R v K

JurisdictionEngland & Wales
CourtFamily Court
JudgeMr Justice Baker
Judgment Date04 September 2018
Neutral Citation[2018] EWFC 59
Date04 September 2018
Docket NumberCase No:

[2018] EWFC 59

IN THE FAMILY COURT

Sitting at the Royal Courts of Justice.

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

THE HONOURABLE Mr Justice Baker

Case No:

Between:
R
Applicant
and
K
Respondent

Timothy Bishop QC and Katherine Cook (instructed by Payne Hicks Beach) for the Applicant

Martin Pointer QC and Judith Murray (instructed by Penningtons Manches) for the Respondent

Hearing dates: 26 – 28, February, 2, 5 – 9, 27 March, 18 April 2018

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.

Mr Justice Baker

This judgment was delivered in private. The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the children and members of their family must be strictly preserved. All persons, including representatives of the media, must ensure that this condition is strictly complied with. Failure to do so will be a contempt of court.

Mr Justice Baker

(1) Introduction

1

This judgment is delivered in matrimonial proceedings in which the wife is seeking a financial remedies order against her former husband after a marriage of 25 years during which three children, all now in their late teens or early 20s, were born. During the marriage, the family enjoyed a luxurious lifestyle as a result of the husband's successful property development business. But latterly his business has run into difficulties and he alleges that he now has liabilities which significantly exceed the family's assets. The central issue in the case is whether the husband, and his business associates who gave evidence at the hearing before me, have fabricated or exaggerated those liabilities in an attempt to defeat the wife's claim.

2

In his opening note at the start of the hearing, Mr Martin Pointer QC for the husband described this as a vexing case in which the costs incurred have been disproportionate to the resources of the parties. It is indeed vexing and the parties have been represented at considerable cost by leading and junior counsel and well-known specialist family solicitors (although for a period earlier in the proceedings the husband represented himself). The wife's case is that the costs have been greatly increased by the husband's failure to comply with his obligations to give full and frank disclosure. Such documents as have been produced by the husband, and latterly by his business associates claiming to be his creditors, have been produced in a piecemeal fashion. This has caused considerable difficulties, not only for those representing the parties and in particular the wife, but also for the court. Preparation of this judgment has been delayed in part because of other commitments but also because of the need to go through all the documents that have been produced in an effort to piece together the evidence to establish whether the wife's allegation that the husband has fabricated or exaggerated his debts has been made out.

3

This judgment is arranged the following sections:

(1) Introduction

(2) Background

(3) The issues

(4) Disclosure

(5) The liability to Mr X

(6) Did the husband show the June 2016 Statement of Assets and Liabilities to Mr Y?

(7) The alleged liability to C Finance and associated entities

a) Evidence concerning dealings between 2007 and 2010

b) Documents downloaded from the wife's computer

c) Disclosure in correspondence from HKH Kenwright and Cox

d) Assignments, the statutory declaration, and “Heads of Terms”

e) Mr K's “statements”

f) Mr K's oral evidence

g) Mr S's evidence h) MO's evidence

(8) Lifestyle and dissipation of wealth

(9) The parties' closing submissions

a) Schedules of assets and liabilities

b) The wife's submissions

c) The husband's submissions

(10) Conclusions and final order.

(2) Background

4

Both parties were born in Iran in 1966 and are thus 52 years old this year. Both moved to live in the UK when they were children, the wife when she was aged 10, the husband when he went to boarding school in this country aged 13. The husband's father, whom the husband describes as an entrepreneurial man, still lives in Iran. It is the wife's case that her father-in-law has property and business interests in that country and that the husband himself has some involvement in those or other business interests there. The husband denies that this is so, having only visited Iran four times since 1979.

5

The parties met in 1986 when, according to the wife, she was a student nurse earning approximately £300 per month and the husband was unemployed and living in a house owned by his father in West London. The husband's evidence is that when they met he had a job as a car salesman. They were married in 1990. At that point, they had little money and no other assets, save that the wife had inherited her late mother's jewellery. The husband obtained work in a Mercedes dealership and after a few years set up his own business as a car dealer specialising in Smart cars. The wife trained and worked as a midwife but ceased paid employment in 1994 when she became pregnant. Subsequently she gave birth to three children, two girls and a boy, in 1994, 1996 and 1998 respectively.

6

It was while the wife was pregnant with their first child that the couple purchased their first property, described by the wife as a modest three-bedroom house. It was in a poor state of repair and, with the assistance of some financial support from the husband's father, the couple carried out repairs and refurbishment. At around the same time, the husband moved from the motor trade into property development, doing up and selling properties. It is clear that he was successful in this business and the parties' financial position was transformed. It is the wife's case that she assisted the husband in the interior decoration and furnishing the properties, and also entertained the husband's business associates and investors. She asserts that through her friends and acquaintances he made some important business contacts. The wife herself did not have any paid employment again, save for a brief period when she operated two children's clothing shops which did not make a profit and had to be closed.

7

In 2001, the parties sold the first property and purchased what was to become last matrimonial home in West London, which was purchased for £1.45m, subject to a mortgage of £1m. It was conveyed into the husband's sole name. The husband's business continued to prosper. In 2003, the parties acquired a property in the South of France as a holiday home. In 2008, the husband acquired a flat in Knightsbridge. In the same year he formed a company as a vehicle for his property business, the shares held 51% by the husband, 49% by the wife.

8

The parties enjoyed a luxurious lifestyle spending substantial sums on holidays, restaurants, artwork, clothes, jewellery and other accessories. I shall return to the matter of their lifestyle later in this judgment. In her oral evidence, the wife describes the husband as having been “an amazing provider … an extraordinarily successful man who's managed to make our life bigger and better … an extremely clever guy, he's done well in business.” But it is the husband's case that the business, and the family's lifestyle, was built on borrowed money. He contends that he and the wife lived beyond their means in a way that could only be sustained if he continued selling properties at a profit or borrowing against his development projects in a rising market.

9

In July 2008, a company hereafter referred to as “C Finance” registered in Panama, was given a charge on the matrimonial home. Correspondence eventually disclosed in these proceedings suggests that this coincided with a loan of £250,000 from C Finance to the husband which, in addition to earlier loans allegedly made by that company, took his indebtedness to them to a figure of £1.1m. It is the husband's case that he had been introduced to the company by a business associate, acting as a broker, hereafter referred to as MO. It is the wife's case that at the time she knew nothing about the loans or the charge.

10

According to documents produced at a late stage in the hearing before me, the charge on the matrimonial home in favour of C Finance was cancelled in 2011. The circumstances in which it was cancelled are a matter of dispute between the witnesses who gave evidence before me. A copy of the application to cancel the entry on the Land Registry charges register was produced. It purported to show that the application to cancel the charge on the matrimonial home had been made by C Finance via a firm of solicitors based in Hampshire, called Daltons, on 14 December 2011. A copy of the Land Registry's cancellation of the charge on form DS1 was also produced, dated 6 December 2011 and executed by Wayne Stebbings on behalf of C Finance. Witnesses representing C Finance who gave evidence before me stated that no one on behalf of that company had authorised the removal of the charge. It was asserted that this had been carried out by the husband fraudulently.

11

In the next few years, the husband, operating through a number of companies, embarked on a series of further property development projects on a larger scale than before, in prime locations in London – they are referred to hereafter as “the Mayfair property”, “A House” and “D House and Cottage”. In due course, a well-known businessman, hereafter referred to as “Mr X”, became a joint venture partner of the husband through complex company structures, and invested in these three projects. It is the husband's case now that, unbeknownst to Mr X, he was also obtaining financial support for the three projects in the form of loans from C...

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