D v D (Financial Provision)
| Jurisdiction | England & Wales |
| Judgment Date | 26 February 2007 |
| Neutral Citation | [2007] EWHC 278 (Fam) |
| Docket Number | Case No: FD 05D00382 |
| Court | Family Division |
| Date | 26 February 2007 |
[2007] EWHC 278 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
the Hon Mr Justice Charles
Case No: FD 05D00382
Jeremy Posnansky QC and Stephen Trowell (instructed by Miles Preston & Co) for the Applicant
Alan Booth (instructed by SAS Daniels) for the First Respondent
Hearing dates: 11 to 15 December 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.
Charles J:
Introduction
The petitioner in this case claims ancillary relief. For convenience, I shall refer to her as the wife and to the respondent as the husband.
The parties were married in October 1971 when they were both 27. The wife is 63, and at the date of the hearing in December 2006 the husband was due to have his 63rd birthday at the end of the month. The parties had been living together for about a year before the marriage. Throughout that period, and until April 1978, both the husband and the wife were working. The wife was a features editor on a weekly magazine and the husband was a sales representative for a company involved in trade concerning metals. In April 1978 the wife gave up work because she was pregnant. Twin girls, who are the only children of the marriage, were born in October 1978. After the birth of the girls the wife never returned to full-time employment but she did occasional freelance work as a journalist. It was not asserted that her income from this was relevant. My understanding is that the work was occasional and something the wife enjoyed.
It was common ground before me that:
i) the marriage was a long one and a traditional one in the sense that the wife stayed at home after the birth of the children and the husband was the breadwinner, and
ii) all the assets of the parties have been acquired during the marriage, and therefore
iii) on the face of it, that this is a straightforward case because in it the application of the cross check or yardstick of equality results in an equal division.
There are however complications as to how this agreed equality should be achieved and whether there should be some adjustments to the division of the assets in particular in respect of expenditure by the husband. There is also an issue as to whether the husband's holding company owns a beneficial interest in the matrimonial home.
In my view the complications and the problems in this case have been increased by a combination of the case being prepared in a manner that fell well below the standard the court is entitled to expect and the attitude and conduct of the parties (in particular the husband).
The assets
These can conveniently be divided as follows:
i) the matrimonial home, this is in central London, it is held on a long lease and it has five floors. The basement has for many years been used as an office for the husband's companies. The top four floors have been the matrimonial home. It is, and throughout the ownership of the parties it has been, subject to an interest only mortgage of about £140,000. The mortgage debt now stands at a little below that figure. It has been valued and the net value after deducting sale costs and the mortgage is put at £2.143 million. That figure needs further consideration in the light of the dispute whether the holding company owns a beneficial interest and the tax consequences of that (and of the company's occupation over many years of the basement as offices),
ii) the pension fund, this is valued at £1.77 million. There is common ground that the prima facie position is that it should be shared equally but there is a dispute as to how this should be done. There is also the possibility advanced on behalf of the husband that the pension fund could be divided differently to achieve overall fairness. I agree that such possibility exists.
iii) the art. Both husband and wife have an interest in art and over the years have acquired a very great number of pieces. There has been a valuation and issues arise as to which of the pieces are owned personally and which are company assets,
iv) the companies, and
v) miscellaneous.
The position in respect of the companies needs further division and explanation. The valuation that has been obtained of the companies has been given by a forensic accountant instructed as a jointly instructed expert (Mr H). There is a holding company (B Ltd, the holding company) which is 100% owned by the husband. It is described by Mr H in his first report as a non trading holding company. It has a wholly owned trading subsidiary (the trading company). Other relevant companies within the group are:
i) a wholly owned subsidiary which does not trade but which incurs or has incurred expenses on behalf of the group,
ii) a wholly owned subsidiary incorporated in the USA (the American company) which does not trade but owns a property in Palm Springs and thus incurs expenses in maintaining this property,
iii) a company incorporated in Uganda (the Ugandan company). 70% of the shares in this company are owned by the holding company and the remaining shares are shown in its memorandum as being owned by a Miss O. This company owns property in Uganda, as yet it has not traded but the husband gave oral evidence that the intention was that this company would trade in African art and that the property owned by it would be transferred to a charitable company, and
iv) some dormant companies which are wholly owned subsidiaries of the holding company.
As I have already mentioned over the years the parties have bought a considerable amount of art. In recent years the husband has been responsible for buying an enormous amount of African art. It is common ground that all of the African art is company property of B Ltd (the holding company) and that much of the other art is also company property of B Ltd. It is shown in its balance sheet as part of its fixed assets. However the remainder of the other art is owned by the husband and wife. The source of the moneys used to buy all of the art has been the husband's business but some of it has been bought from his remuneration and dividend income. The volume of the art and issues relating to the African art have added to the difficulties and the antagonism between the parties.
The group of companies therefore owns assets which can be divided in the following way, namely:
i) the holding company which owns a number of assets in addition to the shares in its subsidiaries, which include the art, the foundry used by the trading company and any share in the matrimonial home,
ii) a subsidiary trading company, and
iii) other subsidiaries which own property but do not trade.
The husband's interest in the companies is as the 100% shareholder of the holding company (B Ltd) and as an officer of that and other companies. The corporate structure and which company owns what are clearly important in connection with issues relating to the net value of the husband's shares in the holding company and the ability of the companies to pay moneys to the husband as dividend or salary or otherwise.
For example it seems to me that it needs to be remembered that:
i) a sale of the shares of the holding company at present involves finding a purchaser willing to buy a company that owns a trading subsidiary, a very large quantity of African art, some other art, the American company, a 70% share in the Ugandan company and (on my findings) a beneficial interest in the matrimonial home,
ii) such a purchaser is unlikely to be found (indeed this is now accepted) and therefore there is a need to consider the extraction or sale of non trading assets,
iii) a sale of assets of the holding company (whether the trading subsidiary, other subsidiaries, or its other assets (e.g. property and art) would produce cash in the hands of the holding company and not the husband, and therefore there are further steps that have to be taken before the husband can receive such moneys as a shareholder or officer of the companies after the deduction of relevant taxes, and
iv) these points clearly give rise to company law issues and tax questions (e.g. what are the tax consequences of the steps that are planned, or are possibilities, in respect of the extraction or sale of non trading assets and the sale of the trading business, and what are the distributable profits).
Lifestyle during the marriage
After the early years when the husband was developing his business it is common ground that the parties had a comfortable lifestyle and they had no money worries. The reason for this was the success of the husband's business activities.
As is not uncommon when a husband, or a husband and wife, own a private company, over the years they have charged much of their expenditure to the companies and this has been allocated within the books and records of the companies between personal and business expenditure. The husband has had a loan account to which personal expenditure has been posted and this has been repaid from time to time from remuneration and dividend. For a number of years the company has had its offices in the basement of the matrimonial home and as the wife explained to me she would regularly obtain reimbursement of expenses she had incurred by going down to see a member of its staff. This would be posted and recorded in the companies' books as a business or personal expense. If the latter it would be posted to the husband's loan account. The designation was that of the companies' bookkeeper (together with the husband and in accordance with the information given by the wife in respect of expenditure she had incurred) and was ultimately reflected in the audited accounts.
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