AW v AH
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Roberts |
| Judgment Date | 21 April 2020 |
| Neutral Citation | [2020] EWFC 22 |
| Date | 21 April 2020 |
| Docket Number | Case No: BV17D04457 |
| Court | Family Court |
[2020] EWFC 22
IN THE FAMILY COURT
SITTING IN THE HIGH COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mrs Justice Roberts
Case No: BV17D04457
Deborah Bangay QC and Georgina Howitt (instructed by Hughmans) for the Applicant
The Respondent appeared in person with the assistance of a McKenzie Friend. There was no appearance by or on behalf of the second and third respondents
Hearing dates: 17th to 28th February 2020
(Draft judgment sent to the parties on 25 th March 2020)
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.
Introduction: the central issues in the case
This is AW's application for orders in respect of financial remedies pursuant to the Matrimonial Causes Act 1973 together with consequential declaratory relief. The first respondent is her former husband, AH. The second respondent, BB, is a business associate of AH's who is based outside the jurisdiction in Hong Kong. He held shares in the third respondent, C Limited (“C Ltd”), a company registered in Hong Kong, in 2008. It is AW's case in these proceedings that BB is her former husband's nominee and that the beneficial interest in C Ltd and its corporate subsidiary holdings belong in reality to AH. That case is disputed by each of the respondents and has informed one of the significant areas of forensic enquiry which this court has been asked to undertake.
As is conventional in these cases, I am going to refer to the principal parties in this case as “the husband” and “the wife”. I hope in doing so, I cause no offence to either. It is intended as no more than a convenient shorthand. The reality is that decree nisi in respect of AW's petition for divorce was pronounced in May 2017, and the parties have been living apart since the early part of 2011. Thus, for more than eight years they have been living an independent existence from one another, albeit that the financial arrangements which were put in place at the time of the separation continued to preserve an infrastructure which underpinned to an extent the manner in which they have arranged their lives over the years since their separation. The husband was declared bankrupt in July 2011, a few months after the demise of the marriage. At that time, he owed some £33 million to unsecured creditors. He was subsequently discharged a year later although his trustee in bankruptcy, a well-known firm of accountants with international experience, spent the next five years investigating his financial affairs. That lengthy enquiry cost over £500,000 and led to the recovery of no more than a negligible sum of less than £20,000.
At the heart of this case lies an allegation on the part of the wife and her legal team that the husband has failed to make full, frank and complete disclosure of his past and present financial circumstances. Whilst he presents the court with a narrative which, on its face, appears to show a spectacular financial fall from grace and an ongoing position of near personal insolvency, the wife claims that he has, or should be treated as having, financial resources at his disposal. Her open proposal at the start of this case included a claim for a sum of £2 million or, in the alternative, an adjournment of her lump sum claims. In her closing submissions, Miss Bangay QC accepted that she is unlikely to be able to demonstrate on the evidence which is presently available that such undisclosed resources as may exist will be sufficient to meet her client's ongoing needs for a secure home and an income. By the conclusion of the case it is now her case that the wife's lump sum claims should be adjourned to await what it is hoped will be the husband's financial renaissance.
Thus, at the heart of this case lie the two central issues of computation and needs. If the husband is presenting to this court a broadly true and accurate position of the current financial landscape, neither parties' needs can be met at the present time. If the wife is right and there is substantial value retained for his benefit in offshore assets, as yet undisclosed to the court, there may nevertheless be significant hurdles to surmount in future before the court can be satisfied that her needs will have been met through the full enforcement of an English award in these proceedings.
The background
This was a third marriage for the husband and the first for the wife. They are now respectively 63 and 55 years old. He has four daughters who are now in their mid-twenties and thirties. His first marriage ended in 1980, some forty years ago. He married his second wife in 1991. That marriage was a short one which ended some four years later during the course of which his youngest child was born.
By this stage he had enjoyed some considerable success in business and was living in central London in a home in St John's Wood which was subsequently sold for in excess of £14 million. His relationship with the applicant began shortly after the demise of his second marriage. By the early part of 1997, their relationship appears to have been sufficiently committed for the wife to state that they were more or less living together. After a brief hiatus at the end of 1997, and by the summer of 1998 on his own case, they were living together at his home in St John's Wood. They married in October 2001. No children were born during their marriage despite what I accept were the wife's wishes to start a family.
Throughout the next decade, their marital standard of living was extremely high, if not exorbitant. In March 1998, at or shortly after the time when they began to live together, the husband sold the majority of his shares in an international business which he had spent many years building up. That sale realised a sum of just over £86 million. At the time he was 41 years old and had doubtless worked hard through many years to reach that position of significant financial security. Their wedding in 2001 was celebrated with an expensive party costing several million pounds at which guests were entertained several famous musical performers. It was followed by ten years of more or less unbridled expenditure on property, yachts and discretionary lifestyle choices. This statement is not intended as any form of criticism or judgment: it is simply to state the facts. The husband himself describes it as “a hugely lavish lifestyle”. In 1999, the husband bought what has been described as a ‘super yacht’ for US$20 million. Some three years later, he took possession of a second yacht which had been built to his specification. The annual cost of the upkeep of the two yachts was in the region of US$3 million. In 2005, he purchased a substantial property in the Luberon region of Provence in the South of France (“the French Property”). Three full-time staff were employed to look after it. This property was subsequently extended through the purchase of some adjoining land.
I extract the following from the husband's written evidence by way of a vignette of the marital standard of living throughout its entire course:
“AW and I enjoyed a hugely lavish lifestyle. We spent several years just having a wonderful time, travelling and partying. We divided our time between our home [in St John's Wood], my yachts, our house in France and on ultra-luxury holidays. I had a number of high-performance cars and a serious wine collection. We always travelled first class or by private jet. In short, we were very fortunate to enjoy the very best of everything.”
These good years were a period during which the husband used a formidable network of similarly wealthy friends and international businessmen to invest in a number of business ventures. I shall come to these in due course. However, at this juncture it is right to record, as the husband accepted, that a significant part of their lifestyle was funded from capital.
He has admitted that he was wholly unprepared to deal with the wealth which he received when he sold his company in 1998 for £86 million. One of his first investments of £20 million in a joint property venture was quickly lost (according to the husband) as a result of an unscrupulous business partner whom he sued successfully but from whom he failed to recover any money. Through a holding company which he set up he was thereafter to make many and various equity investments. The shares in that holding company were held in his name and he owned the entire company.
He acquired an equity stake in a soft drinks business for which he paid £1 million. Through his holding company, he borrowed a further £900,000 from Kaupthing Bank but, despite the brand having been taken up by two of the major high street supermarket chains, he never saw any return on this investment which owed him a sum of c.£640,000 when he was made bankrupt. The entity in which he held shares was wound up in October 2012.
Some five years into the marriage, he invested in a company (‘PB Ltd’) which acquired 545 public houses for a sum of £162.5 million. The husband's shares in PB Ltd (some two-thirds of the issued share capital) were acquired for c.£12 million, half of which he had borrowed from his friend and fellow investor, CR, who himself invested a further £6 million. The shares were channelled through AH's holding company which operated as the holding company for the business. The following year he borrowed £10 million from Kaupthing Bank to finance further investment in four new corporate entities, including PB Ltd.
By 2010, the value of the husband's shares had fallen in value, on his own account, by some 78%. The company's corporate bankers foreclosed and PB Ltd went into liquidation later that year with the loss of...
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