Goddard-Watts v Goddard-Watts
| Jurisdiction | England & Wales |
| Judge | Macur LJ,Nicola Davies LJ,Carr LJ |
| Judgment Date | 15 February 2023 |
| Neutral Citation | [2023] EWCA Civ 115 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2022-000294 |
[2023] EWCA Civ 115
Lady Justice Macur
Lady Justice Nicola Davies
and
Lady Justice Carr
Case No: CA-2022-000294
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
FAMILY DIVISION (SIR JONATHAN COHEN)
FD09D05089
Royal Courts of Justice
Strand, London, WC2A 2LL
Peter Mitchell KC and Simon Webster KC (instructed by Irwin Mitchell Solicitors) for the Appellant
Timothy Bishop KC and Richard Sear (instructed by Pinsent Masons Solicitors) for the Respondent
Hearing date: Thursday 20 October 2022
Approved Judgment
This judgment was handed down remotely at 10.30am on Wednesday 15 February 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives
Introduction
Julia Goddard-Watts is the second wife of James Goddard-Watts. They have been separated since 2009 and were divorced in 2010. Nevertheless, as is conventional and convenient in such cases, I identify them as the wife and the husband throughout this judgment.
The wife and the husband appeared to settle by consent the financial relief claims arising from their divorce in 2010. Subsequently, it was found on two separate occasions that the husband had, first, misrepresented his assets and, second, failed to make appropriate disclosure of likely significant capital accumulations in the foreseeable future. Consequently, two ‘final’ financial relief orders have been set aside. This appeal, twelve years after the first court order, arises from the third determination of the wife's claims in January 2022 by Sir Jonathan Cohen (“the judge”).
The wife appeals the order made, and arrived at, by the judge adopting what is described as “the Kingdon approach”. That is, the judge relied upon the determination made by Moylan J (as he then was) in the first rehearing of the wife's financial relief application in 2016, that she had received an appropriate share of, what is effectively, the husband's company known as ‘CBA’ in 2010. The wife contends that she cannot receive a ‘fair’ resolution of her claim without a root and branch investigation of all financial matters de novo; to do otherwise means that the husband has benefitted from the fraud he perpetrated.
Unfortunately, the fact of deliberate non-disclosure in matrimonial financial disputes is not uncommon, although notably, as Holman J said in what was the second set aside judgment in these proceedings: “A second such application in the same case is vanishingly rare and is probably unique.” ( [2019] EWHC 3367 (Fam) at [2]).
The wife contends that there continues to be a dearth of authority as to the fair disposal of financial claims when earlier orders have been set aside because of fraudulent non-disclosure; see Kingdon v Kingdon [2010] EWCA 1409 at [33].
In granting permission to appeal the single judge, King LJ, determined that “there is a real possibility that the judge fell into error in adopting a Kingdon/needs approach at the rehearing of the case” and also that “[t]here is a compelling reason to hear the appeal in order for the court to consider the role of Kingdon and how to approach a case where on the one hand the increase in the value of the company is not part of the marital acquest but on the other, the reason that the court is seized with the matter many years post separation is as a consequence of the husband's wilful non-disclosure in respect of this and other trust assets.”
Background
The wife's application for financial relief has been considered by first instance courts on five occasions, whether to approve the initial ‘consent’ order in 2010, to set aside orders in 2015 ( [2015] EWFC 64) and 2019 ( [2019] EWHC 3367 (Fam)) and in substantive re-hearings in 2016 ( [2016] EWHC 3000 (Fam)) and finally in 2022 (now under review). The judgments from 2015 to 2019 contain the relevant detail of the background to the marriage and the evolving litigation history and to which the judge said he had had due regard, although he did not refer to the same in any significant detail. Nevertheless, in the circumstances of this appeal, I consider it is appropriate to recite the following details.
The wife and husband lived together since 1987 and married in 1996. They had three sons together, were separated in 2009 and divorced in 2010. Both have formed new relationships. The children of the marriage are now adults and alienated from their father. The husband and his current partner have four children.
The family assets are traced back to the husband's parents' ‘modest’ (as described in the wife's skeleton argument) hardware business. The husband began working in the business in 1988. Eventually, the husband, his brother and their two parents held 25% of the business each. It was sold in 1999 for approximately £85 m gross. The husband received £15 m net. The husband acquired another business which is referred to herein as CBA, and of which about 19% of the shares are held on trust for the parties' three sons and three of the husband's four children with his current partner.
The husband made a loan of over £1m towards his brother's purchase of another business in 2002. Two trusts were established on 11 March 2008, into which the husband's parents and his brother transferred shares and which are settled for the benefit of the husband and his descendants. However, a letter sent in May 2014 from solicitors acting for the trustees, that is the husband's parents and his brother, to solicitors acting for the three older children indicated that “our clients have always considered the Husband to be the principal beneficiary during his lifetime and continue to do so”.
The financial remedy proceedings
The wife and husband reached a negotiated settlement of their financial relief claims. On 1 June 2010, DDJ Marco approved a consent order giving effect to the settlement. In broad terms the wife received £7.6 m in money or moneys-worth; of which £1m was to be paid in instalments over eight years. On the assets then disclosed, which did not include the two trusts referred to above, the husband received the equivalent of approximately £9 m.
In October 2009, the husband's solicitors wrote to the wife's solicitors and referred to the trusts in terms: “There is a family trust which owns shares in another company, [“T”] Ltd. [The husband]'s parents are the Trustees and [the three older] children are in the class of beneficiaries. Neither [the husband] nor [the wife] can benefit under the Trust and [the husband] is neither a director nor a shareholder. I therefore do not expect that an independent report on this shareholding would be considered necessary, though details of the Trust should be exchanged during the disclosure process in the usual way.”
No such disclosure took place. In November 2009, the husband wrote to the wife direct indicating his approximate wealth to be around £15.694 m. There was no reference to the trusts. A schedule of assets was provided by Rory O'Donnell, who had had previous dealings with both the husband and wife as their accountant. The valuation of the husband's interest in CBA was given as £6m.
A meeting took place in Verbier attended by the parties, a “family” solicitor, and Rory O'Donnell. An agreement was reached regarding the wife's prospective financial relief claim. It was agreed that there would be no exchange of Form E, that is the financial statements that would otherwise be utilised in an application for a financial relief order. However, the wife and the husband exchanged Form M1, that is a statement of information for the purpose of seeking approval of a consent order. The asset schedule of the husband's Form M1 referred to the husband as a ‘potential beneficiary’, and the three children of the marriage as primary beneficiaries, of the trusts. The settlements were recorded to have made loans to the husband totalling £1m to assist with his company's poor cashflow and ‘difficult trading conditions’ which were reflected in the Director's Loan Account.
In October 2011, the husband received £3.36 m from the trusts. He received a further distribution of £4.5 million following the sale of T Ltd.
In 2014, the wife discovered that the husband was considered by the trustees to be the principal beneficiary of the trusts. She made application to set aside the consent order.
The application came on before Moor J in July 2015. He heard evidence over two days. His pertinent findings are contained in [81] to [89] of his judgment, to the following effect. The disclosure regarding the two trusts was “clearly not full and frank.” The first letter from the husband's solicitor, see [12 above] was “completely false” and the information had been provided by either the husband or Rory O'Donnell and was a “deliberate” deceit. Moor J rejected the contention that the husband and/or Rory O'Donnell had disclosed that the husband was a beneficiary in November 2009 and “the impression was undoubtedly given that this was a trust for the children.” The Form Ml was equally misleading. The detail given was likely to be “back covering” but was “just plain wrong.” The husband was a beneficiary and he had benefited. It was wrong to equate one trust with the 1997 settlement. It was wrong to say that the children were the primary beneficiaries even if the sentence then tacked on that “(the Husband) is also a beneficiary”. Most fundamentally, it was wrong to give 2008 figures, given the very significant changes thereafter. The wife's attempts to obtain information in 2011 and 2012 had been thwarted. In summary this was deliberate and material non-disclosure. Consequently, Moor J set aside the consent order and gave directions for re-hearing.
The husband's application for permission to appeal was dismissed. The case next came before...
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