FW v FH
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Cohen |
| Judgment Date | 24 May 2019 |
| Neutral Citation | [2019] EWHC 1338 (Fam) |
| Date | 24 May 2019 |
| Court | Family Division |
| Docket Number | Case No: BV17D32383 |
[2019] EWHC 1338 (Fam)
IN THE FAMILY COURT
Sitting at THE ROYAL COURTS OF JUSTICE
Mr Justice Cohen
Case No: BV17D32383
Timothy Bishop QC and Thomas Harvey (instructed by Wedlake Bell) for the Applicant
Nicholas Cusworth QC and Rebecca Carew Pole (instructed by Mishcon de Reya) for the Respondent
Hearing dates: 13 th – 24 th May 2019
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.
The Judge hereby gives leave for it to be reported once the judgment has been anonymised by removing references to the identity of the parties, addresses, business entities and other lay individuals.
The judgment is being distributed on the strict understanding that in any report no person other than the advocates or the solicitors instructing them may be identified by name or location. In particular the anonymity of the children and the adult members of their family must be strictly preserved. If reported, it shall be the duty of the Law Reporters to anonymise this judgment
I am dealing with the wife's claim for financial remedy orders following the breakdown of the marriage between the wife and the husband.
The wife (“W”) is aged 36. The husband (“H”) is aged 45. They commenced a relationship in June 2007 and became engaged and began co-habitation in September 2009. The husband had by that time been working in a company known in shorthand as R Ltd since 1998. He owned a flat in North London. The wife too owned her own flat but is unable to recall details of it. Unlike the husband, she comes from a wealthy background and she says that her father has frequently carried out transactions in the names of her or her siblings the details of which she cannot recall.
W's father was eager to help the young couple on their way. They wished to purchase a house, CP. Their mortgage capacity was limited to a little over £500,000 and W's father therefore loaned the parties the funds to make up the balance of just over £750,000.
There is a discrete dispute about the terms upon which W's father made the loan. It is clear that he took security on H's flat by way of a charge to the extent of 2/3 of its net sale proceeds when it was sold. As it transpires, when it was sold in September 2012 his share of the proceeds produced approximately £402,000, leaving a shortfall of £352,000. H says that W's father took a commercial gamble on what the sale of H's flat would produce and that he is not entitled to any further sum. W says that the £352,000 remains a debt which the parties between them owe to her father.
Her father is not a party to these proceedings although both Mr Justice Mostyn and I have at previous hearings urged him to set out his case. I have seen documents which suggest that no further sum is due and no documents which evidence that a further sum is owing to him, but that does not mean that it might not be the case. The only way that I can do justice to the parties and to W's father so far as this dispute is concerned is to say that if further sums do become payable to W's father they shall be paid equally by the parties. By the end of the case both parties agreed this approach which I had proposed.
The parties lived in CP until November 2016 apart from a short hiatus to which I will return.
In October 2009 W's father lent H approximately £220,000 so that he could buy a 50% share in R Ltd. Prior to this transaction H had no stake in R Ltd and was paid from profits as each deal came to fruition. W's father was well aware of H's wish to acquire a stake which was repaid by H in full in September 2012 from the balance received by H from the sale of H's flat.
The parties married in June 2010. They have two children, O aged 7 and S aged 5. They live primarily with their mother although spending time with their father.
The marriage ran into difficulties and in Summer 2014 H moved out of CP and did not return until Autumn 2015. Thereafter they remained living together under the same roof until a final separation in September 2017.
In March 2014 the parties purchased land for a new house to be built at PG from W's father for £2.7M. A substantial property was then built on the land and the building works were not completed until November 2016. The purchase was in part funded by a loan from W's father in the sum of £1,080,000. It is common ground that this sum is payable by the parties to W's father. The balance of the purchase price and construction costs were funded from various borrowings from Coutts Bank in the total sum of just under £4M.
Upon the completion of the building the parties moved into PG and remained living there until September 2017. On the breakdown of the marriage W and the children initially moved out of PG, but in November 2017 they returned upon H vacating the property and returning to live in CP which previously had been rented out. Thus it is, that W and the children remain in PG and H remains living in CP with his new partner and their young child.
At an early stage in these proceedings H sought to argue that the marriage broke down in 2014 upon the first separation and that his return to the matrimonial home the following year was really no more than to bring him into closer proximity to his children and that the marriage was already at an end. W characterises this as an opportunistic presentation devised to bolster an argument that the marital partnership ended in 2014/2015 and that any increase in the value of his interest in R Ltd should thus accrue from that date to his sole benefit. She cites further in support that in his Form E he gave the date of separation as September 2017 and in the Certificate of Financial Complexity signed by both parties he gave the date of August 2017.
It is clear to me that notwithstanding the prolonged hiccup in 2014/15 both parties were working towards the continuation of the marriage and that it did indeed endure until Autumn 2017. It is thus to be treated as a committed relationship of some 8 years. In fact, it is clear from all the expert evidence that the value of R Ltd has decreased rather than increased over the last few years and thus the point becomes of no relevance in the context of what I have to determine.
The Proceedings
In October 2017 the wife issued her Form A and divorce petition. The proceedings have followed a relatively conventional course, save in one respect, and there is no need for me to set out its history. The one aspect which does need attention is the instruction of expert accountants to value R Ltd and its associated companies. By agreement, Grant Thornton (GT) were instructed to produce a valuation which came in in October 2018. Both sides were dissatisfied with the conclusion and each applied successfully for permission to instruct their own valuer. W has accordingly instructed Jon Dodge of Walton Dodge and H instructed Faye Hall of Smith and Williamson. It is fair to say that the report of Mrs Hall is considerably closer in methodology and outcome to that of GT than is the report of Mr Dodge.
When the matter came before me on a pre-trial review in March 2019 H applied that I should hear oral evidence from GT in support of their report which the parties had agreed that I should read. It was plainly appropriate because of the multiple references to it made by Mrs Hall and Mr Dodge that I should read the report but I refused to allow oral evidence from GT for reasons that I gave at the time.
The parties have put in model practice direction documents for which I am extremely grateful, including a composite schedule of assets and liabilities for the final hearing. The principle issues which are in dispute as to their computation are as follows:
i) Whether or not the parties owe £352,000 to W's father. I have already expressed my conclusion on that issue;
ii) The value of H's business assets. On this the parties are some £9.5M apart, the single biggest component of the dispute being as to whether or not a terminal value attaches to R Ltd;
iii) Whether or not a value is to be attributed to W's shareholding in various entities set up by her father and which in 2015 she transferred to the children of the family;
iv) Whether or not a value should be attributed to her interest in various trusts established by her family.
So far as the issues of her business assets and interests in trusts are concerned, it is said on behalf of the husband that although it is conceded that these are in all respects non-matrimonial assets they are nevertheless resources that are available to the wife either in terms of capital or in terms of income production.
In general terms the parties agree that the assets other than those emanating from W's family should be divided equally between the parties, but they are very far apart as to how that should be achieved. Above all, there is a dispute about how W should be able to access her share of H's business interests, and how her share is valued.
This has been the main focus of the hearing before me for obvious reasons. H's business interests in this case comprise the vast bulk of what the parties own. As the case was opened to me, excluding only W's trust interests (iv above), W says that the total assets in the case are £27.8M of which the business represents £26.9M and the husband puts the total at £21.9M of which the business represents £17.5M. If there is removed from the figures the sum ascribed by the husband to W's interest in the family businesses transferred to the children, the business on his figures at its net value of £17.4M comprises an even larger share of the assets which would accordingly diminish to £18.7M.
It is W's case that I should order an immediate sale...
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