Family Law Hub

J v J [2017] EWFC B77

Final hearing of wife's financial remedies claim where the husband had failed to disclose assets in the Cayman Islands.

  • JUDGE’S NOTE:

    “This judgment was delivered in private. The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the children and members of their family must be strictly preserved. All persons, including representatives of the media, must ensure that this condition is strictly complied with. Failure to do so will be a contempt of court.”

    Case No: AL14D00557

    IN THE FAMILY COURT

    SITTING AT MANCHESTER

    1 Bridge Street West

    Manchester

    M60 9DJ

    2nd February 2017

    Before:

    HIS HONOUR JUDGE BOOTH

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    Between:

    MRS J

    Applicant

    -v-

    MR J

    Respondent

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    Transcribed from the Official Tape Recording by

    Apple Transcription Limited

    Suite 204, Kingfisher Business Centre, Burnley Road, Rawtenstall, Lancashire BB4 8ES

    DX: 26258 Rawtenstall – Telephone: 0845 604 5642 – Fax: 01706 870838

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    Counsel for the Applicant: Mr Cole

    Counsel for the Respondent: Mr Glover

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    JUDGMENT

    HIS HONOUR JUDGE BOOTH:

    1. By Form A issued on the 16th March 2015 Mrs J seeks all forms of financial remedy following the breakdown of her marriage with Mr J.

    2. Mrs J was born on 15th February 1980 and so is 36 years of age. Mr J was born on 2nd November 1976 and so is 40 years of age. They began to cohabit in 1998 when Mrs J was still a teenager. They married on 23rd May 2003 and separated in February 2014. Their marriage lasted 16 years. They have three children. The eldest, who is 14, the second, who is 13 and the third who is 6. They live with their mother at the former family home and are at local schools. Mr J since separation has lived in rented accommodation, although more recently has been occupying a house owned by the parties that was their previous family home.

    3. Mr Cole of counsel has represented Mrs J and Mr Glover of counsel has represented Mr J. I am grateful to both of them for their written material and their submissions to me. The only witnesses I have heard from are Mrs J and Mr J.

    4. Due to the case lasting a little longer than expected I was unable to deliver a judgment at its immediate conclusion. I circulated my judgment about 4 weeks later in December 2016. In a note dated 24th January 2017 Mr Glover, pursuant to his duty to draw to my attention any perceived need for revision/correction of possible errors or the desirability of further clarification so as to avoid an appeal on matters that could have been clarified, invited me to consider a number of issues. Having corrected any matters I readily accept that I have the jurisdiction to alter my conclusions as to distribution of the assets in this case if I think that appropriate – Re L-B (Children) [2013] UKSC 8. I have considered his note, and a note in response from Mr Cole, and have made some alterations to my judgment in consequence. Mr Glover additionally made a request for permission to appeal. I will deal with that at the conclusion of this judgment.

    5. The assets that the parties have can be stated relatively shortly. Their family home, occupied by Mrs J, has a value of £495,000. It is a four bedroom house with each of the children having their own bedroom. It is subject to a mortgage of £258,000 and, allowing for costs of sale, it is anticipated, if sold, would have an equity of £230,000. The previous family home has an agreed valuation of £245,000. It has a mortgage of £151,000 and, allowing for the costs of sale and a potential liability to Capital Gains Tax as it is no longer their principal private residence, has an equity of some £85,000.

    6. They each have some bank accounts with nominal amounts in.

    7. Both parties have business interests. Mrs J has started a beauty salon. That business, it is agreed, has no or negligible value and provides her with a modest income of the order of £50 per week. She has had no formal accounts drawn. She may have to decide in the near future whether to continue with that business or to seek employment elsewhere. So long as she works 16 hours a week she is entitled to tax credits and she has child benefit for the children and I have been invited to assess her current income from all sources at £1,000 per month.

    8. Mr J’s principal business interest is in a company in which he owns 35 percent of the issued share capital. He is the managing director and the driving force behind the business. The business is ancillary to the airline industry and supplies and services wheels and brakes for aircraft. Their clients and customers are airline operators and specialist suppliers of wheels and brakes and related parts. His shares have been valued by a single joint expert at £860,000 net after the costs of realisation and tax. The single joint expert instructed to carry out the valuation raised the question for the court to decide as to whether there should be a deduction from that value for this being minority shareholding or whether that value should be maintained on the basis that the business is run as a quasi-partnership. The other shareholder no longer takes an active part in the business and is a longstanding friend of the husband. He is godfather to the three children. Historically they have acted together and for reasons I will set out below have taken decisions in relation to the business that require each to trust the other implicitly. It is clear to me that the only circumstances in which they would be likely to realise their interests in the business would be a joint sale. I am satisfied that this should be treated as a quasi-partnership and the value I have given should be ascribed to the shares.

    9. Mr J takes from the business a combination of salary and dividends. He has been drawing after tax £10,000 per month. The single joint expert assessed the sustainable level of income for the next few years at £156,000.

    10. Mr J has an interest in another company in which he owns 51 percent of the issued share capital. That company owes Mr J some £27,500. Mr J has interests in two other businesses. The reports to Companies House on both those businesses suggest that they are dormant. For these purposes I include only the debt as an asset. Mr J also has a small pension that he will not be able to access for many years with a cash equivalent value of £75,000.

    11. As a result of the legal costs of bringing this case to trial, both parties have debts. In addition, Mr J has a tax liability that will be due for payment in the future. At the time of separation the parties had a Volkswagen motor vehicle. That was sold by Mrs J with the proceeds going to pay legal fees. The husband has the use of two motor cars through the business, both of them being leased vehicles, one a Range Rover and one a Land Rover Defender which he described as a pool car.

    12. Over the years the husband has collected watches. He has watches to a value exceeding £20,000. In addition he has had an interest in motor racing, but that is paid for by his principle business and the vehicles he races are owned by the company. They are used as a promotional tool for the business.

    13. Houses and watches: £335,000; Business assets: £887,500; Pensions: £75,000.

    14. Since separation Mr J has continued to meet the outgoings on the former family home and has paid maintenance for the benefit of Mrs J and the children. Mrs J seeks a continuation for the time being of maintenance at that level. Mr J proposes a reduction.

    15. Given the background I have just set out and given that everything that this couple have was acquired during the course of their marriage, the starting point would inevitably be to add up everything that there is and to divide it broadly equally between them and to allow the wife and the children some periodical payments for maintenance until such time as the business of Mrs J allowed her to be independent or alternatively she got another job and look towards a clean break between Mrs J and Mr J.

    16. The standard of living enjoyed by this couple is accepted as being a very good one, the husband having for some years drawn out in excess of £10,000 a month for the family to live on.

    17. However, this case has proved far from straightforward. At the heart of the problem is an allegation made by Mrs J that her husband had funds in a Cayman Islands bank account generated by the activities of his principle business. Throughout the case and in the statements that he has filed he has denied that there was any such account. Seemingly confident that it would reveal nothing to his detriment he signed a form of authority to allow those acting for Mrs J to make enquiries of banks in the Cayman Islands to see whether there was any account associated with Mr J’s name.

    18. To the surprise of those acting for Mrs J the Royal Bank of Canada (Grand Cayman) revealed that there was such an account. This came to light at a late stage in the proceedings when the matter was listed for final hearing. The district judge with conduct of the final hearing decided that, given the apparent seriousness of the husband’s failure to disclose what was revealed by the Royal Bank of Canada, the matter should be transferred to me for final hearing.

    19. Mr J’s case, maintained during the course of his evidence, was that although he was a signatory to this account the money contained within the account was not his, that he had no entitlement to it and that it all belonged to a business associate. That proposition was challenged by Mrs J. Her case was that she knew about the money in the Cayman Islands because Mr J, at a time when their marriage remained happy, had shown her a screenshot of a bank statement showing money credited to an account and her understanding from what Mr J had said of this money was that it represented part of their pension savings.

    20. Mrs J had a good working knowledge of the financial affairs of the business. The couple had met when she began working for the business and throughout most of their marriage she worked in the accounts department of the business. She set out in a statement her understanding of how it was that the money credited to the account in the Cayman Islands was generated. She referred to parts that had been scrapped being put together to create serviceable wheels and brakes for aircraft that did not go through the books so that these funds were not accounted for within the business.

    21. Having been caught out it was plainly incumbent on Mr J to provide some further explanation about the account on which he was a signatory. When the case was opened to me by Mr Glover, Mr Glover’s first application was to introduce some new, previously undisclosed, documents that had come into his hands on Monday morning, the first day of the hearing. He told me that they were invoices from a company in the Cayman Islands. He told me that these were invoices produced by Mr J showing legitimate transactions accounted for in the books of the business.

    22. These documents could and should have been attached to Mr J’s statement dated 21st October 2016, his response when was ordered to explain the Cayman Islands account and his involvement or interest in it. The explanation he gave then was that the money was a 10% commission that should have been paid to Mr H’s employers, Mr H being an agent with whom Mr J had a close business relationship.

    23. In his position note Mr Glover presented me with a description of the consequences flowing from the disclosure into these proceedings of the Cayman Islands account. It said that the funds in that account belonged to Mr H who was an agent for a major supplier of parts to the business that the business would both repair and refurbish and sell on into the aviation industry, and included this observation:

    “On any view Mr H would face instant dismissal and a huge claim by his employer for recovery of secret profits were any statement from him to fall into their possession. He would be ruined.”

    24. The position note goes on:

    “Payments into the account come from sources related to Mr H and and the payments out of the account by and large can be identified as going to persons associated with or related to Mr H, namely his mother and father, his sister, his partner, a former employee, fellow employee and other business associates.”

    That passage ends up with these words:

    “In particular there was no fraudulent scheme involving the sale of aircraft parts written off (as supposedly beyond economic repair). That was, according to Mrs J, based on supposition, the engine of profit to be laundered through a tax haven.”

    25. Before I delve further into the murky world of the Cayman Islands bank account I should make it plain that insofar as Mrs J makes an allegation that there are funds that either belong to the husband, or to which the husband has a share, or is otherwise entitled to, it is for her to prove it and she must prove it on a balance of probabilities.

    26. She has established that there was non-disclosure by Mr J of a potentially material bank account. Mr Glover has conceded that there were secret profits being laundered through the account but says they have nothing to do with Mr J. Mrs J invites me to draw inferences. She invites me to conclude that the money in the bank account is in fact that of her husband. She goes further through the submissions of Mr Cole to invite me to conclude that there must be at least one other bank account so far undisclosed and to assume by inference that the husband has a source of wealth that he has chosen to hide from the court by engaging in an elaborate and convoluted lie.

    27. In exercising the powers granted to it by the matrimonial Causes Act 1973 as amended the court is exercising a statutory duty “…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” (section 25(1)). The overarching search is for an outcome that is “fair” – Miller v Miller; McFarlane v McFarlane [2006] 1 FLR 1186 HL.

    28. In order to allow the court to reach a fair solution, fair to the parties and their minor children, each of the parties is under a duty to make full and frank disclosure of all relevant information to one another and to the court – Livesey (formerly Jenkins) v Jenkins [1985] AC 424.

    29. If I decide that Mr J has or has had money in undisclosed bank accounts that he should have disclosed but has failed to do so, what then?

    30. I remind myself of the propositions distilled by Mostyn J in NG v SG (Appeal: Non-Disclosure) [2011] EWHC 3270 (Fam), where at paragraph 16 he set out the following:

    “Pulling the threads together it seems to me that where the court is satisfied that the disclosure given by one party has been materially deficient then:

    (i) The Court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden;

    (ii) But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the Court is satisfied he has not got;

    (iii) If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms;

    (iv) In making its judgment as to quantification the Court will first look to direct evidence such as documentation and observations made by the other party;

    (v) The Court will then look to the scale of business activities and at lifestyle;

    (vi) Vague evidence of reputation or the opinions or beliefs of third parties is inadmissible in the exercise;

    (vii) The Al-Khatib v Masry technique of concluding that the non discloser must have assets of at least twice what the Claimant is seeking should not be used as the sole metric of quantification;

    (viii) The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that than that the Court should be drawn into making an order that is unfair to the Claimant.”

    That approach has been endorsed in Rabia v Rabia [2014] EWCA Civ 1767 and in D v D [2015] EWHC 1393 (Fam). I am satisfied it is the right approach for me to take in this case.

    31. Central to my assessment of whether I can properly draw inferences is what I make of the evidence of Mrs J and of Mr J. Mrs J struck me as a straightforward young woman, exasperated by the failure of her husband to tell the truth. Mr J was a most unimpressive witness. He told me he had been receiving treatment for depression and was in receipt of medication and I have tried to make allowances for those factors. He gave his evidence in a way that was both argumentative and dismissive of the case against him. It is not so much the impression in the witness box that let him down but the documentation in this case which clearly shows a concerted effort on his part to try to prevent the court getting to the truth and to try to persuade the court that his wife was lying when throughout I am satisfied it was him that was being untruthful.

    32. I need to set out what has happened in relation to this account and I make my findings as I go along. Mr J has a sister, married to an accountant, who lives in the Cayman Islands. The decision to open an account in the Cayman Islands was one taken by Mr J with the benefit of the presence there of his brother-in-law and was done for the purposes of secrecy. Mr J told me that.

    33. I cannot know for certain precisely what Mr J and Mr H were up to. It appears on the face of it that it may well have been both of them were behaving in a way that they should not have done. If Mr Glover’s opening position note is right, Mr H was making secret profits at the expense of his employer. Alternatively, or additionally, he was generating profits on business in the United Kingdom for a business operated out of the Cayman Islands.

    34. As far as Mr J was concerned he appears to have been transferring funds that were legitimately the funds of the principle business. That was the effect of his evidence from the witness box. He told me that his fellow shareholder and co-director was aware of this. It would be very surprising if his co director was not aware of it. That his co-director should go along with it is perhaps a testament to the importance to the business of Mr J and his activities that his fellow director was prepared to turn a blind eye. I have no doubt that as Mrs J told me Mr J has worked exceedingly hard in this business and has been very successful. His fellow shareholder and co-director will, of course, have benefited from Mr J’s industry and success.

    35. It is worthy of note that his fellow shareholder and co-director was prepared to indulge Mr J’s hobby of motor racing as an expense of the business to be used in promotional work. In addition, the company engaged in lavish entertaining, football matches and boxing events, all of which were interests of Mr J but not his fellow shareholder and co director.

    36. The amount of money deposited into the Cayman Islands account using then current exchange rates is something of the order of £767,000. It has now gone and the account is no longer active. It has been paid out to a number of different people, some of whom are associated with Mr H, some of whom appear clearly associated with Mr J.

    37. Mr J maintained throughout his evidence that he had never accessed any money from this account. In cross-examination by Mr Cole, he appeared to me to make two concessions. Firstly, there was cash that he withdrew from the account when he was on holiday in the Cayman Islands when his bank statements show no apparent expenditure whilst away, Mr J being a habitual user of his bank cards and his credit cards whereby all his transactions are detailed. Secondly, he did not demur when it was pointed out to him that a watch had been bought with funds from that account from a company that he regularly and frequently bought watches from.

    38. Money had been paid out to his brother-in-law who had helped him set up the account in the first place. There is no reason why his brother-in-law should have anything to do with the money in this account given the way it was generated. When the matrimonial home was purchased it was said that funds came from his brother-in-law by way of a loan to allow the transaction to complete. In fact the account in the Cayman Islands shows his brother-in-law withdrawing funds of an amount that would approximate to the sum needed to complete on the purchase of the family home. Although it was Mr J’s case that he had repaid his brother-in-law, that money was never repaid to the account, nor was there any explanation as to why his brother-in-law should be taking money from that account in the first place rather than lending his own money.

    39. During the course of cross-examination of Mrs J, I allowed Mr Glover to put to her two sample invoices, documents, as I have already explained, produced by Mr J on the first morning of the hearing. They purport to be invoices addressed to the principle business payable to a company in the Cayman Islands. The point put to Mrs J was that as the accounts manager, or accounts clerk, at the time if anybody had made the payments it would have been her. So that in making these payments she knew that they were legitimate. Mrs J’s response was that she had never made a payment to the Cayman Islands and indeed the invoice itself shows that the payment was not to be made to the Cayman Islands but made to JP Morgan Chase in New York for onward transmission to the Royal Bank of Canada (Grand Cayman). So that revealed there was at least one other relevant account, namely, the JP Morgan Chase account in New York.

    40. In the two invoices examined the sums claimed in US dollars required payment in either 30 days by BACS or, inconsistently, a date two months after the invoice date. According to the bank statements for the Royal Bank of Canada (Grand Cayman) account no such payment was ever received. There were no corresponding payments within 30 days, within two months or even within six months. Whilst it is unnecessary for me to make a finding the invoices were unconvincing documents and the question as to whether they were created for the purpose of this hearing was inevitably raised.

    41. Alternatively, if the invoices were genuine and had been paid, then the payment had been to another account as yet undisclosed – a third account.

    42. It was Mrs J’s case that on a trip to the Cayman Islands Mr J had requested her to buy him some watches. To do that she had had to withdraw cash from a bank account in the Cayman Islands. Initially, it was Mr J’s case that there had been no such incident and that his wife was lying about the whole thing. During the course of cross examination of Mrs J, it was put to her that it was not five watches as she had said but only three. Mr J accepted in his evidence that his wife had indeed bought watches on his instruction but if Mrs J is right, and I have absolutely no reason to disbelieve her, that she withdrew funds from the bank in order to pay for the watches, the Royal Bank of Canada (Grand Cayman) bank statements revealed no such withdrawal at the relevant time. That leads to the inevitable conclusion that if Mrs J is right there is in all likelihood other Cayman Islands accounts.

    43. I could go on at great length. Mr Cole very helpfully provided me with closing submissions setting out a long list of reasons why the funds in the Cayman Islands account were in reality, at least in part, the funds of the husband. I am satisfied that all of the points made by Mr Cole are fair and accurate and I adopt every one of them.

    44. So what inferences can I properly draw? It would be wrong of me to draw inferences if I were satisfied that on the evidence there are no assets that might represent what was diverted to the Cayman Islands. Quite to the contrary, I am satisfied that there are such assets. I am satisfied that Mr J has gone to great length to hide the money that he and Mr H have siphoned off from the business with the collusion, or tacit acceptance, of his fellow shareholder and co-director but how much?

    45. There is no real evidence, apart from the purchase of the watches and maybe the use of part of the funds to provide the deposit on the family home, of the funds in the Cayman Islands being accessed to support the lifestyle of the J family. Of more likelihood is that this money has been diverted and invested in business activities or other long-term investment vehicles, putting it out of the reach not only of Mrs J but, it is hoped, the UK tax authorities. Mr J told Mrs J that the money shown on the screen shot was pension provision, in other words, something to be saved for the future. In order to take the risks inherent in such a venture by both Mr H and Mr J the amount of money involved must be reasonably substantial.

    46. The activity on the account appears to show Mr H withdrawing funds and paying them to relatives, for example. Mr Glover suggests that this supports the conclusion that the funds all belonged to Mr H. That is one interpretation. More consistent with the rest of the evidence would be the suggestion that Mr J has yet to receive his share, which remains hidden, hence the lies and the failure to disclose.

    47. The evidence that I have of Mr H’s involvement indicates to me that in all probability Mr J and Mr H were to share the benefit of the money diverted to the Cayman Islands, and by that I mean share equally. On that basis Mr J’s share would be something of the order of £380,000, in the account that has been unearthed. If it were repatriated that money would be subject to tax. The alternative is that it would be a profit remaining within the principle business which would have been subject to Corporation Tax in the UK and may well have caused the value of Mr J’s shareholding to be much higher. But given the elaborate scheme set up by Mr J and Mr H I am quite satisfied that they intended this fund to be enjoyed by themselves without the incidence of tax. For that reason I see no reason to take it other than at its full value. There may be an argument that it should be reduced by an amount to represent the funds that went towards the purchase of the family home. It is Mr J’s case that that money was repaid. He cannot have it both ways.

    48. As I find there are other accounts still undisclosed Mr J could not complain if I attributed additional value to the funds diverted to those accounts.

    49. The effect of my findings in relation to the funds in the Cayman Islands is several. Firstly, it affects the distribution of the assets that the parties have within the jurisdiction. Secondly, it will inevitably affect the way in which I deal with the costs of this litigation, inflated as they are by Mr J’s dishonest efforts to hide both the funds and what he was up to. Thirdly it inevitably affects the structure of any order that I make.

    50. So what do the parties seek? Mrs J seeks a transfer of the family home into her name. It comes subject to a substantial mortgage in the joint names of the parties. Her proposal is that by a series of lump sums Mr J should make payments to her which she can apply to reduce the mortgage and ultimately secure Mr J’s release from his mortgage obligations. She seeks a transfer of the previous family home. She acknowledges that she must be given only a limited period of time to re-mortgage that property in order to release Mr J from his covenants under the mortgage, or alternatively that that property would have to be sold. She seeks a transfer of the one pension policy that currently exists in Mr J’s name with a cash equivalent value of £75,000. Although it is many years before that fund will be accessible it is at least a modest compensation for the funds that will remain inevitably on Mr J’s side of the balance sheet. She seeks periodical payments for herself and on behalf of the children at the existing rate of £3,500 per month. She proposes that as the lump sums that she receives fall in the maintenance should reduce so that ultimately there is a clean break between her and Mr J and that his continuing liability is limited to that for the children. The lump sums she seeks are £107,500 per annum for four years and on receipt of each lump sum a reduction in the periodical payments of £500 per month.

    51. On that basis Mr J would retain his shareholdings and he would retain whatever funds remain in the Cayman Islands, or in New York, or wherever else those investments may now be. Within a relatively short time his income would be his own save for the payments he was making in respect of the children.

    52. Summary of Mrs J’s proposal:

    * Mrs J has the houses at £230,000 and £85,000

    * Lump sums £430,000

    * Mrs J has pension transfer £75,000

    * Mr J retain business assets £887,500 and watches £20,000

    * Mr J retain Cayman Islands funds £380,000

    * Mr J pays lump sums £430,000

    * Mrs J therefore £745,000 plus pension of £75,000

    * Mr J therefore £857,500.

    53. Mr J had made no proposals until the morning of the final hearing when proposals were contained in Mr Glover’s position note. At the end of the evidence Mr Glover had adjusted his position and the proposal was that Mrs J and the children should move back in to their former family home, that also being a four bedroom house but of a lesser value than the current family home, that the current family home be sold, that the proceeds of sale from the current family home be split equally between Mr and Mrs J so that Mrs J could use the money she received to pay her costs and reduce the mortgage so as to release Mr J. Mr J would keep his shareholding.

    * Mrs J former home £85,000 plus half family home being £115,000

    * Mr J half family home £115,000 plus business assets £887,500 and watches £20,000 plus pension £75,000

    * Mrs J therefore £200,000

    * Mr J therefore £1,022,500 and pension £75,000

    54. On that balance sheet, ignoring as it does anything in the Cayman Islands or elsewhere, the vast bulk of the parties’ wealth would sit on Mr J’s side. That is a singularly unattractive outcome with no justification for a move away from equal division of what was generated during the marriage, not least given Mr J’s dishonesty, and ignoring as it does Mrs J’s contribution and her obligations to the children which will continue for many years to come given the age of the youngest child. Such an outcome would be totally unfair.

    55. In deciding how to distribute what this couple have generated together in the course of their marriage I must apply section 25 of the Matrimonial Causes Act 1973 as amended and have regard to all the circumstances of the case giving first consideration to the welfare whilst a minor of the children of the family. I should have particular regard to the checklist at section 25(2) and I should consider in exercising my powers whether it would be appropriate to terminate the parties obligation one to the other as soon as is just and reasonable – section 25A(1).

    56. I am satisfied that the approach by Mr Cole on behalf of Mrs J to support the open proposals is the correct one. The transfer of all the assets within the joint ownership of the parties to Mrs J reflects realism. The lump sum to represent half the value in the shares in the business seems to me the right and inevitable starting point. Those proposals really put little value on the clean break. It seems to me that Mrs J could properly have argued that given the ages of the children, her limited earning capacity and the scale of Mr J’s drawings from the business that a clean break was worthy of a substantial additional payment.

    57. Mr Glover raised with me the standard argument about the shareholding in a business, namely, that I should differentiate between the copper bottomed assets represented by equity in houses and the risks that go with the shares in a business. The shares have been valued. No immediate risk to the business has been identified – see paragraph [60] below. Any reduction in the valuation figure by me would be arbitrary and not based on evidence. The valuation is the best evidence I have got. It is likely to represent the middle of a bracket of possible values. The business has a track record of success and the only evidence in the public domain is as to the continued success of Manchester Airport and ever increasing volumes of passengers and freight. The airport is one of the engines of the North West economy and there is no reason of which I have been made aware to think that Mr J cannot continue to ride the wave of that success.

    58. At no point in this case has Mr J suggested that he would be ready, willing and able to share his ownership of his shares with Mrs J. He clearly sees those shares as his and fails to recognise the contribution of Mrs J in both working and bringing up the children and supporting him in his work for the business. In any event the bulk of his income is paid in dividends and his ownership of those shares has historically allowed him a substantial income and generated the wealth to which I have already referred. In the future once he has paid the lump sum he will be able to keep all he earns save for his obligations towards his children.

    59. The proposed maintenance payments to Mrs J and the children were not the subject of much evidence or submissions. The parties are entitled to ask me to fix for now the level of payment to be made for the benefit of the children. As contended for by Mrs J they seem to me to be entirely appropriate.

    60. Mr J sought to persuade me that all is not well with the business. He suggested that there has been a significant down turn in business and, most importantly, he said that Mr H, having been rattled by Mrs J’s pursuit of the supposedly fictitious account in the Cayman Islands, had decided that he was no longer willing to put the business of the major company he acted as agent for the way of the business. Mr J said that this was a position that had arisen many months ago. All of Mr J’s disclosure into this case by way of Form E and sworn statements provided opportunities to provide that explanation. He has not done so. I reject as utterly fanciful the notion that Mr H has cut off Mr J and the business. There was no a shred of evidence to support such a notion. Mr J could always have called Mr H but he chose not to do so. None of this was put to the single joint expert for investigation.

    61. Having seen Mr J give his evidence, I have no doubt that he is emotional, that he is irrational in his behaviour and he has some recognition of how stupid he has been in the decisions he has taken both to engage in an apparently dishonest venture with Mr H and a dishonest denial of that venture within these proceedings but I have no doubt that he is capable of being a very successful businessman in the future. What is needed from him is to apply his mind and his energy to the business and to put this divorce behind him.

    62. He professed still to have strong feelings for Mrs J. I cannot imagine that the way he has behaved in this litigation and the way he gave his evidence will have endeared him to her at all.

    63. For all of those reasons, I am satisfied that the proposals put forward by Mrs J through Mr Cole are the correct outcome in this case. I have equally no doubt that Mr J, as was accepted by Mr Glover, must make a substantial contribution towards the costs incurred in this case beyond those that would have been incurred had he made proper disclosure and provided proper explanations and truthful explanations of what was going on with the funds sent to the Cayman Islands.

    64. I was told that by the conclusion of the case Mrs J will have spent over £100,000 on legal costs and Mr J over £50,000. This has created debt for Mrs J. The effect of the order I am making will be to restore her finances so that she can support herself and the children. Some legal cost would have had to be incurred in any event. The business arrangements that Mr J has put in place have allowed the family to enjoy a good lifestyle. There would always have been expense in dismantling things.

    65. Those acting for Mr Cole have put together a schedule suggesting that the total extra costs incurred as a result of Mr J’s litigation misconduct is some £57,000. A claim for the extra costs is justified by the findings I have made and should be paid by Mr J. Mr J is entitled to have his costs assessed unless I can properly carry out a summary assessment on the basis of the information I have. If there were a full assessment by a costs judge it is highly unlikely that the whole of the figure claimed would be recovered and the best she would be likely to achieve would be 75%. Doing the best I can on the basis of the information I have been given and looking at the matter over all, the figure of costs that Mr J should pay to Mrs J is £40,000. I see no reason why that sum should not be paid within two months from the date of handing down this judgment. Interest will run at the Judgment Act rate absent payment.

    66. As far as the lump sum payments are concerned, given that I have ordered Mr J to pay costs, I regard it as unrealistic to expect him to be able to pay the first lump sum immediately. I am going to order that the lump sums be paid the first one six months from the date of handing down the judgment and the subsequent lump sums at twelve month intervals thereafter. Interest will run at the Judgment Act rate for sums not paid on time and in full.

    67. As far as periodical payments are concerned, they will reduce, as I have indicated, at £500 per lump sum payment when the money is paid. When the whole of the lump sum has been paid Mrs J’s claims for periodical payments for herself will stand dismissed, consistent with my duty to achieve a clean break if I can fairly do so. I am satisfied that by the time the younger child is at senior school, which will be the time the final lump sum is paid, Mrs J can have no reason not to be independent. I make the lump sums as separate lump sum payments.

    68. I invite counsel to draw an order to reflect what I have decided.

    69. Permission to appeal: Mr Glover has raised this in his note to me dated 24th January 2017. His complaints about my judgment are as follows:

    * I had used the wrong figure for the funds going into the Royal Bank of Canada (Grand Cayman) account – I have adopted Mr Glover’s figure;

    * From that figure, I failed to deduct the benefit of the sum that provided the deposit for the matrimonial home – I have explained why I have not done so;

    * I had failed to explain how I could draw an inference that Mr J and Mr H were to share equally any Cayman Islands funds that I found to exist and that such an inference was against the evidence – I have clarified my explanation and continue to draw such an inference;

    * I failed to discount the value attributed to the principle business pursuant to Wells v Wells [2002] EWCA 476 – I have expanded my explanation as to why I have not made such a reduction and I am satisfied no such reduction should be made.

    70. For the reasons set out above I am satisfied that there is no merit in the complaints made by Mr Glover and so I refuse permission to appeal. Mr Glover is of course entitled to make an application for permission to appeal to a High Court Judge as provided for in FPR Part 30 and PD 30A.

Judgment, published: 20/11/2017

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See also

  • In a tweet: Final hearing of W's FR claim where H had failed to disclose assets in the Cayman Islands Case note, 19/01/2018, members only

Published: 20/11/2017

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