B e f o r e :
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ES |
Applicant |
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- and - |
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SS |
Respondent |
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Mr H Oliver KC and Ms J Palmer (instructed by Stewarts Law) for the Respondent Husband
Hearing dates: 3-6, 9-10 October 2023
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Crown Copyright ©
This judgment was handed down at 2.00pm on 13 October 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives once anonymised.
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SIR JONATHAN COHEN
Sir Jonathan Cohen :
Pre-marital assets
i) A European farmhouse with 25 acres of land. This had been purchased in 1997 and renovated by 2000. It had been the property of H and his former partner and had been transferred into H's sole name in 2004. During the marriage, a small additional area of forestry was purchased. The property has a current value of
£700k and after costs of sale and significant US and UK tax has a net equity of just under £500k.
ii) A farm outside Europe comprising 27,000 acres purchased in 2004. It was subsequently sold in 2008 producing proceeds of £727k.
i) For many years after 2005 H received no income. He did not have a job from the date he left ABC in 2005. Having set up his own business with partners in 2008 he did not receive an income until April 2014 from when he drew £150k
p.a. until April 2018, when it reduced to nothing for a year. It is only after March 2019 that H has been able to draw a very significant income.
The result is that for most of the marriage the family were living on the receipts that H received by way of distributions arising from carry in private equity funds earned pre- marriage.
ii) During the course of the marriage H transferred into W's name approximately
£6.0m in various tranches. This was done for tax saving reasons and to take advantage of W's tax status. I accept H's evidence, not challenged by W, that the understanding was that if he had asked for the funds to be returned to him by W, as he did on at least one occasion, she would have complied. He managed the matrimonial finances during the marriage, although W took an interest in them.
where they were no more than a tax-efficient investment and subject to H's ability to direct their use.
£1.5m) on family expenses and some has gone into the family homes in London and S County, which should be regarded as joint assets. These factors lead me to conclude that the credit that H should receive for his pre-marital accrual should be less rather than more than 50%.
The financial history of the marriage
Investment | Date XYZ granted economic interest | Exit of investment | Outcome of investment |
E Co |
March 2018 |
February 2023 |
Significantly above target XYZ declared total gross receipts to H of 49.9m, of which 1.1m was retained as working capital. |
F Co |
October 2018 |
Not sold fully vested October 2023 |
|
G Co |
March 2020 |
February 2023 |
Above target XYZ made gross distributions to H of 5.3m |
H Co |
March 2020 |
Not sold. Fully vested March 2025 |
|
I Co |
December 2020 |
Not sold. Fully vested December 2025 |
The date of separation
i) This was a marriage that had been limping for a long time. There was no sudden event to bring it to an end.
ii) Whatever their feelings about each other, the parties shared a desire to keep the children protected from and in ignorance of the breakdown of their parents' relationship.
iii) At the time I find it likely that the parties would have physically separated, lockdown came in and prevented it.
Standard of living
E Co
Valuation issues
H Co (968k in issue)
F Co (257k in issue)
I Co (Agreed nil value)
D Co (Nil value)
L Co (261k in issue)
H's interest in New XYZ.
I deal with them in turn.
The M Trust Structure
Other Computational Issues
Inheritance/Pensions
P investment
W's tax liability
Costs
School Fees
Tertiary education maintenance
Open proposals
Determination
i) I exclude the European property and the inherited property; the other properties are to be shared equally, with H retaining them all except R House.
ii) W and H's funds and liabilities are to be retained by the holder and shared equally save for the removal of £4.872m pre-marital accrual, the funds and property inherited by H from his mother, and the G Co proceeds and associated tax liability which are to be divided 75:25.
iii) F and H Co will be the subject of Wells sharing as indicated.
iv) H will retain New XYZ; the retained working capital from the E Co proceeds will be shared equally.
v) To achieve this end, H will pay a lump sum of £15,201,470.
vi) It is intended that M Trust will be retained for the children and any tax liability be borne if practicable out of trust assets, and if not shared between the parties as determined at a further hearing.
vii) H will give an indemnity against W's potential personal tax liability and professional costs limited to £1.2m, with security to be agreed or ordered.
viii) H will pay indemnity costs summarily assessed at £176,400.