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England and Wales High Court (Family Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> Young v Young  EWHC 3637 (Fam) (22 November 2013)
Cite as:  Fam Law 291,  EWHC 3637 (Fam),  2 FCR 495,  2 Costs LO 136
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Strand, London, WC2A 2LL
B e f o r e :
| Michelle Danique Young
|- and -
|Scot Gordon Young
The Respondent appeared in person, assisted by Ms Kelly Edwards (solicitor from Sears Tooth & Co) on the first and last day of the trial
Mr Ben Patten QC for the witness, Mr Stephen Jones, a solicitor
Mr Philip Cayford QC for the witness Mr Paul Osborne, a solicitor
Miss Sarah Cockerill QC for the witness Mr Poju Zabludowicz
Mr Charles Hollander QC for the witness, Mr Michael Slater, a solicitor
Hearing dates: - 28th October to 15th November; 18th November; and
22nd November 2013
Crown Copyright ©
MR JUSTICE MOOR:-
Legal Representation and costs
(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; and
(h) The value to each of the parties to the marriage of any benefit which, by reason of the dissolution …of the marriage, that party will lose the chance of acquiring.
"In cases of this kind, where the duty of disclosure comes to lie upon the husband; where a husband has – and his wife has not – detailed knowledge of his complex affairs; where a husband is fully capable of explaining, and has the opportunity to explain, those affairs, and where he seeks to minimise the wife's claim, that husband can hardly complain if when he leaves gaps in the court's knowledge, the court does not draw inferences in his favour. On the contrary, when he leaves a gap in such a state that two alternative inferences may be drawn, the court will normally draw the less favourable inference – especially where it seems likely that his able legal advisers would have hastened to put forward affirmatively any facts, had they existed, establishing the more favourable alternative."
"…it is as well to state expressly something which underlies the procedure by which husbands are required in such proceedings to disclose their means to the court. Whether that disclosure is by affidavit of facts, by affidavit of documents or by evidence on oath (not least when that evidence is led by those representing the husband), the obligation of the husband is to be full, frank and clear in that disclosure. Any shortcomings of the husband from the requisite standard can and normally should be visited at least by the court drawing inferences against the husband on matters the subject of the shortcomings – insofar as such inferences can be properly drawn."
The Standard of living
The Husband's business career
The Husband's alleged financial meltdown
"The purpose of this letter is to confirm that you are irrevocably instructed, upon release of the Undertaking, to forthwith initiate the sale of my portfolio of 3,100,000 ordinary shares in the capital of O2 PLC which currently support the Undertaking and to account to the Bank of Scotland Private Banking for the net proceeds of such sale. I confirm that the closing price on 27th February 2006 of 199.5 pence per share valued the O2 Portfolio at £6,184,500".
The computer evidence
(a) A schedule dated December 2002 prepared by the Husband for Coutts Bank. It purports to show assets totalling £312,925,000. Of these, £17.5 million is said to be cash held by Fox Williams for the Husband. The Schedule then divides the other assets into risk classifications, namely "Cautious", "Moderate" and "High". The figure under "Cautious" is un-particularised but said to be worth £16 million. Mr Howling, not unreasonably, asks me to infer that these are the shares subsequently held by Mr Beller. There is nothing listed under "Moderate" but under "High" is a total of £279,425,000. Included within this column are a number of private investments. Dione is valued at £21.975 million plus a loan of £2.35 million. Alpha Telecom is valued at £8.6 million. The last two entries are by far and away the largest amounts, namely "MVNO Royalty Income from 1st March 2003, say 6 years - £60 million" and "Tele2Royalty 6 years - £25m pa - £150 million".
(b) A document headed March 2006 prepared for the Bank of Scotland with the assistance of Fox Williams. It is also clear that part of the information for this document came from the Husband's right hand man, Mr Gwilym Davies. The document has four columns, namely "Assets"; "Value paid"; "Current value"; and "Profit". It includes the Husband's property investments and his interests in private companies. It does not include any publicly quoted shares held by Mr Beller. The "Value Paid" column totals £159,660,000. The "Current Value" figure is £382,241,496. The "Profit" figure is therefore £222,554,496. It is clear from notes on one version of the Schedule that the property valuations were supposed to relate to a series of Knight Frank valuations. There are a number of properties on the Schedule that the Husband does not accept he ever owned or even had an interest in. I will have to return to these in due course but they include a value of £20.65 million given to 21 Upper Grosvenor Street and £30 million to Lincoln University Halls of Residence. Most importantly, the Schedule includes a value of £200 million for "Project Mayfair" subject to total development costs of £100 million, with £5 million "already committed". The interests in private companies include MIG (in which the Husband's 22% share is valued at £8 million), Qiosks (in which his 20% share is valued at £20 million) and IDM Cityscape (100% valued at £16 to £20 million).
The litigation against the Husband
The breakdown of the marriage
The Wife's Financial Remedies application
The quest for full and frank disclosure
Financial support for the Wife
The passport issue
The bankruptcy proceedings
Further attempts by the Wife to obtain discovery
The OS/DS hearings
(a) As in certain Public Law cases, where it leads to specific findings of fact that become res judicata so that the issues need not be revisited at the final hearing. An example would be a case in which there is an issue as to whether or not a Trust is a Post Nuptial Settlement. This can easily be determined separately and it is clearly important that the parties know the result so they can then formulate their approach to the rest of the case. In such circumstances, the same judge would almost always have to conduct the final hearing. Moreover, if the case is to be dealt with in this way, the parties' respective rights to a fair trial pursuant to Article 6 must be carefully considered. It may, for example, be unfair to one party to consider a specific part of the case in a vacuum, particularly if issues of credit arise.
(b) By analogy with the case of Khanna v Lovell White Durrant  1 WLR 121, it is part of an exercise in obtaining pre-trial discovery of documents where the witness is asked to give specific evidence by way of explanation of the document or how it came into his or her possession. Inspection Orders pursuant to FPR 21 are a very valuable tool in the court's armoury. I would envisage additional oral evidence only being necessary where it will assist the future conduct of the case either by shaping the remainder of the discovery process or in ruling out a specific line of enquiry (see Frary v Frary  2 FLR 696 at 703B).
The Wife's 2012 and 2013 applications to adjourn
The Wife's Hadkinson application
The final hearing
The health of the parties
The parties' respective cases
(a) A "Preliminary" report from Mr Mark Bezant, a Chartered Accountant from FTI Consulting dated 14th April 2012;
(b) An Affidavit of Malcolm Hebron of Guidepost Solutions dated 7th November 2012;
(c) A Statement of Luke Steadman, Partner in Alvarez and Marsal also dated November 2010;
(d) The Report of L Burke Files dated 22nd October 2013;
(e) Various letters from Mr Carl Biggs, a New Zealand Chartered Accountant, who is also an Associate of the Institute of Chartered Accountants here;
(f) The evidence of various witnesses she summonsed to court and, in particular, the Husband's former solicitor, Stanley Beller; and
(g) Documents obtained by her during the discovery process that she argues are inconsistent with the Husband's case.
The Wife as a witness
The Wife's financial position
The Wife's needs
The Husband as a witness
The alleged offers
"The Respondent never made an offer of £300 million as referred to at paragraph 29 of the Applicant's opening note. The Applicant asked for £300 million (her offer starting at £1 billion)…..The Respondent is ashamed to say, he stated that if Ronald Reagan became the next US President (he was already dead), Jeremy Beadle (of You've Been Framed) walked through the door and the Tooth Fairy arrived, she could have the money. The Respondent apologises for being so flippant but he was in a manic state at the time…and he was admitted to hospital on 28th August 2009. The Applicant's suggestion was so ridiculous that the Respondent thought he would make it even more ridiculous."
The Wife's expert evidence
The source of the family's financial support since 2006
My findings as to the Coutts and Bank of Scotland Assets Schedules
"We are instructed that our clients do not know Mr Scot Young and as far as they are aware have never met him, had any dealings whatsoever with him or made any payments to him. We understand that he has no interest in the LLP, is not an investor in the Fund and as far as our clients are aware has no interest in any investor in the Fund."
(a) SMS – company valuation of £5 million giving the Husband's 60% shareholding a value of £3 million. However, it is clear that this valuation is based on a future contract to the NHS worth £400,000 per annum. On the balance of probabilities, I find that this contract did not go ahead. It follows that SMS did not have any such value. The Husband says the company has since been struck off.
(b) Condor – he says that Condor has financed and acquired a number of properties and currently owes the Husband just under £6 million. For the first and only time, the Schedule is more cautious saying the Husband had lent £4 million and further information was awaited from Mr Davies. It may be that this caution was related to the fact that the Schedule had already included a net value of £3.5 million for Blunt House which was undoubtedly owned by Condor. I have no reason to doubt Mr Davies' evidence so Condor was a significant asset.
(c) MIG – Mr Davies says it was "the real jewel in the crown" with earnings of £25 million that year. He says that, being conservative, the Husband's 22% would be valued at £8 million. These shares were subsequently transferred to Mr JP Williams in satisfaction of an alleged debt. Mr Williams told me that MIG was eventually sold, including earn-out and shares in the purchasing company, for $60 million, valuing the Husband's shareholding at $13.2 million.
(d) Essendex – Mr Davies said it was going from strength to strength, with annualised turnover approaching £5 million. He said that an offer of more than £3 million had been turned down the previous August and that the Husband's sharing must be worth £1 million. I accept this.
(e) Qiosks – Mr Davies reported that sales were growing at up to 20% per month which would produce an annualised income of $12 million in around a year. He valued the Husband's 20% shareholding as being worth $1 million. The Husband, however, ignored Mr Davies and put Qiosks in the Schedule at £20 million "with exit projected at £100 million". I find Mr Davies to be accurate, not the Husband.
(f) Finally, IDM Cityscape – Mr Davies was projecting into the future saying "the guys are confident that we could establish a building management company within two years with an annual turnover of £100m and making 8% net. They have done it before. Value at that point would be £16-20 million." It is clear that this projection was based on both Projects Moscow and Mayfair proceeding, which they did not. These figures went into the Schedule, with the Husband promising the management a stake of up to 20%. The valuation was clearly fictional.
My findings as to the alleged financial meltdown
Did the Husband have any other assets?
(a) The arrangements following the exchange of contracts on 21 Upper Grosvenor Street and whether or not the Husband was reimbursed for the very substantial deposit of £760,000 he had paid for that property. It is clearly relevant that the property ended up in an entity closely connected to a good friend of his, namely Mr Kevin Cash.
(b) In exactly the same way, the arrangements relating to 23 Wilton Terrace and the loss of the Husband's deposit of £115,000 when the property was eventually conveyed to Adamsland International Ltd, a company under the control of another friend, Mr Stephen Kay.
(c) The fact that the Husband's name remained on the title of 27 Eaton Square for two years after March 2006, purportedly so that his tenancy could be used to enable enfranchisement.
(d) The arrangements regarding 28 Eaton Terrace, which appears to have ended up with another associate of the Husband, Mr Jonathan Brown. This is further complicated by references to the Veritas Foundation, an entity owned by Mr JP Williams. Mr Williams was completely unable to explain what this was all about.
(e) The true position regarding the Lincoln University Halls of Residence, albeit at a much lower value than stated in the Bank of Scotland Schedule.
(f) Whether or not the Husband has any interest in a company known as BTG. I have seen a number of documents in which the Husband is said to be from BTG. On 15th May 2005, Mr Beller wrote to the Zabludowicz Trust saying that he understood that the Trust and the Husband would soon be completing the purchase of 100% of the BTG shares. On 26th September 2005, another Attendance Note indicates that purchases were to be made through "BTG (SY/PZ as beneficial owners)".
(g) Whether or not the Husband had a shareholding in a Finnish technology company, Liekki Oy.
(h) The arrangements between the Husband and Legal & Equitable, owned by a Mr Lawrence, which are completely unclear to me even now.
(i) The fact that the Husband was, at one point, trying to purchase the Wife's rented property at Regent's Park Terrace. This would have been completely impossible if his finances had been as he says.
(j) The sum of £200,000 which the Husband accepted during oral evidence that he invested in a beach villa being developed on the Island of Nevis. While I accept that this is a small amount in the overall scheme of things, it is another indicator that there remains a cloak hiding the true financial position of the Husband.
The position since 2006
(a) The huge level of financial provision available in the period 2006 to 2008. Whilst I accept that his friends have been very generous, I cannot accept that all this provision was borrowed. I find that he borrowed money where he could to try to support his case but the majority of the provision came from his own hidden resources, in part held for him by third parties. I accept that he stopped paying when the Wife started to uncover information on the laptops he gave the girls. For a time thereafter, the money was channelled to him via Mr Constantine at Baron & Co, something the court would not have known about had it not been for the Wife's investigations.
(b) His lifestyle is not consistent with being a penniless bankrupt. He continues to live in Central London in an expensive flat paid for by a "friend". He and Ms Reno eat out roughly twice a week. He has wads of cash in his possession.
(c) Mr Christopher Dunhill, a business associate of the Husband's, sent an email dated 4th October 2011 to a Mr Marek Bilinksi which said "George Constantine good mate of mine and he looks after Scott's properties which of course he "doesn't" have technically any more". In an earlier email, he described Mr Constantine as the Husband's property adviser. I reject the explanation of Mr Dunhill that he was just trying to get the Husband an invitation to a property event. He was telling the truth as he understood it and it was the truth.
(d) On 17th August 2009, Mr Ed Jakeway sent the Husband an email which said "Thanks for the introductions on Friday. Just to recap, you want me to set up an off the shelf UK limited company (Newco) with "Jimmy" as the director and Newco will acquire either the shares of an existing BVI company which owns property or Newco will acquire the Property itself out of the BVI company…Justin Williams will also require an EBT for his/your company…" On 18th September 2009, he sent a further email which said "I have started the ball rolling with City Trust in the Isle of Man…Are you making arrangements for the companies to be set up or shall I? Yesterday you suggested 2 IOM companies and presumably the other 2 will be UK." It may well be that Mr Jakeway did not take any further action but I reject the explanation of the Husband that this was a potential deal on behalf of Mr Jimmy Creed. Mr Creed gave evidence and I find that his role was that previously undertaken by Mr Davies. In other words, he would have been the nominee. It may be that Mr Williams was going to be an equal partner with the Husband in the venture. I do not know if this went ahead or even what it related to but the Husband is intent on keeping the cupboard door shut so we do not know what is going on behind it.
(e) I heard oral evidence from Mr Creed. Like the Husband, he is now a bankrupt. He told me he re-mortgaged his property and invested £300,000 in a company called Shop Robotics as well as loaning £112,000 to the Husband. I find it almost impossible to see why a man of relatively limited means, who told me that he was "running low on money" and needed to take a gamble to get back on his feet would loan such a large sum to a man with whom he had, according to him, never done business. None of this adds up at all.
(f) In March 2012, the Husband had a phone bill in his possession for his then residential address at 20 Barrie House in the name of Honeysuckle Property Investments Ltd. He had absolutely no explanation for this.
(g) There are numerous other similar loose ends. One example was a document said to have been found in the Husband's possession from Investec showing that a company called Intrasales Limited had £3,146,614 in its account in November 2011. It is impossible for me to find that this money belongs to the Husband but it is yet another unanswered query.
The Husband's debts
Conclusion as to the Husband's wealth