Strand, London, WC2A 2LL
B e f o r e :
| PAULINE SIEW PHIN CHAI
|TAN SRI DR. KHOO KAY PENG
1st Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP
Telephone: 020 7067 2900 Fax: 020 7831 6864 DX: 410 LDE
MR. CHRISTOPHER WAGSTAFFE QC and MISS AMBER SHERIDAN (instructed by Shakespeare Martineau LLP) for the 1st Respondent, Tan Sri Dr. Khoo Kay Peng
MR. YASH BHEEROO (instructed by Ariff Rozhan & Co.) for the 2nd, 3rd and 4th Respondents
Crown Copyright ©
MR. JUSTICE BODEY:
[This version of the Judgment has been slightly redacted following submissions from Counsel for the Respondent husband].
By one of several consequential directions, I ordered that the husband should set out a "ballpark" description of his income and outgoings, so as to enable the court to conduct a MPS and LSPO hearing on 13th November 2012. This he did, getting it approved by his accountants Crowe Harwath. It showed a gross income for 2013 of £4.4 million and for the nine months from January to September 2014 a gross income of £3.9 million, which pro-rata'd, came to about £5.2 million per annum. There were various deductions of several hundred thousand pounds in each year, together with the husband's budget of just over £1 million per annum, as per his Form E. But there appeared to remain a substantial surplus.
THE HEADLINE ISSUES
(i) Whether to take any account of Malaysian law, either because the wife has now been shown within these financial proceedings to have been a dishonest and manipulative 'forum-shopper' in 2014 (which the husband asserts and she denies) and/or because of the allegedly close connections of the case with Malaysia, where the courts were equally ready, willing and able to deal with the matter.
(ii) What the expert evidence on Malaysian law suggests the outcome of financial proceedings there would have been.
(iii) Whether the husband owns or controls a particular entity, which I shall call Fresh Approach Inc (BVI) ("Fresh Approach"), the ownership (or not) of which substantially affects the value of his assets, this being an issue which requires consideration of his credibility.
(iv) A decision as to the value of the husband's business interests and, factoring in that information, as to the size of the overall kitty.
(v) Whether the appropriate approach is one of so-called 'needs' or 'sharing'.
(vi) If the appropriate approach is 'sharing', whether there is any reason to depart from the 'yardstick of equality' on the basis of the husband's pre-acquired wealth and/or his claimed 'special contribution'.
(vii) Whether Rossway Main House and/or Estate are held on a resulting trust for the husband by the companies which own them.
(viii) If not, whether the Rossway Main House and/or the Rossway Estate and the structure which owns them constitute a post-nuptial settlement. If so, whether and if so how it should be varied.
(ix) Whether, as a matter of fact-finding, the wife has established on the facts her civil claims against the husband and the three respondent companies to be entitled to an equal interest in all the assets in the kitty.
(x) Whether or not I should make orders where enforcement may prove impossible or difficult.
(xi) The amount and nature of the wife's award; the timing of it and how it is to be structured.
(xii) Interim arrangements pending full payment.
(i) First, there is 'property' in the sum of £26.8 million. This includes (a) the two component parts of the Rossway Estate, above (notionally extracted from the value of Central Point and Dunross) in the sum of £17.8 million net; (b) the property where the husband lives in Kuala Lumpur, 10 Ukay Heights, in the sum of £1.8 million (again notionally extracted from the company which owns it and which I will call Fresh Properties Sdn Bhd ["Fresh Properties"]); (c) the family's home in Canada at 1063 Gardenwood Court (above) in the sum of £2.6 million; (d) four investment properties in Victoria, Canada, in the sums of between £300,000 and £400,000 each; and (e) five properties in Australia valued at between £260,000 and £541,000 each. All these properties (other than the Rossway Estate and 10 Ukay Heights, which are in corporate ownership, as above) are owned either solely by the husband or else jointly by him and the wife. As I say, the total value of those property assets is £26.8 million.
(ii) Second, there are 'funds' in the total sum of £24.7 million, achieved by netting off the husband's funds of £29.3 million against the wife's liabilities (mostly a litigation loan) of £4.5 million. These figures will not correlate perfectly because I am 'rounding'.
(iii) Third, the husband has pensions in the sum of £970,000.
(iv) Finally, there is the value of the husband's business interests. These are held within a spider's web of inter-related companies. They are set out in an Organogram attached to the husband's Form E in December 2014 (the "Organogram") although he went some way to disavowing this document in his evidence. The Organogram defies verbal description and only makes sense when considered diagrammatically. In summary, it contains 26 companies incorporated in respectively Malaysia, Hong Kong, BVI, and Great Britain. I do not understand it to be disputed that there are other companies which extend below the companies on the Organogram, for example, Banyan Tree Limited and Regent Corporation: but these other entities have not been explored during this hearing much or at all.
THE PARTIES' CURRENT POSITIONS
A PEN PICTURE OF THE PARTIES
RESOLUTION OF THE HEADLINE ISSUES
"The court shall have power, when granting a decree of divorce to order the division between the parties of any assets acquired by them during the marriage by their joint efforts
(2) In exercising the power conferred by subsection (1), the court shall have regard to
(a) the extent of the contributions made by each party in money, property or work towards the acquiring of the assets;
(b) any debts owing by either party which were contracted for their joint benefit;
(c) the needs of the minor children, if any, of the marriage,
and subject to those considerations, the court shall incline towards equality of division.
(3) The court shall have power, when granting a decree of divorce to order the division between the parties of any assets acquired during the marriage by the sole effort of one party to the marriage
(4) In exercising the power conferred by subsection (3) the court shall have regard to
(a) the extent of the contributions made by the other party who did not acquire the assets to the welfare of the family by looking after the home or caring for the family;
(b) the needs of the minor children, if any, of the marriage,
and subject to those considerations, the court may divide the assets in such proportions as the court thinks reasonable; but in any case the party by whose efforts the assets were acquired shall receive a greater proportion."
"It goes without saying that the discretion vested in a judge of the Family Court is to do 'rough justice' between the parties, as there is no measure which can fit all marriages. The Act provides a guideline as to the range of that discretion. S. 76(3) and (4) govern the situations where the wife's contribution is indirect (looking after the home and the family)."
" I flag this up now so that Mr. Wagstaffe can think about it. I cannot see that restriction to 'needs' or to a one-third emerges from Mr. Singh's reports. I cannot see that."
That is where I was then and that is where I am now. I am with Mr. Todd that S.76(3) and (4) appear to give the Malaysian Court a discretion to do what it considers reasonable and fair, subject only that the party " by whose effort the assets were required shall receive a greater proportion". It may be that a 51/49 split, as per Mr. Todd's example, is an extreme suggestion and very unlikely: but where there has been a very considerable contribution to the welfare of the family by a wife as home-maker and mother (as here) it might, for all I know, be seen as fair. Mr. Singh was not called to amplify his report, nor to correlate the maintenance approach of his first report with the statutory asset-division approach of his second report.
If it had been established (contrary to my view above) that the Malaysian Court would have awarded significantly less than this court: (i) would I have been satisfied on the Husband's case that in 2014 the wife was dishonestly "forum-shopping"?
If it had been established (contrary to my view above) that the Malaysian court would have awarded significantly less than this court: (ii) should I take a "sideways glance" at the law of Malaysia when deciding the wife's claims?
The appropriate approach to calculating the wife's award
Are there reasons to depart from an approach of equality: (i) 'Special Contribution'?
'"... those characteristics or circumstances clearly have to be of a wholly exceptional nature, such that it would very obviously be inconsistent with the objective of achieving fairness (i.e. it would create an unfair outcome) for them to be ignored.'"
Are there reasons to depart from equality: (ii) the husband's pre-marriage wealth?
Has the husband disclosed all his assets: Fresh Approach?
" I flew to Malaysia and spent days there identifying relevant documents which I have personally carried to England I have spent most of my time since returning to England working tirelessly on putting the papers into good order. I can hopefully reassure you and your client that [the husband] has fully co-operated and has made both himself and his team freely available in an attempt to very much assist the completing of a helpful and clear Form E."
The questions and answers continued in cross-examination until reference was made by Mr. Todd to a further letter from Mr. Breakwell, dated 18th December 2014 accompanying service of the Form E, saying: " We enclose a final and approved copy of our client's Form E together with attachments " [emphasis added]. But the husband continued to say, in answer to Mr. Todd's questions, that as he had not signed the Form E, he would have to study it and " go through whether I approved this". That is where the status of his unsigned Form E remains.
Valuation of the husband's business interests
Conclusion as to the 'kitty'
Is Rossway, or any part of it, held on a resulting trust for the husband?
"There must be a reasonable basis for some hypothesis in the evidence or the inherent probabilities, before a court can draw useful inferences from a party's failure to rebut it."
"Whether assets legally vested in a company are beneficially owned by its controller is a highly fact-specific issue. It is not possible to give general guidance going beyond the ordinary principles and presumptions of equity, especially those relating to gifts and resulting trusts. But I venture to suggest, however tentatively, that in the case of the matrimonial home, the facts are quite likely to justify the inference that the property was held on trust for a spouse who owned and controlled the company. In many, perhaps most cases, the occupation of the company's property as the matrimonial home of its controller will not be easily justified in the company's interest, especially if it is gratuitous. The intention will normally be that the spouse in control of the company intends to retain a degree of control over the matrimonial home which is not consistent with the company's beneficial ownership. Of course, structures can be devised which give a different impression, and some of them will be entirely genuine. But where, say, the terms of acquisition and occupation of the matrimonial home are arranged between the husband in his personal capacity and the husband in his capacity as the sole effective agent of the company (or someone else acting at his direction), judges exercising family jurisdiction are entitled to be sceptical about whether the terms of occupation are really what they are said to be, or are simply a sham to conceal the reality of the husband's beneficial ownership."
Variation of Post-Nuptial Settlement regarding Rossway pursuant to S24(1)(c) of the Matrimonial Causes Act 1973?
" broadly stated, the disposition must be one which makes some form of continuing provision for both or either of the parties to a marriage, with or without provision for their children. Conversely, a disposition which confers an immediate, absolute interest in an item of property does not constitute a settlement of that property."
He made the point that the authorities consistently give a wide meaning to 'settlement' in this context. In Ben Hashem v. Al Shayif  1 FLR 115 at paragraph 290, Munby J (as he then was) set out five guidelines when dealing with a post-nuptial settlement. I have considered that case and have those guidelines in mind. Last, in DR v GR (Financial Remedy: Variation of Overseas Trust  2 FLR 1534, at paragraph 18, Mostyn J stated:
"I am of the opinion that if under an arrangement 'some form of continuing provision for both or either of the parties to a marriage' (which would include, on the authorities, the provision of accommodation) has been made from assets held by a group of family companies then the entire set-up, when viewed as a whole, is capable of amounting to a variable nuptial settlement. If the top company is owned by a trust of which the spouses are formal beneficiaries then the position is a fortiori."
The wife's civil claims
RESOLUTION OF THE APPLICATION