Robertson v Robertson

Introduction

This is a wife's claim for financial remedies after divorce. Without any objection, or even demur, by or on behalf of either party, I heard the whole of this case in public, save for a period of about five minutes when I very briefly went into private to touch upon a sensitive matter personal to the parties. I now give this judgment in public. It may be freely reported, but no report of, or relating to, this judgment may name the children (whose names I will not disclose), nor their home addresses or school.

At the outset I would like to thank the four counsel, very ably supported by their instructing solicitors, for the very high quality of the oral and written presentation of this case. I hope that each party will respectively feel that his/her case could not have been better presented. I also wish to thank both parties themselves for their patience, close attention and, so far as possible, good humour during the course of the hearing.

The law, as developed by the courts, recognises that there is an analytical distinction between so-called matrimonial and non-matrimonial (including pre-marital) property or assets, and that that distinction may, and often will, impact upon discretionary distribution after divorce. In the present case, the husband already owned before the cohabitation and marriage publicly quoted shares in a company of which he was a co-founder and the chief executive officer. He still owns most of them. When the parties began their relationship and cohabitation those shares were trading at around 12 to 8p each (the parties differing as to the precise month in which cohabitation began). When the parties finally separated, the shares were trading at around £67 each. At one point since the separation the shares were trading at as high as about £70 each.

The agreed market price of the shares for the purpose of this hearing and judgment is £29.09 each (being their value during 25 February 2016). I mention that even during the course of the hearing they rose as high as £31 each, thereby adding nearly £14 million to the gross wealth at that moment of the husband. (Partly for that reason I will generally use rounded figures in this judgment. When the combined assets of the parties may rise or fall by several millions of pounds, even as they are sitting in the court room, it is petty and pedantic in judgment to use very precise figures, although that is how they appear in the agreed asset schedule.)

The central issue in the case is how the value of those shares should be treated by me, and to what extent the wife should share in their value. A slightly complicating feature is that since the separation the husband has sold some of the shares and invested the proceeds in three properties in Wimbledon, purchased in his sole name, whose aggregate net value is about £20.1 million. The husband says that the remaining shares and also those three properties are non-matrimonial assets, and that the wife should not share in them or their value at all.

The wife concedes that the actual value of the shares as at the date when the parties began to cohabit, uprated by an assessment of so-called passive growth, should be carved out as a non-matrimonial asset and ascribed to the husband. But she says that the balance of their value (representing so-called active growth during the period of the cohabitation and marriage) should be divided equally between the parties on the sharing principle, being, she contends, matrimonial assets. The accountant's assessment of the net value of the shares uprated for passive growth since June/July 2002 (when the wife contends they began to cohabit) is about £4.84 million. The bottom line total of all the net assets on the agreed asset schedule (i.e. the combined total net wealth of these parties) is about £219.5 million.

The wife therefore contends that she should retain or receive assets to the value of about £107.33 million, being half of £219.5 million less £4.84 million. The husband contends that, strictly, the wife should retain or receive assets to the value of £29.2 million, being half of £219.5 million less the sum of £141 million (the net value of the remaining shares) and £20.1 million (the net value of the three Wimbledon properties purchased from share sales since separation). The husband has, in fact, agreed that the wife should retain or receive assets to the net value of £30.26 million.

The parties are thus very polarised and entrenched between two very hard edged positions: total exclusion of the value of the premarital shares (and of the three properties into which some of them have been converted); or total inclusion of the value of those shares and properties, save for the relatively small carved out portion of £4.84 million, to represent the value of the shares at the date cohabitation began, uprated for passive growth. The gap between the parties is about £77 million (£107.33 million less £30.26 million).

At several stages at the outset of, and during the course of, the hearing I very strongly urged and encouraged the parties to settle the case. I have pointed out the high element of litigation risk when each is taking these relatively extreme, polarised and hard edged positions. But no compromise has resulted.

The essential facts

There is very little material dispute as to the material facts, and I can summarise them fairly shortly. The husband is now aged 48. The wife is now aged 43. They first met in the summer of 2002, having been introduced by Lorri Penn (see below), who was already employed by the husband's company. There is a dispute as to whether they rapidly began to live together in about June/July 2002, as the wife contends, or in September 2002, as the husband contends. Nothing turns on whether the cohabitation was about two months longer or shorter, and wisely neither leading counsel asked questions about this issue. Accordingly, I make no finding as to the precise month in which cohabitation began. Paradoxically, the husband's shares were trading in June/July 2002 at about 12p each, higher than in September when they were trading at about 8p each. Since the wife is the applicant and it is her case that they began to cohabit in June/July, I will assume (favourably to the husband but consistent with the wife's case) that at the start of cohabitation the shares were trading at about 12p each.

The parties continued to live together until their marriage in December 2004. They have two daughters, now aged eight and seven, who were born less than a year apart, so the wife became pregnant for the second time only about two months after giving birth the first time.

Very sadly the marriage broke down. Each party no doubt has their own perspective of the reasons for that, which are touched upon in the written evidence, but they are immaterial to outcome. The wife did say in her oral evidence that they were largely living what she called "separate lives" in 2011, but they struggled on and indeed undertook counselling in late 2012. During 2013 they were still living under the same roof, and indeed during 2013 several investment properties were purchased in joint names. The parties finally separated around the end of 2013. This was thus a cohabitation and marriage of about ten to eleven years' duration. Both had grounds for divorce, but it was the wife who petitioned for divorce in May 2014 and the present proceedings ensued.

The parties were relatively mature people when they first met, the husband being then aged 34, and the wife 29. When they met, the wife had a small start-up business of her own, but it was struggling and she was, as she said in her oral evidence, having difficulties servicing the mortgage upon her flat. So the husband bought the flat from her with a large mortgage and let it out. She moved into his rented flat. At the point when they began to cohabit, the wife therefore had negligible means.

In 1996 the husband, whose earlier background had been working in advertising, founded a company called Entertainment Marketing (EM) jointly with a man called Quentin Griffiths, whom he had met at a business event. The business of EM was "product placement", which essentially involves getting the client's branded product, whether it be a pair of sunglasses or a car or a foodstuff, used in films or on television, thereby promoting the product. EM was successful, but quite soon the husband and Quentin Griffiths identified another business opportunity which the husband calls effectively "the other side of the same coin", namely selling online to the public products which they have seen on film or television. For this purpose, they created a new company, As Seen On Screen Limited (now called ASOS, to which for convenience I will refer to it from the outset). The business was launched online in about May 2000.

The husband describes, and I accept, that EM and ASOS were "folded into one", and ASOS was able to launch utilising the existing funds, staff, IT, and other infrastructure of EM. Although the nature of the business was different, there is an evolutionary stream from the first...