Revised: 20th March 2025 |
B e f o r e :
(sitting as a Deputy High Court Judge)
____________________
GR |
Applicant |
|
- and - |
||
AR |
Respondent |
____________________
Mr James Roberts KC and Ms Lucia Crimp (Counsel instructed by Family Law Partners, Solicitors) appeared on behalf of the Respondent wife.
____________________
Crown Copyright ©
(i) A collection of applications and court orders.
(ii) Material from the husband including his Form E dated 23rd February 2024, his answers to questions and replies to a schedule of deficiencies, his 'contributions' statement dated 26th June 2024 and his 'section 25' statement dated 21st January 2025 (as amended on 14th February 2025).
(iii) Material from the wife including her Form E dated 20th February 2024, her answers to questions and replies to a schedule of deficiencies, her 'contributions' statement dated 26th June 2024 and her 'section 25' statement dated 22nd January 2025.
(iv) Material from various SJEs on valuation and taxation issues.
(v) Properly completed ES1 and ES2 documents.
(vi) Selected correspondence and disclosure material.
(i) The wife is aged 47. She was born and brought up in significant poverty in country X, impressively progressing to a top university level there on her talent and hard work. She then moved to England in 2001 and later became a dual citizen and continues to live in England. In the years that have followed her arrival she has had a phenomenally successful business career in England in the field of asset management and investment analysis, working for ABC Company from 2005 to 2022. She has managed to achieve this despite having gone through IVF treatment for the birth of her only child and also suffering from three serious bouts of cancer (breast cancer first appeared in 2010 and reappeared in 2018, and treatment for thyroid cancer in 2019) which have required highly invasive and debilitating medical treatments and for which she is at present in remission, though of course ever conscious of its possible reappearance. She stepped back from her asset management work for ABC Company in 2022 on health grounds, though now works as a part-time non-executive director.
(ii) The husband is aged 41. He was born in country Y, but later his family moved to the USA and he is a US citizen. After his education he began what was also a very successful business career, working from 2006 for a substantial private equity firm DEF and from 2015 as CEO of G company, which he impressively rescued from a poor financial position and guided through to its sale in 2019. He moved to England while working for DEF in 2009 and has lived in England since then. He stepped down from G company on its sale in December 2019 and his abilities appear to be highly regarded in the business world. In the period since 2019 he has been offered more than one very highly paid employment role, including being head-hunted for a CEO role, but has declined all remunerative employment offers. On his own assessment, he has made the beneficent choice to prioritise spending time with his family over earning money. The wife sees a darker motivation, believing the choices as having been made to position himself advantageously in relation to the divorce as the relationship began to break down in 2020. Either way, he has not had remunerative employment since December 2019.
(iii) The parties met in June 2009 and started a relationship, the precise details of which are disputed, but in relation to which it is common ground that no seamless pre-marital cohabitation began before September 2013.
(iv) Nonetheless, the parties began properly cohabiting in September 2013. They cohabited in a home purchased by the wife in her sole name in April 2013.They became engaged in October 2013 and married on 22nd May 2014.
(v) The marriage produced one child, C, who is now aged 7. After extensive disputes in Arbitration (before Barbara Mills KC, culminating in an Arbitral Award dated 31st May 2024), and later in the Central Family Court, the legal situation is that C's care is divided broadly equally between the parties.
(vi) Unfortunately, the marriage ran into difficulties in its later years and it is common ground (and recorded in the agreed chronology) that the parties 'separated' in October 2022 (although remained living under the same roof until September 2023).
(vii) Divorce proceedings were commenced by the husband issuing a divorce application on 25th October 2022. A Conditional Order (Decree Nisi) was ordered on 11th April 2023. The final divorce order (Decree Absolute) awaits the outcome of the financial remedies proceedings and is not, in itself, controversial and my order can contain the usual direction permitting the application for a final divorce order.
(viii) It is common ground that the 'duration of the marriage' for the purposes of the financial remedies proceedings was from 1st September 2013 to 25th October 2022, a period of just over nine years. It does not therefore fall into the category of a 'short marriage'. The 'family home' throughout this period was the property owned by the wife.
(i) The husband issued his application by Form A on 29th November 2023.
(ii) Forms E were exchanged in February 2024.
(iii) A First Appointment was heard by Recorder Nice on 26th March 2024.
(iv) The parties exchanged witness statements on 'contributions' in June 2024 and questionnaires and schedules of deficiencies were answered.
(v) A fully engaged private FDR took place on 23rd July 2024 before Elizabeth Clarke; but sadly no settlement was reached.
(vi) A post-pFDR directions hearing took place before me on 4th September 2024. I timetabled the case for trial in March 2025.
(vii) Narrative statements were exchanged in January/February 2025.
(viii) I heard a PTR on 4th February 2025.
(ix) A final hearing has taken place before me on 4th, 5th and 6th March 2025. The hearing had initially been scheduled to last four days, but because almost all of the factual and computational issues were in the end agreed it was possible in the end to reduce this to three days, but still to leave more than adequate time to explore all the disputed issues in cross-examination and submissions. My task is largely to determine the distributional issues.
(1) It shall be the duty of the court in deciding whether to exercise its powers under section 23, 24, 24A or 24B above and, if so, in what manner, to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.
(2) As regards the exercise of the powers of the court under section 23(1)(a), (b) or (c), 24, 24A or 24B above in relation to a party to the marriage, the court shall in particular have regard to the following matters:-
(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
(c) the standard of living enjoyed by the family before the breakdown of the marriage;
(d) the age of each party to the marriage and the duration of the marriage;
(e) any physical or mental disability of either of the parties to the marriage;
(f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
(g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;
(h) in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.
(i) There had been a consensus that all of the parties' chattels (the division of which is agreed and has not been controversial in the case) would be omitted from the ES2 and that neither party would argue that the other was to be left with chattels at a greater value than the other. Amongst the items left with the husband was a valuable watch which the wife had given him in happier times, though there was no objective evidence of its particular value. This consensus was disturbed by the wife's purchase of a watch for herself for £30,928 in January 2025. The husband wished this to appear at purchase value on the ES2 to be taken into account in any distributional calculations. In similar vein, the husband also identified another £190,714 which he sought to characterise as "significant and abnormal transactions between October 2024 and January 2025" which should be added back and taken into account in any distributional calculations. His case was that, whilst this did not amount to "wanton dissipation", these were purchases targeted at manipulating the asset schedule. The wife vehemently took objection to the husband's case in this regard, suggesting that these transactions were just part of the normal conduct of her life and were counter-balanced by equivalent spending decisions made by the husband over the past few years. On this dispute I have decided, on balance, to prefer the wife's position. I have not been persuaded that these transactions were such, in all the circumstances of the case, to place them in a different category from many other transactions which took place in this family and my conclusion is that to attach particular significance to them would not be fair to the wife. I shall therefore not include the husband's proposed figures (for add-back and for the watch) in my asset schedule.
(ii) The husband has also sought in a similar way to argue that the gift of $200,000 (£165,840) by the wife to her mother in January 2023 should be added back into the ES2 to be taken into account in any distributional calculations. The timing of the gift, being just after the separation, is part of his complaint. The wife has responded powerfully by pointing out that her mother gave (in total) more than three years of unpaid care to her when she was suffering from cancer and after C was born and that she had long since promised a gift of this nature to her. She also suggested that the gift was counter-balanced by various pieces of financial assistance that the husband had provided for his parents (for example, spending money on his property to make it wheelchair accessible for the benefit of his mother). Again, I have decided on this dispute, on balance, to prefer the wife's position. I have not been persuaded that this gift was such, in all the circumstances of the case, to place it in a different category from other transactions carried out by the husband and my conclusion is that to attach particular significance to it would not be fair to the wife. I shall therefore not include the husband's proposed add-back figure in my asset schedule.
(iii) I have decided that the inter partes costs order of £12,500 made in the Children Act proceedings against the wife should not feature in my asset schedule as her debt in my asset schedule (to do so would be to undermine the purpose and efficacy of the costs order and is wrong in principle, and I think Mr Roberts in the end conceded this). I have not been persuaded, however, that the wife's outstanding financial remedies costs liability of £57,666 should be excluded from the schedule. Although the wife's legal costs are higher than the husband's, I have not been persuaded that the differential here is such as to place it in the category of cases where an adjustment is appropriate to reflect disproportionate over-spending (see, for example, YC v ZC [2022] EWFC 137).
(iv) In relation to the dispute as to what figure should be included as the wife's income tax liability for the tax y/e 5th April 2025, I have been persuaded that the correct figure is £204,888 as this debt almost entirely relates to income already received rather than income yet to be received in what remains of the tax year. I shall use this figure in my schedule.
Joint
HSBC account 1 | 392 |
HSBC account 2 | 0 |
TOTAL | 392 |
Husband
London flat[1] | 1,261,000 |
Bank accounts in sole name | 3,003,238 |
Investments/Policies in sole name | 277,917 |
Business interests in sole name | 2,780 |
Other investments/Interests | 285,487 |
Liabilities | -84,983 |
Outstanding Legal Costs [2] | 0 |
Pensions | 344,610 |
TOTAL | 5,090,049 |
Wife [3]
Family home[4] | 2,016,836 |
Properties in country X purchased in July 2013 [5] | 138,368 |
Properties in country X purchased in November 2019 [6] | 384,435 |
Swiss Bank accounts in sole name | 25,289,135 |
Other Bank accounts in sole name | 167,579 |
Swiss Investments/Policies in sole name | 8,753,057 |
Other Investments/Policies in sole name | 524,341 |
Business interests in sole name | 6,890 |
Other investments/Interests | 12,865 |
Liabilities | -2,497,640 |
Outstanding Legal Costs [7] | -57,666 |
Pensions | 1,380,312 |
TOTAL | 36,118,512 |
(i) The husband's open position, essentially that set out in the LMP letter of 21st February 2025, but developed slightly at trial, is that:-
(a) The country X Properties currently in joint names should be transferred to the wife.
(b) The joint accounts should be closed and the proceeds divided equally.
(c) The chattels should be divided as agreed.
(d) He will undertake to vacate the garage space that he currently occupies which is opposite the wife's home within 12 months, though he is willing to be bound by my determination of what is a fair period to do this and still give the undertaking.
(e) There should be a paragraph in my order recording a consensus on future joint spending on C.
(f) The wife's Avios and Marriott Bonvoy points should be shared equally between the parties unless the terms and conditions under which they are held prevent this.
(g) The wife should pay a lump sum to the husband of £14,950,073 (marginally amended in closing to £14,956,323) within 10 days.
(h) All other assets should remain as they are on a clean break basis.
(i) Costs should be considered in light of the court's determination of the outcome of the case.
(ii) The wife's open position, essentially that set out in the Family Law Partners letter of 21st February 2025, but developed slightly at trial, is that:-
(a) The country X Properties currently in joint names should be transferred to the wife.
(b) The joint accounts should be closed and the proceeds divided equally.
(c) The chattels should be divided as agreed.
(d) The husband should undertake to vacate the garage space that he currently occupies which is opposite the wife's home within 3 months.
(e) There should be a paragraph in my order recording a consensus on future joint spending on C.
(f) The wife should retain all her Avios and Marriott Bonvoy points.
(g) The wife should pay a lump sum to the husband of £7,564,025 (marginally amended to £7,541,442 in closing) within 60 days.
(h) All other assets should remain as they are on a clean break basis.
(i) Costs should be considered in light of the court's determination of the outcome of the case.
"A key component of fairness is drawing the distinction between matrimonial and non-matrimonial property…Matrimonial property is the property which the parties have built up by their joint (but inevitably different) efforts during the span of their partnership. It should be divided equally. This principle is reflected in statutory systems in other jurisdictions. It resonates with moral and philosophical values. It promotes equality and banishes discrimination…These arguments do not apply to property received or created outside the span of the partnership, or gratuitously received within the partnership from an external source. Such property has little to do with the endeavour of the partnership and the equal sharing principle as explained by Lord Nicholls just cannot apply to it on any moral or fair basis…For obvious reasons the span of the partnership is looked at de facto and not de jure. It is not looked at from the date of the marriage to the date of decree absolute. Rather it is measured from when the cohabitation began on a permanent basis until the date of the separation. Given that a claim to share non-matrimonial property (as opposed to having a sum awarded from it to meet needs) would have no moral or principled foundation it is hard to envisage a case where such an award would be made. If you like, such a case would be as rare as a white leopard…This seems to me to mandate that the court should always attempt to determine the partition between matrimonial and non-matrimonial property. Once it has done so the matrimonial property should usually be divided equally and there should usually be no sharing of the non-matrimonial property".
"[61] I now turn to the court's approach to non-matrimonial and matrimonial property when applying the sharing principle. I address the reasons underpinning their different treatment in the discretionary exercise and the question of whether the court's approach should be formulaic or can be broader. I also address the manner in which, in my view, the court should deal with this issue in practical terms as a matter of case management and determination.
[62] The classification of property as non-matrimonial or matrimonial is relevant in the application of the sharing principle because the court is seeking to establish the extent to which the current assets owned by the parties comprise or reflect the product of marital endeavour and the extent to which they do not. This arises because, as explained below, the sharing principle applies with force to matrimonial property but does not apply, or applies with significantly less force, to non-matrimonial property.
…
[84] In my view, the court is not required to adopt a formulaic approach either when determining whether the parties' wealth comprises both matrimonial and non-matrimonial property or when the court is deciding what award to make. This is not necessary in order to achieve 'an acceptable degree of consistency', Lord Nicholls of Birkenhead in Miller at para [6], or to achieve a fair outcome. Indeed, I consider that the present case demonstrates the difficulties which can arise if a court strives to adopt a formulaic approach in circumstances where that is not likely to be easily achieved because of the nature of the financial history.
…
[86] In my view, the guidance given by Lord Nicholls of Birkenhead in Miller remains valid today and, indeed, bears increased weight in the light of the courts' experience since that case was decided. It can, as he said, be artificial to attempt to draw a 'sharp dividing line'. Valuations are a matter of opinion on which experts can differ significantly. Investigation can be 'extremely expensive and of doubtful utility'. The costs involved can quickly become disproportionate. Proportionality is critical both because it underpins the overriding objective and because, to quote Lord Nicholls of Birkenhead again: 'Fairness has a broad horizon'.
…
[90] It may be, for example, that the external contribution can immediately be seen to be sufficiently insignificant in the context of the case that it warrants no further inquiry. It may be, at the other end of the spectrum, that there is clearly no matrimonial property so that there is also no need to undertake any further factual investigation. In other words, if the facts clearly demonstrate the existence of a 'sharp dividing line' the court will use that line for the purposes of determining what award to make. If, on the other hand, the inquiry would require an account to be undertaken of the marriage and/or some other expensive investigation and/or would be of 'doubtful utility', the court could be expected to decide that such an inquiry was neither proportionate nor required to enable the court to achieve a fair outcome. If some further inquiry is warranted, the court will have to determine what 'degree of particularity or generality' is required. Where, in the spectrum, any particular case lies is for the court to decide.
….
[92] The court may decide that the non-marital contribution is not sufficiently material or bears insufficient weight to justify a finding that any property is non-matrimonial.
[93] Alternatively, if the evidence establishes a clear dividing line between matrimonial and non-matrimonial property, the court will obviously apply that differentiation at the next, discretionary stage.
[94] If, however, at the other end of the spectrum, there is a complicated continuum, it would be neither proportionate nor feasible to seek to determine a clear line….In those circumstances, the court will undertake a broad evidential assessment and leave the specific determination of how the parties' wealth should be divided to the next stage. As I have said, where in the spectrum a case lies depends on the circumstances of the case and is for the judge to decide.
[95] The third and final stage of the process is when the court undertakes the s 25 discretionary exercise. Even if the court has made a factual determination as to the extent of the parties' wealth which is matrimonial property and that which is not, the court still has to fit this determination into the exercise of the discretion having regard to all the relevant factors in this case. This is not to suggest that, by application of the sharing principle, the court will share non-matrimonial property, but the court has an obligation to determine that its proposed award is a fair outcome having regard to all the relevant s 25 factors.
[96] If the court has not been able to make a specific factual demarcation but has come to the conclusion that the parties' wealth includes an element of non-matrimonial property, the court will also have to fit this determination into the s 25 discretionary exercise. The court will have to decide, adopting Wilson LJ's formulation of the broad approach in Jones, what award of such lesser percentage than 50% makes fair allowance for the parties' wealth in part comprising or reflecting the product of non-marital endeavour. In arriving at this determination, the court does not have to apply any particular mathematical or other specific methodology. The court has a discretion as to how to arrive at a fair division and can simply apply a broad assessment of the division which would affect 'overall fairness'. This accords with what Lord Nicholls of Birkenhead said in Miller and, in my view, with the decision in Jones.
[97] Finally, I would repeat that fairness has a broad horizon."
"[138] This leaves the second category Baroness Hale of Richmond identified, namely great wealth 'generated by the business efforts and acumen of one party'. It is the 'nature and source of the property' which are the key features identified as potentially justifying the asset being 'separate property' which is not 'automatically … shared equally', at para [153]. On this issue, I agree with the husband's written submission that this is not a fragmented issue. The manner in which the parties have run their lives, by for example pooling the asset or not, is a subsidiary element of the same factor which depends on there being property which, because of its nature and source, may potentially not be shared equally. It is subsidiary because it only relates to whether the way in which such property has been used in the marriage might affect the question of whether it remains 'separate property'. I would add that it would be far too vague as a freestanding factor and, in any event, would be difficult to apply as such given the manner in which the Supreme Court has set out in Radmacher the required circumstances before the court will give effect to a marital agreement."
Husband
Bank accounts in sole name | 849,068 |
Investments/Policies in sole name | 2,625,115 |
Business interests in sole name | 1,393,370 |
Liabilities | -91,557 |
Pensions | 122,940 |
TOTAL | 4,898,936 |
Wife
Family home[8] | 680,000 |
Properties in country X purchased in July 2013 [9] | 63,806 |
Bank accounts in sole name | 531,313 |
Investments/Policies in sole name | 1,084,005 |
4,470 shares in ABC Company | 3,454,768 |
Loan from ABC Company in relation to share purchases | -2,393,076 |
C Stock | 64,103 |
Z Pension | 37,494 |
ABC Company Pension | 447,585 |
TOTAL | 3,969,998 |
TOTAL NET ASSETS | As at September 2013 | Now |
Husband | 4,898,936 | 5,090,049 |
Wife | 3,969,998 | 36,118,512 |
Date | Number of ABC Company Shares acquired | Amount of loan advanced by ABC Company to facilitate share purchase |
30th December 2010 | 1,200 | $1,271,875 |
29th June 2011 | 960 | $1,052,721 |
30th January 2012 | 1,350 | $1,619,635 |
30th July 2012 | 120 | $143,408 |
30th January 2013 | 840 | $995,072 |
Total number of shares as at September 2013 prior to the marriage |
4,470 |
Date | Number of ABC Company Shares acquired | Amount of loan advanced by ABC Company to facilitate share purchase |
30th January 2014 | 750 | $991,807 |
29th January 2015 | 810 | $1,164,148 |
29th October 2015 | 450 | $646,996 |
29th September 2016 | 1,650 | $2,426,044 |
28th September 2017 | 1,260 | $1,985,218 |
27th September 2018 | 150 | $262,956 |
Total number of shares during the marriage | 5,070 | |
TOTAL overall | 9,540 |
Date of sale of shares | Number of ABC Company Shares sold | Sale proceeds |
July 2024 | 3,180 | £6,558,563 |
October 2024 | 6,360 | £12,632,045 |
TOTAL | 9,540 | £19,190,608 less CGT = £17,078,708 net |
(i) 20% of the current value of the wife's Aviva pension, i.e. 20% x £1,298,348 = £259,670.
(ii) 2/3 of the MI investments, i.e. 2/3 x £4,826,944 = £3,217,962.
(iii) 1/3 of the MII investments, i.e. 1/3 x £3,926,113 = £1,308,704.
This makes up a total of £259,670 plus £3,217,962 plus £1,308,704 = £4,786,336.
(i) The wife is earning a lot less than she used to because of her health problems, but even working as a part-time non-executive director she is able to earn approximately £100,000 per annum gross. With her pensions and other capital, it could not be said that the wife will have insufficient income in the future to have a comfortable life.
(ii) The husband has a very substantial earning capacity which he is currently choosing not to exercise. I accept to some extent he is not exercising it because of his wish to spend a lot of time with C and this is understandable up to a point. He may decide in due course to go back to remunerative employment, perhaps when C is a little older and more independent, but even if he does not, he will have sufficient capital to have a comfortable life.
(iii) My overall view is that the income position does not have much impact on the proper outcome here.
Wife | Husband | |
Own realisable assets | 36,118,512 | 5,090,049 |
50:50 division of joint accounts | 196 | 196 |
Lump Sum from W to H | -11,025,808 | 11,025,808 |
TOTAL REALISABLE ASSETS | 25,092,900 | 16,116,053 |
% REALISABLE ASSETS | 60.9% | 39.1% |
(i) The Country X Properties currently in joint names should be transferred to the wife.
(ii) The joint accounts should be closed and the proceeds divided equally.
(iii) The chattels should be divided as agreed.
(iv) The husband should undertake to vacate the garage space that he currently occupies which is opposite the wife's home within 3 months of the date of this order.
(v) There should be a paragraph in my order recording a consensus on future joint spending on C.
(vi) The wife's Avios and Marriott Bonvoy points should be shared equally between the parties unless the terms and conditions under which they are held prevent this.
(vii) The wife should pay a lump sum to the husband of £11,025,808. I think the time period of 60 days from the date of the order is reasonable, i.e. 9th May 2025. I think that the normal rule, that interest in default should be payable at the High Court judgment debt rate, is appropriate here.
(viii) All other assets should remain as they are on a clean break basis.
HHJ Edward Hess
Central Family Court
10th March 2025
As slightly amended on 20th March 2025
Note 1 This figure is based on a value of £1,300,000 less notional sale costs at 3% = £1,261,000 [Back] Note 2 This figure is based on a total of incurred fees of £348,458 less a total of fees paid of £348,458 = £0 [Back] Note 3 W also owns 1,376,219 Avios points and 554,201 Marriott Bonvoy points. These plainly have a value in producing future discounts on flight and hotel costs but no attempt has been made in the proceedings to place a monetary value on them. [Back] Note 4 This figure is based on a value of £2,600,000 less notional sale costs at 3% less the outstanding mortgage of £502,651 and ERP of £2,513 = £2,016,836 [Back] Note 5 This consists of Apartment 20 and two related parking spaces. They are held in W’s sole name and were purchased in July 2013. [Back] Note 6 This consists of Apartment A310 and a related parking space and two apartments at A501. They are held in the joint names of the parties but are included in W’s column for the present purpose because it is common ground that they will be transferred to her as part of my order. There is a dispute as to how and why they came to be placed in joint names as W paid for them. [Back] Note 7 This figure is based on a total of incurred fees of £528,735 less a total of fees paid of £471,069 = £57,666 [Back] Note 8 This figure is based on a value of £1,980,000 less the outstanding mortgage of £1,300,000 = £680,000 [Back] Note 9 This consists of Apartment 20 and two related parking spaces. They are held in W’s sole name and were purchased in July 2013. [Back]