: “This is about as bad an example of how not to litigate as any I have ever encountered.”

He criticised both Mr and Mrs Young, saying of her: “I do not consider her evidence to be reliable. She has become utterly convinced that her husband is a liar who has hidden vast resources. She sees conspiracy everywhere.

Mrs Young was furious, angrily describing the award as “disgraceful”, and insisted there were secret assets to be found.

But as a result of refusing to accept the £26m awarded to her Mrs Young found herself in breach of contract, according to her investors, who had agreed to fund her litigation to the tune of £3.3m along with a share of any eventual divorce settlement.

That meant that she owed them £11.2m, they claim, which would in theory have still left her with £14.8m from the High Court settlement – a substantial sum by anyone’s standards.

Mrs Young is accused of subsequently turning an offer by the investors to reduce the amount she owes them by almost half, to around £6.2m.

The investors were stunned by her refusal. But according to Mr Sutton the explanation may be that Mrs Young was in no position to pay her investors the agreed amount.

The investors are looking into claims that the divorcee was already in debt over previous funding of her case and would be left bankrupt if she paid them out of her settlement.

There was also the suspicion that she was spending funds she had received to pursue her case to pay for her lifestyle, said Mr Sutton.

This allegedly includes more than £3,500 in monthly rent for her apartment close to the Houses of Parliament and Westminster Abbey.

Mr Sutton said: “Michelle Young has been the single biggest obstacle in preventing her own judgment being enforced. She has refused to work with her investors to seek resolution to this Judgement Order, which has led them to question her intentions. They feel that she has misled them from the outset.”

He added: “It would appear that some of the litigation funding has been used by her to supplement her lifestyle.”

Among those left out of pocket was a salesman and father of three, who invested £10,000 from a redundancy payment in Mrs Young’s legal battle.

Brian, 51, from Essex, said her refusal to pay back the money had left him and his family in financial difficulties.

He said: “It’s unbelievable the way she has behaved. I supported her as a woman going through a divorce from someone she said was hiding money from her.

“She had a number of offers from her husband and a court settlement yet kept refusing them. She should have been able to walk away with her money and been able to pay off her funders.”
Mrs Young said she would fight the accusations.

Responding to the claims she said: "I utterly refute all allegations made against me in this regard. A payment was due to the funder only upon the receipt of assets.

"As my husband was declared bankrupt in 2010 and he died a sad and unexpected death in 2014, I unfortunately have not received a penny of the judgement awarded to me in November 2013. And the judge even admitted in his judgement that he doubted my husband would ever pay, and so I have never been in a position to pay anyone."