Cooper-Hohn v Hohn
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Roberts |
| Judgment Date | 12 December 2014 |
| Neutral Citation | [2014] EWHC 4122 (Fam) |
| Docket Number | Case No: FD12D01549 |
| Court | Family Division |
| Date | 12 December 2014 |
[2014] EWHC 4122 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mrs Justice Roberts
Case No: FD12D01549
Martin Pointer QC, Stephen BrandonQC, Geoffrey KingscoteandOliver Marre (instructed by Mishcon de Reya) for the Petitioner Wife
Lewis Marks QC, Elizabeth ClarkeandEmma Chamberlain (instructed by Withers LLP) for the Respondent Husband
Hearing dates: 1st to the 11th July 2014
This is necessarily a lengthy judgment. It is arranged in the following sections:-
| A. Introduction | (paragraphs 1 – 6) |
| B. Headline issues | (paragraph 7) |
| C. Background | (paragraphs 8 – 84) |
| D. Computation | (paragraphs 85 – 146) |
| E. Law in relation to post-separation accrual | (paragraphs 147 – 197) |
| F. Tax | (paragraphs 198 – 227) |
| G. Findings in relation to the known tax risks | (paragraphs 228 – 242) |
| H. Consideration of the individual tax risks in respect of which the husband seeks an indemnity from the wife | (paragraphs 243 – 248) |
| I. Conclusions in relation to computation | (paragraphs 249 – 251) |
| J. Special contribution | (paragraphs 252 – 294) |
| K. Quantum of the wife's award | (paragraphs 295 – 310) |
A. Introduction
Over the course of ten days between 1 st and 11 th July 2014, I have been dealing with the final hearing of a wife's claim for financial remedy orders. During the course of that hearing, I delivered an extempore judgment in relation to a discrete issue which arose in relation to the ability of the press to report the proceedings. It is reported as Cooper-Hohn v Hohn at [2014] EWHC 2314 (Fam). This is my judgment in respect of the main application. The issues canvassed in the hearing were complex, involving both disputed issues of facts and law. I heard submissions from leading counsel instructed on both sides to deal with aspects of publicity and tax, as well as the financial teams who were assembled to represent the parties. Mr Martin Pointer QC with Mr Geoffrey Kingscote and Mr Stephen Brandon QC with Mr Oliver Marre appeared for the wife. Mr Lewis Marks QC and Miss Elizabeth Clarke represented the husband with Mrs Emma Chamberlain. To both those teams I owe thanks for the meticulous and detailed preparation of their respective cases and the quality of the advocacy, all of which was of enormous assistance to me in reaching my decision on the issues with which I shall need to deal in this judgment.
Given the complexities of the case, the written material before the court was helpfully contained within three core bundles. Both sides produced detailed written skeleton arguments in opening and closing. I had two full bundles of authorities before me in relation to the matrimonial and tax issues and a very helpful organogram showing how the husband's business structure operated as between the various entities (both onshore and offshore) through which the wealth in this case has been created. The only witnesses from whom I heard oral evidence were the husband and the wife.
The assets which are available for division between these parties in this case are worth between US$1.35 billion and US$1.6 billion. There are various aspects relating to computation with which I shall deal in due course. However, those figures do not represent the full extent of the assets which have been generated by the husband's commercial activities during the subsistence of this 17 year marriage. In addition to the wealth which the parties hold personally, a further sum of US$4.5 billion has been channelled into a charitable Foundation which, through donations made to grantees in both the UK and the US (where there is a separate charitable Foundation), has achieved international recognition as one of the leading world charities in the fields (amongst others) of child poverty, HIV/AIDS and climate change. It is known as The Children's Investment Fund Foundation (or CIFF UK and CIFF US). In this judgment, I propose to refer to these two limbs of the charity as respectively 'the UK Foundation' or 'the US Foundation'.
The respective cases of the parties
It is common ground between the parties that all of this wealth (c. US$6 billion) has been accumulated during the course of their 17 year marriage. In terms of their personal wealth, the husband contends that much represents post-separation accrual, having been accumulated or 'earned' during the ensuing years of separation since 2012 at a time when the wife's contributions qua spouse had ceased. That, he says, is one reason why there should be a departure from equality in terms of the share of the wealth she should receive at the end of the marriage. He also contends that his creation of wealth on this scale falls to be considered as a special and unmatched contribution which is further justification for a reduction in the wife's entitlement.
His case is that the wife should receive no more than one-third of the assets as they stood in April 2012 when the marriage effectively came to an end and one half of one third of the post-separation accrual which has been achieved since then. In round terms, this would see her leaving the marriage with assets of c.US$350 million (c. £200 million on prevailing exchange rates at the date of trial), or some 25% of the currently available assets. The wife seeks what she contends to be her entitlement to a full and equal share in what has been built up to date. She brings her claims from the foot of substantial and valuable contributions which she claims match those made by the husband, even if they are different in kind and quality to his wealth creating function. To seek to discount her 50% entitlement would, she claims, amount to clear discrimination in terms of the evaluation of those contributions.
That each of these parties has devoted most of their adult lives to the pursuit of philanthropic causes is not in dispute. Whilst I shall need to say more at a later stage about the roles which each adopted in furthering their charitable work, it needs to be said at the outset that these are remarkable people who have undoubtedly already made a significant difference in terms of their combined objective to leave the world a better place. That much is a given in this case. What I have to decide is how their personal fortune is to be divided between them as they begin the process of leading future lives independent from one another save for their continuing roles as parents to four much loved children.
B. Headline issues
Essentially, the headline issues which I shall have to determine are these:-
i. What is the extent of the assets available for distribution as between the husband and the wife (the computation issue)?
ii. To what extent do those assets fall to be considered as part of the marital acquest or, alternatively, to what extent have they been generated (or added to) in the period between separation and the date of trial (the marital acquest or post-separation accrual issue)?
iii. What percentage of the overall available wealth should each party receive at the end of the marriage? In particular, is a departure from equality justified on the facts by either or both of (i) post-separation accrual and/or (ii) special contribution on the part of the husband (the distribution issue)?
iv. In either event, should there be a Wells sharing of any or each of the various categories of assets, to include any goodwill value which I find to exist in the TCI entities over and above the value of the assets they currently hold?
C. Background
The parties and the early years of their married life
This case has already attracted a significant amount of publicity in the media generally, not least as a result of (i) its journey to the Court of Appeal on a discrete issue in June this year, and (ii) the well-publicised substantive final hearing before me in July when, amongst other issues, I had to decide the extent to which there should be restrictions on reporting. Neither party seeks anonymity; each accepts that the scale of their wealth and the issues which arise for determination carry the inevitable consequences of widespread media interest. Thus, whilst the identity of the parties and their individual roles in connection with the charitable Foundation is information which is widely known, I have directed that none of their personal financial information may be disclosed or reported publicly. I have explained my reasons for this restriction in my earlier judgment.
However, as will be obvious, I cannot in this judgment embark upon the detailed forensic exercise which will be required in terms of the financial analysis of the evidence without reference to, and examination of, several aspects of that private information. To that extent, as I advertised at the conclusion of the hearing, consideration will undoubtedly need to be given to the extent to which redaction of parts of this judgment may be required. That will need to be the subject of further thought in due course once my decision and the reasons for it have been released to the parties and their respective legal teams. However, for present purposes and save where indicated by reference to abbreviation, I have not sought to anonymise any of the individuals or entities about whom or which I heard. Whilst I shall identify the parties in what follows, I propose to refer to them in this judgment as "husband" and "wife". I intend no disrespect to either in adopting this convenience.
The husband is Sir Christopher Hohn. He will be 48 at the end of October this year. Shortly before the hearing, in June 2014, he was appointed to the Order of St Michael and St George, KCMG, for services to UK philanthropy and international development. He has accumulated great...
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