Susan Jennifer Shield v Richard Arthur Shield Christopher Richard Francis Shield (Intervenor)
| Jurisdiction | England & Wales |
| Judge | Mr Nicholas Francis QC |
| Judgment Date | 17 January 2014 |
| Neutral Citation | [2014] EWHC 23 (Fam) |
| Date | 17 January 2014 |
| Court | Family Division |
| Docket Number | Case No: FD12D04076 |
[2014] EWHC 23 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Nicholas Francis QC
Sitting as a deputy High Court Judge
Case No: FD12D04076
and
Philip Cayford QC, Mark StuderandLynsey Cade-Davies (instructed by Payne Hicks Beach) for the Applicant
Nigel Dyer QC and Peter Duckworth (instructed by Shakespeares LLP) for the Respondent
Christopher Wagstaffe QC and Amber Sheridan (instructed by Shakespeares LLP) for the Intervenor
Hearing dates: 25 th, 26 th, 27, 28 th, 29 th November, 2 nd, 3 rd, 4 th December 2013
Introduction
On the 5 th March 2013 District Judge Hess ordered the hearing of the following preliminary issue within Financial Remedy proceedings:
" Whether the Respondent and/or the Applicant's shareholdings in R A Shield Holdings Limited are held on trust for the Intervenor, and if so on what terms".
The time estimate was four days. Given that, by the time of the hearing of the preliminary issue, there were 11 trial bundles and I was to hear oral evidence from 8 witnesses, this was plainly an inadequate time estimate and at the pre-trial review before Holman J on the 1 st November, the time estimate was extended to 9 days, to include 2 reading days and 2 days for preparation and delivery of the Judgment. In the event, the hearing lasted 8 days, not including reading or Judgment writing/delivery days, hence it was necessary for me to reserve Judgment.
The parties in this matter are the Applicant, Mrs Susan Shield (to whom I shall refer as "the Wife"), the Respondent, Mr Richard Arthur Shield (to whom I shall refer as "the Husband") and the Intervenor, Mr Christopher Richard Francis Shield, the parties' son (to whom I shall refer as "Christopher"). I shall refer to R A Shield Holdings Ltd as "RASH", as it has been called during the course of these proceedings.
Initially, the Husband appeared by his Litigation Friend Mr S, a solicitor. However, in circumstances which I shall recite in the course of this Judgment, I discharged Mr S as Litigation Friend on the third day of the hearing, the 27 th November. The Husband has been represented by leading and junior counsel but did not attend court at any stage of the hearing and so I have not had the benefit of his oral evidence, although he has filed some limited written evidence.
Background
The Husband is aged 72 and the Wife is 69. They were married in 1969 and have four children: Alexandra (40), Nicola (39), Christopher (36) and Fiona (30). The Husband and the Wife separated in July 2012. No one could fail to observe, and to be dismayed and saddened, by the fact that, after 43 years of marriage, this couple's divorce has involved not only themselves but their adult children, with two of the daughters giving evidence in support of their mother's case and the son Christopher giving evidence in support of his father's case, and more importantly, in support of his own case as Intervenor. It is, in fact, the Wife and Christopher who stand to gain or lose in respect of this preliminary issue, since the Husband does not contest Christopher's case that he holds his RASH shares on behalf of Christopher. I am satisfied that the polarised positions that many family members have taken has caused them on occasions to lose sight of the material issues in the case and, from time to time, to allow them to give evidence which is inconsistent with the truth. Certainly, there are occasions, as I shall recite during the course of this Judgment, where family members have jumped to the wrong conclusion. This is in part, I am sure, because the Husband, as all agree who know him well (from whom I have heard), has a tendency to say one thing to one person and something else to another. In the light of these factors, I have paid particular attention to the contemporaneous documents. I made it clear to the parties that I would find it difficult to attach substantial weight to the Husband's written evidence, untested as it was by cross-examination, unless that evidence was corroborated by other oral or documentary evidence.
The Wife issued a divorce petition on the 24 th August 2012. An answer was filed by the Husband on the 19 th October 2012. That Answer was in due course withdrawn and Decree Nisi was pronounced on the 4 th June 2013.
The Wife issued her application for a financial order in Form A on the22nd August 2012 (it was subsequently amended on the 28 th November 2012 and the 2 nd July 2013). Her Form E is dated the 1 st November 2012. In that document she stated that she holds 1,660 "B" shares in RASH. Perhaps unsurprisingly, she stated in her Form E that she was not at that stage able to state the value of her shares. She made no reference to any trust, agreement or understanding that she held those shares for Christopher.
The Husband's Form E is dated the 30 th October 2012. In that document he stated as follows:
"I own 50.22% of the "A" ordinary shares in RASH. For the reasons stated at box 4.3 below, I consider these are held on trust for Chris at my death."
In box 4.3 the Husband said:
"The impressive growth of RASH in the past 10 years is almost entirely due to the efforts of Chris and is not, I believe, something to which either Susan or I can or should lay claim…..
In 2001, Susan and I began discussing the future of the business with our four adult children and with my sister, Jill Graham and her children. As it happened, Chris was keen to take the business on, although its future was far from secure. The arrangement reached in 2003, with the benefit of tax advice, was threefold. First, the company would buy out the shares of the Graham family. Secondly, our daughters' interest would be converted to loan notes and paid out on my death. Thirdly, Chris would receive the gift of some shares but would be primarily motivated by the prospect of inheriting my 50.22% shareholding on death. Likewise, he would receive Susan's shares on her death."
The positions which the Husband and the Wife each respectively adopted in their Form E would have come as no surprise to the other since the issue had already been canvassed between the parties' solicitors in correspondence.
In his Form E, the Husband acknowledged, sensibly after such a long marriage, that "the marital assets themselves should be divided equally between us and that Susan has made an equal contribution to our long marriage".
Although there has been no attempt to put a precise value on RASH for the purposes of this preliminary hearing, it has been put by both sides at several tens of millions. Although there are some other significant assets in this case, RASH is without doubt the most substantial. If the Husband succeeds in his case that he holds his shares in RASH for Christopher, then those shares will not be available to the court when it comes to exercise its dispository powers.
It was in these circumstances that Christopher intervened. The statement prepared in support of his application to intervene was dated the 26 th February 2012. At paragraph 3 of his statement Christopher stated:
"I seek permission to intervene because as I understand it my mother is pursuing a claim to shares in the family company R A Shield Holdings Limited. These are held in my father's name but are subject to my interest in them, which arises in the circumstances I set out below. In a nutshell, pursuant to the agreement and understanding I reached with my father some years ago my father holds only a life interest in those shares, following which the shares will become my absolute property."
Christopher did not, and does not, seek any declaration in relation to the small number of RASH shares in his mother's name.
The application to intervene was allowed by consent at the first appointment which (having been adjourned in the Autumn by DJ Malik) was heard by DJ Hess on 5 March 2013. On that occasion, DJ Hess gave detailed directions for the resolution of the issue arising on the intervention as a preliminary issue prior to the FDR (which has been listed for the 20th January 2014). These directions included appropriate timetabling for Christopher to file and serve Points of Claim on the preliminary issue and for the Husband and the Wife each to file and serve Points of Defence. Directions were also given for the filing of witness statements.
It is accepted by Christopher that the burden of proof lies upon him.
The pleaded cases
Christopher's Points of Claim run to 5 pages. By his Points of Claim he seeks:
a) A declaration that 15,108 ordinary "A" shares of £1.00 each in RASH registered in the name of the Husband are held by the Husband on trust for himself as to a life interest and for Christopher as to the remainder interest;
b) Alternatively, a declaration that the Husband is estopped from denying Christopher's entitlement to such shares on his death;
c) All necessary consequential orders and directions; and
d) Costs.
Christopher asserts that, in or about 2002, RASH had been in declining economic health for some time. At that time, he says, it was widely agreed and understood by all of the shareholders in RASH that the Group and its constituent companies were more than likely to fail and go out of business. Accordingly, he asserts that, following family discussions, he and the Husband agreed in principle that he (Christopher) would resign from his then current employment and would take over the running and management of the Shield Group, on the basis of the future growth of the business would be for his benefit. He says that it was further agreed that the Husband would retain an ongoing role within the Group.
Mr Wagstaffe QC for Christopher made clear in...
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