FAMILY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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HC (By Emma Gaudern her litigation friend) |
Applicant |
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- and - |
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FW |
Respondent |
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The Respondent (husband) (FW) was neither present nor represented
Hearing dates: 13 November 2017
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Crown Copyright ©
The Honourable Mr Justice Cobb :
Introduction
Determination of the application in the absence of the husband
i) Dr. Amy Izycky, Clinical psychologist, dated 19 October 2015, and 21 November 2016 (wife's instruction);ii) Katherine Kirby, registered nurse and full-time care consultant (joint instruction), dated 4 November 2016, with supplementary letter, dated 19 November 2016;
iii) Dr. Donald Brechin, Consultant Neuropsychologist (joint instruction), dated 7 November 2016, and supplementary letter 20 November 2016;
iv) Dr. Ruth Kent, Consultant in Neurological rehabilitation (joint instruction), dated 29 December 2016;
v) Patti Summerfield, social worker and rehabilitation consultant and needs assessor, specialising in the field of acquired brain injury (wife's instruction), dated 27 July 2016 and 15 June 2017;
vi) BDO Stoy Hayward (joint instruction), dated 11 January 2017.
I have been provided with a note of the points of agreement and disagreement prepared by Ms Kirby and Ms Summerfield, following their meeting on 16 October 2017.
Background
Wife's capacity to litigate?
"The determination of capacity under MCA 2005, Part 1 is decision specific. Some decisions, for example agreeing to marry or consenting to divorce, are status or act specific. Some other decisions, for example whether P should have contact with a particular individual, may be person specific. But all decisions, whatever their nature, fall to be evaluated within the straightforward and clear structure of MCA 2005, ss 1 to 3 which requires the court to have regard to 'a matter' requiring 'a decision'. There is neither need nor justification for the plain words of the statute to be embellished".
The issues
i) The value of the assets of the parties;ii) What is known about the husband;
iii) The wife:
a) Her reasonable needs;b) Her medical condition and specific needs;c) Future care requirements;iv) The basis of computation for future provision: Ogden or Duxbury;
v) The section 25 review: a just award.
The value of the assets of the parties.
i) What is the evidence of the assets or wealth of the parties, and what can reasonably be gleaned as to their wealth by inference?ii) Which if any assets are matrimonial, and which are non-matrimonial i.e. pre-acquired or inherited?
i) There is no doubt that the disclosure from the husband has been materially deficient; his financial information is now more than 12 months out of date; he has failed to comply with orders for updated disclosure;ii) A significant question over non-disclosed income-producing assets is raised by the fact that in 2009, the husband and wife co-signed a questionnaire (see [49] below) declaring that their income needs were in the region of US$2.5m p.a., yet most of the investment assets in PS were believed to be non-income producing;
iii) The husband has volunteered minimal information relating to EP Ltd. ('EP') or AV (a private equity investment fund: see [36] below); the court is still left knowing nothing about the value of the husband's indirectly held investments in AV; all that is known is that it distributed US$44k to him in September 2016;
iv) The husband appears to have been active in managing his financial affairs, including in drastic ways, (i.e. placing PS in voluntary liquidation) while taking no steps in the proceedings; this, in itself, fuels the inference I am invited to draw.
Mr. Bishop invites me to attach a notional value of £5m to the undisclosed assets. There is no science attached to the calculation of this figure; it is an arbitrary sum. As it happens, it makes no or no material difference to my evaluation of the case as a whole, precisely what value (if any) I attach to this 'inference' of non-disclosure, given that the case has been realistically argued, and rightly so, on the basis of 'need'. Insofar as I do draw inferences as to the husband's wealth, I do so by interpreting the financial data in such a way as to give the wife the benefit of the doubt in the assessment of the assets, rounding up rather than rounding down my computation.
"In the case of a short marriage, fairness may well require that the claimant should not be entitled to a share of the other's non-matrimonial property. The source of the asset may be a good reason for departing from equality. This reflects the instinctive feeling that parties will generally have less call upon each other on the breakdown of a short marriage. … With longer marriages the position is not so straightforward" Lord Nicholls in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 at [24/25]).
This is a marriage of less than median length, to which the comments above are therefore apposite.
"Of course, all of this is subject to the question of need. As Lord Nicholls of Birkenhead said in White 'however, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant's financial needs cannot be met without recourse to this property'". (emphasis added).
Companies
Liquid cash
Property
Miscellaneous
Liabilities
i) There is no evidence of the value of the gift to N under the will of the husband's mother, or how it was handled;ii) Even if it were right that the sum bequeathed by the grandmother was indeed €5m, N has been given 2 out of the 10 shares in PS (which represented in part the mingled funds) in 2010/2013 which has an approximately equivalent value;
Additionally:iii) The wife's lawyers discovered that in 2010, Canadian $3m was paid to N (not previously mentioned or disclosed in the proceedings).
It is asserted on behalf of the wife that, given the extensive documentation generated in the administration of the parties' finances, it is notable that no document has been produced which evidences this apparent liability.
Placing a value on the assets as a whole
i) c.£26,346,000 invested through BVI companies, notably PS;ii) c.£1,506,609 represents the wife's net property holding in the UK (the Mews House, the commercial property (NE)), together with the Singapore former-housing association property;
iii) c.£8,455,149 represents the net value of property holding in Singapore (nine properties in the in the joint names of the parties);
iv) c.£1.4m in bank accounts, and loans due to the parties; the wife's case is that the sums in her accounts have been eroded in the last 24 months by her liability for legal fees;
v) c.£5m capital undisclosed (i.e. I am asked to draw an adverse inference from the husband's litigation behaviour, and non-engagement).
vi) From this sum, there is deducted a liability of £296,422 for ongoing legal fees, and outstanding car finance.
i) not have included the £5m reflected by alleged undisclosed assets ([51](v)) above;ii) have deducted a further c.£7m from this figure to represent his indebtedness to his son for his inheritance;
iii) have added £642k for the wife's jewellery and other chattels.
This would have given a global sum of a little over £31m.
i) As I have indicated above ([28]), I do not feel able to quantify the 'undisclosed assets' and attribute to them a specific figure. I therefore reject Mr. Bishop's notional but specific figure of £5m. within the asset schedule;ii) I include in the schedule the wife's declared chattels (her 10-carat ring and other items) valued at £642k (she refers to these in her own Form E); however, I accept that the resale value as opposed to the insurance of purchase cost is likely to be in the region of 1/3 of this figure;
iii) I am not persuaded on the information available to me that the husband still owes N €7.9m (£7m) representing his inheritance (or a part thereof). N acquired the final share of his 20% holding in PS in 2013 when he was 27, the age at which it is said he would be entitled to inherit from his grandmother. The 20% shareholding is not just coincidentally worth a little over c.£6.5m; insofar as there may be a shortfall, I accept the wife's account that the husband had already given to N the sum of Canadian$3m in 2010 c.£1.7m.
I therefore value the global assets at £38,042,000. In view of the husband's lack of transparency and his failure to co-operate with my orders for disclosure, I would round this up to c.£40m.
What is known about the husband
The wife: her reasonable needs
The wife: her medical condition and specific needs;
"… performance on psychological tests indicates a substantial decline from [the] estimated premorbid level…. [HC] displays neuropsychological and behavioural evidence of problems with executive functions, consistent with her suffering from a dysexecutive syndrome. An important of this syndrome in [HC]'s case is that she demonstrates limited insight into the extent of her difficulties… [HC] cannot independently manage her personal and financial affairs (including organising her care package) … it is more likely than not that the majority of spontaneous cognitive recovery has occurred, and that further recovery of cognitive abilities is limited in scope. The nature of her dysexecutive syndrome is that it affects insight, problem-solving and judgment, and my assessment indicates that [HC] confuses information, she is impulsive and she is vulnerable to suggestion. As such, she could inadvertently put herself in situations that compromise has safety, and she is at risk of exploitation by others. As such, it is my view that [HC] requires care and support to maintain safety."
"The main area that she is missing is her inability to visit members of her extended family, and to have an increased variety of contacts. Essentially, she had been used to travelling on a regular basis beforehand. She does find a cold climate can be quite difficult…"
The wife: future care requirements
"Clearly [HC] cannot live by herself, and although she currently lives alone at night she is very vulnerable and ideally requires someone to live with her on a permanent basis. A live-in carer will be able to provide the level of assistance [HC] will require … it is unlikely that there will be any improvement in [HC]'s overall functioning, and the level of support will be required indefinitely.
i) The wife requires a support worker for 14 hours per day;ii) When the wife is away from her home in England, there should be an increased care allowance;
iii) There should be a contingency for night care for 6 weeks per year, to cover periods of illness;
iv) When the wife attains the age of 70, she will need permanent night care.
Item | Cost p.a. (£) | |
1 | Case Management Yr 1 (set up year) | 19,824 |
2 | Case Management Yr 2 and ongoing | 15,571 |
3 | Personal assistant: 15 hrs per week | 17,160 |
4 | Support care cost Yr 1 | 174,996 |
5 | Support care cost Yr 2 | 172,959 |
6 | Support care cost Yr 3 | 173,668 |
7 | Community Care Alarm | 445 |
8 | Vestibular physiotherapy | 1,140 |
9 | Light therapy | 1,000 |
10 | Occupational therapy Yr 1 | 4,940 |
11 | Occupational therapy Yr 2 | 1,140 |
12 | Pain consultant | 2,290 |
13 | Personal trainer | 4,680 |
14 | Art therapy | 1,350 |
15 | Dietician | 180 |
16 | Neuropsychologist | 9,280 |
* | Acupuncture | 1560 |
* | Optometrist | 2,600 |
* | Speech and Language therapy Yr 1 | 1,890 |
* | Speech and Language therapy Yr 2 | 945 |
* | Neurophysiotherapy | 7,410 |
TOTAL (Yr 1) | 250,745 | |
TOTAL (Yr 2) | 238,150 | |
Those items marked with a (*) above are not agreed, but are the figures proposed by Miss Somerfield, which I accept. | Those items marked with a (*) above are not agreed, but are the figures proposed by Miss Somerfield, which I accept. | |
Those items in italics are the figures for future years | Those items in italics are the figures for future years |
The basis of computation for future provision: Ogden or Duxbury
"…suffer from the uncertainties of prediction. Nothing will in fact turn out exactly as it is predicted to turn out, whether in family law or in personal injuries law. A far safer way of catering for future financial losses is by way of a structured settlement involving capital payments for some needs and periodical payments for future needs, which can be adjusted year on year for inflation in accordance with the most suitable index available" (Baroness Hale in Simon v Helmot [2012] UKPC 5, [2012] Med LR 394).
The section 25 review: a just award
1 | Purchase of her current property ([88] above) | 1,200,000 |
2 | Property in Singapore ([89] above) | 1.865,489 |
3 | Future income (Duxbury) | 10,458,626 |
4 | Account for rental income from the Singaporean properties | 50,000 |
5 | Outstanding legal fees | 270,000 |
6 | Balance to pay developer to complete purchase of second tranche of the Singapore properties | 685,253 |
7 | Capital Gains Tax liability | 365,480 |
8 | Adaptations to her current home ((1) above) | 250,000 |
9 | Stamp Duty Land Tax | 106,250 |
TOTAL | 15,251,098 |
1 | Wife retains the Mews House (which I anticipate she will sell) | 1,273,899 |
2 | Wife retains the commercial property (NE) | 58,200 |
3 | Wife retains the Singapore Housing Association flat | 174,510 |
4 | Wife to have transferred to her a three-bed flat in Singapore for her use as her home there | 1,865,489 |
5 | Wife to retain her jewellery and chattels (1/3rd insurance value) | 214,000 |
6 | Wife to retain liquid cash in her bank accounts | 500,000 |
7 | Singapore properties (gross) | 7,640,393 |
TOTAL | £11,726,491 | |
Balancing cash payment | £3,524,607 |
Following judgment:
"the applicant must show, by reference to clear evidence, an unjustified dealing with assets (which would include threats) by the respondent giving rise to the conclusion that there is a solid risk of dissipation of assets to the applicant's prejudice. Such an unjustified dealing will normally give rise to the inference that it is done with the intention to defeat the applicant's claim (and such an intention is presumed in the case of an application under the 1973 Act)."
i) The husband's non-engagement with this legal process once the FDR concluded without settlement;ii) The husband's 'drastic' step (see [28](iv)) in August 2017, shortly before his lawyers came off the record, of liquidating PS, thus placing significant assets into the 'dark' (my phraseology not theirs);
iii) The husband's lack of transparency generally;
iv) My finding that the husband had sought to reduce the assets available for distribution by arguing a specious liability to account to N for his inheritance when this had been satisfied some years ago.