Ac v DC and Others
| Jurisdiction | England & Wales |
| Judge | Sir Hugh Bennett |
| Judgment Date | 29 August 2012 |
| Neutral Citation | [2012] EWHC 2420 (Fam) |
| Docket Number | Case No: FD11D05745 |
| Court | Family Division |
| Date | 29 August 2012 |
[2012] EWHC 2420 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Sir Hugh Bennett
sitting as a High Court Judge
Case No: FD11D05745
Ms Deborah Bangay QC, Mr David EwartQC, and Mr Dakis Hagen (instructed by Levison Meltzer Pigott, Solicitors) for the Applicant
Mr Valentine Le Grice QC, Mr Giles GoodfellowQC, and Ms Pegah Sharghy (instructed by Brachers LLP, Solicitors) for the Respondent
Hearing dates: 6,7,8,9 and 10 August 2012
This is an application for financial remedies by AC ("the wife") against DC ("the husband"). They married in August 1998, when the wife was 20 years old and the husband was 48 years old. They have three children, X born in November 1997, now 14 years old, Y born in August 1999, now 13 years old and Z born in March 2008, now 4 years old.
The husband was previously married. He and his former wife had one child, W, now 33 years old. In 1995 the wife and the husband met. The wife was then 17 years old and working in the husband's business. In February 1996 they began to cohabit in the husband's property. In October 1996 the matrimonial home, was purchased by the husband for £550,000 with a mortgage of £390,000. The wife and children still live there.
On 22 June 2010 the husband was arrested and charged with a sexual offence with a female friend of X. The same day the husband left the matrimonial home and went to live with his brother E. In December 2010 the wife issued her divorce petition and Form A. However, on 7 April 2011 both the petition and the application for ancillary relief were dismissed, by consent, as the husband was very upset at the prospect of divorce. In October 2011 the wife issued another petition for divorce with a Form A also being issued in October. In March 2012 a decree nisi of divorce was pronounced. On 2 July 2012 Mostyn J., upon the wife having amended her petition for divorce to ask for judicial separation, rescinded the decree nisi and pronounced a decree of judicial separation. The reasons for this course of events will become apparent in due course.
In 2008 the wife says that she noticed a change in the husband's behaviour in that he became increasingly aggressive and uninhibited. It was a condition of the husband's bail, following his arrest in June 2010, that he live apart from the wife and children. What appears to have triggered the husband's behaviour was the onset of frontal lobe dementia. He was first diagnosed with this condition by Dr S, a consultant neurologist, in September 2010, which he formally confirmed in his report in March 2011. This diagnosis was confirmed by Dr C a consultant neurologist, in April 2011.
In September 2011 the husband was convicted of a sexual offence with a child. He was given an absolute discharge (because of his mental condition), placed on the sexual offenders' register for 5 years and prohibited from having contact with girls under 16, unless supervised, until 1 September 2016.
As a result of further medical evidence, in particular the report of Dr S of February 2012, that the husband did not have the capacity to conduct the matrimonial finance proceedings, on 29 February 2012 Mr T was appointed as the husband's litigation friend.
On 4 April 2012 Dr S made a further report in which he opined that he expected the husband to live for at least 3 years from the date of his report and that it was very likely he would live beyond December 2013. The cause of death in patients such as the husband is usually due to physical decline associated with severe cognitive dysfunction.
It will be necessary to trace the history of this case, particularly as to the husband's business, in more detail to see how the present position is arrived at. But, first, I shall set out the current financial position of the family.
The husband is the owner of 712,753 shares in D (Holdings) Ltd. ("DH"), i.e. 84.6% of the issued share capital. The balance is held as to 12.4% by Mr R, the managing director of DH and as to 3% by the directors of L Ltd., an Irish company wholly owned by DH. In the spring of 2012 three offers were received for the shares in DH ranging from about £55m to about £62m. On 11 July 2012 Heads of Agreement were entered into between DH's shareholders and B Ltd. Clause 1 recites that, except for clauses 10-15 inclusive, the Heads of Agreement are not intended to be legally binding. Clause 3 provides that the entire issued share capital of DH will be sold for £63.75m on "cash free/debt free" basis payable in full in cash upon completion. An exclusivity period of 6 weeks from 11 July was agreed (clause 12), i.e. that the shareholders and DH would not seek to sell the shares to anyone else during that period. However, clause 12.4 provides that if B Ltd gives notice not to proceed with the transaction the exclusivity period etc. would lapse. Thus if the sale goes through at a price of £63.75m the husband's gross proceeds of sale would be c. £53.9m. What are the net proceeds of sale of the husband's shares is hotly disputed.
The wife, through her legal team led by Ms Deborah Bangay Q.C., asserted in opening that the total net assets of the wife and the husband are roughly of the order of £43m. I say "roughly" because Ms Bangay told me in opening that there were a number of assets of the husband upon which she could then put no figure. She assessed the husband's net proceeds of sale to be £38.07m — see Annexe 9 of her written opening.
The husband, through his legal team led by Mr Valentine Le Grice Q.C., asserted that the total net assets amounted to £30.68m. He assessed the husband's net proceeds of sale of his shares in DH to be £27.5m.
The difference between the parties' contentions as to the net proceeds of sale of the husband's shares amounts to some £10.56m — see Annexe 9 where Ms Bangay sets out the constituent elements of the difference, which I shall have to resolve.
It is therefore unsurprising that the parties' open positions are far apart, save for one matter. It is agreed that the former matrimonial home, held in joint names of the wife and husband, should be transferred absolutely to the wife. It is mortgage free and valued at £1.9m. Net of costs of sale it is worth £1.843m on the wife's schedule (Appendix 4 to Ms Bangay's opening) and £1.862m on the husband's schedule attached to Mr Le Grice's position statement.
The parties' open positions were not made known until Ms Bangay's and Mr Le Grice's position statements exchanged at the very end of the week before the hearing began on 6 August 2012. The husband's position is that the former matrimonial home should be transferred to the wife and she should be paid a lump sum of £8m provided that the sale of DH to B Ltd is completed. Completion of the sale should be a condition of the order of the court. If the condition fails to materialise the order for the lump sum should fall away and the wife's claims be adjourned with liberty to restore. It is recognised that such a fall back position is "unsatisfactory". However, the prospect of the sale proceeding is sufficiently good to justify the wife's claims being heard now rather than in proceedings under the Inheritance (Provision for the Family and Dependants) Act 1975 should the husband die in the near future.
So, broadly speaking, the husband proposes that the wife should exit with assets worth just under £10m (presumably together with her flat, her cars, horses, jewellery, bank account and any pension she may have from D Ltd. from a total asset pool (on his case) of about £30.68m.
So far as the children are concerned, the husband proposes that he should pay the children's school fees and £15,000 pa periodical payments per child during his lifetime. They are well provided for under his statutory will and letter of wishes.
The wife, through Ms Bangay, asserts that she is entitled to 50% of the marital acquest. She should be paid a lump sum by the husband equivalent to 50% of the net proceeds of sale of the husband's shares in DH (having made certain add backs). In the alternative, if the contemplated sale falls through by 1 December 2012 or does not proceed to completion within 3 months of exchange of contracts, then 50% of the husband's shares in DH should be transferred absolutely to the wife. There should be lump sum orders for each of the 3 children, following a sale, in the sum of £2m, for their maintenance needs, to be held on "bare trust" for each child by the wife. In the alternative, if the contemplated sale falls through by 1 December 2012 and does not proceed to completion within 3 months of exchange of contracts, then 15% (i.e. 5% for each child) of the husband's shares in DH (as remain following the satisfaction of the wife's award) should be transferred absolutely to the wife in equal shares for the children to be held on "bare trust" by her.
Thus, again speaking broadly, the wife proposes that for herself if the sale proceeds she should receive, on the basis of her computation of the assets (including add backs) at c. £42.87m, the former matrimonial home and 50% of £38m (the alleged net proceeds of sale of the husband's shares) (and together with the assets set out in parenthesis in para 15 above).
I shall now turn back to the narrative of the parties and their relationship and deal with issues between the parties.
The husband at the time the parties met in 1995 was 45 years old, divorced with one child then aged 16 years (W). The wife, who gave evidence before me and who impressed me as a truthful person and still very much in love with the husband, told me that in 1995 and perhaps more importantly as at February 1996 when cohabitation began, the husband was established in a good and successful business. He lived in a good...
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