AB v CD
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Roberts |
| Judgment Date | 11 January 2016 |
| Neutral Citation | [2016] EWHC 10 (Fam) |
| Court | Family Division |
| Docket Number | Case No: FD11D02580 |
| Date | 11 January 2016 |
[2016] EWHC 10 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Roberts
Case No: FD11D02580
Mr Nicholas Yates (instructed by Bromets LLP) for the Applicant And the respondent acting in person
Hearing dates: 22nd June to 1st July 2015 and 11 TH November 2015
A. Introduction
This is an application by a former husband to set aside a consent order agreed on 6 February 2012 1. The basis of his application is an allegation that, at the time of the agreement, his former wife failed to make full and frank disclosure in relation to a company of which she was both a director and shareholder. It is his case that the non-disclosure upon which he relies was a material factor in that he entered into the agreement to compromise his financial claims arising in the divorce proceedings on the basis of incomplete (and, on his case, misleading) information.
It will be convenient in this judgment to refer to the parties as 'the husband' (H) and 'the wife'(W). I intend no disrespect to either in adopting this shorthand.
H's present application was issued as long ago as 30 July 2012. The case has been before various judges of the Family Division since then and very significant costs have been incurred on both sides. Whilst each has during the currency of the litigation instructed top flight London firms of solicitors, neither can now afford that level of representation. W now acts in person, assisted by a McKenzie friend. H is represented by a firm of solicitors in which his brother is a partner. He instructs Nicholas Yates who has been his junior counsel of choice throughout.
The application to set aside the consent order was due to be heard over five days by King J (as she then was) in March 2014. For reasons which I shall explain, there was deemed to be insufficient time to conclude that hearing and the matter was relisted before me as a ten day fixture, some fifteen months later in June 2015. At that stage both sides were represented by leading counsel and I suspect that their availability and the court's ability to accommodate the case in the lists led, in part, to that delay. At the pre-trial review before me on 8 May 2015, Mr Yates, on H's behalf, made an application to adjourn the forthcoming hearing. He did so on the basis that the Supreme Court was about to hear the final appeals in Sharland v Sharland [2014] EWCA Civ 95 and Gohill v Gohill [2014] EWCA Civ 274. Judgment was not expected in those cases until the start of the Michaelmas term in October 2015. Because of the significant delay which had already been incurred (a delay of almost three years since the issue of H's set aside application), I dismissed the application to adjourn but agreed to reserve my judgment at the conclusion of the set aside hearing until the judgments from the Supreme Court became available.
On 14 October 2015, the Supreme Court handed down judgment: Sharland v Sharland [2015] UKSC 60; Gohill v Gohill [2015] UKSC 61.
The matter was relisted before me on 11 November 2015. On that occasion I had written submissions from both W and Mr Yates who, by then, had had the opportunity to absorb the judgments and reflect upon their impact on these proceedings. W elected to rely upon her written submissions and did not attend the hearing. Mr Yates did appear and I heard from him, albeit not at any length since, like W, he relied for the most part upon his written submissions.
I am now in a position to deliver my judgment on the application before me.
B. The relevant history
H was born in March 1950. He is now 65 years old. W was born in November 1968. She is now 47 years old. The parties met in 2006. They married on 15 November 2008 having lived together since the beginning of March 2007. It was a second marriage for W and a third marriage for H. Each had a child or children from their previous marriages. Whilst there is a dispute as to the date upon which the marriage came to an end, it is clear from the evidence that, by June 2009, they were no longer living together in the same household. W contends that it was not until July 2010 that they abandoned their final attempt to repair the marriage. She speaks of holidays and times spent together during those last few months. In my view, the precise date upon which the marriage came to an end matters not in the context of this case since each accepts that, on any view, it was a short marriage which, on H's case, lasted no more than 7 or 8 months. Even on W's case, they were married for less than two years.
Each of the parties was independently wealthy when they married. H was, and is, a successful venture capitalist. He is chairman of E Co. At the time he met W, he was living in a home which he owned in a fashionable part of South Kensington. He had other property in the South of France and elsewhere in England.
W is an entrepreneur and the CEO of B Limited ('B Ltd'), a company which she founded in 2002 and incorporated in 2004 shortly before meeting H. The company is involved in the development of technology hardware. At one stage, the company was tendering for an important contract with the Ministry of Justice. Even before she incorporated B Ltd, W had already established a successful track record as an entrepreneur. She had built up, and subsequently sold, previous companies and her endeavours as a successful entrepreneur were recognised in 2012 by the award of an OBE.
W issued a petition seeking dissolution of the marriage in May 2011. Sadly, it was an acrimonious parting of the ways. H was to issue his own petition some two months later. Those issues were compromised and the marriage was formally dissolved by decree absolute in May 2012. By that stage, both parties had issued applications for financial remedy orders (or ancillary relief, as it was then known).
W made her financial presentation in Form E on 13 December 2011. H's Form E is dated 20 December 2011. The liquid assets totalled some £5.4 million. That sum, together with the illiquid business assets and pension, amounted to c. £6 million. A little over £930,000 2 was held in W's name and the balance in H's. In terms of property, H owned the London home in SW7 which W claimed to be their former matrimonial home to which she had added value as a result of project-managing a substantial programme of renovations. She retained the flat in SW1 in which she was living when they met. The third property was a country house in Oxfordshire which had been purchased in their joint names in November 2007 and which was subject to a substantial mortgage 3.
H stated his annual net income to be just under £180,000. W's income was estimated to be £95,520 net for the coming 12 months, although the actual earnings for the previous year were £40,283.
Within her Form E, W had valued her own (founder) shares in B Ltd at £1 per share, a total of £162,000. By that stage, she held 162,000 ordinary shares, a holding of 36.96% of the total issued share capital.
B Ltd had been founded in December 2004. W told me that it had been a concept which she had been developing for some two years before she met H. She provided the entirety of the start-up capital with £200,000 from her own funds. Her original shareholding was 200,000 shares. At that stage, there was no actual value in these shares since the company was not even trading, let alone profitably.
By September 2005, she had been able to persuade other investors to put money into the company. New shares were issued at £3.75 pence per share. The third round of "angel" investing occurred the following year in July 2006 at a price of £5.75 per share. H was one of the private investors who put money into the company at this stage. The following year he made a further investment in the company at a price of £6.50 per share. In all, by the time he and W had embarked upon their relationship, he had acquired 19,738 shares. Because he was able to invest as an individual, he was able to benefit from the tax relief then available under EIS (a government sponsored Enterprise Investment Scheme).
Later in 2007, and from time to time thereafter, further funds were raised by the issue of additional shares in the company. By November 2007, shares were being sold for £13 each. Subsequent tranches were issued at £25 per share. However, as is clear from the accounts, external investors were supporting the business on a speculative basis since the company was, and had been from the outset, loss-making. There was no tangible benefit in any of its underlying assets and expenses exceeded profits on a year on year basis. It is abundantly clear to me from everything I have heard and read in this case that W had put her heart and soul into her business venture and was working diligently to ensure its success. She was adept at securing good publicity as a means of encouraging the necessary further investment in the business. The ongoing development costs of the B Ltd product and its operating expenses were high; external investment was the company's lifeblood at this stage.
When the divorce litigation commenced, W was in urgent need of funds to pay her then solicitors, Withers LLP. In 2010, she sold 50,000 of her founder's shares and raised £50,000 towards her legal costs. That transaction was the only sale she has made of her own shares since she started the company. It was the basis upon which she valued her remaining 162,000 shares in her Form E. That valuation, which she accepts to be her own, was the product of the financial consideration she had received in the 2010 share sale seen against the backdrop of ongoing corporate losses. By the end of the 2009 financial year, B Ltd had lost just over £668,000. By 2010, the loss had increased to c....
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...133 Gohil v Gohil [2015] UKSC 61. 134 FPR 2010, PD9A, para 11. 135 FPR 2010, PD9A; Livesey v Jenkins [1985] 1 All ER 586. 136 AB v CD [2016] EWHC 10 (Fam). 137 FPR 2010, r 1.1. 138 FPR 2010, r 28.3(6). 139 Solicitors’ Code of Conduct, para 4.2. 82 The Single Family Court: A Practitioner’s H......