W v W (Periodical payments: Variation)
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE MOYLAN |
| Judgment Date | 06 November 2009 |
| Neutral Citation | [2009] EWHC 3076 (Fam) |
| Docket Number | Case No.GU03D00374 |
| Court | Family Division |
| Date | 06 November 2009 |
[2009] EWHC 3076 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Mr. Justice Moylan
Case No.GU03D00374
MR. J. COHEN QC (instructed by Charles Russell, Guildford) appeared on behalf of the Applicant.
MISS K. BOYD (instructed by Preston and Company) appeared on behalf of the Respondent.
At this hearing, I have to determine an application by a former wife under section 31 of the Matrimonial Causes Act 1973 and an appeal by a former husband against an interim order made in the course of the wife's application under section 31.
For ease of reference, I propose in this judgment to call the parties "the husband" and "the wife" although they were divorced many years ago.
The issues raised by the section 31 application are broadly agreed to be:
(a) Should the current periodical payments order be varied and, if so, to what amount?; and
(b) Should the periodical payments order be capitalised and, if so, in what amount? By that, of course, I mean should the court exercise its powers under section 31(7)(a) and (7)(b) of the Matrimonial Causes Act and, if so, how? The amount to which child maintenance should be increased was effectively agreed by the end of the hearing but I have also been invited to indicate the proportion of that maintenance which should be paid to the wife during the child's tertiary education. In my view it is premature to deal formally with this latter issue, although at the end of this judgment, if I am nevertheless requested to do so by the parties, I will express an informal indication as to the approach which I would expect the court to adopt at that time.
I have heard oral evidence from the husband and the wife, and I have read those parts of the bundles to which I have been referred. I have also received comprehensive written and oral submissions from Mr. Cohen QC, on behalf of the wife, and Miss Boyd, on behalf of the husband.
By her open offer, the wife proposes that her periodical payments should be capitalised by the payment of a lump sum of £840,000. She also seeks an increase in the periodical payments payable for the parties' child to £25,000 per annum. By his open offer, the husband proposes that the capitalisation lump sum should be £250,000 or, alternatively, that the wife's periodical payments should be increased to £24,000 per annum. He proposes that child maintenance should be increased to £23,000 per annum, although in her final submissions Miss Boyd increased the amount proposed to £24,000 per annum.
Factual Background
The factual background to this application is as follows. The wife is aged 42 and the husband is aged 48. They met in 1996 and started living together in 1997 or 1998. They married on 25th September 1999. They have one child, T, who is now aged 9. The parties separated in November 2001. Divorce proceedings were commenced. A final consent ancillary relief order was made on 6th April 2004.
When the parties met, the wife was working as a veterinary nurse and the husband was working as a solicitor. In 1996, the husband incorporated a company ("the Company"), a project on which he had been working for some years prior to this. In 1997 the company began trading. The husband ceased working as a solicitor and from then on worked full-time in the business. In February 2003 there was a management buy-out. The wife left her employment shortly before their child's birth and has not been in paid employment since then.
The wife's substantive application for ancillary relief was determined by the consent order of 6th April 2004. A side issue has been raised as to whether the husband gave full and frank disclosure for the purposes of that application and order. The husband's interest in the Company had been valued by an expert accountant, Mr. Walton, in late 2006. In January 2007 the husband had a meeting with the owners of another company called S. This led ultimately to the Company purchasing S in August 2004, in other words, following the making of the consent order. In correspondence, and in Mr. Cohen's skeleton argument, a question has been raised as to whether the husband's failure to disclose the meeting and subsequent developments prior to the final ancillary relief order constituted non-disclosure.
In his evidence the husband says that the developments which had taken place prior to the consent order were not sufficient as to merit their disclosure. They were no more than tentative developments and, further, the husband contends that the purchase of S did not affect the value ascribed to his interest in the Company by Mr. Walton.
It can be difficult to identify what developments in a company must be disclosed for the purposes of ancillary relief proceedings. At one level it could be said that everything which might have a material effect on the value of the shares in the company should be disclosed. This could easily be wholly impracticable because in many companies such events occur with great regularity. Companies can frequently be looking for or tendering for new business. If successful, the fortunes of the company might change significantly. But, again, it would be unrealistic to expect every tender or business proposal to be disclosed when they might lead to nothing. It would make the whole exercise too cumbersome and expensive. The disclosure line can be a difficult one to draw. However, in the present case, I am satisfied by the husband's evidence that the line had not been crossed so that there was any obligation on him to disclose additional information regarding the possible purchase of S by the Company.
The parties' capital resources at the date of the consent order were as follows: the net equity in the former matrimonial home of approximately £130,000; the husband's interest in the Company which had been valued by Mr. Walton as being worth approximately £3.65 million, and a small pension fund. The husband's shares were unrealisable and there was minimal capacity to withdraw capital from the Company. His net income was £127,000 per annum.
Under the order, the wife was provided with a housing fund of £478,000 by way of an immediate lump sum of £100,000 and borrowings of £378,000 to be funded by the husband. The husband was required to redeem the mortgage if he disposed of the bulk of his shares in the Company or if he ceased to reside in this jurisdiction. With the capital provided to her pursuant to this order, the wife purchased a property, which remains her home.
In addition, the husband was ordered to pay maintenance to the wife for herself at the rate of £18,000 per annum and for T at the rate of £15,600, making a combined total of £33,600. Both were index linked. This total met the wife's then budget. The husband was also ordered to pay school fees and agreed extras. After deducting the sums due in respect of his own and the wife's mortgage of approximately £55,000 and child maintenance, the wife received a substantial proportion of the husband's then remaining net income. As a result of indexation provisions, the payments due under the 2004 order have increased to approximately £21,000 and £18,000 for the wife and T respectively. The husband also undertook to notify the wife 14 days prior to any sale or other disposal of 75% or more of his shareholding in the Company and to redeem the wife's mortgage on such a sale or other disposal.
The wife began a relationship with Mr. N in October 2004 and he moved to live with her in her property in January 2005. They have lived together since then. Mr. N has two children from his marriage, who spend just under half their time with him under a shared care arrangement.
The husband also has a new partner, called Ms B, with whom he has been in a relationship since 2004. She has a child by a previous relationship. The husband and his partner have a child now aged almost four. They all live at the former matrimonial home and the husband is responsible for maintaining all of them.
In November 2006, the husband's Company was sold. This was effected at a propitious time which, combined with other perhaps fortuitous circumstances, led to the Company being sold for an extremely advantageous sum. The husband received a total of approximately £11.4 million net, which was paid as to £9.1 million in December 2006 and the balance of £2.3 million approximately a year later.
Notwithstanding the terms of the husband's undertakings in the consent order, the husband did not inform the wife of the sale. On 5th February 2007, the husband's then solicitors wrote to the wife's solicitors stating that the husband was "willing to accelerate the redemption of the remaining mortgage borrowing so that he discharges earlier than anticipated his lump sum obligation under the court order". There was then reference to the fact that a significant penalty would be incurred if the mortgage was repaid prior to July 2008, so it was proposed that the mortgage would be discharged as at that date.
The husband has apologised for his failure to comply with his undertakings, stating that he had forgotten about them. This was a regrettable failure, as it has given the wife the impression that the husband was in fact trying to hide the sale of the Company. This impression was compounded because he told the wife he had chartered a yacht when he had in fact purchased it for approximately €3.4 million with part of the proceeds of sale of his interest in the Company.
The wife became aware of the sale in the course of 2007. Her solicitors first wrote on 10th September 2007 seeking an increase in the level of...
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