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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> FRB v DCA (No. 2) [2020] EWHC 754 (Fam) (30 March 2020) URL: https://www.bailii.org/ew/cases/EWHC/Fam/2020/754.html Cite as: [2020] EWHC 754 (Fam) |
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Neutral Citation Number: [2020]
EWHC
754
(
Fam)
Case No: BV17D16308
IN THE HIGH COURT OF JUSTICE
FAMILY
DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 30/03/2020
Before:
MR JUSTICE COHEN
- - - - - - - - - - - - - - - - - - - - -
Between:
- - - - - - - - - - - - - - - - - - - - -
Mr R Todd QC, Mr N Yates QC, Mr B Wooldridge (instructed by Vardags
style='letter-spacing:-.15pt'>) for the Applicant husband
Mr S Leech QC, Mr D Bentham, Ms A Kisser (instructed by Payne Hicks Beach) for the Respondent wife
Hearing dates: 20
January - 14 February
2020
- - - - - - - - - - - - - - - - - - - - -
Approved Judgment
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.
The Honourable Mr Justice Cohen :
Introduction
2.
The parties have had the benefit of the most expert representation by solicitors and counsel, but that of course comes at a price. The husband (“H”) has issued proceedings against the wife (“W”) in the Chancery Division, in the Queen’s Bench Division for the tort of deceit, and in the
Family
Division in respect of the child of the
family
and financial proceedings. So far, he has spent some £6.5m on the litigation. As he lives abroad, he pays no
VAT.
W has spent some £3.8m inclusive of
VAT
but exclusive of the sum of £1.05m paid by her father for a forensic investigator.
3.
The extent of the differences between the parties, in part reflecting the animosity that at least H feels towards W, is very
clearly seen in their open proposals, which are poles apart.
The parties
6.
H was born in 1978 and is now aged 41. W is 3 years younger, aged 38. They are the children of extremely wealthy Indian families.
Each says that the other
family
is worth £
2
billion or more. Money has been made in
various
different areas including land, hotels, hospitality and the provision of health services.
7.
H is the elder of two children of his parents. His brother is 4 years younger than him. H’s family
have become wealthy over several generations and I will come back to this later in the judgment. But it does give rise to one of the issues which I have to resolve, namely the extent to which the resources I find that he has available to him are the result of marital acquest or whether they are pre-marital or extra-marital.
8.
H describes his father as “the patriarch”. He says that his father controls most of the family
resources and that much of what H holds is held to the order of his father. Both of H’s parents are still alive and H’s mother is particularly involved with the
family
art collection which is of great
value.
9.
The impression that I have is that W’s family
only became significantly wealthy as a result of her father’s business success rather than having built up money over the generations. W is the eldest of 3 children of her parents.
10.
The parties met when teenagers and established a relationship some time before they married. The marriage took place in India in April 2003.
Their married life was based in London. In
2008
a substantial house in Central London was purchased and that has been the main matrimonial home since that time.
11.
The marriage eventually became unhappy and in early 2017
the parties separated, and H left the matrimonial home. W issued a petition for divorce in June
2017
and H responded with his Form A. A decree nisi was pronounced on 17 January
2018.
In March
2018
H moved to Dubai, where he has lived since then, as I understand it for a combination of business and fiscal reasons. W remains in the former matrimonial home with the one child of the
family
whom I shall call “C”.
12.
C is 9 years old. After the marriage broke down H says that he heard rumours that W had had an affair and on 10 December 2018
a paternity test was carried out which revealed that H was not C’s biological father. A second test in February
2019
confirmed the results of the first test.
13.
W admits to a liaison at the relevant time with a man whom she names as C’s father, but claims that she had no suspicion that C was anything other than the biological son of H. She says that she was shocked by the results of the tests. One of the issues that I have been called upon to determine is the state of W’s knowledge or suspicion of the true paternity of C. H says that it is inconceivable that W did not know the truth of the paternity and that her non-disclosure of it to H amounts to conduct that it would be inequitable for me to disregard pursuant to s. 25(1)(g)
of the Matrimonial Causes Act 1973. If he had known, he says that he would have ended the marriage in
2010.
14. Throughout the marriage the parties lived to an extraordinarily high standard.
Standard of living
16. The parties have or had the use of other substantial properties around the world including:
i) A property on the Riviera, France, worth €12m, fully serviced throughout the year by 7 or 8 members of staff (Property 7, France on Schedule A);
ii) A substantial property in Surrey (Property 14, Surrey on Schedule A);
iii) A property in India with 20
staff on rotation (Property 8, India on Schedule A);
iv) An apartment in New York (Property 9, New York on Schedule A);
v)
style='font:7.0pt "Times New Roman"'> An apartment in Switzerland (Property 10, Switzerland on Schedule A).
Most of these properties are also used by other members of H’s family
(in whose ownership they are) from time to time, particularly H’s brother and, when they were younger, H’s parents.
17.
The parties flew by private jets around the world, except for trips to India or New York when they normally flew first class. In 2016
W took 44 flights by private jet. In just 3 months in
2017
W spent €150,000 in three
visits
to single shops buying fashion items. H spent at a similar level. Summer holidays would normally involve the rental of luxury
villas
and/or chartered yachts. Parties were thrown of unbelievable lavishness costing massive sums of money. The main
family
car was a Rolls Royce Ghost and W had a series of customised Ferraris.
18.
H does not dispute that the parties wanted for nothing during the marriage and spent without any restriction whatsoever. He has provided minimal evidence as to the source of funds but says that much of the cost was put through various
family
companies, the details of which he is unable to specify. If the payment was not to be made by himself personally, he would simply contact the
family
office to make the necessary arrangements. He says that he had the use of his brother’s credit card, just as his brother was able to charge items to H’s credit cards. Sometimes bills were paid by proxies.
19.
It is W’s estimation that the parties spent at the rate of about £10m per year. H says that it was at nothing like that level. I doubt very
much that the parties knew or gave any thought to how much was being spent. Judging by the standard of living I suspect that it was well in excess of £5m p.a. The level of H’s disclosed income is no guide whatsoever to the level of funds available to be spent. All expenditure was funded by H.
20.
The relevance of the standard of living is the light that it casts on the available resources and the assessment of W’s needs.
The issues
21.
I shall have to deal with the following issues:
i) The assessment of the assets, in terms of value,
origin and ownership;
ii) Whether they are subject to a family
arrangement, either general or specific;
iii) Whether they are subject to a clawback;
iv) Minority discounts;
v)
style='font:7.0pt "Times New Roman"'> The movement of resources;
vi)
style='font:7.0pt "Times New Roman"'> Tax;
vii)
style='font:7.0pt "Times New Roman"'> Pre-acquired wealth;
viii)
style='font:7.0pt "Times New Roman"'> The known unknowns: those assets the existence of which are established but which it is impossible for the court to
value
with accuracy because of inadequate information;
ix) Unknown unknowns: entities which I find to exist but of which there are no details.
22.
As a separate but key issue in this case I have to assess whether W’s behaviour amounts to conduct and, if so, what its impact is upon the outcome of this case.
23.
I have heard evidence from H and W and from Mr Andrew Caldwell (SJE accountant) on financial matters. I have also read his report and a series of supplements, prepared by Mr Caldwell, necessitated as H’s disclosure evolved. I heard from H and W and also a past and a current employee on the conduct issues.
24.
Before H’s claim that the assets are largely non-matrimonial can be examined, it is necessary to establish what H’s resources are.
H’s deficient disclosure
25.
I do not under-estimate the difficulty which disclosure presents to some litigants. H is an international businessman. He has a
very
busy work life as a
venture
capitalist. He is active in many different spheres and there is a huge network of companies and trusts with which he is connected. It would not be at all surprising if initial disclosure had its inadequacies and that there were aspects that needed correction as time went on.
26.
On the other hand, I do not ignore the fact that he has a small army of advisors to help him and that if H did not know the answer to a question, it is likely that he would know who could provide the answer. I set out in schedule form the disclosure that he has provided:
R1 |
H’s initial replies to questionnaire, dated 9 May ![]() |
R2 |
H’s further replies to questionnaire, dated 16 August ![]() |
R3 |
H’s replies to W’s schedule of deficiencies and further questions, dated ![]() |
R4 |
H’s replies to questions re Trust D2, dated 3 June ![]() |
R5 |
H’s further replies to W’s schedule of deficiencies and further questions, dated 11 July ![]() |
WS/4 |
H’s 4th statement, dealing with qu.7 of W’s questionnaire, dated 12 July ![]() |
R6 |
H’s additional further replies to W’s schedule of deficiencies, dated ![]() |
R7 |
H’s outstanding additional further replies to W’s further schedule of deficiencies, dated 30 Oct ![]() |
WS/7 |
H’s 6th statement, revising his financial presentation, dated 30 October ![]() |
R8 |
H’s replies to W’s further questionnaire, dated 14 January |
27.
I will deal with individual entities later in this judgment but there is one point of general import. In his Form E, H set out his financial details. It was broadly consistent with disclosure he had made when a post-nuptial agreement was being considered in
2016.
28.
The shareholding that he had in
various
enterprises is contained in schedule A attached to this judgment. Only in respect of Company B, BVI and Company C, BVI did H say that the shareholding that he held did not accurately reflect his beneficial ownership of those shares. In respect of those two companies he said that his shareholding was held in equal (one-third) parts for himself, his brother and his parents.
29.
Although there were some adjustments to his Form E disclosure in the replies to subsequent questionnaires, it was only on 31 October
2019,
two years into this litigation, that H’s case radically changed. He said in his statement of that date (names redacted):
9. My family
is a typical Indian Hindu
family,
in which decision-making power and financial control rests with the older generation of the
family,
and ultimately with the patriarch, or matriarch, who is the head of the
family.
In our case, this is currently my father (who was preceded by his mother, and before that his father, and his father before him), though he often works in tandem with his cousin, S, who is the head of his own side of the
family.
10. While at university, and during my early 20s,
I was 'learning the ropes' of investment from my
family,
like an apprentice. I was entrusted (subject to
family
arrangements) with monies specifically for investment or co-investment alongside one of the more senior members of the
family
notably my uncle (S) or my father. I would be guided by them in my investments: I did not have the necessary knowledge to be left to my own devices.
11. During that period, my father had been seriously unwell and by 1999 he had to undergo a heart transplant. The family
had to ensure that the businesses were not affected by any uncertainty caused by my father's health problems, making it publicly clear that there was a plan in place for succession and continuity, should anything have happened to my father. Thus, I had to engage in some PR activity, far earlier than anticipated, while my uncle and my cousin D ran the businesses. Thankfully, my father made a full recovery, and we have all worked together in
various
capacities since then, with my brother joining in
2005.
12. The pattern of being entrusted by the older generation with funds to purchase assets continues to this day. This is the context behind the "general family
arrangement" (described in my reply to question 3 of W's questionnaire) whereby there is a non-specific power of recall in relation to funds provided to me by the older generation. If my father or uncle were to require the funds provided to me for such an investment, I would be accountable to them for those monies.
13. At this point I need to mention "specific family
arrangements" which are a sub-set of general
family
arrangements. Often, as a matter of convenience, funds subject to the general
family
arrangements are held as determined by the patriarch. These specific
family
arrangements are more fluid than a trust arrangement, but are essentially formal recognitions of others' specific rights over assets that I hold.
30.
This is not quite the first mention of family
arrangements, because on
28th
February
2019,
H had said in reply to a question about transfers of money between him and his brother or other
family
members:
3. What if any other transfers did the applicant make in or around February 2014,
or at any time since, whether to his brother or any other
family
member or associate? Provide documentary evidence in support.
Reply: In answering this question it is necessary to understand that there is a great deal of fluidity in respect of the financial relations between everybody in my family.
We have what is understood in India as a
Family
Arrangement. I understand that such
Family
Arrangements have not been defined statutorily under Indian laws (but Indian lawyers can confirm that). I also understand that Halsbury's Laws of England define it as an agreement among members of the same
family,
intended to be generally and reasonably for the benefit of the
family,
either by compromising doubtful or disputed rights or by preserving the
family
property or the peace and security of the
family
by avoiding litigation or by saving its honour. It is a hybrid between a trust and contractual agreements.
It is a verbal
arrangement by which the members of my
family
have settled their inter se ("among themselves”), rights in relation to a property to avoid disputes and to promote
family
harmony. The purpose of a
family
agreement is to secure mutual co-operation and to avert future disputes. It maintains peace and harmony in the
family.
I understand that a
family
arrangement is a
valid,
legally-binding and enforceable understanding. I am told that the Indian courts give great force to a
family
agreement. The Courts have upheld
family
arrangements that also include those who are not members of a joint
family,
or those whose entitlement to inheriting a property is doubtful. Courts lean in favour of upholding a
family
arrangement instead of disturbing the same on technical or trivial grounds even if they suffer from a legal lacuna or a formal defect. The courts in the past have applied the rule of estoppel — a legal bar to alleging or denying a fact because of one's own previous actions or words to the contrary — to prevent the unsettling of a
family
agreement.
I have given a description of the movements within my family
in the bank statements' explanations provided later in this answer. To go back a full four years is unrealistic in the context of a
Family
Arrangement. My
family
and I make gifts to each other regularly; our
family
assets and finances are fluid. As such, it is simply not possible for me to detail every transfer I have made to
family
members or associates since February
2014.
Again I emphasise that this position is one of a Family
Arrangement and so there is fluidity in the arrangements. What is critical here is that this is non-matrimonial money; the provenance of the money is entirely from my
family.
It should only be invaded in case of need. (I note that the Respondent is alive to this which is why she has recently embarked on an entirely litigation-driven spending spree aimed at giving credibility to what I suspect will be an absurd claimed income need).
Deficiency
The applicant's lengthy reply states inter alia that: "1 have given a description of the movements within my family
in the bank statements' explanations provided later in due course. To go back a full four years is unrealistic in the context of a
Family
Arrangement. My
family
and 1 make gifts to each other regularly; our
family
assets and finances are fluid. As such, it is simply not possible for me to detail every transfer I have made to
family
members or associate since February
2014."
The applicant has not answered the question. As ordered, please now set out all transfers made by the applicant in or around February 2014,
or at any time since, whether to his brother or any other
family
member or associate, with documentary evidence in support.
Reply: To follow.
Further reply: To follow.
Deficiency
The applicant has failed to answer the question. Please set out all transfers made by the applicant in or around February 2014,
or at any time since, whether to his brother or any other
family
member or associated, together with documentary evidence in support.
Reply to further deficiency: To follow.
With regards to cash transactions, I have previously explained that there is a lot of fluidity between me and other members of my family
in respect of cash, and there will have been many transactions between us during this period, particularly from the older generation as part of the
family
arrangement. Furthermore, many of the historical accounts have been closed, and therefore the information is simply no longer available to me. The Respondent's request has therefore proved, as I initially stated, unrealistic, and logistically impossible.
31.
It is clear that H’s presentation of 31 October 2019
amounted to a sea change in his case. Assets which had until this time been resources available to him were suddenly described for the first time as being subject to clawback.
32.
H’s explanation of this change was utterly unconvincing. He accepted that he had answered five questionnaires by then but says that it was only in October 2019
that he sat down with
family
members and understood the details of the arrangements. He said it was then that he learnt, for the first time, of the specific
family
arrangements and clawbacks.
33.
This was all the more remarkable because in June 2019
in reply to a question H had produced documents from his father and brother confirming that they did not hold anything for him, but, he says, neither of them during the course of their discussions which led to the production of these letters had suggested that H owned something which they were entitled to have back.
34.
Arrangements of “one for all” between Hindu families
are not uncommonly seen in this sort of litigation. They are akin to trusts held in equal shares for members of a
family
with benevolently inclined trustees who ensure fairness between the different
family
members. But there are aspects in H’s case on this issue which are beyond belief:
i) H is the elder son of the patriarch of the family
and is 41 years old. He is his father’s heir. At one stage H’s father was
very
ill and unable to take his full part in business management which had to be assumed by others including H. H is himself a
very
able businessman. It is inconceivable that H was not aware of the
family
arrangement, if it exists, from the
very
outset of this litigation.
ii) H says that as far as he is aware no other family
member, in particular his father or his brother, own assets from which H can benefit. Thus it is, he says, that other
family
members can benefit from what H has in his own name but H is not able correspondingly to benefit from what they have. This is an inherently implausible proposition.
iii) An intelligent man like H would inevitably have been alerted to the existence of the family
arrangements both by the discussions that he had which led him to reply in the way that he did as set out at the end of February
2019
and when he approached his father and brother for the production of documents in June
2019.
Yet it was only at the end of October
2019
that he chose to disclose that the assets that he held were not under his control.
iv) H sought to rely also on the statement of Mr S in the Chancery Division proceedings. H’s reliance was intended to show that W had much more knowledge of his business affairs than she admitted to. Mr S was not called and I decline to make the finding that H seeks. What is much more significant is that Mr S sets out that he has provided professional advisory financial services to H and his family
from
2003
and deals with the
family
wealth that is outside Company U or its subsidiaries. He says that he knows H extremely well and is the person in the
family
with whom he has the most dealings. He says that he normally speaks with H at least once a week about the
family
investments. On about a quarterly basis there would be a
family
council comprising H’s parents, H and his brother and their spouses. It is inconceivable that a
family
arrangement would have remained concealed throughout these interactions.
35.
The only other relevant witness on this issue was H’s father who provided a statement dated 12 December 2019
accompanied by a Civil Evidence Act notice annexing a doctor’s letter. That letter required amplification, but its conclusion was that H’s father was not well enough to give evidence, even by way of
videolink,
from UAE where he lives.
36.
He sets out in his statement the background to the family
wealth and how, following the death of his father at an early age and his grandfather the
family
wealth was divided between his mother and two uncles and how he went on to inherit a share of that wealth. He states that he is the current patriarch of the
family
and works closely with other
family
members. He says that he felt responsibility to ensure dynastic wealth was preserved whilst teaching H the skills to forge his own business career. He descends to
very
little detail or particularisation in his statement. What he says is not accepted by W.
39. I am therefore left with these alternatives:
i) The family
arrangement/clawback simply does not exist and is a ploy created by H in order to distance himself from the assets in his name so as to ensure that W receives a smaller award; or
ii) The family
arrangement does exist but it encompasses assets, probably held in the name of H’s father or his brother or entities controlled by them, which H has chosen not to reveal.
iii) As a separate point I have to consider whether H has assets of which he is the legal or beneficial owner but which he has not disclosed.
40.
In general terms, I am confident that H is the beneficial owner of those assets which he set out in his Form E and in his subsequent disclosure. I am further satisfied that those assets in which he does not have a 100% interest have as their co-owners other close members of his family.
I am also convinced that H has significant interests in assets which he has chosen not to disclose.
Draft post-nup (Oct 16) |
First Appointment (Feb 18) |
Second Appointment (Dec 18) |
WS/6 (Oct 19) |
£109,943,353 |
£60,356,801 |
£84,058,686 |
£45,931,163 |
i) There were very
substantial elements of his answers which provide no information or documentation except the words “to follow” (see for example paragraph 30 above). Despite orders, information never came.
ii) Some assets were only disclosed, often very
late, when a trail led to them and H was specifically asked questions of them by W. This applies to both company and trust interests.
iii) His whole presentation in the witness box became increasingly evasive. H repeatedly refused to answer questions until he was shown the documents, in my view
so that he could see what he had previously said in an attempt to avoid inconsistency. This was notwithstanding the fact that many of the answers were plainly within his knowledge.
iv) His professed ignorance of why certain transfers, whether of funds or shares, or adjustments to family
trusts took place was unbelievable.
v)
style='font:7.0pt "Times New Roman"'>
Vast
swathes of transactions remain unexplained and/or the necessary corroborative documents, for example in the form of trust deeds and accounts or bank statements, have not been provided.
43.
This was all the more remarkable because there is no doubt that H is a highly successful and astute businessman. His ability is obvious. After school he went to university in America and did a 4-year degree in international business and marketing and then spent one year with a well-known American bank. He subsequently came to London and has been working in London since about 2001,
until his move to Dubai in
2018.
44.
He learnt the family
business from childhood. He used to go to the office from age 12 so “I could sit and hear how business and the
family
empire was conducted”. He said his father and uncle used to work together and he would hear how the
family
would all talk about the business that was conducted. It is against that background also that I find his assertion that he was unaware of the
family
arrangement incredible.
45. I turn now to the individual assets which make up the resources in this case.
46.
A schedule has been prepared which I annex marked A to this judgment and which I have simplified somewhat. The various
categories of assets are divided into those where there is no significant dispute and those that require findings of fact. The first eight items that follow (paragraphs 47-52) are either agreed or subject to relatively small difference. I have not been addressed on the differences. This is not a criticism. I have chosen to resolve these differences by simply taking the mid-point of the different figures, as I suggested to counsel.
47. Properties held in H’s sole name:
These comprise lines 4-14 of the final combined schedule. They have a net value
of some £5.
262m.
I accept that by far the most
valuable
of these properties (Property
2,
India) was purchased before the parties met and that it should be treated as non-matrimonial, to be invaded only if the needs of W and C require it. The other properties purchased during the marriage have a net
value
of just over £704,000.
48. Properties held in W’s sole name:
These have net value
of £815,000. They were gifted to her by her father and are entirely non-matrimonial.
On mid-point figures H has some £634,000 and W has some £125,000.
Taking mid-point figures H has £910,000 and W has £63,000.
H has other liabilities of £7.192m and W liabilities of £66,000. So far as W’s liabilities are concerned, I have taken her figure rather than a midpoint because she is the one who will know the precise amount of her litigation loan facility cost. So far as H’s liabilities are concerned I draw particular attention to the inclusion of loans that he has received from Company K, Mauritius (£1.66m), in the light of the issue about its ownership, and the security deposit for H’s pre-marital property Property 2,
India (£130,000) which along with the asset must also be considered non-matrimonial.
52. Business interests, pensions, H’s Grandparents’ Trust:
I regard these assets as being of such minor significance that it is unnecessary for me to refer to them beyond noting their appearance on the schedule.
53. I turn now to the items where there are significant issues to resolve.
The matrimonial home
54.
The property along with the attached mews house has been valued
at £15m. Together they comprise some 6,000 sq. ft. and apparently are in need of some refurbishment. More important for these purposes is that they are subject to two charges. The first is a mortgage of just over £12m. I accept W’s figure rather than that of H because it is the more up-to-date. The mortgage was taken out by H through one of his companies and has apparently been used for commercial purposes (I know not what).
55.
The issue relates to the second mortgage in a sum of about £2.19m
which has been taken out for the benefit of H’s brother and used by him for some commercial purpose. It is not interest-bearing. The arrangements within H’s
family
for the conduct of financial affairs are
very
fluid. Assets and monies are transferred between
family
members at the drop of a hat and members of the
family
come in and out of companies and trusts whenever it is decided that it is useful. I have no doubt that H can cause his brother to remove that liability and that it will not fall upon H to satisfy it unless some other resource of equivalent
value
is transferred by his brother to H.
56.
Further reasons for my disregarding the loan are that H makes no reference to it in his Form E, when he sets out his interest in the matrimonial home which he says is subject only to the commercial mortgage; and there is no reference to it in the document that he provided when the parties were considering a post-nuptial agreement (‘PNA’) in 2016.
The French property
57.
This is a very
substantial Riviera
villa.
It is
valued
at some €12m (£10.3m). It is held in the joint names of H and W but there are documented loans in a sum equivalent to its
value
as to some £10m from H’s brother and a little over £1m from Mr. C. I am satisfied on the evidence that these were loans that were made for the purpose of the purchase of the property in November
2016.
I think it highly unlikely that H will be required ever to pay £10m to his brother. The way that the
family
works is that there will be some adjustment of assets between the
family
members.
58.
The property is used more by H than his brother. I have been given no explanation as to why the ownership of the property is not in H’s brother’s name as the main contributor of the finance. But, I have no reason to believe that the ‘loan’ was other than genuinely made. I do not find that the property is a resource that is available to H to dispose of as he wishes. It is part of the family
arrangement, available for H to use whenever he wishes. It is entirely foreseeable that the loan from H’s brother will be dealt with by an adjustment of assets between the brothers and that adjustment may well involve entities of which I am unaware. I accept that the purchase was funded from resources that were not part of H’s wealth and were by way of loan, and I therefore conclude that the
value
of the property should not be treated as a resource available to H. H must indemnify W against any liability to the lenders.
59.
As the value
of the property is now more or less identical with the amount of the loan from H’s brother it is unnecessary for me to consider the position of Mr. C. I think it highly unlikely that Mr. C has ever put forward his own money for the property. I have been given no explanation of what his role in it might be. He is not a
family
member. I do not regard the liability, if it exists, as a debt of H.
60. Properties which H denies are his:
i) Property 8, India. H says that he has a 25%
interest in this property. However, it is his case that he has his share as part of the undivided HUF (Hindu Undivided
Family)
and that it is subject to his father’s control or order. He says that under Hindu law a HUF comes into existence upon the marriage of a person and arises from status rather than contract. H describes himself as a “coparcener of [H’s father’s] HUF of which he holds a
25%
undivided share”. The unchallenged
value
ascribed to it on the schedule is the one that H himself gave in his
2016
draft PNA disclosure. I accept that he does indeed have a
25%
share to the
value
of £3.
266m
but I also accept that H holds this interest subject to the HUF and that the
value
will only become available to him with the consent of his father. There has been no suggestion that H has put his own money into the property and I treat it as non-matrimonial.
ii) H has the use of an apartment in New York (Property 9). W says that H has always described it to her as his flat. I am satisfied on the evidence that it is not owned by H but is an apartment owned by a part of the family
empire outside his control and that H has no current beneficial interest in it.
iii) There is no evidence put before me that H is beneficially interested in the skiing chalet in Switzerland (Property 10) in which he has enjoyed luxury holidays albeit, as with Property 9, New York, he has the use of it whenever he wishes.
Chattels
61.
H asks that I include the valuable
contents in the FMH in the sum £
2.836m.
I decline to do so. This is not a case where chattels need to or should be considered within the matrimonial division. There is so much other money in this case that it is unnecessary. As I have mentioned earlier, I recognise that there may be a dispute about who should retain the artwork that the parties have purchased and which remains in the ownership of H or W and also that which was purchased by one or both of them and put into Trust E. W’s personal jewellery should not be the subject of debate between the parties any more than any personal jewellery or watches that H might have.
Clawback
63.
As I have made clear, I was wholly unconvinced by H’s argument that there is indeed a clawback under which H can be commanded by his father to hand over monies or forgive the monies that are owed to H. The very
late presentation as an argument was a forensic device to seek to limit the extent of his assets available for distribution.
64.
H’s case is in fact somewhat more nuanced than the headline given in the schedule. On the one hand H says that these loans are recoverable by his father on behalf of the family
at any time, which I reject. But, on the other hand he says that the monies that are owed to him emanate from or represent funds provided by his
family
and do not come from his own business endeavours. This is a more persuasive argument and one that I will consider later in the judgment when dealing with the origin of funds. For the avoidance of doubt, I make it clear that I accept that these are monies which are indeed owed to H by the entities set out in the schedule. There is no dispute as to the principle or quantum of the items at lines 140-144 and I do not accept that H’s
family
can call for them to be paid to them.
65.
Item 151 is somewhat curious. On 26
June
2019
the Isle of Man-based director of the company wrote to H’s solicitors saying that the sum that W contends for (£4.815m) was owed to H. Two months later the same directors of the company wrote to say that the figure was that which H contends for, namely £4.184m. There is no proper explanation of how the figure came to be adjusted. I shall therefore take the mid-point.
67. Company U’s Holding Company, BVI & Company U, England
Company U’s Holding Company is owned by two trusts, Trust D1 (whose sole beneficiary is H’s brother) and Trust D2. H settled Trust D2 in February 2002
and he was the beneficiary of Trust D2 until he was excluded in February
2009.
Despite orders to do so, H has failed to produce any trust documents other than the deed of exclusion. He says through his solicitors [
2:387]
that he was informed of his exclusion from the trust at a meeting with the trustees and that there are no notes of why the exclusion happened. H’s blithe explanation was that it was a decision of the trustees and it caused him no anxiety.
69.
W says that I should pay little regard to H’s exclusion. There are various
examples of occasions in the past when H has been excluded from entities, added back so that he can then receive benefits from them, and then when the benefit has been paid he is duly removed again. This is all part of the way that the
family
works.
71.
When he transferred his shareholding to his brother, $12m had been loaned by Company U to Company Q, Singapore, a company which on paper H owns entirely (via
a nominee). H says that this was a decision by his uncle and brother to invest in Company Q. It would follow, on H’s case, that the loan is a debt to Company U, but in the accounts of Company U the loan does not appear (thus understating Company U’s assets) and in the Company Q accounts it appears as a loan to a shareholder in the
2017
accounts. H’s case is that although nominally the loan is due to him as the sole shareholder it is in fact due to his
family.
72.
A further curious aspect of H’s divesting of his interest is that in the accounts of Company U’s Holding Company he is owed £14.267m.
At the time he transferred the shares in Company U to his brother in March
2014,
Company U’s Holding Company owed H nothing. All the money that he has loaned has been since then. Why, one asks, should these loans be made by him in circumstances when he says that he was at the time not a beneficiary of the trust?
73. Although H denies he has any direct or indirect interest in Company U the fact remains that:
i) He founded the company in November 2002
and he has been a senior employee throughout the period, albeit he ceased to be a director in
2014
as a
family
decision in the light of the investigation;
ii) In addition to his interest through Company U’s Holding Company, he also had an indirect interest in it through Trust B1 which he did not initially disclose;
iii) His family
advisors wrote a letter on
28th
January
2013
(6:760) saying that they “act as accountants and tax advisors to H and his
family’s
businesses within the Company U Group …”
iv) H accepts that he spoke to the protector of Trust D2 on a weekly basis yet claims (unbelievably) never to have questioned the decision for his removal as a beneficiary;
v)
style='font:7.0pt "Times New Roman"'> Although H allegedly transferred the shares to his brother in
2014
he was not paid anything for them until
2017
and payment only came about (he says) as a result of his uncle, rather than his brother, making a payment described as “a gift”. H claims that he had completely forgotten that the payment received from his brother, originating from his uncle, was anything to do with the shares. To add to the mystery of the transaction H had only, a couple of months before then, given his brother $485,000, and the payment of $500,000 made in February
2017
at first blush would suggest a cancelling payment rather than an independent transaction by way of settling a long-outstanding debt arising from the share transfer. In respect of this as in many transactions H just says, “it was a
family
decision”, and can offer no further explanation.
74.
H says that his decision to transfer the shares to his brother was as a result of an internal family
arrangement. He says that he remembers nothing whatsoever of the events. He claimed in oral evidence that he only found out that he had been excluded from Trust D2 in
2018
when he requested documents from the trustees. This is of course inconsistent with the solicitor’s letter referred to at paragraph 67. He claims to remember nothing whatsoever about his exclusion nor indeed of the exclusion of W and C as beneficiaries.
75.
In addition to the loans of £14.267m
made by H to Company U’s Holding Company, H has also loaned £
2m
to Company U3, which is 97% owned by Company U. Two other companies of which he is the sole owner, namely Company K, Mauritius and Company L, Mauritius, have also made loans in or about
2016
in the sum of $500,000 each to Company U’s Holding Company. In each case Company U’s Holding Company is described as a related entity having a common owner - i.e. H.
77.
I cannot fathom why the exclusion took place in 2009.
Equally I am completely satisfied that H’s distancing himself from Company U’s Holding Company and Company U is not a true presentation of his relationship with them. I am asked by W to find that H is owed by Company U’s Holding Company £14.
267m
as per the accounts.
78.
I have no hesitation in finding that H is indeed owed the sum by Company U’s Holding Company which appears in the company accounts and which H does not challenge. The figure is the addition of those appearing at [2:425],
[3:596] and [3:652]. I do not accept that these sums are subject to any clawback to H’s
family.
79.
W asks me to attribute to H 50% of the value
of Company U. Her case is put this way:
i) H founded the group in November 2002;
he has worked in it since its incorporation and is a director;
ii) Company U is almost wholly owned by Company U’s Holding Company and H, along with W and C, were beneficiaries of one half of Company U’s Holding Company whilst his brother was the beneficiary of the other half;
iii) H’s disclosure in this case has been woeful;
iv) H can or will be able to receive benefits from the trust by being re-appointed as a beneficiary of Trust D2;
v)
style='font:7.0pt "Times New Roman"'> It is inconceivable that H would not have an interest in such a
valuable
entity when he and his brother had always been treated broadly equally;
vi)
style='font:7.0pt "Times New Roman"'> H has made unsecured loans to the company and to Company U’s Holding Company both personally and through companies owned by him in a way that are completely inconsistent with an absence of any interest in the underlying assets.
I have simplified but I hope accurately stated the way she puts her case.
80.
H says that he has no interest in Company U and is simply entitled to the return of the £2.9m
which appears at line 142.
81.
Whilst I am of the clear view
that H does have an interest in Company U, I am unable to assess whether it is 50% as W claims or something less. The principal reasons I reach my conclusion are because I accept the force of the arguments made by W at paragraph 67 onwards and:
i) I think it inconceivable that H would work so hard and so long for, and lend substantial sums of money, both directly and indirectly, to an entity in which he has no interest;
ii) The fact that his brother has a 50% interest and the brothers are broadly treated equally makes it highly likely that H has a substantial interest in the company;
iii) H’s inability to provide any plausible explanation of his removal from the company makes his account incredible.
It is very
difficult to know what
value
I should attribute to the whole of Company U for the reasons set out in the schedule prepared on behalf of W and which I attach hereto marked B. Five properties and plots of land were
valued
by Smith & Williamson for the purposes of a return to HMRC. Mr Todd QC questioned their basis of
valuation
but I have no reason to think that it was anything other than a proper market
valuation.
Six properties were
valued
by Savills and others pursuant to an order made by me. The ratio of
value
against cost falls between 1.16 at the low point to 7.59 at the high point. This is not necessarily a criticism of the accounts as the properties no doubt will have appeared at cost price. The effect of applying the mean of
2.54
(as W proposes) to the cost
value
of the properties/non-current assets would enhance their
value
by some £
228m,
as the schedule sets out.
83.
Mr Caldwell did not think it proper to value
Company U on anything other than the figures that appear in the accounts, save for updating for those properties which had been the subject of SJE
valuations.
The result of that would be that Company U had no net
value.
He says that what he did was in accordance with normal accounting practice but he understands why it is that the court might wish to take a different
view.
Mr Todd QC did not demur, when I put the matter to him, that it would not be unrealistic for me to uprate the cost figures if I did so in a modest and proportionate way.
84.
It is relevant at this stage for me to refer to what happened when the valuer
came to
value
Hotel
2,
India, and which can only be called most unfortunate shenanigans. The freehold of the hotel is owned by a company owned as to 99.79% by H’s father and aunt. It is leased to Company U1, India, which is a 100% subsidiary of Company U. Savills
valued
Company U1’s long leasehold interest at a little over the sterling equivalent of £50m. There was no suggestion whilst they were doing the
valuation
that there was any problem with the hotel company’s ownership and tenure of the land, yet after the
valuation
was produced it was asserted for the
very
first time that the landlords, who had apparently issued a final ultimatum to the hotel in October
2018
to carry out works, might be in a position to terminate the hotel’s lease, with a dramatic reduction in its
value.
85.
In the light of this assertion Savills valued
the leasehold on two additional bases, namely (i) the
value
assuming the lessee’s rights are revoked in the litigation (£
26,000)
and (ii) the
value
of the lease assuming on-going operations with no future development (£3.55m).
87.
It was extraordinary that the existence of this dispute should have arisen in these proceedings for the first time in this way; even more remarkably, it is completely inconsistent with the accounts of the hotel company to 31 March 2019
which declared that it was not involved in any litigation which could affect its
value.
The landlord is, of course, one of the companies within H’s
family
business empire and the alleged dispute is between close members of H’s
family.
Unless there was a corresponding commercial benefit (and none was explained) it is hard to see the reason for terminating the hotel’s lease other than to reduce its
value
having become aware of the SJE
valuation.
89.
It would be proper for me to disregard the ratio 7.59 which appears as the multiplier for Hotel 2,
India because it is so much an outlier, but with that excluded there is still an average increase of
2.25%.
I think it right that I should adopt a conservative approach and having thought about the matter, rather than applying a ratio of
2.54%
or
2.25%
to cost
value
I have decided to apply a ratio 1.75%. The effect of this would be to increase the net assets of the company to £
216.334m
after adding back the Company U’s Holding Company loans, and a half share to £108.167m.
90.
I cannot go so far as to make a finding that H’s share is worth £108m. On the assumptions that I have made, this will be the maximum that it is worth, but I have no doubt that he has a substantial interest in the company which will not be less than 25%
and may be 50%. I take the figure of
25%
as the minimum because there are 4 active participants in the
family
ventures,
being H, his parents (or father alone), his brother and his uncle.
91.
I accept that in taking a figure of 25%
it might be argued that I have been too generous to H. I have done so because I am confident that by so doing I am not overstating his interest and also because the realisation of it may require the cooperation of H’s
family.
Company Q, Singapore
93.
H says that he overlooked his interest in this business when completing his Form E. His interest came to light in examination of the Company U accounts by W which revealed that H owned 100% of the shares in Company Q which in turn owned various
other significant companies. The
2017
accounts for Company Q disclosed an outstanding amount due to the shareholder of $19.322m. H explained that this was funded in the main by Company U, in part by H and in part by his uncle. He provided a breakdown which stated that $11.922m was due to Company U, $6.150m was due to H and $1.
260m
was due to his uncle. H accepted that he failed to disclose this debt due to him in his Form E albeit it remained W’s case that the whole of the $19.322m was due to H. The breakdown to which I have just referred contained
various
discrepancies which H could not explain and in respect of which I draw no conclusions.
94.
On 28
February
2014
H had divested himself of his shareholding in Company U. Yet, since that date Company U loaned to Company Q some $12m. Why, one might ask, would Company U loan monies to Company Q when on paper Company Q had nothing to do with Company U and when Company Q was owned 100% by H?
96.
H claims that he has an effective interest of 16% in Company Q. He says that he owns 100% of the shares in the company via
a nominee. He says its funding came from shareholder loans, namely 61% by Company U, 32% “ostensibly by me” and 7% from his uncle. However, he says his loan was in fact funded by his father subject to
family
arrangements and is due back to his father with the consequence that nothing is available to H.
97.
It is apparent from Mr Caldwell’s analysis of Company Q that the value
of the company is due to the shareholder and that the shareholder referred to in the accounts can only be H. I reject H’s assertion and find that H is indeed owed the sum that the accounts show. Of course, that is not conclusive of the argument that he should be given credit for advances given by his
family
from their own resources.
99.
Company B, BVI and Company C, BVI (lines 181-182): I take these two companies together because in respect of each H has said from the time of his Form E (albeit not in his PNA disclosure) and notwithstanding his apparent 100% interest, other family
members own two-thirds of the company and that he only owns one-third beneficially. But his position in respect of those two companies evolved on 31 October
2019
to state that although they were subject to the
family
arrangement described, the work that had been done to enhance the
value
of the companies had been done by others and that he had had no involvement in it. Thus he says, that rather than the sums at which they had been
valued
by him in his Form E, the only sum available to H was his share of the passive growth, put by him on 31 October
2019
at £607,000 and £
295,000
respectively, but now put at £346,000 and -£
21,000
respectively.
100.
The decline in the value
in Company C was explained by H by the fact that he had failed to reveal that the shares held in the company had been converted into cash. He went on to say that when the shares were sold the money went into three trusts, Trust B1 (H’s trust), Trust B2 (his mother’s) and Trust B3 (his brother’s). It follows that his account at paragraph 41 of [5:
204]
was, if ever true, overtaken by events. The Company C share investments had been sold in March
2017
for $9.776m and of that $7m had been paid to The B Trusts’ Subsidiary Company 1 (the
family
office owned by Trusts B1, B2 and B3) for distribution in equal shares between the
family
trusts. But, the difference of $
2.776m
remained with H and was used by him.
101.
According to the contemporaneous documents he gifted $495,000 to his brother and $150,000 was put by him into Trust E. He said in reply to questionnaire that the remaining $2m
was going to be put into Company U’s Holding Company. In oral evidence he said that the $
2m
that went into Company U’s Holding Company came out of the balance of the $
2.776m
but although he refused to admit it in his oral evidence in a number of answers, the bank documents show quite clearly that the $
2m
in fact came from the $7m that went to The B Trusts’ Subsidiary Company 1, of which $
2m
came back to H, who then paid it to Company U’s Holding Company. Thus, it was established that the $
2m
that went into Company U’s Holding Company came through H. This will become relevant as seen later.
102.
A similar situation arises in respect of Company B. On 6 June 2018
Company B sold part of its investments for $13.37m and that sum was transferred to H. In his answers he said that $10m of that sum went to The B Trusts’ Subsidiary Company 1, but that this was the case was incapable of proof by H as he says he has never had access to The B Trusts’ Subsidiary Company 1’s accounts. He accepts that those who manage The B Trusts’ Subsidiary Company 1 would have no means of knowing how the balance of $3.37m might have been used by H. H said that he would have told his father and brother (when they met) that in fact the sale proceeds were $13.37m rather than $10m but there would be nothing in writing to evidence it.
103.
It would have been very
interesting to have seen any form of documentation from The B Trusts’ Subsidiary Company 1 which would show how the respective accounts of the three trusts were kept and how equalisation might have taken place between the three parties. Unfortunately, no such information was provided although records must exist for parity to be achieved.
104.
With some misgivings about where the unaccounted for money has gone, I am prepared for these purposes to accept H’s interest in Company B and Company C as being one-third because there is evidence of the monies going to The B Trusts’ Subsidiary Company 1 and benefitting the trusts of two other family
members and because in his Form E (although not in his PNA disclosure) he set out his interest as being one-third.
106.
Company G, India (186): In his Form E, H described his holding as being 45.03% which is confirmed by the accounts. It was subsequently diluted to 38.53%. In the company accounts H, his father and his brother are described as individuals having control over the company with H’s brother having the same shareholding as H and his father having the remaining 9.94% of the shares (before dilution). H now claims that he has been told by his family
that in fact the company beneficially belongs to his brother and his father. He did not know before and there is no document that supports his assertion.
107.
H’s 6th statement refers to his interest being reduced to 23.58%,
which if accurate would reduce the
value
of his interest from £5.3m (38.53%) to £3.
2m,
a figure accepted by Mr Caldwell if H’s assertion was correct. The higher figure of 38.53% appeared on all schedules that I was provided with, unchallenged as to the size (as opposed to the
value)
of the holding. It appears likewise at 38.53% in H’s closing schedule (emphasis added). In the circumstances I intend to take this higher figure.
109.
Company K, Mauritius and Company L, Mauritius (190-192): I deal with these two companies together. In each case, H in his Form E declared he was the 100% owner and in the Companies’ accounts he is described as the ultimate beneficial owner. He now says that 50% of each company is beneficially owned by his father, his brother and himself and the other 50% is owned by his uncle’s side of the family.
Thus, his interest in the company is, he says, 16.67%.
110.
H‘s shifting evidence was that the Company K dividend had been divided between the family,
before he changed his answer to say that he did not know if it went to him and others, before finally, having seen the bank statements, accepting that all the Company K dividend came to him. He was unable to explain how the others who were allegedly beneficially interested in the dividend would have been compensated for their non-receipt.
112.
There was a dispute as to the value
attributable to H’s interest in Company L, put initially by Mr Caldwell at £1,779,797 and then revised by him to £1,000,186 if the certain loan balances to two corporate entities had been written off, as H subsequently asserted but without providing any underlying documentation. The lower figure has been a shifting amount because of currency movements and in closing was put by H at £934,781. I have looked again at Mr Caldwell’s reports. It is clear that again he revalued the asset on the basis of the assertion made by H. In this instance H has set his case out consistently since 31 October
2019
when his solicitors raised this issue and although the supporting documentation is incomplete, I am prepared to take the lower figure.
113.
Company M, Seychelles (193): In his Form E, H said that he was a 50% shareholder but that the company had no assets and thus his interest was of no value.
That was plainly erroneous because subsequent disclosure by the company shows that the company had the funds to subscribe for two sets of shares in the total sum of $1.478m. The other shareholder in the company was H’s brother. It came as an apparent complete surprise to H when he was told that “the intention has always been that the shares will be transferred back to my parents in due course”.
114.
Company N, Seychelles (194): H says that a similar situation arises with Company N. In his Form E, H described himself as the 50% shareholder and said that the company was a holding company of no value
in itself. Subsequent disclosure by the company described the company as having a net asset
value
of $1.
245m
and stated that H “is the ultimate beneficial owner of the company since 7th April
2015”
(i.e. 100%, not 50%), as H’s later presentation accepted. H’s answer to this was to say that the
value
to him remained as nil because he was told by his
family
to his surprise that the money in the company would revert to the older generation who supplied it. In each instance I reject his argument.
115.
Company O, Singapore (195): In his Form E, H said that he had a 100% interest and that the company was of no value.
He was only told late on by his
family
that his interest is
25%.
Exactly the same applies to Company P, Singapore (196). I reject that evidence but as both companies have negligible assets it is unnecessary to say more.
Disputed Liabilities
116.
HMRC: In his schedule H claims that he owes £1.369m to HMRC. It transpired during his evidence that about £200,000
of that has been paid and that the balance is being challenged. I have no basis upon which I can or should speculate whether any further sum is payable, but I am satisfied that H will have the resources from undisclosed assets elsewhere to meet any liability that might ultimately be due.
117.
The B Trusts’ Subsidiary Company 1: This is the family
company which has produced no accounts for the court to consider. It is impossible to believe that no documentation is available. There is no evidence that persuades me that this is a debt owed by H. It does not appear in his Form E as a liability nor in his sixth statement. Whilst there may be a document evidencing the receipt of a loan, I do not find there to be any satisfactory evidence it will be repayable. I therefore reject that a sum is repayable but I also do not take into account the offsetting sum of £425,000 which H says was transferred from that advance to his brother.
118.
W’s debts: I accept that W owes her cousin £230,000
which she has advanced to W to help with her costs. The money is properly evidenced and I accept it as a liability. I do not, on the other hand, accept a liability to her father to repay him the sum of £1.05m that he put forward to pay the investigative agent instructed by W in respect of H’s disclosure. I know nothing about the work that this man might have done. I know nothing about the instructions that he was given. There is no commercial loan arrangement between W and her father. W may wish to repay him but that is a matter entirely for her and is not a liability that I should take into account.
Minority Discounts and Tax
119.
For just 7 companies Mr Caldwell applied a minority discount to H’s interest, varying
between 10-
25%.
He said that he applied a lesser discount than would normally be the case to reflect the fact that the purchaser would find a ready market within the
family.
In the case of all these companies the shareholdings are held by entities which are completely under the
family’s
control. He said that he applied a market participant standard not an interested party standard. The total
value
of the discounts is £3.5m.
120.
This is the perfect example of the quasi-partnership to which a discount will not attach. I accept that if an outsider was to buy into one of these companies he or she would expect a discount, but it is in my judgment inconceivable that any outsider would either be permitted ownership or be interested in acquiring it. Nor could I imagine why an outsider would want to invest if he would not have any control. I refer also to what I say at paragraphs 133 onwards as to movement of resources. There is no history of family
members acting to the detriment of other
family
members. On the contrary, they assist each other.
Company R/Company S/Company T
122.
W argues that I should attribute to H the value
of £13.696m in respect of his shareholding in Company S. Mr Leech QC puts that figure as the
value
of the
visible
shares owned by Company R in Company S and on the basis that there is no other figure that he can select. It is no fault of W that there is no other way of presenting it.
123.
The figure is somewhat speculative but when Mr Caldwell attempted to value
the whole of the Company S he was able only to produce the
very
wide bracket of $51.94m - $
215.83m.
The lower figure ascribes
value
only to the A and B shares not subject to redemption at the current price of $10.
20
per share. The higher figure includes all of the shares including the B shares which H has, but which only have
value
when (or if) the project takes wing whereupon they are automatically converted into A shares.
124.
H’s disclosure has been lamentable. It was only in August 2018
that he revealed that he had an interest in these entities and that it was “omitted from my Form E in error”. Only more recently did he say that his interest was in fact 41.34% of its
20%
ownership of Company S. This was subsequently reduced by H changing his presentation to say that there was a
family
arrangement so that he only held
25%
of 41.34%. It would be consistent with my findings to reject, as I do, that assertion.
125.
Company S is a company set up to make property acquisitions in New York and $150m was raised by way of an IPO, a fact which H also did not reveal. The intention was to invest in projects and on three occasions Company S has come very
close to acquisitions. For
various
reasons those acquisitions have fallen through and if there is no further acquisition by
28
May
2020
the shareholders are entitled to the return of their investment unless a resolution extending the date is passed. Mr Caldwell, the SJE forensic accountant, says that there is a strong incentive for the original investors to extend the date and the public subscribers would benefit likewise as their investment is held in trust and there is no downside for them if the date is extended.
126.
Mr Caldwell’s attempts to value
H’s interest have been completely frustrated by the refusal of Company S/Company T/Company
V
to provide any information whatsoever for
various
purported reasons including confidentiality. I am in no doubt that if H had wanted them to provide information that could have been achieved.
127.
As Company T holds 4,232,222
shares of Company S (representing
20%
of the total issued stock) and at a
value
of $10.
20
per share, a 41.34% interest would be worth some $17,845,000, the sterling equivalent being £13,696,678. H’s shares will, of course, only acquire this
value
as and when the project goes ahead. If that does happen then they may become worth significantly more. At $11.50 per share, the warrants which he holds acquire a
value
but only upon payment, and I accordingly exclude them.
128.
H is an extremely astute businessman and I find it hard to think that if the investment was thought likely to fail, he would not have told me so, which he did not. I am therefore driven to accepting the figure put forward by W as the best information that there is in the circumstances. In arriving at this conclusion, I bear in mind that it is desirable for me to make a finding of the probable value
if I properly can as the project is plainly a matrimonial endeavour. H knew how W was putting her case and in my judgment it was within the power of H to produce information if he wished to counter it.
Trust B1
129.
H is the beneficiary under a trust known as Trust B1. H’s interest in that trust has been valued
by the parties respectively at a little more or a little less than $
25m
(£
20m)
and I accordingly take the midpoint. Mr Caldwell had not been told by H that the accounts of one of its underlying subsidiaries made no reference to the ownership of a flat in New York, the existence of which had not been disclosed and of which there is no evidence of
value.
130.
I find the evidence on this point to be clear. The flat in New York is owned by Trust B1’s Sub-subsidiary Company 1, a subsidiary of Trust B1’s Subsidiary Company 1, which in turn is owned by Trust B1. Yet, the ownership of Trust B1’s Sub-subsidiary Company 1 is not revealed in Trust B1’s Subsidiary Company 1’s accounts, which refer only to “securities” which are not the same as “real estate”. Mr Caldwell knew nothing of Trust B1’s Sub-subsidiary Company 1 or its assets and accepted when it was put to him by Mr Leech that the apartment was “off balance sheet”. In re-examination by Mr Todd it was put, without any underlying evidence being produced, that “securities” could include the Trust B1’s Sub-subsidiary Company 1 shareholding. Mr Caldwell accepted that it was possible but as H had not disclosed the Trust B1’s Sub-subsidiary Company 1’s accounts, he could not verify
this. H’s evidence that it was included was tentative and unpersuasive and I do not accept it.
131.
Mr Caldwell applied a discount to H’s interest in 2
of Trust B1’s companies. I do not understand the logic and it was not pressed by H. The parties agreed the
value
of Trust B1, subject to the issue of the apartment, and it is unnecessary to say more on this issue.
132.
There remains uncertainty as to whether Property 12, London remains in the ownership of another subsidiary company or whether it has been sold to a third party. The uncertainty arises at least in part by H answering a questionnaire served on him by indicating that he still has (in the present tense) an interest in the property. In evidence he said that he sold it in 2012
and indeed it is clear that the ownership did change in
2012,
but the identity of the new beneficial owner is a mystery. I do not have the evidential basis for concluding that the flat remains in H’s ownership.
Movement of Resources
133.
I have referred to the manoeuvres of H and his family
in connection with the
valuation
of Company U. It is appropriate that at this stage I should refer to some other like matters.
134.
Both H and W accept resources and monies flow between the different family
members of H’s
family
in a fluid manner. The distinction between them is that H says that he simply does whatever he is asked to do by his father without there being any form of quid pro quo, while W says that there is a form of accounting kept so as to ensure that in broad terms the
family
members, and in particular H and his brother, are treated equally. As a matter of common sense, W’s account seems to me to be far the more plausible.
i) In 2014
immediately after his arrest as a result of the investigation, H transferred his shareholding in Company U to his brother. No consideration was paid until
2017
when a payment was made, not from his brother, but from his uncle;
ii) In November 2015
H transferred some shares in Company AB, to his uncle and in January
2017
his interest in Company AC. Likewise, in June
2017
and January
2018
shares in other entities were transferred to his uncle.
iii) Very
large sums of monies were paid to H from his uncle including some $1.8m in an 18-month period from January
2016.
All of these are described as “gifts” but were
very
probably a quid pro quo as part of a business transaction between them.
iv) H was excluded from Trust D2 for reasons which he claims to have absolutely no knowledge of and in respect of which he has provided conflicting evidence saying that he was told at the time of his exclusion in February 2009
and then saying that he only learnt of it in
2018.
It is completely inconceivable that this happened without his knowledge or approval. H just shrugs his shoulders and produces no documents to explain a decision which has such apparently serious financial consequences for him as being a perfectly reasonable action of the trustees.
v)
style='font:7.0pt "Times New Roman"'> H dips in and out of trusts as a beneficiary when it is thought expedient so that benefits may be received.
vi)
style='font:7.0pt "Times New Roman"'> In a different context, but one which is apt in this context, H’s case was that “funds are transferred to whoever requires them”.
136.
A clear example of the way that the family
operates can be seen by the transactions that happened following the DNA results. H had settled a trust fund by the name of Trust C1 for C but of which W was also a beneficiary. On
25
January
2018,
just after decree nisi, W was excluded from the Trust. On 4 March
2019,
just after receipt of the confirmatory DNA test, C was excluded from the Trust and in place of C, H’s brother and his children were added as beneficiaries.
137.
H was very
insistent that the decision was taken by the trustees and protector. He tried hard to disassociate himself from the decision. He accepted that the decision makers might have heard that C was not his biological son. It was prised out of him that he did not disagree with the trustee’s decision. He claims that it was entirely the decision of the trustees to change the beneficiary away from C. His assertion that he was in no way a participant is completely at odds with his other actions taken against W upon the discovery of C’s paternity.
138.
C suffered a similar fate in respect of Trust C2. H had settled the trust in 2010
for the benefit of his parents but they were not the only beneficiaries. On 4 March
2019
any illegitimate child of H was excluded from being a beneficiary. H claims that he had no idea that illegitimate children were being excluded, notwithstanding that he was the settlor of the trust. He also claimed to be astonished to find that he was a potential beneficiary of the trust. He thought that the only beneficiaries were his parents. I do not believe him.
140.
I have focussed on the movement of resources and the way that the family
operate as “one for all and all for one”. It also shows also how inappropriate it would be to apply a minority discount. The
family
operates as one unit.
Hindu Undivided Family
141.
At line 223
there is a figure of £458,337. This is the difference between the
value
given for the HUF and the
value
attributed to Property 8, India. The figure itself is not in dispute but the ability of H to access it is. It would be consistent and logical for me to accept the figure but to park it as a non-matrimonial asset.
Trust E
142.
Trust E holds a substantial amount of art, valued
at around $48m (£37m). On 17 December
2018
a meeting was held by telephone where notice was waived and an immediate decision made to redomicile the Trust from Panama to Dubai. H says the meeting did no more than implement what his parents had decided to do some time ago and that it was complete coincidence that it happened within a couple of days of the results of the DNA test. Notwithstanding Mr Leech’s invitation, I do not think it is right for me to draw any conclusion about the timing or reason for the re-domiciling as I can see no logical connection between the action taken and the discovery of C’s paternity.
143. In his Form E, H said this:
The applicant is a 50% discretionary beneficiary under the [Trust’s] regulations, but the council at its sole discretion can add or remove potential beneficiaries at any time. Value
calculated on the basis of mid-point of auction
values
(per Sotheby's catalogue) plus invoice
value
of artwork purchased subsequently (less costs of sale).
145.
In various
places the Trust has been described as charitable, but it plainly is not charitable in a sense that would be understood by English law. The pictures are held in houses belonging to members of the
family.
Some are in storage and some are on display in company premises. A study of H’s accounts shows that payments are made from them from time to time for expenses of the Trust. H explained that they were payments for things like transportation and storage of art works and insurance.
147.
I accept that H’s mother has been for many years the leading light behind the Trust, the purchase of artworks for it, and the person in the family
most interested in art. I accept further that that artwork is not immediately available to H and his brother, but I have no doubt that it is a resource that will be available to them in due course.
148.
In support of my finding I rely also on his first statement when he said “in preparing my Form E I received confirmation that I in fact have a 50% discretionary interest in the [Trust] and that my interest has always been at this level” and the letter of instruction to a firm of valuers
by H’s solicitors in which again they refer to H’s interest as being 50%. Only in October
2019
did he change his case.
149.
H makes the point, which I accept, that Trust E has never made any distributions to its beneficiaries and that its origin was his parents’ personal art collection which they have grown over the years. It follows that I accept that, with the exception of those items purchased by the parties, it is very
substantially non-matrimonial and I treat it as such.
Pre-acquired/Externally Provided Assets
150.
The sharing principle applies to all assets but in so far as assets emanate from without the matrimonial partnership they are normally to be treated in a different way to those generated during the partnership. It is in that context that I have to consider the extent to which H’s assets have been self-generated or provided by his family
for him.
152.
H states that he was worth some £17m at the time of the marriage. The marriage lasted for some 14 years, encompassing most of the parties’ 20s
and 30s.
153.
Money washes around in H’s family
in such a way that I cannot see any trail. I have no doubt that H’s early investments were funded by monies that came down through his father but as time went on H became more able to set up entities with the profits made from his business activities.
154.
Because of his ability and training, H was able to start creating wealth very
soon after he established his business career. Whilst I accept that he would have had a degree of spoon feeding and benefit from his father in the early years, as time went on the need for this kind of generosity disappeared.
155.
I can only make a broad assessment on everything that I have heard and read and conclude that it would be fair to regard 25%
of the wealth that H has created to be non-matrimonial. In reaching this figure I have taken into account particularly the length of the marriage, the abilities of H, and his own estimate of his worth at the time of marriage.
157.
In arriving at this figure, I make it clear that my assessment of H is that he is an extremely able businessman. He was brought up learning business from a young age. I do not for one minute accept the description of him as a playboy. True it is that he has played hard, but he has also worked hard as well. I have no doubt that he had made very
substantial sums of money during the marriage but equally he was given a significant step up by his
family,
which needs to be recognised.
The known unknowns
158.
I have already commented on Company R/Company S/Company T and the New York apartment owned by Trust B1 of which H is the beneficiary. The most significant other known unknown is Company V.
159.
Schedule A sets out various
other known unknowns. I am unable to make any finding as to whether there is
value
in them for H.
Company V
160.
Company V
makes money out of New York property. It invests in new-build properties or renovations and their management. In public documents H is described as a co-founder of Company
V
and President and Director of the company which manages the investment funds. He has provided
very
substantial guarantees for the company projects. H claims that he is unable to take any money out of the Company
V
structure. W describes the business as his baby since its founding in
2010.
161.
H has put a considerable sum of money into Company V
although he was unable to recall anything about the size of the investment. His guarantees amount to £68m, more than what he now states his entire wealth to be. They include £34m in respect of acquisition and construction loans taken out for Company
V’s
real estate projects in New York. H plainly regards the chances of his being called upon to honour his guarantees as minimal.
162.
There are two arms to Company V.
The first is Company U2, which is owned 100% by Company U. H is the President and Director of Company U2. His involvement is an additional reason why I am disinclined to believe his removal from an interest in Company U. Company U2 receives a fee for the management of the Company
V
enterprises.
163.
The profits from the Company V
ventures
go to five trusts including one settled by H for the benefit of his parents (Trust C2), one settled by H’s brother for his
family
(Trust C3), and one settled by H for the benefit of W and C (Trust C1). 50.
2%
of the profits go to those 3 trusts with the balance to two other trusts with which I need not be concerned. Company
V
is said to have $1.
2b
of assets, although I cannot know whether that is anywhere near accurate.
164.
The attempts to find out what Company V
is worth have, as the case is presented by H, been completely stymied by the trustees. As is to be found in other instances, the trustees’ unwillingness to give information is only partial and, I have no doubt, directed by H or his
family.
165.
The non-disclosure of this asset by H is significant and serious. I find it incredible that H would spend his time and invest his money in the enterprise if he had no interest in it. I am satisfied that H has or will have in the imminent future, a substantial interest in Company V,
probably to the extent of 16.67%, being the original interest of W and C before their removal. That would put him in a position of equality with his brother and with his parents. However, I can form no assessment at all of its likely
value,
although I am satisfied that is it substantial.
Unknown unknowns
166.
This aspect is even more obscure. W has been able to expose H’s ownership of assets that he did not disclose. I have no means of knowing what remains undetected, whether held for him in his name, that of a nominee entity, or by other family
members. The
family
have closed ranks so that the court’s
vision
is dimmed. I am confident that H will have an interest in assets not held in his name, but I cannot begin to speculate what that interest or its
value
might be.
Costs add-back
Contributions
168.
H’s contributions have been significant. He has provided well for his family
and has built up
very
significant sums of money. He has taken the role of a fully committed father. But, for these purposes W’s contribution has been equally significant. It was by agreement between them that she did not work during the marriage. She was in charge of the home and
family.
H accepts that she has been a good mother to C and was complimentary about the support that she gave him throughout the marriage and in particular when times were difficult, such as when the investigation was taking place.
The Wife
169.
There is no doubt that both H and W come from very
wealthy
families.
Each is fortunate to belong to a
very
supportive and close
family.
170.
W, perhaps because of her gender, has not had any involvement in the running of her father’s family
business. She has
very
small shareholdings in some of his companies worth less than £1,000. She has never been involved in business affairs. H sought to counter this by reference to a statement prepared by Mr S who is a professional financial advisor to H’s
family.
I accept that W has no particular knowledge of or interest in financial affairs. That is not in any way to suggest that she is anything other than intelligent. I am satisfied that she is an educated, intelligent and articulate lady, but one who has largely been excluded from financial affairs.
171.
W denied that she was aware of the existence of any arrangement whereby Indian family
monies were the subject of a
family
arrangement which permitted the older generation to claw back money passed on to the younger generation whenever wanted. She said, and I accept, that whilst a child might out of filial loyalty comply with a parental request made for monies to be returned, there is no legal obligation absent a specific agreement to do so.
172.
Her understanding was that money, when it came into H’s family,
was divided between H’s father, H and his brother, and it was theirs to do with as they wished. Whilst money might shift between the different
family
members in a fluid manner, a scoresheet would be kept so that approximate equality could be achieved in the long run. That is what I would have expected to be the case.
173.
H was very
critical of W’s disclosure of financial support from her
family.
I do not regard the criticism as being of any material significance. Clearly W’s father did not regard it as being any part of his responsibility to pay W’s legal fees when she could obtain an order that H should do so. What he did do was pay £1.05m to an investigative agent to assist W dealing with and enquiring into H’s disclosure and wealth. I have no report and do not know how the money was utilised. In my judgment if W’s father wishes to spend his money that way that is his option. W may want to pay her father back, but there is no legal obligation to do so and I disregard it as a debt in considering her resources. In exactly the same way if W wishes to use £72,000 of her brother’s money to pay for an upmarket concierge that is a matter between her and her brother and not a debt which I should take into account.
Property 11, London
175.
W put no money in to the property, but H put £2m
towards the purchase, representing somewhat under 40% of the cost of the purchase price, the balance having been paid by W’s parents. W was cross examined as to whether or not the £
2m
had been repaid by her father or grandfather to H. She said that she understood that he had been repaid and Mr Todd QC on behalf of H challenged this.
176.
I accept W’s case that notwithstanding the ownership, she regards it as her parents’ home in London. She has spent 2
nights there in some 7 years. Her parents stay in it when they come to London as does her brother on his occasional
visits.
I expect that in the long run when the parents no longer have any use of the premises it will become an available resource for her, but in the short term it is not.
177.
In closing submission H made it clear that he did not expect back his investment from W. It may be of significance that nowhere in his Form E does H declare £2m
as money owing to him. It is not within the remit of this trial for me to investigate whether he has been repaid or not, but bearing in mind the determination of H to pursue W
via
every form of litigation possible, I make it clear that I find that he has no claim against her for this sum.
178.
I have concluded that the fairest way of treating H’s investment in the property is to say that 50% of his contribution is to be treated as matrimonial, and the rest of the value
of the property as non-matrimonial.
Conduct
180.
The court is under a duty to take into account conduct if it would be inequitable to disregard it. H says with force that W’s conduct is such that any right-thinking person would conclude that this is indeed such a case. Putting it very
graphically H says, “if one partner deceives another, then they are not entitled to gather in the fruit from that poisoned tree”. Conceiving “a child by another man and keeping that secret (thus inducing H to commit both financially and emotionally to another man’s child) was misconduct”.
C’s paternity
183.
W’s evidence was that the relationship began in March 2009.
H challenges that and relies on the evidence of Mrs R, a long-time employee of W and her
family.
She claims that she saw the man at the matrimonial home in winter
2008.
The circumstances of the meeting, if it happened, are unremarkable and cast no light on anything relevant. She says that W told her on one or two occasions that she was having an affair. That particular comment does not appear in her statement.
184.
Mrs T, who succeeded Mrs R in her role from January 2006,
says that she knew nothing of any affair. It is plain that Mrs T did not have the same closeness of relationship with W as had Mrs R.
185.
I regard the precise dating of the start of the affair as immaterial. I decline to accept that either the evidence of Mrs R or the exchange of intimate messages in 2007
is probative of the relationship starting before
2009.
The messages do not evidence physical proximity as opposed to emotional closeness.
186.
W said in her written evidence that the affair continued from March 2009
to about 19 April
2010.
She accepts now that the cessation of the affair must have been about one month later than that as the conception period was between 11-31 May
2010.
187.
W says that she only ever had unprotected sex with H and that is why she was convinced that he was the father of C. It is H’s case that on 22
May
2010
W persuaded H to have sexual intercourse with her as a cover for the fact that she knew or suspected that she might be pregnant by C’s father. I cannot make this finding on the evidence.
188.
However, it would be naïve of me to find that it never crossed W’s mind, as she claims, that anyone other than H might be the father of the unborn child. I regard that evidence as incredible. I am prepared to and do accept that she was very
anxious to believe that H was the father and as time went on put the alternative to the back of her mind.
189.
I have no reason not to accept that the relationship stopped as soon as W discovered that she was pregnant and that it has not resumed save for a one-off occasion in 2018.
I reject as far-fetched the attempt by H to prove that there was something going on between them recently in Goa based on the fact that he attended a large party which was attended also by W’s siblings. I have no reason to think that he will play any significant part in W’s life or that of C in the future.
192.
I reject unhesitatingly H’s attempt to say that the circumstances and/or duration of the relationship are part of all the relevant circumstances which I need to take into account. This is unarguable, as Miller, McFarlane [2006]
AC 618 made clear [paras 64-65]. The only matter of any relevance is whether W’s action in allowing H to bring up C in the belief that he was the natural father amounts to conduct.
195.
In part, it is unrealistic simply to draw a line through the marriage at the time of the conception. I cannot speculate what would have happened if W had informed H of her unfaithfulness. I have no doubt that there were many happy moments from 2010
onwards between H and W and they were far more numerous than the bad times. Further, notwithstanding C’s paternity, H has a paternal relationship with C which is of enormous
value
to both C and to H. C knows no other father and H treats no other child as his.
196.
There is no guidance in reported authority as to how this sort of conduct should be reflected. I accept that it can have the effect of reducing W’s award. There are some cases of which I am aware from the 1980s in which sexual misconduct has been reflected in an award. But those cases are of no value
in the times in which we now live.
198.
The conundrum is in my view
answered in this way: I have found that H’s disclosure has been seriously deficient. I am quite confident that he has access to/ownership of assets which he has not disclosed as well as his interest in Company
V
(in particular) which I cannot quantify. I consider in the circumstances that whilst I cannot and should not try to put a monetary figure on undisclosed assets, I should likewise not reduce W’s award by giving her a lower percentage of the disclosed assets. That would be to inflict a double jeopardy.
Needs
200.
The parties’ presentation of needs were at the two ends of the scales (one might say beyond the two ends).
201.
I do not need to dwell long on needs. I am satisfied that the award that I am making can more than permit W to live with her reasonable needs met. I regard her budget as hugely inflated. That is not to say that it represents a standard of living which she did not enjoy in the past. But, she is only 38 years old. She cannot expect to make her way through life living at an astronomic standard paid for by her former spouse.
202.
I have come to the clear
view
that the former matrimonial home and mews property should be transferred to W. She should receive them free of charge. It is the only home that C has known. The suggestion by H that C should live in a property about a quarter of the
value
to what he knows with no room for any staff is unrealistic and the polar opposite of the life he enjoys when with H. The
family
home is of course a
very
substantial property for a spouse and one child, but
virtually
every aspect of the parties’ lives exceeds needs.
203.
That said, when casting an eye at W’s needs I work on the basis that the time will come, at the latest when C finishes his schooling, when it would be appropriate for W to move into smaller accommodation and I attribute half the
value
of the FMH to be a reasonable housing cost for W thereafter and the balance to be available to meet income.
204.
On that basis her capital sum will be topped up by another £7m plus in due course. Together with the award I am making this is more than sufficient to meet her needs.
205.
I reject W’s claim insofar as I have to consider it for other properties. The claim for an Indian property was not supported by the evidence as W accepted that she would always go and stay with her parents. It makes no economic sense for W to have the expense and anxiety that would go with a holiday home in the South of France when she would spend next to no time there, as most of her holidays would be spent in India, restricted as she is to England during the school terms.
Child periodical payments
206.
In his open proposals H proposed that C’s father should be responsible for payment of one half of C’s reasonable expenses. As a starting point I have no problem with the suggestion that C’s father should contribute. It is a reasonable proposition bearing in mind that he is the biological father of C, whilst H is C’s psychological father and the man who assumes the paternal parental role in C’s life.
207.
The issue is complicated by the fact that at H’s instigation W has given an undertaking that C should have no contact with his natural father. There would be an obvious tension if H were to argue that that this man should have little or no part in C’s life whatsoever, yet at the same time be responsible for all his costs.
The approaches of the parties
208.
W’s case is as set out in the schedule. She says that H’s
visible
worth is not less than £347m and that she is entitled to share in that fully. She has not explained how it is that her claim at less than 50% of this is calculated but she says that her claim is at a figure which is the minimum at which her entitlement should be put, is one that meets her needs, and one that H can meet with ease.
209.
H’s approach is that he was already wealthy when the parties married as a result of gifts that were made to him by his
family.
Thereafter, the money that was made was largely subject to
various
family
arrangements which permit the older generation to recall the funds. Insofar as assets are in his name, they are in the main the product of funds advanced to him by his
family
and their genesis is non-matrimonial. Therefore, he says that W’s claim is not a sharing claim but is one to be calculated on a needs basis, the
vast
bulk of which he says is available to her from her own resources.
210.
Each party has a duty to provide the court with full and frank disclosure of means. As I have set out, H has singularly failed to meet this requirement. He has hidden from the court’s eyes the extent of his wealth. His non-disclosure deprives W of the opportunity of her entitlement claim being fully considered.
211.
I am not able to calculate the
value
of that which he has not disclosed. All I can say is that I am satisfied that he is
very
comfortably able to meet the award which I am making and that the level of his wealth justifies the award. As the recent case of Moher [
2020]
1 FLR
225
explains, the court does not need to make its award by reference to the quantification of non-disclosed resources. But notwithstanding that, I can and do find that their existence is established, and this makes the level of award one well within H’s capacity to pay and fair between the parties.
212.
My approach must be to start with an assessment of the available resources. Thereafter
i) Each party is entitled to share those resources which have been built up by the efforts of either during the course of the marriage. Unless there is reason to the contrary that sharing will be equal.
ii) Provision made from outside the marriage, that is gifts or inheritances from third parties, are subject to the sharing principle but would not normally be shared between the parties unless the meeting of needs so requires, which it does not in this case.
iii) Insofar as assets have been built up during the marriage on the foundation of pre-existing assets I must form a view
as to the extent of the accrual which is due to matrimonial endeavours and the extent to which it is the result of money which has been built up before the marriage or provided by third parties.
iv) My goal is to produce an outcome which is fair to the parties bearing in mind all the considerations set out at section 25(1)
Matrimonial Causes Act 1973.
The Award
213.
I am asked by the parties only at this stage to give headline figures. They expressly have not asked me to deal with issues such as liquidity, time for payment, interim provision and security.
214.
The conclusion that I have reached therefore is that the matrimonial assets to which H can have immediate recourse in terms of ownership are £117m. So far as Company U is concerned, I find the
value
of his interest to be between £54m (
25%)
and £108m (50%). I take the lower figure as it is one which I can be confident is or will be available for H. I calculate W’s assets at less than £1m.
215.
I regard as being non-matrimonial the property in France, bought as it was with borrowed money as the marriage was ending, H’s interest in the HUF and his interest in Trust E, and the bulk of W’s interest in Property 11, as well as the relatively modestly
valued
properties each owns in India.
216.
Deducting
25%
from the assets in H’s name and a
25%
interest in Company U produces a marital acquest of £128m. Adding W’s limited asset base to this total results in a sharing claim by W on an equal division of £64m. I have rounded figures slightly to avoid giving a false precision.
217.
As I have been preparing this judgment I have become concerned by the absence of address on liquidity. Mr Caldwell put it in his report as being
very
modest, but he did not have my findings as to ownership. H said no more than if asked to find £30-£40m he did not know how he would do so. I shall require to be addressed upon how the sum should be paid and whether W should receive any part of her award by way of transfer of assets.
218.
The matrimonial home and mews property together are worth £15m and for the reasons already given I order that they be transferred free of charge to W. I decline to make any order in relation to the other property in which some of the staff of H and W and some of his brother’s staff are accommodated as all of W’s staff can be housed in the main FMH or the mews. In addition, I order a lump sum of £49m, subject to the point made in the immediately preceding paragraph.
Child periodical payments
219.
Excluding the costs of education and childcare, I find it difficult to envisage a case in which a level of child periodical payments in excess of £100,000 p.a. per child could appropriately be ordered (putting to one side those rare cases involving children with special needs). Both H and W’s budgets include eye-watering figures - for example each of clothing and holiday costs over and above the costs to his parents for this 9 year old boy at £100,000 p.a. per item. That may have been what was spent on him in the past, although I doubt it, but it does not mean that it is reasonable for it to be paid in the future.
220.
I conclude that costs of C should broadly be divided between H on the one hand and W and the natural father on the other hand. The childcare costs substantially exceed the costs of education. The appropriate order to make to achieve that broad equality is that H should pay C’s school fees and all associated educational expenses and the sum of £60,000 p.a. It will be up to W to obtain whatever assistance she seeks from C’s father.
221.
It is of course open to the parties to spend
very
much more on C than these figures. H will have C staying with him for significant periods of time. He alone will bear the costs of those periods and the maintenance is not reduced for the periods when C is absent from his mother. W will have more than sufficient resources as a result of my award to spend whatever she wishes upon C.
Conclusion
222.
The sum that I have awarded will no doubt be a disappointment to both parties. It has been tragic to see them locked in this litigation.
223.
Both parties come from loving and supportive
families.
Mr Todd on behalf of H readily accepted that if H was to meet financial ruin nevertheless his
family
would give him full financial support and in all probability his life would continue as before. I am sure the same applies to W. The sum that I am ordering H to pay to W is in the big scheme of things a small part of the resources available to H and a
very
small part of the
family
resources, amounting to about 8 years of
family
expenditure. Pride is
very
important to H and I fully understand how hurtful the breakdown of the marriage has been. Mr Todd floated across my bows the difficulties that H may say he has in complying with an order for payment. I
very
much hope that these premonitions do not turn out to be accurate, but they cannot be a reason for the court not making what it regards as a fair order.
Supplement to judgment
224.
During the trial I was (quite conventionally) not asked to assess needs in a situation where I found that W’s sharing claim exceeded her needs-based claim.
225.
As the order was being finalised I have been asked to provide a figure for the
value
of the “needs” of W and C for the purposes of enforcement under the Maintenance Regulations and the Lugano Convention. Maintenance is for these purposes given a wide definition under the Convention. I have not been addressed by either counsel as to the level I should so designate but have been referred to AAZ
v
BBZ [
2016]
EWHC
3234 at paragraphs 129-133.
226.
I find W’s needs to be
(i) A house worth £15 million.
(ii) An income fund of £2.5
million p.a. to which I would apply a multiplier of 9 = £
22.5
million
(iii) £250,00
p.a. inclusive of education expenses for C for 13 years which should take him to the end of his first degree = £3.
25
million
(iv) A sum to meet her debt to her cousin and outstanding legal costs which together total £296,388.
227.
Together these total £41,046,388. I assess for the purposes of enforcement under the Convention this figure to be the minimum to meet the “maintenance” of W and C.