Strand, London, WC2A 2LL
B e f o r e :
|- and -
Lewis Marks QC and Katie Cowton (instructed by RadcliffesLeBrasseur) for the Respondent
Hearing dates: 28 February – 3 March 2017
Crown Copyright ©
Mr Justice Mostyn:
"It is also important to have in mind the role of a judgment given after trial. The primary function of a first instance judge is to find facts and identify the crucial legal points and to advance reasons for deciding them in a particular way. He should give his reasons in sufficient detail to show the parties and, if need be, the Court of Appeal the principles on which he has acted and the reasons that have led him to his decision. They need not be elaborate. There is no duty on a judge, in giving his reasons, to deal with every argument presented by counsel in support of his case. His function is to reach conclusions and give reasons to support his view, not to spell out every matter as if summing up to a jury. Nor need he deal at any length with matters that are not disputed. It is sufficient if what he says shows the basis on which he has acted."
Reference may also be made to Re F (Children)  EWCA Civ 546, paras 22 - 23, which is to the same effect.
"38. I am firmly of the view that the correct approach to give effect to the sharing principle is to try to calculate the scale of the matrimonial property and then normally to share that equally leaving the non-matrimonial property untouched. This is logically pure, morally sound, easy to understand, and limits individual judicial caprice. I recognise that not everyone agrees with this approach. For example, the Hong Kong Court of Appeal in AVT v VNT (CACV 234/2014) at para 69 described it as "not helpful at all" apparently because it encroaches on the exercise of a wide discretion. Even so, I continue to oppose the school of thought that plucks a random percentage out of the air where the pool of assets is a mixture of matrimonial and non-matrimonial property.
39. The (equal) sharing (of matrimonial property) principle is not a Procrustean bed. Cases have shown how it has been modified (some might say manipulated) to achieve an overall intuitively fair result. Thus it has been described as a tool and not a rule. So, by way of example, Mrs Miller did not receive half of the value of Mr Miller's New Star shares, as the House of Lords felt that he had brought into the marriage some intangible unquantifiable knowhow which contributed to the later establishment of the business during the marriage. Similarly, Mrs Robertson did not receive half of the increase in value of Mr Robertson's ASOS shares, Mr Justice Holman considering that the numerically quantified figure for the value of those shares at the start just did not fairly reflect what Mr Robertson really brought into the marriage. Equivalently, Mr Jones succeeded in persuading Lord Justice Wilson to adopt a very creative, arguably artificial, inflation of the actual starting figure for the value of his business in order to shrink the amount of the matrimonial property. But in all of these cases there was fidelity to the basic principle, more or less."
I then in  dealt with some factual aspects specific to that case, and continued at [41 - 44]:
"41. I agree with Mr Justice Moylan in SK v WL  EWHC 3768 (Fam) that it is not merely legitimate but is realistic and right to use hindsight when making in family proceedings a historic valuation. Mr Chamberlayne QC rightly says that in any event the pass has been sold in this regard when we uprate a historic figure with passive growth. For passive growth is obviously a post valuation event.
42. It must be remembered that in this respect the court is exercising a pure discretion and whilst the case of Jones v Jones  EWCA Civ 41,  Fam 1 supplies a valuable guideline (that is to say it indicates the direction of travel), it is not supplying a tramline (that is to say a predetermined destination). And, as I have already stated, Jones v Jones is a good exemplar of the exercise of discretion in that the doubling of the initial figure £2 million to £4 million seems to be based more on instinctive feelings of fairness rather than being referable to any particular piece of evidence.
43. I wholly disagree with Mr Pointer QC's submission that Mr Justice Holman incorrectly decided the case of Robertson v Robertson  EWHC 613 (Fam). On the contrary, I regard it as a paradigm example of a wise and careful exercise of discretion. It was not appealed. The Supreme Court has recently stated that a High Court judge should follow the decision of a fellow High Court judge unless there is a powerful reason not to: see Willers v Joyce (No 2)  UKSC 44 at para 9 per Lord Neuberger PSC. No good reason, let alone a powerful one, has been demonstrated to me.
44. Mr Chamberlayne QC argues that one third of the present residual net value of the business should be regarded as being non-matrimonial given what we now know about its development since 2003. In my judgment that is too much, but to allow only the bare numeric figures of the accountants would in my opinion not remotely do justice to the true latency of this business in 2003. In my judgment one quarter of the present value of this business is the fair quantum to attribute to the husband's premarital contribution. It is rather less than the proportionate amount which the House of Lords attributed to Mr Miller, which I calculate to be a third."
"In parenthesis, I would add that, because of this principle of 'reality', I would reject the graphs provided by Miss Stone seeking to establish the values of the company at certain dates based on an artificial assumption of a straight-line growth up to eventual sale."
The other two judges do not mention this argument. I am surprised that it was so lightly dismissed or disregarded as it seems to me to provide a useful heuristic basis for analysing the issue, which if commonly adopted would have the beneficial side effect of eliminating arid, abstruse and expensive black-letter accountancy valuations of a company many years earlier at the start of the marriage.
|Property (net of debt and sale costs)||Note|
|less costs of sale||(4,239,232)|
|less dividend tax on £80m||(30,480,000)||4|
Note 1: The husband purchased the shooting estate at the end of last year, shortly before the pre-trial review. I then expressed the provisional view that I would regard that purchase as not having happened and would treat the husband as if he still had the relevant funds in his bank accounts. I maintain and confirm that view. The husband did not need to purchase this property at that time – it is not his primary home – and it would not be fair and reasonable to deduct from the pool of marital assets the costs and taxes of purchase let alone the notional costs of sale.
Note 2: This figure includes the sum of £800,000 which is the best estimate, albeit not particularly well evidenced, of sums by way of back taxes, penalties and interest that will have to be paid. It is reasonable for these sums to be deducted from the pool of marital assets especially (but not necessarily) as I am satisfied that the wife was aware of the conduct that gives rise to this liability.
Note 3: I have excluded from the value of the husband's pension the sum of £1 million which I accept is a reasonable value to attribute to the husband's premarital pension pot.
Note 4: Although the husband's initial stance before me was that the wife should receive very little by way of cash award, and a much larger shareholding in XG, by the time that final submissions were made Mr Marks QC on behalf of the husband accepted that a dividend of £80 million could be declared. There is a dispute as to how much of this should be made available to the wife as a lump sum – the husband claiming that he has liquid needs comparable to hers, and I will deal with this below. However, my calculation of the net marital assets proceeds on the basis that a dividend of £80 million will be declared and the dividend tax of 38.1% will be paid on it. In calculating the capital gains tax the amount of the dividend is of course deducted from the starting point value.
|Her and Joint banks||222,337|
|From monies owed||184,000|
The target allocation is £72,876,484, so there is a shortfall of £19,174,769, which, as I have stated earlier, represents 26% of the wife's overall allocation. The net residual value of 100% of XG, after payment of the £80m dividend, I calculate to be £109,760,543. £19,179,769 is 17.5% of £109,775,543. Therefore, the wife's shareholding will be increased from 1% to 17.5% immediately following the payment to her of the deferred element of the lump sum of £20 million.