Sk (Applicant/wife) v Wl (Respondent/husband)

JurisdictionEngland & Wales
JudgeMR JUSTICE MOYLAN
Judgment Date26 February 2010
Neutral Citation[2010] EWHC 3768 (Fam)
CourtFamily Division
Docket NumberCase No: BM 07 D 01137
Date26 February 2010

[2010] EWHC 3768 (Fam)

IN THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Moylan

Case No: BM 07 D 01137

Between:
sk
Applicant/wife
and
Wl
Respondent/husband

MR R. ANELAY QC and MR B. SOMERVILLE appeared for the Applicant Wife

MR N. MOSTYN QC and MR P. DUCKWORTH appeared for the Respondent Husband

Approved Judgment

MR JUSTICE MOYLAN
1

This judgment follows the hearing of the wife's ancillary relief application. The wife is represented by Mr Anelay QC and Mr Somerville, and the husband is represented by Mr Mostyn QC and Mr Duckworth. The wife seeks an equal division of the current wealth. The husband seeks a very substantial departure from an equal division, with the wife receiving approximately 25% of the current wealth.

2

The husband's case is based on his assertion that there is a "very significant post-separation accrual" which is the product of his endeavours in the period following the separation. It is submitted that this justifies the outcome he seeks. He accepts that, but for this, the wife would be entitled to an equal share of the wealth. The husband's case relates to that part of the current wealth which reflects the sale proceeds received by him on the sale of a private company which was incorporated in 2001, some three years before the separation, and sold in 2008, approximately three and a half years after the separation. The husband contends that the success of the company, and consequently the sale price achieved, was due to his "endeavours alone performed outside the partnership of marriage".

3

The wife challenges the husband's factual case on this issue, contending that the value achieved on the sale reflects a number of factors of which the husband's role post-separation is just one. The wife submits that the current wealth should be divided equally. This, she submits, would be a fair outcome which gave appropriate weight to all the factors in this case, including that in the period between separation and trial the husband has continued to "trade with" the family assets, including the wife's notional share both in the private company and, more generally, in the family's wealth which, as a result, has been at risk.

4

The evidence at this hearing has focused principally on the dispute as to the extent to which the success of the company and the price achieved reflects the husband's post-separation endeavours. However, as counsel agree, in order to ensure that my award is fair, I must stand back and assess the fairness of my proposed award by reference to all the circumstances of the case. This is to ensure that I do not lose sight of the overarching objective and that I determine my award on a broad basis and not by focusing unduly on those factual parts of the case which happen not to be agreed. For reasons which will become apparent later in this judgment, I consider that the case advanced on behalf of the husband has focused too narrowly on the issue he has raised.

History

5

The parties married in 198The wife is now aged 46 and the husband is aged 49. They have two children aged 19 and 23. The parties separated in September 2004, following which the wife and the children remained living at the former matrimonial home.

6

In their written statements, the parties referred to elements of the history of the marriage, in part to support their respective cases as to the contributions each had made during the marriage and also to deal with the alleged state of the marriage at various time. In addition, they have filed a number of statements from third parties, again in part to support their respective cases in respect of these contributions. It is not clear to me why this extensive evidence was thought to be necessary or indeed appropriate. Neither party sought at this hearing to rely on conduct or exceptional contributions during the course of the marriage, quite rightly, as it is clear to me that the marriage was very much a partnership. In his evidence the husband was considerably more generous about the wife and her contributions than appeared from his written evidence, and, through Mr Mostyn, he accepts that the wife made a full and equal contribution to the date of separation. I do not therefore propose to deal with much of the historical evidence in this judgment.

7

In the early years of the marriage both parties worked extremely hard in very demanding circumstances. They lived on a small farm and worked in the family business.

8

As a result of difficulties in the early 1990s, the precise circumstances of which I do not need to investigate, the husband was made bankrupt in 1993 and the family home and the farm were put on the market for sale by the receiver. The position was retrieved, but I have no doubt that, as the wife says, "it was a real challenge".

9

Thereafter the parties had two businesses: C Partnership ("CP") and TCo. The former was a farming partnership. It was a successful business. The latter was incorporated to buy back the family home and land from the receiver. It then diversified into haulage.

10

After his discharge from bankruptcy the husband and the wife were equal partners of both businesses. The businesses clearly thrived in the second half of the 1990s —the husband talks of them being "awash with funds".

11

The husband says that he first had the idea of going into food production in early 2001. He sets out in his written evidence the steps he took to progress this business idea. The wife has set out in her evidence the work she says that she undertook in respect of this project.

12

In December 2001 PCo was incorporated. The husband was the sole shareholder and director. In his first statement the husband says that "he regarded the business as entirely external to our marriage and wholly separate from" the wife. The evidence does not support this assertion and, in any event, it would in my view be difficult for a business founded during a marriage to be entirely external to it.

13

In an application for a grant for PCo, completed probably towards the end of 2001, it is said that the husband will be the project director and that the wife will be responsible for accounts, administration and human resources. In fact the wife's involvement was substantially less than that, but I am satisfied by the evidence that she played more than a minor role in the very early development of PCo.

14

In his report, the husband's expert accountant describes the growth of the business from small beginnings and how it developed into selling to retail multiples and even branched into exporting foodstuffs.

15

At the date of separation the parties had assets, excluding PCo, which are currently worth just over £2 million.

16

The husband asserts that from 2004 he, to use his word, "transformed" PCo. I will deal with this aspect of his case later in this judgment. During the course of 2005 to 2006 PCo created a new production facility in some buildings that were owned by TCo and had been built some two to three years previously.

17

In October 2006 the husband incorporated another business, DCo. This business was not sold when PCo was sold. At present this business has not been successful. The husband appears to have lent the company in excess of £1.5 million. The net value, appearing in the agreed asset schedule, is £24,000.

18

In April 2008 PCo was sold for £37 million gross; £31.6 million net of debt. Of this, £8.5 million was paid in loan notes and £21.5 million was paid in cash. After the deduction of tax of £2.8 million the husband had cash of £18.5 million. In addition, the husband rolled over £47,500 to retain a percentage interest in the holding company, HCo.

19

Following the sale of PCo, the husband has, relative to the wife, been able to spend with significantly greater freedom. A schedule has been produced showing how he has utilised the sum of £18.5 million. He has purchased properties and has lent substantial sums to the businesses. Taking the values appearing in the agreed schedule of assets, it is apparent that some of the husband's investments since April 2008 have been successful, whilst some have not. This can be demonstrated by the fact that the net cash received by the husband of £18.5 million is now represented by assets worth £14.3 million.

20

Part of this difference is accounted for by living expenses of £750,000, legal expenses of about £300,000 and staff gifts of £130,000. The husband has also spent £1.5 million on (as set out in the schedule) "yachts, boats, etc", cars and furniture. The yacht was purchased for £1 million and sold for £550,000, and the husband has spent £136,000 on a car for his personal use. Also, as I have said, part of the difference consists of monies invested by the husband and which have been "lost", at least to the extent that they find no current reflection in the agreed schedule of assets.

The Proceedings

21

The Petition is dated 24 th April 2007 and Decree Nisi was pronounced on 11 th February 2008. The wife's Form A is dated May 2007.

22

I have heard oral evidence from the wife and the husband, from two other witnesses of fact, and from the parties' respective expert accountants (whom I shall call "WA" and "HA"). There is a substantial volume of written evidence, including statements from a number of other witnesses.

Valuation Evidence

23

Turning now to make some general comments in respect of the valuation evidence which has been produced in this case. In three respects the valuation evidence has, in my view, been deficient, in that it has not been based on the best available evidence. As a general...

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