A v A
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE MUNBY,Mr Justice Munby |
| Judgment Date | 29 January 2007 |
| Neutral Citation | [2007] EWHC 99 (Fam) |
| Court | Family Division |
| Docket Number | Case No: FD03D06116 |
| Date | 29 January 2007 |
[2007] EWHC 99 (Fam)
Mr Justice Munby
Case No: FD03D06116
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
(In Private)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Philip Moor QC and Mr Christopher Wood (instructed by Messrs Tallents) for the petitioner (wife)
Mr Charles Howard QC (instructed by Messrs Simon Bennett) for the respondent (husband)
Mr Christopher Wagstaffe (instructed by Messrs Simon Bennett) for the interveners (the trustees)
Hearing dates: 12–16, 19–21 December 2005, 24–28 July 2006, 10 November 2006
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This judgment was handed down in private but the judge hereby gives leave for it to be published.
These are proceedings by a wife seeking ancillary relief. In circumstances to which I shall have to return in due course, the proceedings have become needlessly complicated and, as a result, quite inordinately protracted. The consequence is that it is only in January 2007 that I am able to give judgment following a trial that commenced as long ago as December 2005.
The background
The husband and the wife (as I shall for convenience refer to them) were born in 1942 and 1948 respectively. Their relationship began in 1982. They married on 26 October 1984. The marriage seems to have come under significant strain in 1997. They separated in 2001, though for a time continuing to live under the same roof. The wife petitioned for divorce on 22 May 2001. The decree nisi followed on 23 August 2001. The wife served her Form A on 10 July 2003. There was more than the usual amount of interlocutory skirmishing. On 18 November 2003 Pauffley J granted the wife a freezing order against the husband, continued by an order made by Bennett J on 25 November 2003. On 18 February 2005 Singer J adjourned the final hearing, which had been fixed for 28 February 2005, to 12 December 2005. The final hearing did indeed start before me on that day but, for reasons explained below, did not conclude until 10 November 2006. I now (29 January 2007) hand down judgment.
There are no children of the marriage. Both the husband and the wife were previously married. By his first marriage the husband had two children, Simon and Zara. Simon is married to Melinda. The wife's children by her first marriage include a daughter, Jane.
Although, as I have said, the parties married in 1984 that was before the ancillary relief proceedings arising out of the husband's first marriage had been concluded. They came to an end only on 17 December 1985 when Mr Registrar Turner gave judgment and made a final order.
There are three family companies: HDC, CWM and FHP:
i) HDC was set up many years ago by the husband's now deceased father (he died on 16 April 1985). It owns and operates a chicken processing plant. HDC has 5,000 shares. The husband has 1,150 shares (23%), the wife has 1,149 shares (22.98%) (transferred to her by the husband on 2 December 1988) and Simon has 1 share (0.02%). The remaining 2,700 shares (54%) are held by the interveners, as the trustees of two separate trusts (“the trusts”).
ii) CWM was set up in 1990 by the wife to market a fitness aid she had invented. Her case is that she has since given CWM to her daughter Jane, who is now running the business full-time, and that she no longer has any interest in it. The husband disputes this.
iii) FHP was incorporated on 4 December 2003. There are two shares, one each held by Simon and Melinda. FHP also deals in chicken.
I must add a little detail about the trusts. Each of the trusts was created by a deed dated 9 November 1984 – that is, it will be noted, before Mr Registrar Turner had given judgment in the ancillary relief proceedings arising out of the husband's first marriage. Each of the trusts is governed by English law. One trust (which I shall refer to as the Parents' Discretionary Trust) was created by the husband's parents and holds 1,700 of the shares in HDC (34%). The other trust (which I shall refer to as Anthony's Discretionary Trust) was created by the husband's unmarried brother, Anthony, and holds the remaining 1,000 shares (20%). Subject to the fact that, in the usual way, Anthony, as settlor, is excluded from benefit under Anthony's Discretionary Trust, the beneficiaries under both trusts are the children and remoter issue of the husband's parents then living or born at any time before 9 November 2064. The beneficiaries thus include Anthony, the husband, his children (Simon and Zara) and their children and grandchildren. It is important to note, therefore, that the beneficiaries are not a closed class all of whom are ascertained and sui juris.
Initially the trustees of the Parents' Discretionary Trust were two professionally qualified English accountants, Mr Halton and Mr Luder. The trustees of Anthony's Discretionary Trust were a Mr Pickard and a Mr Jolly. In October 1989 all four trustees retired and were replaced, as trustees of both trusts, by the husband and the wife. In 1991 the husband and the wife retired as trustees and were replaced by a trust company, Credit Suisse Trustees (Guernsey) Limited (“CSTGL”) which, as its name would suggest, was based in Guernsey. In 1996 CSTGL was replaced as trustee by the interveners, who are based in Jersey. The first intervener is a trust company used as a vehicle for such purposes by the second and third interveners who are also trustees, along with the first intervener, of both trusts. The second intervener (Mr St George) and the third intervener are both professionally qualified accountants. It is to be noted that although the current trustees are based in Jersey, and are therefore personally responsible to the Jersey regulatory authorities, the trusts continue to be governed by English law and not by Jersey law.
The matrimonial assets, apart from the wife's jewellery, two motor cars, the contents of the former matrimonial home, some money in a bank account and some quoted shares worth approximately £13,500, consist of:
i) The shares in HDC, CWM and (as the wife would have it) FHP.
ii) The former matrimonial home, a property called Drum Grange, purchased in 1993 in the names of HDC and CWM, the purchase monies having ostensibly been provided as to 75% by HDC and 25% by CWM. It has now been sold for £2,700,000.
iii) The husband's pension fund, worth £717,576.
There is also a holiday property in Antigua, purchased by the husband and the wife in 1997 for US$160,000, but owned by HDC.
The issues
But for a number of issues raised by the wife, the case would be fairly straight-forward. It has been made much more complex because of the wife's allegations (i) that the trusts are shams – with the consequence, so the wife would say, that the husband is to be treated as owning not 1,150 (23%) of the shares in HDC but 3,850 shares (77%), (ii) that the shares in HDC held by the trusts are in any event to be treated as available to the husband in accordance with the principle in Thomas v Thomas [1995] 2 FLR 668, and (iii) that the value of HDC has been artificially reduced by the husband (a) skimming off substantial sums in cash and (b) diverting its business to FHP. To a much more limited extent the case has also been made more complex because of the husband's allegation that the wife still has an interest in CWM.
In these circumstances the following issues arise in addition to those which would have to be considered in any claim for ancillary relief:
i) the allegation of sham in relation to the trusts;
ii) the Thomas v Thomas claim;
iii) the allegation that cash has been skimmed off from HDC;
iv) the allegation that HDC's business has been diverted to FHP;
v) the value of the shares in HDC; and
vi) the ownership of the shares in CWM.
I shall deal with them in turn.
Sham – the forensic context
Mr Charles Howard QC, on behalf of the husband, was justifiably scathing about what he says was the muddled and confused way the allegation of sham was being put even as late as the first day of the final hearing. It would seem that the allegation finds its origin in findings made by Mr Registrar Turner in 1985. The allegation was made in terms, using the word “sham”, in an affidavit the wife swore on 18 November 2003. In the wife's Form E (sworn on 10 September 2003), and in the very detailed Chronology prepared on her behalf by Mr Philip Moor QC and Mr Christopher Wood, it was said that the husband was “the de facto controller and beneficiary” of the trusts. It was further asserted in the Chronology that “the reason for placing the shares in trust was because [the husband] was in the process of divorcing from his first wife and wished to present himself as a minority shareholder in that dispute” and that “in practice” the husband “controlled those shares.” In the Case Summary they prepared for the final hearing, Mr Moor and Mr Wood asserted that the husband “set out to do everything in his power to defeat his first wife's claims against him, including the creation of the off-shore trusts as an integral part of the campaign.” Mr Howard's acerbic comment is that the husband did not create the trusts and that they were not initially off-shore.
I have to confess that a careful pre-reading of all the relevant papers had nonetheless left me wholly unclear as to how exactly the case was being put by the wife. I raised this matter with Mr Moor on the first day of the hearing and indicated that I wanted written clarification of exactly how the wife was putting her case. That was provided on 15 December 2005.
Before turning to see exactly how Mr Moor puts his case it is convenient first to survey the...
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