Jenifer Eileen Evans v Mark Stephen Evans

JurisdictionEngland & Wales
JudgeThe Hon. Mr Justice Moylan,THE HON. MR JUSTICE MOYLAN
Judgment Date13 March 2013
Neutral Citation[2013] EWHC 506 (Fam)
Docket NumberCase No: FD10D05217
CourtFamily Division
Date13 March 2013

[2013] EWHC 506 (Fam)

IN THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Hon. Mr Justice Moylan

Case No: FD10D05217

Between:
Jenifer Eileen Evans
Applicant
and
Mark Stephen Evans
Respondent

Mr C Howard QC and Mr R Castle (instructed by Hughes Fowler Carruthers) for the Applicant

Mr M Pointer QC and Mr T BishopQC (instructed by Alexiou Fisher Philipps) for the Respondent

Hearing dates: 29th October to 6th November 2012

The Hon. Mr Justice Moylan
1

This judgment follows the hearing of the wife's financial application. This is a rehearing of the wife's application for reasons that are not relevant to this judgment but for which the parties are not responsible.

2

Accordingly, the parties are not solely responsible for the costs incurred in these proceedings which have inevitably been increased as a result of this rehearing. However, to have to record that this litigation has cost a total of £2.7 million is, to put it mildly, a stark reflection of the extent to which this case has been contested. It is clear to me that this case has not been litigated in a manner which complies with the obligations imposed on parties pursuant to the overriding objective. I regret to say that I also found the approach taken by both parties during the course of the hearing to be unhelpful. Points have been pursued in a confused and confusing manner. Each side seemed to be focused largely on forensic point scoring and both put forward offers that, in my view, paid little regard to the resources which are in fact currently available.

3

In this respect I echo the observations of Munby LJ in H v H (Financial Relief) [2010] 1 FLR 1864. Also, like him, I do not propose to deal in this judgment with all the points canvassed before me but I have taken into account all the evidence and all the submissions when determining this application. Given that many of the figures have been given in pounds and/or dollars I propose to use both during the course of the judgment.

4

The resources in the case can be divided into three categories:

(a) Shares in a private company, called Confluence Technologies Inc ("Confluence") which are estimated to have a net worth of £32 million (on a very broad indicative valuation). They are currently illiquid, in that they cannot be sold.

The shares are in a company founded in the early years of the marriage. The husband has always worked for the company and continues to do so. The husband and wife currently own 34.7%. The value of these shares is uncertain. They have been the subject only of a preliminary valuation which gave a gross value of between $65 to $83 million. This is no more than a very broad indication of their possible value. Further, there is no firm date by which the value of the shares will be realised. This is one of the issues which I will have to address in this judgment. However, given the uncertainties the parties agree that the shares should be divided between the parties in kind. The issue is the percentage which the wife should receive.

5

(b) Other assets which can be valued but not all of which are currently realisable.

On the husband's case these assets are worth in total £9.3 million; on the wife's case they are worth £8.4 million, in both cases excluding chattels of £5/600,000. The difference is largely accounted for by differences in tax, the wife contending that significant amounts will be payable on the realisation of certain investments and for the tax years 2011 and 2012. The main issue appears to be the extent to which losses can be carried forward to reduce the tax which would otherwise be payable. Given the costs incurred and the duration of these proceedings (approximately 2 years), it is extraordinary that this issue has not been resolved or even properly addressed during the hearing. Following the conclusion of the hearing, I was provided with additional evidence on behalf of the husband in an attempt to address this point. I have had a brief look at this new evidence but it is, in reality, far too late.

6

(c) The husband's earned income from Confluence. The wife has no earned income.

7

The principal issues in the case are:

(a) What percentage of the Confluence shares should each party receive? The wife contends that they should be divided equally; the husband contends that the wife should receive 1/3 rd. The husband's case rests on two points. First, he submits that he has made a special contribution during the marriage such as to justify a departure from an equal division. Secondly, he submits that the fact that the value of the shares will not, and cannot, be realised until some years after the end of the marriage, during which he will continue to work in the company (an unmatched contribution), justifies a departure from equality;

(b) How should the currently available capital resources be divided having regard to the parties' current needs. The husband contends that they should be divided equally. The wife contends that she should receive £5.4 million (excluding chattels);

(c) Should there be a clean break or should the wife receive maintenance pending the realisation of the Confluence shares;

(d) The wife asserts that the division of the assets should be adjusted in her favour on the sale of Confluence to reflect a "wanton campaign of extravagance" by the husband. This has been referred to as an " add-back" submission;

(e) The wife also seeks additional safeguards in respect of the Confluence shares.

There are a number of additional issues which have been raised by the parties but which, as referred to above, I do not consider it necessary for me to address in this judgment.

8

The wife's case, as outlined above, is that there should be an equal division of the parties' capital resources. This is the longer term outcome because she seeks an unequal division of the capital resources currently available to enable her to meet, principally, her housing need pending realisation of the Confluence shares. At the start of the hearing it was submitted that the wife should receive £6.1 million of these resources and the husband £3.5 million. At the conclusion of the hearing this had become respectively £5.4 million and £3.4 million (although these figures ignore the wife's case that tax of approximately £815,000 is or may be due as set out below). In addition the wife seeks periodical payments at the total rate of £30,000 per month for herself and one child until realisation of the Confluence shares.

9

The husband's case is that there should be an unequal division of the Confluence shares to reflect his special contribution and the fact that the value of the shares will not be realised until some years after the end of the marriage. The proposed division is 2/3 rd to the husband and 1/3 rd to the wife. The husband additionally proposes that the non-business assets should be divided equally giving each party just under £5 million (including chattels). In order to provide the wife with greater current liquidity and with the ambition of achieving a clean break, in his closing submissions Mr Pointer indicated that the husband is willing to "countenance a solution" which provides more of the liquid wealth for the wife.

History

10

The parties married in 1985 when the husband was aged 21 and the wife 20. They are both US nationals. The husband is now aged 48 and the wife is aged 47. They have two children aged 18 and 16.

11

Following the parties' separation in 2010 the wife has remained living in the former matrimonial home in London and the husband has moved to live in California. Their elder child lives with the father and the younger lives with the mother. The parties' elder daughter will very likely attend university in the USA. The younger daughter attends a boarding school just outside London. Following completion of her secondary education she is expected to attend university although at present there is no definite plan as to in which country this will be.

12

The parties met and spent most of their married life living in Pittsburgh, Pennsylvania. When they married they had no money. Indeed, it appears that the husband had substantial debts. The parties worked in employment until 1991 when the husband set up Confluence. Not long after, the wife embarked on qualifying as a lawyer and she received government loans which were used to support the family until the business began to generate sufficient income to pay the husband a salary.

13

After the wife qualified as a lawyer she practised for a very short period and then worked, also for a very short period, as general counsel to Confluence.

14

In 2006 the husband sold 65% of his interest in Confluence to a venture capital fund for $40 million net. The family's wealth was transformed as a result. It is apparent that their lifestyle changed dramatically as can be demonstrated by their purchase of an interest in, that conventional mark of substantial wealth, a private jet.

15

The parties lived in Pittsburgh, where Confluence's head office is located, until 2009 when they moved to London. This resulted in part from Confluence's decision to seek to expand its European business. The husband obtained a three year residence visa for himself and the family. The parties initially lived in rented accommodation before buying their last matrimonial home in April 2010 for just over £10 million with a mortgage of approximately £7.4 million. For the period April to December 2010 Confluence contributed approximately £9,500 per month gross towards the mortgage instalments totalling £30,600 per month (of which approximately £18,500 is interest).

16

The parties' former home in Pittsburgh was sold in February 2012 for $1.8 million.

17

As referred to above, the wife has remained living in London. The husband moved to live in San Francisco in late 2010. He lives in rented accommodation...

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