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AB v CD [2016] EWHC 10 (Fam)

Application by a former husband in financial remedy proceedings to set aside a consent order on the basis of an allegation that, at the time of the agreement, his former wife failed to make full and frank disclosure in relation to a company of which she was both a director and shareholder. Consent order set aside and matter relisted for further directions.

The parties separated after a short marriage and financial remedy proceedings ensued. The Husband is a successful venture capitalist. The Wife is an entrepreneur and CEO of B Limited ("B Ltd"), a technology company founded and incorporated by her. The liquid assets totalled £5.4million. These included the former matrimonial home in South Kensington and a country home in Oxfordshire.

A First Appointment was listed in February 2012. Although both parties attended with lengthy Questionnaires, settlement discussions took place and the proceedings were compromised by way of a consent order. In summary, this provided for the payment of a lump sum to the Wife and a division of the real property on a clean break basis. Importantly, it provided for the Husband to transfer to the Wife his 4.6% shareholding in B Ltd.

The principal issue in the set-aside application was the value to be attributed to the Husband and Wife's shareholdings in B Ltd. In his Form E, the Husband valued his shareholding at £225,000 on the basis that he adopted the value achieved by another investor who had recently sold his shares in B Ltd.

Less than six weeks after the agreement had been reached, an article appeared in the Daily Telegraph referring to a recent investment by Odey Asset Management ("Odey") in B Ltd believed to be in the "tens of millions". This came to the Husband's attention and enquiries were made of the Wife. Following a considerable degree of correspondence, it transpired that the basis of the investment was at £35 per share and the Husband issued his application.

The Wife's case was that the Husband was, by virtue of his being a shareholder, well aware that the Wife's role was to actively seek out investment. He would have been aware that B Ltd was seeking additional funding to support it in a bid for a potentially lucrative contract with the Ministry of Justice. She rejected that the Odey investment was in the "tens of millions". She accepted that Odey injected £3.5 million in October 2011, and stated that this was used to discharge a previous liability with the balance being used to inject cash flow to survive the financial year. She described this use of so-called "angel" investors as the companies' modus operandi.

The Wife disputed that she had failed to be full and frank in her disclosure. She asserted that the "Odey effect" was fictional as the investment had done nothing more than enable the company to survive. She explained that the Odey investment was subject to a number of conditions which were not met. Thus, the shares could not be issued. It was her understanding, therefore, that these monies were repayable on demand and that they did not belong to the company. 

The Husband's case was based on two limbs: (i) Odey's investment prior to the settlement at £35 per share represents a significant undervaluing of his own shares; and, (ii) had he known that a blue chip investor of Odey's calibre was prepared to back the company he would not have agreed to part with his shares as he did.

Roberts J describes in detail at paragraphs 88 to 148 the oral evidence that she heard over 10 days. At paragraphs 149 to 165, she sets out the relevant legal principles, including the recent decisions of Sharland v Sharland [2015] UKSC 60 and Gohil v Gohil [2015] UKSC 61. These principles are summarised at paragraph 177.

Roberts J made the following findings:

(a) The injection of cash by Odey would have been a potentially material factor in the valuation exercise of the shares in B Ltd. Despite the fact that the company continued to make a loss, the value of its shares had increased throughout the proceedings.

(b) The Wife's Form E valued B Ltd at only £500,000. Although there was no obligation on her to provide any further disclosure between signing her Form E and the First Appointment, as discussions progressed at the First Appointment and it became clear that she would not be asked to provide any further disclosure, her duty of disclosure continued.

(c) The information provided by the Wife was not full and frank. Roberts J was not willing to find that this was deliberate fraud or deception, but did criticise the Wife for her 'unhelpful at best and misleading at worst' responses to the Husband's enquiries following the appearance of the Daily Telegraph article.

(d) The non-disclosure was material. The Husband was deprived of the opportunity of deciding whether to agree to the proposed settlement on the basis of a fully informed decision. Roberts J accepted the Husband's evidence that he would not have accepted the settlement had he known of the Odey investment. The Husband discharges the burden of persuading the court that the terms of the consent order were substantially different from the order that would have been made or agreed had the Wife revealed the investment.

Roberts J therefore set the order aside. She refused to consider substituting a new order and gave directions enabling the parties to have time to reflect.

Summmary by Thomas Wilson,  barrister, 1 Garden Court Family Law Chambers
_____________________

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

Case No: FD11D02580
Neutral Citation Number: [2016] EWHC 10 (Fam)

IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION


Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 11/01/2016


Before :

MRS JUSTICE ROBERTS

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Between :

AB
 Applicant
- and - 
CD Respondent
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- - - - - - - - - - - - - - - - - - - - -

Mr Nicholas Yates (instructed by Bromets LLP) for the Applicant
And the respondent acting in person    

Hearing dates: 22nd June to 1st July 2015 and 11TH November 2015
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Judgment
Mrs Justice Roberts

A. Introduction
1. This is an application by a former husband to set aside a consent order agreed on 6 February 2012 1.  The basis of his application is an allegation that, at the time of the agreement, his former wife failed to make full and frank disclosure in relation to a company of which she was both a director and shareholder.  It is his case that the non-disclosure upon which he relies was a material factor in that he entered into the agreement to compromise his financial claims arising in the divorce proceedings on the basis of incomplete (and, on his case, misleading) information. 

2. It will be convenient in this judgment to refer to the parties as 'the husband' (H) and 'the wife'(W).  I intend no disrespect to either in adopting this shorthand.

3. H's present application was issued as long ago as 30 July 2012.  The case has been before various judges of the Family Division since then and very significant costs have been incurred on both sides.  Whilst each has during the currency of the litigation instructed top flight London firms of solicitors, neither can now afford that level of representation.  W now acts in person, assisted by a McKenzie friend.  H is represented by a firm of solicitors in which his brother is a partner.  He instructs Nicholas Yates who has been his junior counsel of choice throughout.

4. The application to set aside the consent order was due to be heard over five days by King J (as she then was) in March 2014.  For reasons which I shall explain, there was deemed to be insufficient time to conclude that hearing and the matter was relisted before me as a ten day fixture, some fifteen months later in June 2015.  At that stage both sides were represented by leading counsel and I suspect that their availability and the court's ability to accommodate the case in the lists led, in part, to that delay.  At the pre-trial review before me on 8 May 2015, Mr Yates, on H's behalf, made an application to adjourn the forthcoming hearing.  He did so on the basis that the Supreme Court was about to hear the final appeals in Sharland v Sharland [2014] EWCA Civ 95 and Gohil v Gohil [2014] EWCA Civ 274.  Judgment was not expected in those cases until the start of the Michaelmas term in October 2015.  Because of the significant delay which had already been incurred (a delay of almost three years since the issue of H's set aside application), I dismissed the application to adjourn but agreed to reserve my judgment at the conclusion of the set aside hearing until the judgments from the Supreme Court became available.

5. On 14 October 2015, the Supreme Court handed down judgment: Sharland v Sharland [2015] UKSC 60; Gohil v Gohil [2015] UKSC 61.

6. The matter was relisted before me on 11 November 2015.  On that occasion I had written submissions from both W and Mr Yates who, by then, had had the opportunity to absorb the judgments and reflect upon their impact on these proceedings.  W elected to rely upon her written submissions and did not attend the hearing.  Mr Yates did appear and I heard from him, albeit not at any length since, like W, he relied for the most part upon his written submissions.

7. I am now in a position to deliver my judgment on the application before me.


B.The relevant history
8. H was born in March 1950.  He is now 65 years old.  W was born in November 1968.  She is now 47 years old.  The parties met in 2006.  They married on 15 November 2008 having lived together since the beginning of March 2007.  It was a second marriage for W and a third marriage for H. Each had a child or children from their previous marriages.  Whilst there is a dispute as to the date upon which the marriage came to an end, it is clear from the evidence that, by June 2009, they were no longer living together in the same household.  W contends that it was not until July 2010 that they abandoned their final attempt to repair the marriage.  She speaks of holidays and times spent together during those last few months.  In my view, the precise date upon which the marriage came to an end matters not in the context of this case since each accepts that, on any view, it was a short marriage which, on H's case, lasted no more than 7 or 8 months.  Even on W's case, they were married for less than two years.

9. Each of the parties was independently wealthy when they married.  H was, and is, a successful venture capitalist.  He is chairman of E Co.  At the time he met W, he was living in a home which he owned in a fashionable part of South Kensington.  He had other property in the South of France and elsewhere in England.

10. W is an entrepreneur and the CEO of B Limited ('B Ltd'), a company which she founded in 2002 and incorporated in 2004 shortly before meeting H.   The company is involved in the development of technology hardware. At one stage, the company was tendering for an important contract with the Ministry of Justice.  Even before she incorporated B Ltd, W had already established a successful track record as an entrepreneur.  She had built up, and subsequently sold, previous companies and her endeavours as a successful entrepreneur were recognised in 2012 by the award of an OBE. 

11. W issued a petition seeking dissolution of the marriage in May 2011.  Sadly, it was an acrimonious parting of the ways.  H was to issue his own petition some two months later.   Those issues were compromised and the marriage was formally dissolved by decree absolute in May 2012.  By that stage, both parties had issued applications for financial remedy orders (or ancillary relief, as it was then known).

12. W made her financial presentation in Form E on 13 December 2011.  H's Form E is dated 20 December 2011. The liquid assets totalled some £5.4 million.  That sum, together with the illiquid business assets and pension, amounted to c. £6 million.  A little over £930,000 2 was held in W's name and the balance in H's.  In terms of property, H owned the London home in SW7 which W claimed to be their former matrimonial home to which she had added value as a result of project-managing a substantial programme of renovations.  She retained the flat in SW1 in which she was living when they met.  The third property was a country house in Oxfordshire which had been purchased in their joint names in November 2007 and which was subject to a substantial mortgage 3.

13. H stated his annual net income to be just under £180,000.  W's income was estimated to be £95,520 net for the coming 12 months, although the actual earnings for the previous year were £40,283.

14. Within her Form E, W had valued her own (founder) shares in B Ltd at £1 per share, a total of £162,000.   By that stage, she held 162,000 ordinary shares, a holding of 36.96% of the total issued share capital. 

15. B Ltd had been founded in December 2004.  W told me that it had been a concept which she had been developing for some two years before she met H.  She provided the entirety of the start-up capital with £200,000 from her own funds.  Her original shareholding was 200,000 shares.  At that stage, there was no actual value in these shares since the company was not even trading, let alone profitably.

16. By September 2005, she had been able to persuade other investors to put money into the company.  New shares were issued at £3.75 pence per share.  The third round of "angel" investing occurred the following year in July 2006 at a price of £5.75 per share.  H was one of the private investors who put money into the company at this stage.  The following year he made a further investment in the company at a price of £6.50 per share.  In all, by the time he and W had embarked upon their relationship, he had acquired 19,738 shares.  Because he was able to invest as an individual, he was able to benefit from the tax relief then available under EIS (a government sponsored Enterprise Investment Scheme).

17. Later in 2007, and from time to time thereafter, further funds were raised by the issue  of additional shares in the company.  By November 2007, shares were being sold for £13 each.  Subsequent tranches were issued at £25 per share.  However, as is clear from the accounts, external investors were supporting the business on a speculative basis since the company was, and had been from the outset, loss-making.  There was no tangible benefit in any of its underlying assets and expenses exceeded profits on a year on year basis.  It is abundantly clear to me from everything I have heard and read in this case that W had put her heart and soul into her business venture and was working diligently to ensure its success.  She was adept at securing good publicity as a means of encouraging the necessary further investment in the business.  The ongoing development costs of the B Ltd product and its operating expenses were high; external investment was the company's lifeblood at this stage.

18. When the divorce litigation commenced, W was in urgent need of funds to pay her then solicitors, Withers LLP.  In 2010, she sold 50,000 of her founder's shares and raised £50,000 towards her legal costs.  That transaction was the only sale she has made of her own shares since she started the company.   It was the basis upon which she valued her remaining 162,000 shares in her Form E.  That valuation, which she accepts to be her own, was the product of the financial consideration she had received in the 2010 share sale seen against the backdrop of ongoing corporate losses.  By the end of the 2009 financial year, B Ltd had lost just over £668,000.  By 2010, the loss had increased to c. £762,000.  By the time she swore her Form E in December 2011, the loss had risen to £1.364 million.  The company then had cash reserves of £1.53 million to see it through its next year of trading.  The provenance of that cash is something to which I shall return shortly.

19. H's own Form E had attributed to his shares in B Ltd (a 4.6% minority interest) a value of £225,000.  These were not founder shares.  They were shares which he had purchased at arm's length and for financial consideration.  He told me that he was aware that another investor had recently sold shares for £11.59 per share and that was the value he attributed to his own shareholding in B Ltd.  His interest in his Form E was listed as one of several holdings in various unquoted investments.

20. The First Appointment in respect of the financial aspects of the divorce had been listed for 6 February 2012. By that time, the legal teams on both sides had prepared lengthy questionnaires and statements of issues.

21. The documentation prepared by Withers on W's behalf identified the following as issues which were likely to feature in the case :-

i. whether the valuable property in South Kensington (to which W had attributed a net value of just under £6.5 million) had ever been the matrimonial home (the parties having lived in rented accommodation nearby for a number of months whilst renovations had been ongoing);

ii. the ownership of the country property in Oxfordshire and who should retain it following the divorce;

iii. the definition of property which fell into the 'marital acquest';

iv. whether W was in a new relationship with a wealthy individual who was, or might be in future, contributing to her income needs;

v. whether H had made full and frank disclosure in relation to his own financial resources (W was then alleging he had deliberately omitted various assets and sources of income);

vi. whether H had made any contribution towards her company, B Ltd (a contention of his which she denied);

vii. the effective length of the marriage; and

viii. whether W's (then) 18 year old daughter was a 'child of the family' for the purposes of financial provision under the Matrimonial Causes Act 1973.

22. H had his own (equally full) list of issues which he intended to raise with the court.  By and large, and in terms of substance, the statement of issues prepared by his (then) solicitors, Vardags, mirrored the points which I have set out above.  The value of W's shares in B Ltd was not specifically referred to in that list.  However, his questionnaire did include a whole section entitled "B Ltd". H had already been provided with a copy of the 2009 and 2010 Accounts (he was, in any event, entitled to see them because of his status as a shareholder).  Over the course of twenty-two separate questions, he raised a number of enquiries which were clearly designed to establish the most reliable parameters for the present and (likely) future value of the company.  In particular, his questionnaire sought the following information :

'19. In relation to the [B Ltd] shares, please provide a full history of new investment received including purchaser, number of shares purchased, and price paid per share.  Please provide documentary evidence in support to include, but not limited to, any investment or shareholder subscription agreement.'

'20. Please provide a copy of [B Ltd]'s most recent business plan and/or financial projections which have been presented to potential external investors.  Please provide documentary evidence of any and all offers of investment in B Ltd or offers to buy the business received in the last 24 months and the status of any such discussions.'
 ….

'24. Please provide copies of the minutes of all [B Ltd]'s board meetings in the last 24 months.'

'25. Has anyone approached [W] or her representatives to buy [B Ltd] ?  If so, please provide details.'

'26. Please provide details, together with documentary evidence, including any contracts or correspondence (including email) in relation to the oft publicized NHS and prison tagging contracts [B Ltd] is due to/has obtained.  See attached articles from The Telegraph of 26 April 2011, The Telegraph of 9 July 2011, The Daily Mail article of 4 November 2010 and The Telegraph of 19 December 2010.'

'27. In relation to the [B Ltd] shares, please provide a full history of sale and purchase price including for each transaction:

a) The identity of the seller and buyer;

b) price per share;

c) terms; and

d) the number of shares bought.'

….
'33. As of the last filed annual return for [B Ltd] (31 December 2009) Zinc Limited is listed as having 81,332 shares.  What is the connection between [W] and [B Ltd] to Zinc Limited ?'

'34. On 14 September 2011, 30,723 shares in [B Ltd] were sold for £11.59 per share to Zinc Limited.  Please confirm how Zinc obtained the funds for this share purchase.'
   

23. W's own questionnaire of H was a no less formidable document.  It ran to 17 pages of almost 60 separate questions.  Within the material put before the court were the two position documents prepared by W's leading counsel (Mr Philip Marshall QC) and Mr Yates.  Of B Ltd, Mr Yates commented in his document, "[The company] has huge potential as recognised in the financial press" (para 7).  In terms of outcome, by her Form E, W had set her sights on the following:

a. the transfer into her sole name of the Oxfordshire country property;

b. £1.65m to refurbish that home;

c. £600,000 to repay a loan to Investec.

Thus she was seeking a total of some £2.23 million.

24. That claim was informed and underpinned, according to her Form E, on the basis of a clean break and by reference to "[her] needs and entitlement" and her belief that "there is a significant marital acquest".  She also sought the transfer of the shares in B Ltd held by H.

25. H's approach to outcome was very different.  By the time of the First Appointment, he was contending that this was a case where the marriage was so short that the parties should simply 'drop hands' and walk away with that with which they came.  There was no offer to transfer his B Ltd shares to W.  He justified that stance by the fact that W had substantial assets of her own and was then in a stable relationship with another 'very wealthy individual', a fact which was denied by W.

26. Thus were the battle lines drawn when the parties attended court with their respective legal teams on 6 February 2012.

27. As to the information which H then had about B Ltd over and above that provided with W's Form E, shareholders would periodically receive by email narrative updates on the affairs of the company.  These appear to have been circulated by W in December each year and were regularly provided together with management accounts 4.  It is W's case that H saw both the December 2010 update and the December 2011 update before the First Appointment on 6 February 2012.  She has exhibited copies of these documents to her statement dated 4 March 2014.  There is a specific reference in the December 2011 update to possible opportunities for future contracts with the Ministry of Justice.  It also referred to two recent additions to the B Ltd board in Lord Stevens, a former Commissioner of the Metropolitan Police, and Julian Wolfson, a strategist at Odey Asset Management LLP.

28. There is an issue as to whether or not H had received these shareholder updates.  He said he did not, or cannot recall having seen them.  W says that, as a registered shareholder, he would have been sent copies.  In my judgment, W's evidence is to be preferred on this issue because, within the body of the chronology which H's own solicitors sent to W's solicitors in advance of the First Appointment, there is an entry dated December 2011 which reads as follows:

"[W] sends a circular update to B Ltd investors, including of course to [H] as he owns 4% of its shares.

In the circular she states that, "We raised a committed £2.2m during 2010, at £25 per share (valuing the business pre-money around £10m."

The circular also boasts both the growth of the team as well as increasing advertising and several new investment prospects."

29. This entry immediately precedes the entry recording the issue of her divorce petition on 26 May 2011.  This supports W's assertion that H was in possession of the 2010 update and gave a copy to his solicitors.  Whilst there is no equivalent entry on the chronology in respect of the 2011 update, I find it is likely that H did indeed receive a similar document in or around December 2011 (which he may or may not have read with any care).  However, apart from those updates and the other documents which were available to all the company's shareholders, I accept his evidence that he had no wider knowledge of B Ltd's affairs.  His evidence, which I accept, was that, on this basis, he assumed that his shares in B Ltd had little or no value over and above that which he had attributed to them in his Form E.


30. The parties' common expectation as they approached the hearing on 6 February 2012 was that any disputes in relation to valuation or the ambit of disclosure would be resolved by the judge on that occasion.  However, matters never reached that point because on the day the parties decided to negotiate with a view to achieving an overall settlement.   Each decided to take a view and compromise so as to avoid months of future costly litigation.  On W's case, as I accept, one of her essential objectives was to put into effect a complete clean break between herself and H so that neither would need to have any future involvement in the other's life or business interests.  In this context, securing the return of H's shares in B Ltd was an essential prerequisite for W and one for which she was prepared to sacrifice the opportunity of further exploring the disclosure which he had made in his Form E.  She was also prepared to abandon any claim to share in what she contended was a potentially significant marital acquest.


C.  The terms of the consent order signed on 21 March 2012 which reflected the agreement reached at the First Appointment on 6 February 2012
31. The deal which was struck on that occasion, and subsequently approved by the court, included the following headline points:

i. H was to pay to W a lump sum of £350,000 and transfer to her his B Ltd shares within 28 days of the consent order being sealed;

ii. the country home in Oxfordshire was to be transferred into W's sole name on the basis that H would pay the mortgage on that property for a period of a year and thereafter the mortgage would become her responsibility.  If he were not released from the mortgage covenants at that point, the property would be sold with W receiving the net proceeds. By that stage there was virtually no equity in the property;

iii.  W would have no further claim upon any of H's assets, including the South Kensington property which she claimed to be the former matrimonial home.  In a similar manner, all further financial claims which he might have against her were dismissed.

iv.  There would be no order as to costs.

The "anti-embarrassment clause"
32. There was a further and, on W's case, central clause in their agreement which provided for what was to happen in the event of a sale of W's shares in B Ltd before 31 December 2013.  H has referred to this clause as the "anti-embarrassment clause".  H contends that these types of clauses are a fairly regular feature of commercial contracts and, typically, operate at the behest of the seller so as to require the purchase price to be recalculated and subject to upward adjustment in the event that the buyer sells on, at a higher price, within a specified period of time following completion of the original transaction.  In a commercial context, they are said to be designed to protect the seller's position in the event that, for example, the buyer sells shares in a business at a significant mark-up shortly after acquiring its interest from the seller.  A seller might typically insist upon such a clause if, for example, it suspects that the buyer might be attempting to put together a back to back deal with another buyer waiting in the wings.  Other instances where such a clause might appear at the seller's stipulation are those where there may be a lack of clarity as the underlying value of the business or other asset which is the subject of the sale contract, or if the seller simply wants to share in any possible future uplift in underlying value.  H told me during the course of his evidence that these types of clauses were a regular incidence of his commercial business dealings.  He said that it would have been natural for him to have asked for the inclusion of such a clause.  W, on the other hand, relies upon the insertion of this clause in the consent order as being fundamental to the issues which H now seeks to raise.  On her case, there was no non-disclosure but, even if there was, and even if it were to be considered material, this is the mechanism to which she points for redressing any financial imbalance.  On her case, this was the mechanism upon which the parties agreed in order to provide H with the ability to increase his share of the assets in the event that she were to sell the company before the end of 2013. 

33. The relevant clause appears at paragraph 5 of the consent order.  I set it out below in full.

'5. In the event that a sale of the Petitioner's shareholding in B Ltd Limited is completed prior to 31 December 2013, the Petitioner shall make a lump sum payment to the Respondent as follows:

(i) the lump sum shall be of an amount equivalent to the sum the Respondent would have received had he retained his current shareholding (i.e. 19,738 shares) in B Ltd on the basis that:

(a) in calculating the sum due to be paid to the Respondent the first £5 million of any net proceeds of sale paid to the shareholders (which shall be defined as the gross sale proceeds less any sale costs) shall be disregarded; and

(b) the sum to be paid to the Respondent shall be reduced by a sum equivalent to whatever tax the Petitioner is required to pay upon receipt of the sale proceeds on 19,738 such shares on completion of the sale;

(ii) subject to sub-paragraph (iii) below, the lump sum shall be paid to the Respondent within 28 days of the Petitioner receiving any cash element paid for her shareholding in B Ltd Limited;

(iii) in the event that the consideration received upon the sale of the Petitioner's shareholding in B Ltd Limited is in the form of new shares or partly in the form of new shares, that part of the lump sum to be paid to the Respondent in respect of that part of the consideration shall equate to the pro-rata value of the new shares after applying (i)(a) and (b) above to such figure and shall be paid to the Respondent within 28 days of the new shares vesting unconditionally in the Petitioner.' 

34. On W's case, the relevance of the figure of £5 million which appears in paragraph 5(i)(a) is that it is by and large the product of B Ltd's entire issued share capital x £11.59 or, in other words, the approximate underlying value which H was then attributing to the company for the purposes of his Form E. Thus, she contends, there was an agreed in-built mechanism for ensuring that, in the event she should sell her shares, H was not deprived of the opportunity to benefit if the future value of those shares increased over a period of slightly less than two further accounting years 5.

35. H denies that this was the specific reason for the insertion of this clause in the consent order.  Whilst he accepts that, ex hypothesi, it operated so as to provide him with the opportunity to share in any future uplift in value before the end of December 2013, his case is that it was never intended to provide W with a shield against allegations of material non-disclosure.


D. Events following the agreement reflected in the consent order
36.   On 14 May 2012 H sent to W's solicitors a cheque for £200,000 in part payment of the lump sum of £350,000.  The balance of that lump sum remains unpaid because of his subsequent allegations of non-disclosure.  On the same day, he sent a signed share transfer form which was intended to satisfy his obligations in relation to the transfer of the B Ltd shares into her name.  In fact, it appears that he had used an out of date form to effect the transfer, a fact which he had not noticed at the time.

37. It is H's case that he was unable to pay the full £350,000 lump sum at that time because he needed to raise the additional cash by selling some shares but was then in a 'closed window' period in relation to the relevant shares.  W does not accept that explanation.  It is her case that he purchased shares in four publicly quoted companies during that period at a cost of just under £200,000.  These he added to his personal portfolio and thus his explanation for failure to pay the full sum rings hollow.  H disputes these facts.  I did not hear specific evidence about this aspect of the case and make no findings as to why the full amount was not paid on time.


E. The alleged material non-disclosure
38. B Ltd had already attracted significant publicity in the financial press.  As W told me, she had worked hard to ensure that the company attracted positive media attention in order to give her a platform from which to continue to raise funding for ongoing running and development costs.

39. On 19 May 2012, less than six weeks after the consent order was sealed, an article appeared in the Daily Telegraph which included the following passage:

'Odey Asset Management, the $7bn (£4.4bn) hedge fund run by Crispin Odey, has taken a multi-million pound stake in [B Ltd], the personal tagging firm led by [W].'

…. 'The 20pc stake, which is believed to value [B Ltd] in "the tens of millions", is designed to boost the company's funds as it bids for a crucial Ministry of Justice (MoJ) contract to track previous offenders who have been released but remain tagged.

The investment is an unusual one for Odey, which is better known for its stakes in BskyB, JP Morgan and Pendragon, and it is thought to be only the second time the fund has invested in a private company.'

'…. Odey's Julian Wolfson will join [B Ltd]'s board as a result of the investment, sitting alongside Lord Stevens of Kirkwhelpington …. who joined as chairman in July 2011….'


'[B Ltd] is understood to be down to the final four for an [sic] MoJ contract to provide the technology to allow those who are tagged to be tracked using GPS.'

'… [W] confirmed the Odey investment, saying in relation to the MoJ bid: "We weren't looking for money, but it has given us the financial support to win a contract like that."

She added [B Ltd] may need to raise additional funds if it succeeds in winning the MoJ contract, depending on the size of the deal.'

40. When this article came to H's attention, he instructed his solicitors to write to W's solicitors in order to seek clarification about precisely when the negotiations for the deal with Odey were undertaken and whether this was something which should have been disclosed during the negotiations at court on 6 February 2012.  In a letter dated 21 May 2012, Vardags asked Withers to ensure that the £200,000 part-payment of the lump sum which had already been paid was secured pending the outcome of these enquiries and that no further steps were taken to execute the stock transfer form in relation to the B Ltd shares. There was also a request for a significant quantity of documents which W claims were confidential to the company. (Despite what H describes as the defective form which H had used for this purpose, it appears that the share transfer was indeed registered.)

41. W immediately instructed her solicitors to respond confirming that the value of her shares had not changed since her Form E. She refuted the suggestion that the company was "worth tens of millions" and that it was "down to the last four in a MOJ contract" as the press report claimed. Over the course of the next month, correspondence went back and forth between the two firms without much headway being made.  On behalf of W, Withers maintained that she had given full and detailed disclosure of all relevant facts and matters whilst H's solicitors continued to press for further information.

42. There was more press coverage about W and B Ltd in the summer 2012 edition of The Director Magazine.  The piece was a fairly lengthy profile of W's business career.  Speaking about the company, she appears to have told them that "… the recent investment in the business from Odey Investment Management – the £4.4bn hedge fund run by Crispin Odey – has given B Ltd the financial backing the company needs to deliver its bid to the ministry [of Justice].  If the MoJ are [sic] going to give us this contract they need to know that we can finance it which is funny because they are the ones with the solid balance sheets and should be able to pay us on time. But in the absence of them wanting to do that we need to have financial support, and now we have that in Odey."

43. As to the potential value to the company of the Ministry of Justice contract, I have within the court bundles a copy of a tender document produced by the government as part of its commitment to transparency.  That document refers to the Ministry's wish to establish a framework agreement with potential providers – partners and investors – who might be interested in participating in delivering 'payment by results' projects for two pilot projects for offenders within the community.  The estimated length of the contract was four years; the estimated value was '£0 - £4,000,000'.

44. W's fundamental case in relation to these allegations is that H was throughout aware that the company had been looking for additional funding to secure not only its bid for the Ministry of Justice contract but also its ongoing running costs on a day to day basis as it pressed ahead with its bid.  She describes as 'nonsense' the suggestion that this round of external funding from Odey (being simply the latest of several rounds of investment) injected value to the tune of 'tens of millions'.  On her case it was no more nor less than working capital which was used to repay existing borrowing and provide the company with sufficient cash-flow to survive the 2012 financial year which lay ahead.  These are matters to which I shall have to return at a later stage of my judgment.

45. In the meantime, and against the background of H's ongoing requests for information, he himself took action which gave rise to considerable consternation on W's part.  She had a significant press profile in the financial media by that stage, not least because in June 2012 she had been awarded her OBE.  It was during this period that she became aware that H had approached the press making allegations of financial irregularities against her.  W refutes that there was any truth whatsoever in these allegations.  However, because she was then in the throes of competitive negotiations with the Ministry of Justice in relation to the widely advertised tender for tagging offenders, she saw his actions as a potential threat to the success of that bidding process.  She instructed her solicitors to apply for an injunction preventing H from speaking about her to the press.  H filed a statement in response to her application.  In it, he admitted that he had used his corporate contacts to approach a well-known Daily Mail journalist because he wanted to discuss with that journalist a story he had previously written about another female entrepreneur (not related in any way to W).

46. That particular press story (which W describes as a "smear piece"), written in March 2012, had sought to cast some doubts on the financial integrity of some of this individual's corporate dealings.  It referred to the fact that previous companies in which she had been involved had collapsed leaving debts and that the company which she then owned and controlled had made successive losses year on year since its foundation.  It cast this individual as a focus of scrutiny, if not outright controversy.

47. In his statement of 18 July 2012, H said this of his meeting with the Daily Mail journalist:

"25. I contacted [the journalist] and discussed [W] and her business history with him.  Everything I discussed with him was information which can be found in Companies House records and from third parties willing to discuss the matter.  However I realise that one of the documents I provided to [the journalist] was page 12 of [W's] Form E in respect of her shareholding in B Ltd.  The level of [W's] shareholding can of course be found from Companies House though I of course appreciate that this should not have been provided to [the journalist]." 

48. W's initial and continuing impression was that H was attempting to persuade the journalist in question to write a similar piece about her, thereby prejudicing the company's chances of a successful bid for the Ministry of Justice contract.

49. For my part, I find it difficult to understand what motive H might have had in approaching this journalist and providing him with various documents about W's business interests if such motives were not contaminated, at least in part, by a wish to discredit her in some shape or form.  I find it difficult to accept that the provision of an extract from her Form E was an entirely innocent mistake, as he suggests it was.  He does not explain in his written evidence why he was pursuing what he describes as "the matter" with this journalist, but I do not accept that his intentions were wholly innocent.  His actions almost certainly fuelled the climate of hostility and mistrust between them during this period of time (which manifestly continues to this day).

50. On 17 July 2012, W issued a further application for enforcement of the outstanding balance of the lump sum due to her under the terms of the consent order.  Both matters came before Coleridge J two days later on 19 July 2012.  At that hearing, H advertised his intention to issue an application to set aside the consent order on the basis of W's material non-disclosure.  W's application for injunctive relief was compromised on the basis of cross-undertakings and a further hearing was fixed for directions in relation to the outstanding applications for enforcement and set aside.

51. H's notice of application to set aside the consent order was duly issued on 30 July 2012.  On 5 November 2012, W responded with her own application to strike out the 'set aside' application.

52. These matters were listed before Parker J on 22 November 2012.  By this stage, there was before the court a lengthy questionnaire from H's legal team in relation to what he described as W's 'Material Non-disclosure'.  I have had the benefit of reading a verbatim transcript of that hearing.  Mr Yates appeared on behalf of H on that occasion; Mr Philip Marshall QC represented W.

53. In the context of events as they unfolded during this hearing, I need to record how the various exchanges between the parties' solicitors had developed since H first called into question W's disclosure in the context of the negotiations which resulted in the consent order.


F. Developments in disclosure after 21 May 2012
54. Included within the body of the first letter written by Vardags on H's behalf on 21 May 2012 after publication of the article in The Daily Telegraph was a series of over thirty questions which sought not only a narrative response from W but also the provision of underlying company documentation, much of which was confidential and contained commercially sensitive information.

55. Her solicitors' response on 22 May 2012 was in these terms:

'Your assertions [about non-disclosure] are totally misplaced.

The article in The Sunday Telegraph misrepresents the position.  Odey has not made an investment in B Ltd and our client did not confirm the investment by Odey.  However, there has been a director of Odey's on the B Ltd board as a non-executive for some considerable time and your client is well aware that our client is constantly talking to potential investors.  It is for that reason that the structure of the settlement that was negotiated took the form that it did – your client wanted to be able to benefit if B Ltd comes good.

Certainly our client hopes that Odey will make a proposal because in order to bid for the Ministry of Justice contract, she needs to demonstrate that there are backers who will provide financial support.  However, what Odey is being asked to do is to provide financial support in the event that the bid is won by B Ltd.  That bid will only be determined mid-late next year.  As our client is quoted as saying in the Sunday Telegraph article, winning the MOJ bid would definitely mean having to secure significant investment.

As of now, the turnover in B Ltd is around £500,000 pa and it is a loss making venture.  Our client gave full disclosure and detailed disclosure.  There are no new documents relevant to the value of B Ltd since we gave disclosure. 

Nothing has changed from the position that was outlined so extensively in respect of disclosure concerning B Ltd; there has been no new business plan drafted and no injection of cash.' [my emphasis]

56. H's solicitors' response to this letter is dated 28 May 2012. In that letter they reminded W's solicitors that she had made numerous representations about the value of B Ltd and its shares.  Those representations, it was said, were relevant not only to the value of the shareholding which H had agreed to transfer to W but also to the merit of further investigation of the other issues referred to in his questionnaire which pertained to the valuation of the shares which she herself was retaining.  Her non-disclosure of the Odey investment, if indeed it was such, was "material to the understanding upon which [H] compromised the cross-claim between our clients".

57. There was no response from W's solicitors to that letter.  A further reminder was sent on 11 June 2012.  It precipitated a response on 14 June 2012 which threatened an application for costs in the event that an application had to be made for the enforcement of payment of the balance of the lump sum.

58. It was that exchange which led to W's enforcement and H's set aside applications and the parties' appearance with their legal advisers before Parker J on 22 November 2012. As I have said, by that stage, H's advisers had produced a formal questionnaire in relation to the alleged material non-disclosure.  This had been sent to W's solicitors on 15 October 2012.  W was directed to respond to H's questions although the scope and the reach of the enquiry was restricted in terms of the time line in respect of which she was obliged to provide primary or source documentation.  Her application to strike out H's set aside application was dismissed with costs.

59. H's questionnaire was targeted at disclosure relating to any financial support or investment by Odey or any other entity in B Ltd.  The document served on W's solicitors contained, amongst others, the following definition clause:

'"Investment" means the provision, or option to provide, or requirement to provide, to [B Ltd] (as defined above) or to the Applicant (as defined above), of equity investment and/or debt and/or any other funding whatsoever, whether already provided or to be provided in the future, whether unconditional or contingent upon events or milestones being reached, and whether in the form of cash [or] any other form of compensation.' [my emphasis]

60. The publicity in the financial press was clearly the catalyst for H's set aside application.  As he had contended in his statement in support of that application, W had not disclosed during the course of the proceedings or the negotiations at court on 6 February 2012 that there was any potential investment deals on the horizon in respect of B Ltd.  The lack of any positive or helpful response to his solicitors' enquiries since then had fuelled his suspicions that she had yet to reveal the true position. In fact, she had referred in one of her circulars to "several new investment prospects". H also confirmed in his oral evidence that he realised raising money for the company was an important part of her role as CEO of B Ltd.

61. On 23 November 2012, Lord Stevens on behalf of B Ltd's board of directors wrote to W reminding her that her employment contract prohibited her from releasing confidential company information and/or documents which were company property.  The letter recorded the board's concern that H could not be relied upon to respect the confidentiality of such material.  I was told by Lord Stevens when he gave his oral evidence that this letter was written following legal advice from the company's solicitors.

62. W's case that she was trying to do what she could at that stage to answer H's questions is evidenced in part by the fact that she had asked H to allow her to provide the B Ltd board with a copy of his questionnaire.  That request was turned down by him on the basis that to do so would breach his own confidentiality in the matrimonial proceedings.  His solicitors maintained his position that W did not need the Board's consent to produce the material he had requested since, as a director, she was entitled to it.  In my view, the position was not quite so straightforward:  W was wearing two hats in these proceedings.  In the normal course of events, the disclosure of relevant financial information is protected by the implied duty of confidentiality which attaches to financial remedy proceedings :  see Clibbery v Allen [2002] EWCA Civ 45, [2002] Fam 261, [2002] 1 FLR 565 and DL v SL [2015] EWHC 2621 (Fam). W might well have been entitled to see the various documents and information which were being requested by virtue of her status as a director but the board's stated position in relation to production of that information to H was clear, for reasons which they had explained.   The information sought was commercially sensitive in the extreme concerning, as it did, negotiations which were ongoing with third parties who had an expectation that confidentiality would be maintained.  In the view of both the company and W, H had not respected the confidentiality of her financial disclosure in these proceedings in the past and the board of B Ltd had withheld its permission in response to her request to be allowed to disclose what was sought by him and his legal team.  I shall return to this aspect and W's position in due course.
 
63. W's response to H's first questionnaire was delivered on 4 January 2013. In that document, she made the following representations :

(i) she denied confirming to the Daily Telegraph journalist that Odey had made an investment in B Ltd;

(ii) she was aware that the Ministry of Justice would have had concerns about the level of B Ltd's turnover (then less than £500,000 per annum) in circumstances where there was a restriction on bidding for work from a public sector procurer where the value of the work was more than four times a provider's annual turnover;

(iii) there were ongoing discussions within the company about raising financial support for the company in the event that it were to enter a competition for the Ministry of Justice contract;

(iv) Julian Wolfson, a member of B Ltd's board of directors, was affiliated to Odey.  He and W had met officials from the Ministry of Justice in May 2012 when the contract was announced.  During that meeting he had assured these officials that, in the event B Ltd was awarded the contract, subject to its terms, investors like Odey were likely to provide funding;

(v) In relation to the article in the Director magazine, at no time did W say or confirm that Odey had made any investment in B Ltd;

(vi) There were several inaccuracies in the Director article, including the report that the company's turnover was "over £4m".  H would have known from the accounts that this was untrue;

(vii) Julian Wolfson had told her that Odey would be likely to support B Ltd if it won the government contract and needed working capital but the results of the tendering process were not likely to be known until late Summer 2013;

(viii) Other than the offer of potential support in relation to the Ministry of Justice bid, Odey had not made any other investment or agreement with B Ltd; [my emphasis]

(ix) W had not received a draft of the article in the Director magazine prior to publication 6;

(x) W had first met Crispin Odey in 1994 and they had met socially from time to time during the intervening years.  Julian Wolfson became a non-executive director of the B Ltd board in September 2011;

(xi) There had been no exchange of business plans, financial projections or the like between B Ltd and Odey and no legal documentation had been prepared or exchanged in relation to any investment;

(xii) W denied that she had ever stated that Odey had already invested in B Ltd; she had only ever made it clear that financial support would be required by B Ltd if the company were to have a chance of winning the government contract;

(xiii) She confirmed that she met potential investors during the course of her daily working life but none had invested to date;

(xiv) The company was seeking independent legal advice in relation to the provision to H of commercially sensitive company information (including board minutes) because of H's earlier admission that he had provided confidential information to the press.

64. Amongst the documents which W provided on that occasion was a letter dated 5 December 2012 which the Chairman of Odey (Mr David Fletcher) had written to her.  I reproduce its contents below:

"Odey is a UK based Asset Management company.  Odey's attention has been drawn to an article in the Daily Telegraph of 19 May 2012.  Odey's policy is to maintain strict confidentiality in its relationships and in particular Odey does not normally comment on inaccurate press speculation.

However, Odey can confirm that it began discussions with B Ltd in May 2012 with a view to providing financial support to the company for its discussions with the Ministry of Justice.  B Ltd is engaged in the development of tracking devices suitable for use in the monitoring of older people living alone and patients in care and in offender management.

Odey's particular interest is offender management, since it believes that pressures on public expenditure create a potential worldwide market for tracking solutions in substitution for custodial sentences.  Odey believes that if suitable devices are developed and sufficient contracts won, there is an opportunity to create a successful global business in this sector.  Odey considers that B Ltd, under your leadership, may be capable of providing the basis for the development of such a business.

For these reasons, Odey would consider, subject to the structure and terms of a Ministry of Justice contract being awarded, providing B Ltd with a proposal for the Board to consider for the financing of this contract.  Neither B Ltd nor Odey is able to estimate the likely requirement, if any, for such funding.  No commitment has been made either by Odey to provide this finance, or for B Ltd to accept it, and the terms would have to be negotiated between Odey and B Ltd when the requirement arose.

Odey would not make an offer to buy B Ltd Limited or any or all of the founders' shares in B Ltd.  Such a transaction would not be consistent with Odey's investment objectives.  We look forward to discussing the financing with you as the process advances and are willing for you to share this letter with your legal advisers.'

65. The letter from her solicitors which accompanied W's replies referred to this letter as conclusive evidence that earlier press speculation was inaccurate and that any further enquiries into confidential information relating to B Ltd was "nothing more than a fishing expedition which will not be tolerated".

66. On 4 May 2013, some four months after delivering her replies to H's questionnaire, another article appeared in The Daily Telegraph.  It concerned the ongoing progress of the company's bid for the Ministry of Justice contract.  Whilst acknowledging that B Ltd was competing against the likes of major international companies,  it continued:

'Were B Ltd to win, the deal would be transformational, and need an increase in manufacturing and executive management, not to mention investment.  [W] is talking to potential investors, but rules out going public at any time in the near future.'

67. The article also referred to the fact that W had funded the business with her own money and capital from angel investors but "she has also gained a recent investment from Odey Asset Management, the hedge fund, which now owns a 20pc stake".

68. On 10 May 2013, H issued a further application seeking disclosure from the company itself.  This appears to have prompted a further letter from Lord Stevens on behalf of the board.  On 13 May 2013, he wrote to W expressing once again the board's concerns about releasing to H any information which was commercially sensitive.  However, the company was prepared to provide certain information which had been requested which was not relevant to matters of particular sensitivity or to individual employees.  Of relevance in the present context and the value of W's shares as 6 February 2012, Lord Stevens' letter laid out the following points:-

(i) in 2012 the company received an interest bearing loan of £150,000 which is repayable in 2015.  The loan was secured in order to assist in the development of a new product.  Both the name of the American corporate lender and details of the product were commercially sensitive matters.  The loan was not contemplated as at 31 March 2012.  Negotiations had begun in September 2012 and completed in November 2012.  This was the only offer of investment received by B Ltd in 2012;

(ii) the company had allocated share options to employees during 2011 and 2012 but W was not a beneficiary of the scheme.  Her Majesty's Revenue and Customs had approved the scheme on the basis that the option price was £25 per share and it was a requirement that the option price should not be lower than the market value of the shares on the date of the grant.  Thus, the company's shares did not exceed £25 per share in December 2012.

69. On 17 May 2013, a firm of solicitors instructed by B Ltd, Jones Nickolds, wrote to H's solicitors in relation to his pending application for disclosure against the company.  They pointed out that W was a minority shareholder and there were a number of registered institutional shareholders on the register.  She was but one of six directors and a separate sub-committee had been set up to deal with these matters in her absence.  She had no part in the preparation or presentation of the board's position and would not see the letter until her solicitors were copied in.  That letter contained the company's proposal that an independent expert should be appointed to value W's shares and the company would provide to the expert instructed whatever documentation was necessary to enable that process to be undertaken.  It described the breadth of the existing questionnaire as a 'fishing expedition' which was seen as an attempt to 'cause commercial "trouble"' for the company. The letter continued in these terms:

'The current application is also of serious concern to the company because it is the subject of onerous confidentiality obligations in relation to commercial negotiations and early stage contracts which are ongoing with the British government and other governments and clients internationally.  [H] is aware that the production of documentation bearing on those third parties will naturally cause them a high degree of concern at a particularly sensitive stage in our negotiations.'

70. There was a further hearing before Parker J on 20 May 2013.  By this point in time, H and his advisers had obtained copies of the 2012 accounts for B Ltd which had been filed at Companies House.  H contends that these were filed late.  A reconciliation of those accounts with the earlier accounts appeared to show that a sum of approximately £3.5 million had been injected into B Ltd in an apparently unconventional manner.  According to H's written evidence, this investment appeared to have been made before W's Form E in which she represented that the value of her founder's shares was £1 each.  In terms of the company's share capital, the notes to the accounts recorded that, whilst 438,206 ordinary shares had been allocated and fully paid, there were a further 102,248 shares which had been paid up but not yet allotted.

71. B Ltd was represented at the hearing on 20 May 2013 by counsel, Mr Ben Shaw.  He prepared a written skeleton argument.  Paragraph 3 of that document reads as follows:

'3. The Company's solicitors, Jones Nickolds, have sent the attached letter to [H's] solicitors making the Company's position clear.  As set out in that letter, it is a crucial point that [W] does not control the Company.  In this regard, [W] holds roughly one-third of the shares in the Company.  The remaining shares are held by independent "angel" investors and others.  The investors include a well-known hedge fund, Odey Asset Management.  Further, [W] is one of six directors on the board. She therefore has no control of the Company either in general meetings or at board level.' [my emphasis]

72.  Mr Yates, on behalf of H, submits that this was the first occasion – some ten months after H issued his set aside application – on which the existence of the investment by Odey in B Ltd was confirmed by the company.

73. At the conclusion of that hearing, Parker J ordered W to answer five separate questions in substitution for an order that she respond to H's lengthy questionnaire.  These were the five questions:

(i) Who paid £3.4 million for the purchase of shares in B Ltd (as referred to in the Notes to the accounts for the year ended 31 December 2011) and when was that paid ?

(ii) Why were those shares paid up but not allocated ?

(iii) Who has invested or been given options to invest in B Ltd Limited from 1 January 2011 to date and:

a. How much did they invest ?

b. What price did they pay ? and

c. When did they invest ?

(iv) What was W's remuneration after the £3.4 million investment ?

(v) Does W have any other investment in B Ltd via a separate entity, such as Zinc, and, if so, provide full details.

74. W's response to those questions on 14 August 2013 came at a time when she was acting as a litigant in person, her previous solicitors, Stewarts Law, having ceased to act the previous month.  In her replies, she set out the detail of the cash which Odey had made available to B Ltd, a sum of £3.5 million 7.  It had been paid in October 2011, some five months before the agreement which the parties had reached at court on 6 February 2012.

75. Much of the substance of her written replies to these questions was explored in forensic detail during the course of her cross-examination by Mr Yates.  I shall come to that evidence in due course.  However, at this point, the broad thrust of her narrative response in August 2013 was in these terms.  She said that the only shares purchased in B Ltd in 2011 were new shares issued to a named individual at £25 per share.  The shareholders had been informed in 2011 that the company was in dire need of a further cash injection but none (including H) had been prepared to advance new working capital.  A South African businessman (Nathan Kirsh) had been prepared to support the company financially.  Through one of his holding companies, KI Corporation ("KI"), he had provided £2 million in 2010.  This loan had been channelled through the vehicle of a formal Convertible Loan Agreement dated 9 July 2010.  The initial agreement provided for a loan of £500,000 which sum could be converted into equity at the price of £25 per share on the basis of put and call options.  The loan was repayable at the end of one year.  The intention underpinning the initial agreement was that KI would carry out its due diligence in relation to B Ltd with the objective of determining whether to provide the company with an additional amount of up to £1.5 million.  W contends that this information would have been available to H since it was included in the shareholder updates for the relevant year.

76. Over the course of 2010 and 2011, KI paid the full £2 million which had been contemplated by the terms of the original Convertible Loan Agreement.

77. W explains the difference in price between the £25 per share quoted in the Convertible Loan Agreement and the £11.59 value given by H in his Form E on the basis that the price at which a speculative investor puts new money into a company is different from the price at which shares would change hands as between existing shareholders and/or the founder.  She had never been able to sell her shares for any more than £1.00 per share because the company was not making a profit and had no underlying assets.  Without her presence driving the company forward, investment was likely to dry up altogether.

78. Without securing the Ministry of Justice contract, W was concerned as to whether B Ltd would be able to repay the £2 million loan.  By 2011, KI was in any event refusing to convert the loan into equity on the basis that it regarded the conversion price of £25 per share to be too high.  In addition, the lender was insisting on securing preference shares to the detriment of the existing body of shareholders.  Relations between the two companies deteriorated further and KI threatened to sue B Ltd.  It was at this point that W secured the new funding from Odey.  On W's case, the cash which was provided (£3.5 million) was to be held to the order of Odey and had to be repaid in the event that completion of its investment did not take place.    With the threat of litigation by KI, part of the Odey funds was used to redeem the loan of £2 million due to KI.  Final settlement with KI was concluded in February 2013.  The balance of Odey's advance of £1.5million was earmarked as cash flow which would be needed to keep the company solvent for the next 12 months.

79. According to W's evidence, the proposed investment agreement with Odey required B Ltd to comply with an extensive range of conditions.  These conditions had not been satisfied by the company's financial year end (31 December 2011) and, thus, the transaction could not be completed and the shares could not be issued.  When the time came to file year end accounts, the company was presented with two options.  Either the Odey funds could be treated as a loan (with the result that the company would have finished the year with a significant negative balance sheet) or they could be treated as what they were (i.e. paid up but unissued share capital).  Given that B Ltd was then pursuing the Ministry of Justice bid, it was important that the company was seen to be in a position of solvency.  It is for this reason that W maintains she was justified in not disclosing this information either at the time of the original agreement with H on 6 February 2012 or subsequently over the intervening months during which H was seeking further information after the publication of The Daily Telegraph article.  On her case, Odey's injection of cash had made no material difference to B Ltd's underlying share price.  It had simply enabled the company to repay its existing loans and carry on trading.  The fact that the Odey funds had become available some five months before the compromise of the matrimonial proceedings was no more nor less than part of the financial modus operandi under which the company had operated more or less since its incorporation.  It was a small technology company with significant development costs.  Not only did those costs have to be serviced by means of external investments or loans, the company also required cash flow for its day to day operational expenses.  Odey was simply one such potential investor, on W's case, and she saw no reason to disclose this aspect of the company's internal affairs in the context of her obligation to make full and frank disclosure in the matrimonial proceedings.  She points to the fact that H was, and would throughout have been, well aware that her role as the company's CEO was to secure investors precisely so as to ensure the company's survival and its ability to become profitable through securing contracts such as that which was on the horizon with the Ministry of Justice.

80. According to part of W's response to the five questions, "Odey agreed to convert their loan to shares in [B Ltd] following the KI settlement.  They now hold 119,920 shares, with preferential rights".

81. Thus, H's case in relation to material non-disclosure is based upon two limbs.  First, he contends that Odey's investment at £35 per share would have represented a significant undervalue of his own and W's shareholding as at the date of their agreement in February 2012.  Secondly, he says that had he known that a blue chip investor of this calibre was prepared to back the company, he would not have agreed to part with his shares on the terms he did.  His case is that the Odey investment in B Ltd was transformational in terms of potential future value and he maintains that case from the perspective of an experienced venture capitalist.

82. In response, W contends that this so-called "Odey effect" is fictional because its intervention in terms of providing capital to B Ltd has done nothing more than  enable the company to survive to this point.  The bid for the Ministry of Justice contract was not successful and the company has continued to trade at a loss.

83. In October 2013, H's solicitors raised a schedule of deficiencies in relation to W's written responses.  By her replies in February 2014, W provided further information.  She provided a timetable in respect of the dates upon which B Ltd had drawn down against the loans which KI had made available.  She explained that KI had refused to sign the Deed of Adherence to B Ltd's Shareholder Agreement which was a requirement of every one of the company's shareholders, including H.  In relation to the Odey funds, she said this:

"There has never been a Loan Agreement with Odey.  Discussions envisaged an equity investment, subject to the majority of shareholders agreeing to give special shareholder rights to Odey.  The shares ultimately granted to Odey at the end of February 2013, following their signature of the Deed of Adherence, are consequently more valuable than other Ordinary shares, as Odey's shareholding cannot be diluted without their consent."

84. When asked about the treatment of Odey's investment in B Ltd's accounts, W responded in these terms:

"As [H] knows, I am not an accountant and have no financial training.  However, I understand that shares cannot be issued, and an SH01 filed just because there is an "intention" of an investment.  I was aware throughout 2012 that Odey had the right to ask for the return of their money at any time, and the consequences of that for the Company.  Had Odey asked for their money back during that period, including 6 February when we reached the consent agreement, then [B Ltd] would have been insolvent.

The company secretary, [SP], is responsible for all filings on behalf of the Company.  The decision regarding the accounting treatment of the monies held on behalf of Odey was made by the Board of [B Ltd].  The decision was led by the economist Professor John Kay CBE FRSE FB in consultation with the company's accountants, Mazars."

85. In preparation for the anticipated final hearing in March 2014, Professor Kay had written a letter on behalf of B Ltd and signed a formal witness statement.  He dealt in that statement with the accounting treatment of the Odey investment.  Professor Kay joined the company's board in September 2012.  He explains the situation in this way:

"25. The reason the company's internal and external accountants had adopted this treatment was that Odey had provided funds in contemplation of an investment, but their terms had not been met within the required timeframe.  Under the terms of the agreement, the monies received from Odey were repayable if the conditions precedent to an equity investment were not completed within 28 days, and were therefore technically repayable on demand at 31 December 2011 and indeed continued to be repayable on demand at October 2012.

26. I thought that the draft accounts revealing the company's position as insolvent at 31 December 2011 did not properly represent the financial affairs of the company, because I knew that the intention had been that the Odey monies that were provided to [B Ltd] would convert into an equity investment, allowing the company to meet its liabilities and continue trading.  I was confident from my knowledge of the progress of discussions with Odey in October 2012 that their loan would in fact become an equity investment."
 …..

"28. Following further discussion, I proposed the treatment contained in the filed accounts i.e. that the Odey investment should be treated on the basis that the subscription monies had been paid up, in contemplation of the subsequent equity investment, although the shares had not been issued at the balance sheet date.  The effect was to enable the Odey investment to be classified in the balance sheet as equity rather than debt….".

86. On 26 March 2014 the parties and their legal advisers attended court for the start of what was to have been a five day final hearing of both H's set aside application and W's cross-application to enforce the terms of the original consent order.  W was represented on that occasion by leading and junior counsel, Mr James Turner QC and Mr Deepak Nagpal.  Mr Richard Todd QC and Mr Yates appeared for H.   The first day of that hearing was set aside for the judge's reading day.  By the time the parties appeared in court on the second day, negotiations to settle the case had started.  King J (as she then was) attempted to assist the parties to narrow the distance between them but, by the time it became clear that negotiations were not going to be productive, there was insufficient time for the case to be completed.  I suspect that by that stage, the judge may have felt herself to be conflicted in any event as a result of what must have been an agreement that she should enter the settlement arena on the basis of a quasi-FDR type of hearing.  The matter was listed before me with time estimate of 10 days, along with a pre-trial review.  Both parties have since filed further updating statements.  As I have said earlier in this judgment, I subsequently rejected Mr Yates's application on behalf of H for an adjournment of the final hearing in view of the inordinate length of time which it has taken this litigation to reach the end of its journey in the Family Court.

87. I pause only to say at this point that it is a great shame, in my judgment, that H and W have not managed to settle this litigation.  I have seen copies of various open offers which each has made to the other in an attempt to secure closure.  At times it seemed as though they were very close to agreeing matters although the final hurdle was never crossed.  Thus it was that, on 22 June 2015, the final hearing before this court  commenced.  By that stage, I had additional written statements not only from the parties but from Barry Stiefel, a witness upon whose evidence H wished to rely.  Mr Stiefel is a director of KI Corporation and H wished to adduce at trial his evidence in relation to the repayment of that company's loan to B Ltd in October 2011 on receipt of the injection of the Odey funds.  Despite the lateness of this evidence (to which I shall return), I gave permission to H to call this witness at the final hearing.


G. Oral evidence: the witnesses from whom I heard
88. Before turning to the substance of the oral evidence, I propose to say something about my observations of the parties at this point.

89. Inevitably, W's task at the hearing was made more difficult than H's because she appeared as a litigant in person.  Although she had the assistance of one or two McKenzie friends throughout, she conducted her own cross-examination of H and his witnesses herself.  In my view, she discharged her task with an impressive command of the case.  She was a courteous advocate who typically addressed the court with an economy of language which was almost invariably on point and in context.  Notwithstanding the exquisitely sensitive task which fell to her in her cross-examination of H, she remained calm and in control of her personal brief.  Her questions were invariably on point and, in terms of the areas which needed to be covered forensically, she needed little assistance or guidance from either me or her McKenzie friends.  That I do not make similar remarks in relation to Mr Yates's presentation of his client's case is no reflection of any shortcomings on his part.  Characteristically, his advocacy was of the highest standard and he pressed H's case and his cross-examination of W with complete mastery of his facts.  However, Mr Yates stood firmly on his familiar professional ground in discharging this task whilst W had no such advantage.  I wish her to know that she has assisted me considerably, both in her written and oral submissions in this case.


90. W is quite clearly an impressive woman.  It does not surprise me that she has succeeded in her business career to the extent about which I have read and heard.  She is plainly intelligent, focused and driven in her desire to make a success of the various projects and commercial enterprises into which she invests so much of her time and energy.  She is also charismatic and extremely personable.  I have little doubt that her communication skills and her ability to persuade potential investors across the corporate threshold justify the reputation she clearly has as CEO of B Ltd.

91. In terms of her own evidence, she was scrupulous in her efforts to ensure that every detail of what she told me was accurate both in terms of its content and nuance.  On several occasions whilst she was being cross-examined by Mr Yates, she challenged his use of a particular word or phrase which he had attributed to her.   I am satisfied that this was not mere pedantry on her part but a wish to ensure that the court was not misled about the smallest detail of her case.  I did not find her to be a devious or evasive witness, despite the challenges which Mr Yates properly made to some parts of her evidence.  On a number of occasions, she was prepared to accept that a particular statement, or the impression it sought to convey, was not accurate or entirely truthful when looked at in the light of this litigation's timeline.

92. And what of H ?  It was not an easy exercise for him to sit in the witness box over a lengthy period of time and deal with W's questions.  It was quite clear to me that each of these parties carries significant emotional scars from their failed marriage and the subsequent court proceedings which have flowed from it over the course of what is now years of expensive litigation.  H is himself an impressive individual who has carved out over many years a highly successful track record in the field of commercial investment.  He is by profession an accountant and has a clear grasp of both the financial and commercial undercurrents which permeate the case.  He was, like W, a courteous witness despite his evident exasperation at times when he was unable to contain his obvious feelings that W had 'duped' him into the agreement reflected in the consent order.  I found him to be a fundamentally truthful witness although his grasp on the underlying detail of the history and events now long past was not as clear as parts of the evidence which emerged from W's recollection.

93. I accept, as each told me, that H and W have genuinely tried hard to reach a compromise acceptable to both.  That they have not been able to do so is singularly unfortunate in circumstances where the global costs bill is now approaching £1 million 8.

94. Much time was taken up during the oral evidence of H and W with issues of share valuation.  Surprisingly for such a contentious issue, there was a good measure of agreement between them on the underlying principles.  Both agreed that it was very difficult to value shares in unquoted start-up technology companies since these can often be loss making over a number of years.  H told me that one of the most reliable indicators of value is the last price at which an external investor was prepared to put money into the company.  He explained about the tax breaks which are available to an individual investor, but not to a corporate or institutional investor.  He confirmed that he knew that shares in B Ltd were being traded at £25 per share when he completed his Form E since the 2010 accounts (which he had seen) contained that information.  However, he qualified that evidence by telling me that an investment by an individual at a particular price is not necessarily a reliable indicator or benchmark of value at that particular time since the actual net cost to the investor is likely to be less.

95. Of the 'anti-embarrassment clause' in the February 2012 agreement, H denied that this had been included so as to compensate him for any potential uplift in value of the shares in B Ltd in circumstances where the value remained largely unknown at the point of the agreement.  He said that if this had been the intention and the clause was intended "to have teeth", he would have insisted on a much longer period than the less than two years provided for.

96. Of the so-called 'Odey effect', he confirmed that he would not have done this deal with W had he known that Crispin Odey's fund had already made an investment in B Ltd.  He spoke of that investor's international reputation in terms of his 'investment eye' which, he told me, put him on a par with Warren Buffet in the United States.  He spoke of a corporate 'pivotal moment', being one where, as an investor, you realise a company has significant potential value and will start "motoring".  The fact that Odey had been willing to inject £3.5 million into B Ltd to support its potential bid for a government contract was such a 'pivotal moment'.  That investment, in his eyes, had given the company a status, standing and access to a high level of expertise and support.  It opened up a 'back room' to B Ltd which provided the collective support of Odey's analysts and researchers.  This was, in H's experience, a very unusual investment for Odey to make and stood quite apart from the scenario whereby a private individual (such as himself) made an investment in a start-up company in order to secure, amongst other potential benefits, a significant tax saving through the government's enterprise based schemes which were then available.

97. He described what he perceived as W's attempt in the accounts to disguise this investment by reference to "share capital paid up but not yet allotted" as a device which was specifically designed to prevent him from discovering the identity of the investor prior to the agreement which led to the consent order.  Had the shares been properly described as 'paid up and allotted', she would have been obliged to disclose details of the investor on the company's annual return at Companies House.  He rejected W's account of the interim arrangements with Odey whereby they could have called for the return of capital on demand.   A straightforward reading of the accounts showed this to be a fully paid up equity investment in B Ltd, albeit that the identity of the investor remained obscure.

98. He told me that he had first seen the 30 December 2011 year end accounts for B Ltd a few days after the hearing before Parker J on 22 November 2012. He says that  the accounts had not been available as at the date of that hearing because they were filed late. (W says they were filed before the hearing). Shortly after that, he had read the letter sent by Odey's chairman, David Fletcher, on 5 December 2012.  That letter contained no reference to the injection of £3.5 million into the company some 14 months earlier.  It spoke only of the fact that Odey had begun discussions with B Ltd in May 2012 (3 months after the agreement he had reached with W) and the fact that '… Odey would consider, subject to the structure and terms of a Ministry of Justice Contract being awarded, providing [B Ltd] with a proposal for the Board to consider for the financing of this contract'.  At this point H told me that he was ready to give up but, some three or four days later, he had asked his personal assistant to see if the 2011 accounts for B Ltd had been filed.  It was at this point that the extent of an unidentified injection of cash was revealed.

99. H was asked by Mr Yates whether he considered that his assumed value of £33 or £34 per share (predicated on the basis of the Odey investment) was an accurate reflection of the underlying value in B Ltd at that point in time.  H accepted that he could not confirm definitively that the investment translated into a hard value at par for the shares since "young technology companies were often a law unto themselves".  However, he pointed to the subsequent prices at which external investors had been prepared to invest in B Ltd following the injection of Odey funds in October 2011.  In 2013, an external investor came in at £45 per share.  Most recently, shares had been offered at £122 per share 9.

100. H was keen to stress in his evidence that a company's turnover, even if low, was not necessarily an indicator of value because this could often be based upon a monthly subscription value of anything between three and five years.  I pause at this point to say that there was no evidence before me at all that the turnover of B Ltd was comprised of, or underpinned in any significant way, by this type of guaranteed income stream.

101. He was asked about his knowledge of the convertible loan due to KI of £1.5 million.  W put to him that he knew about this because (a) she had disclosed this information; and (b) his advisers had referred to it specifically in the chronology they prepared for the First Appointment on 6 February 2012.  H's evidence was that he had known of the loan of c. £1.039 million but he knew nothing of the conversion price of £25 per share, nor of the circumstances of the company's arrangements with that lender.

102. When cross-examined by W, H said that he genuinely believed that he had never seen a copy of B Ltd's shareholder agreement dated September 2005.  However, he was taken to a copy of a Deed of Adherence which he had signed in July 2006.  He confirmed that the signature appearing on the foot of that document was his and that it had been witnessed by his PA.  He said he could not recollect signing it or being provided with a copy of the shareholder's agreement which he had acknowledged receiving by signing the deed.  In my judgment, W was correct in stating that he had received the former and signed the latter.  I do not believe that H was deliberately seeking to mislead me.  I accept that he has no independent recollection of these events, but I accept W's evidence on this point as being more reliable supported, as it is, by contemporaneous documents.

103. Equally, I accept that her memory is accurate in relation to the discussions (or, more accurately, absence of discussions between them) in relation to her previous non-domiciled status, her frequent trips to Guernsey and her supposed connections with Ansbacher/Investec bank.  These were all connections which H had sought to run in relation to his case that W owned or had some indirect beneficial interest in a company called Zinc Ltd, a shareholder in B Ltd.  That interest, he contended, had enlarged her ownership or control of B Ltd over and above her interest as declared in her Form E.  It was an enlarged interest, on his case, which she had failed to declare.  When W cross-examined H about these matters, it was abundantly clear to me that there was very little foundation or substance for H's suspicions.  I accept that she is not, and never has been, non-domiciled.  I accept that there is no evidential basis for his assertions that she spent a good deal of time in Guernsey.  I accept that her only connection with Ansbacher Bank is the existence of a commercial loan which she took with that institution, a liability recorded – properly – in her Form E.  Eventually H himself was forced to retreat from his suggestion that she was "very 'up' on foreign trusts", a statement for which there was no evidence at all, even prior to its retraction.

104. For the avoidance of doubt, and despite the evidence which I was to hear from Mr Stiefel (to which I shall come), I do not accept that H has made out even a prima facie case in relation to W being the owner of, or having a beneficial interest in, Zinc Limited.

105. When W entered the territory of share valuation in her cross-examination, H confirmed that he was not aware of any institutional investors in B Ltd at the time he prepared his Form E and that had been the reason for basing his share price (£11.59) on the most recent transaction of which he was aware between two individual shareholders.  Instead of looking at balance sheets, he had quite simply used the last price paid.

106. He was asked about the conversations which he alleged they had about the progress of the company's bid for the Ministry of Justice contract.  It was H's case that W had told him during these conversations that the company was 'in trouble' and the contract had been delayed.  This was disputed by W who told me that there were no discussions at all between them about B Ltd once they had separated.  H was asked when these conversations had taken place.  He was unable to give me any specific information as to when, or in what circumstances, he had spoken to W about the company's financial fortunes.  He told me about his recollection that she was constantly telephoning to 'pester' him, although most of the time he tried not to take the calls.    He told me that he had a number of girlfriends at the time and W would call early in the morning on occasions when it would be difficult or embarrassing for him to take the calls.  On balance, I am prepared to accept W's evidence that there was no direct discussion between them about the financial health of the company once they had formally separated.  I am quite prepared to accept that, in the months following June 2009 when H told W he did not wish to live with her any longer in the South Kensington property, there may well have been several anxious telephone calls between them as they entered a difficult 'no man's land' in terms of their marriage.  It is W's case that the marriage limped along for another few months, albeit that they were living separately.  In her mind, there was still a prospect of saving the marriage during this period.  On the balance of probabilities, I am prepared to accept that the telephone calls to which H was referring had happened during this period and related to the difficulties in which this couple then found themselves rather than to any issues surrounding W's work with B Ltd.  I accept that, once the separation became final (in W's mind, at least, by July 2010), there was little – if any - direct discussion between them about the company.  This is consistent, I find, with H's earlier evidence that W was not forthcoming with information about the company.  He said at one point of his oral evidence that he did not ask questions because he knew that she would not tell him anything.  Thus, on his case, he was dependent upon her for information at the time he struck the deal in February 2012, a case which W appears to accept save only in respect of the information he received (or could have ascertained) in his capacity as a shareholder of B Ltd.

107. H confirmed that when he prepared his Form E, he had not necessarily believed that his shares were then worth £11.59 each.  Rather, this was the price at which at least two (named) investors had sold their shares to other arm's length investors.  It was a benchmark which he put forward, rather than a formal statement of belief in their value.  He was prepared to agree with W that, at that value, the total issued share capital would have been somewhere close to the figure of £5 million which informed the 'floor value' for the anti-embarrassment clause.  However, he maintained that whether or not that might have been the case, he entered into the agreement without the knowledge that the company had recently received an external injection of £3.5 million and, of even greater significance to his mind, that the investment had come from Odey.

108. H was then asked about the rolling losses which B Ltd had continued to make on a year on year basis 10.  He accepted that W had to finance the business because it was continuing to lose money.  He said that he had been unaware of the circumstances of the redemption of the KI loan until he had spoken to Barry Stiefel.  The subsequent investment by Odey was highly relevant in his view because it was a significant sum of money which had been invested by a major player.  The identity of that investor would have been sufficient by itself to enable B Ltd to attract other wealthy investors who would have been happy to follow Odey's lead.  This, on H's case, was a key piece of information which would have been highly material to any decision he took about the terms on which he was prepared to part with his own shares in B Ltd or, alternatively, the "price" at which he was prepared to release them into to W's control.  He disagreed with her suggestion that this was a small and insignificant investment for the likes of Odey.  Whether or not the sums involved were a substantial part of Odey's assets under management, the company owed a fiduciary duty to its investors to carry out proper due diligence into B Ltd.  He told me that this was not an investment decision which could be viewed as 'a commercial punt'.  Rather, he described Odey's decision to back B Ltd's commercial future as 'a wholly different league' in investment terms.  In my view, much of his case was encapsulated in a response he gave to one of W's questions at this point:

"You pulled off a real coup with Odey; congratulations [he referred to W by her first name]; I would just have liked to know about it before I signed the consent order."

109. In my view, that answer reflected H's genuine sentiments about his own perception of her conduct.  That, of course, is not an end to the matter because one of the matters I shall have to determine is the extent to which (if at all) the investment by Odey in B Ltd has had the transformational effect upon the company for which H contends.  This I shall consider when I come to deal with the issue of 'materiality'.

110. In terms of W's evidence, she was keen to stress that she had never had any dishonest intention in terms of her presentation of B Ltd's financial affairs.  Of Mr Yates's criticism of the terms in which David Fletcher's letter dated 5 December 2012 had been framed, she told me that she had no involvement whatsoever in its formulation.  Her point of contact with Odey was Mr Wolfson, an affiliate of Odey's who sat on B Ltd's board.  She continued to maintain her case that the injection of funds by Odey into B Ltd in 2011 was not an equity investment.  At the point of receipt, it could not properly be characterised as the provision of long term capital (i.e. an investment of more than 12 months) because the 28 day window which was specified as the deadline for agreeing terms had closed without agreement.  The terms being proposed by Odey as a condition of its investment involved wide-ranging provisions which included a change to the company's Articles of Association.  The agreement into which the company entered had a specific clause which provided that Odey's offer would lapse if terms had not been agreed within the specified time frame.  Of course, by that time, the outstanding loan from KI had been repaid using a significant part of the Odey funds. The balance was retained within B Ltd as working capital. 

111. W told me that she had her own views as to why Odey had not demanded the return of its cash.  She told me,

"They were speculating we might win the Ministry of Justice [bid].  If we had won that contract it would have been a, as [H] describes, pivotal moment and anybody would want to have been invested.  But there was a very, very – the odds of winning were so outside, so by doing what they did was very clever.  They provided cash, but they didn't reach an agreement and they sat on it.  So it gave them effectively an option at any time.  We didn't give the money back because we didn't have it, we had spent it, so we didn't raise our head above the parapet to get shot down.  And I thought, well, worst case, if they ask and it's a year's time they ask or three months' time, at that stage I will work hard to negotiate something with them or I will try to find somebody else to replace them.  In the same way I did when KI reneged on their agreement, and with KI we actually had a fully executed signed agreement and they still reneged on it and said they wouldn't convert it.  So I was in the context of knowing that this is what investors do, they sit there and keep the option open, which gives them a preference … effectively then it's a loan, which is a preference.  So if the company falls over they get their money out before anybody else does, and we were not offering that.  We were only offering them – if they were going to invest it was going to be in ordinary shares.  Now when they finally did complete their investment in February 2013, three things had happened.  We had qualified to bid for the MOJ, which is extraordinary, so the MOJ had changed the criteria for the bidding and allowed small companies to bid for one part of it, and we had qualified for that.  So that was amazing.  It was an incredible achievement.  We had completed our disagreement with KI …. But one of the terms of the Odey proposal was that we could all warrant as directors that there were no outstanding legal issues, and [H] knows full well that that is something any investor would require.  We couldn't do that until that agreement was reached and that agreement was reached in February 2013.  And the third thing was in 2013, February, that we had run out of money again.  We had spent the working capital and we needed to go out and raise, and I went to talk to [N Co] and they said they'd come in at a higher price, so Odey went, "Well we want to complete" and at that point said, "We want to complete and we want to complete on this price" and then there was a negotiation and they completed.  But they had managed to keep for 14 months the option of investing."

112. When she was cross-examined by Mr Yates about the contents of her Form E, she accepted that there was no mention of the Odey investment despite the fact that it had been made some two months previously.  It was W's clear view, expressed forcefully from the witness box as I have set out above, that it had not occurred to her that the identity of the investor was in any way relevant to the value of her shares in B Ltd.  She did not then, and does not now, consider that she was under any obligation to refer to the investment in her Form E and she questions its relevance in terms of the set aside application being pursued with such determination by H.   She told me that she believed to this day that she had completed her Form E honestly and accurately.  At that point, as far as she was concerned, B Ltd was holding the balance of Odey's £3.5 million investment (£1.7 million of which had been applied to redeem the KI loan) and those funds were repayable on demand.  She did not consider the funds to belong to the company.  Had the accounts been drawn to reflect a greater burden of debt, it would have significantly prejudiced the company's position in its bid for the Ministry of Justice contract.  She described the position as being "in no man's land; technically we should have given the money back but it was not in our interests to do that".

113. She did not accept that there was any basis or foundation in the so-called "Odey effect" in terms of  H's current application.  She pointed to another early investor in B Ltd, Anthony Bolton, whose fund (Fidelity) had made an investment in B Ltd some 12 months before H's initial investment.  That investment was made on the basis of £5.75 per share.  Despite the considerable reputation of that particular investor, it had made no material difference to the price at which she had been able to attract future investment in B Ltd.  She told me that she had learned from a very early stage that  investors do not make commercial decisions based upon the identity of their fellow investors.  In this context, she was in agreement with H that the price at which new investors were prepared to put money into B Ltd had no relevance to the value of her founder's shares. She rejects H's argument that Odey's arrival as an investor opened doors to valuable networks of contacts and/or that it provided so-called 'backroom' facilities which offered new opportunities which would otherwise have been unavailable to B Ltd.  In this respect, there was no evidence before me of any such opportunities having being introduced to B Ltd by Odey.

114. Of the "anti-embarrassment clause", W accepted when she gave her oral evidence that H had not known that Odey had made an investment of cash at the time he agreed to its insertion in the agreed terms of settlement.

115. Following the making of the agreement, she described to me how she felt under virtual siege by the demands which H was making in 2012 for information and documents about B Ltd.   His solicitors' initial response to The Daily Telegraph article had been a demand to see several categories of documents which she was being prevented by her board from disclosing.  She told me that she had construed these requests as H's attempt to continue and prolong the highly acrimonious litigation which had then been ongoing between them for two years.  She had felt exhausted by that litigation and had all but run out of funds to continue it.  Because of his earlier approach to a Daily Mail journalist and his disclosure of confidential court documents (or, at least, a page from her Form E), she was extremely anxious about releasing to H in the context of the ongoing litigation any further commercially sensitive documents which he might use to damage B Ltd's bid for the Ministry of Justice contract.  She had no confidence in any undertakings he might give to keep this information private and, further, the board of B Ltd was telling her that she could not release the documents which were being sought.  On her case, it was a combination of these factors, rather than any reluctance on her part to provide information, which prolonged the disclosure process over the course of 2012.

116. Of the potentially damning statement in her solicitors' letter written on 22 May 2012 that there had been "no new injection of cash" into the company, a statement which post-dated Odey's financial injection of funds by some seven months, W accepted that the statement was not true but denied that she had intended to lie.  She told me that she should have read that letter with greater care but had never anticipated that this correspondence, written after they had concluded their agreement, would be the subject of such rigorous scrutiny.  She accepts that she gave clear instructions to her solicitors that there had been no investment by Odey; this was simply working capital which enabled the company to continue to trade from a position of corporate solvency for the next twelve months.

117. She was asked about the statement she made to the journalist who wrote the article in 'The Director' magazine.  In that article, she had been quoted as referring to Odey's financial support for the company as "an investment".  She was adamant that she did not refer to the transaction in those terms during the interview and was misquoted.  She told me that, following the publication of the article, she had been telephoned by Julian Wolfson who had challenged her about her reference to an "investment".  She had told him what she was subsequently to tell me.

118. Of the many requests for information which followed H's challenge to her disclosure at the time of the agreement, she gave evidence about the position of conflict in which she felt she was placed.  She had been prevented by her board of directors from disclosing sensitive commercial information which they suspected H might well misuse in order to damage the company.  There was already a basis for that suspicion in terms of the information which had been given by him to the Daily Mail journalist.  W told me that she had written a personal letter to her board asking for their assistance and for permission to disclose the information which was being sought.  Although that letter was not included in the bundles of material before the court, she provided me with a copy the following morning.  The letter confirms her evidence and sets out in clear terms her request to be released from her contractual obligations to the company to the extent of providing the information sought by H and his legal team.  She accepted that she could have gone privately to H to inform him that the company was holding cash belonging to Odey which might have to be returned.  She did not do this because she believed he would have used the information to damage her and the company.  She described H as "an angry man".  In my judgment, that was probably an entirely apt description of his feelings towards her at the time.  It was not until May 2013 when the lengthy questionnaire directed towards W was distilled by order of Parker J into 5 direct questions that the board agreed to assist W in her disclosure obligations to this court.

119. I recorded earlier in my judgment that W had been prepared to make concessions where she believed them to be appropriate.  One such concession was her response to a question put to her by Mr Yates in relation to a schedule of deficiencies which H had served on 17 May 2013.  In relation to potential investors in B Ltd, she had been asked to identify "any offers (whether formal or informal) of Investment received by [W] or by [B Ltd]".  In response, she had provided a letter from Lord Stevens, the company's chairman, dated 20 February 2013 to which I have already referred.  Its terms were quite clear:   "The Board of [B Ltd] will not release you from these obligations [of confidentiality] and will not permit you or any employee to release or copy company property for the benefit of any third party without the board's specific authority".

120. The letter continues:

"You have asked me to confirm that [B Ltd] has not recently received material external funding and that there are no commitments to provide such funding.  The only external funding provided to the company in 2012 was a small loan from a US business and there are no outstanding commitments of any kind to provide further funding to the company.  The board is content that you should give this information to [H]."

121. Lord Stevens provided further information about that loan in a subsequent letter which he wrote to W on 13 May 2013, although H's schedule of deficiencies only referred to his earlier letter written in February 2013.  Mr Yates asked W why, with the Odey investment having been agreed in February 2013, she had not instructed her solicitors to write prior to the hearing before Parker J on 22 May 2013 (the occasion for further scrutiny of H's schedule of deficiencies) to reveal the fact that Odey's "loan" (on her case) had since been converted into an investment.  W very fairly conceded that she had not done so because she did not consider it relevant.  I mention that here because, on Mr Yates' case, it goes to the heart of her credibility in relation to what she believed about her obligation to disclose Odey's involvement at the time she concluded the February 2012 agreement with H.  He relies on that failure as a further brick in the evidential wall he seeks to erect to support his case against her in relation to a deliberate intention to deceive both H and the court in relation to the information which was provided in her Form E.

122. It is common ground that the first time W herself made any formal disclosure about Odey's injection of cash into B Ltd came on 14 August 2013 when she responded in writing to the five questions authorised by Parker J at the hearing at which the company had been separately represented.  That narrative explanation coincides with the evidence which she has subsequently set out in her written evidence and as she explained matters during the course of her oral evidence.  She set out in that narrative that Odey had agreed to convert its loan to shares in B Ltd following the company's settlement with KI in February 2013.  As a result, Odey then held 119,920 shares with preferential rights.

Mr Barry Stiefel
123. I heard oral evidence from Mr Barry Stiefel about the involvement of KI with B Ltd.  He is a director of that offshore (Jersey) holding company which is owned by a South African businessman called Nathan Kirsh.  Late in the day, H made contact with Mr Stiefel and he agreed to appear on his behalf as a witness at this hearing although they had never previously met.  I agreed to allow him to call Mr Stiefel on the basis that H, through Mr Yates, informed me that he had relevant evidence which might assist me in determining the issues which I have to decide.  As I made plain at the time, the weight to be attached to his evidence would be a matter for me once I had heard from him.

124. Mr Stiefel confirmed in his written statement that KI had entered into a convertible loan agreement with B Ltd on 9 July 2010.  I have seen a copy of that agreement which provides for an initial loan of £500,000 to B Ltd which, at KI's sole discretion, could be converted into shares in B Ltd at a price of £25 per share.  The loan was stated to be repayable in full on the first anniversary of the agreement (i.e. 9 July 2011).  Clause 7 of the agreement provides that, after carrying out a due diligence examination of B Ltd's affairs, KI would consider lending a further £1.5 million to the company.  Thereafter, sums totalling £1.5 million were made available to the company.  Those loans were never converted into equity in accordance with the loan agreement.  I heard evidence from both Mr Stiefel and W as to why that was not done.  Had the loan been converted into shares, there would have been no need for part of the Odey cash injection to be used to repay the debt.  Mr Stiefel stated in his written evidence that, in October 2011, W had visited his office and told him that she no longer wished KI to be involved with B Ltd.  She handed over a cheque made out to KI in the sum of £1.5 million.  He says that this came as a surprise to him since there had been no earlier indication from KI that repayment of its loan was required.  He made reference to an earlier disagreement between KI and B Ltd/W in relation to the production of a share certificate to which KI was entitled as a result of buying the shares of a previous investor in the company.  Litigation was threatened but never proceeded as a result of an out of court settlement.  This litigation related solely to the transfer of shares; it did not concern the loan which KI made to B Ltd.

125.  In relation to that threatened litigation, Mr Stiefel told me that Lord Stevens, the chairman of B Ltd, and Professor Kay, another board member, came to see him shortly before the court hearing.  He said they told him that they could not issue KI with a share certificate because W had sold the shares twice and there were none to allocate.  I heard evidence about the reasons why KI had refused to sign a Deed of Adherence in relation to B Ltd's shareholders agreement.  Mr Stiefel told me it was because of W's failure to produce a certain business plan.  I heard about Mr Stiefel's opinion that W was the controlling shareholder on the B Ltd board.  I heard about his 'impression' that W was the alter ego of a company called Zinc Ltd (which was itself a shareholder in B Ltd).

126. Some of Mr Stiefel's evidence was in direct contradistinction to W's evidence and to the evidence I was to hear from Lord Stevens.  There was no consensus as to the circumstances in which the Convertible Loan Agreement had been signed.  W produced on the third day of the hearing a different version of the signed agreement which had been signed by "L S Coomer" on behalf of Zinc, as one of B Ltd's shareholders.  Frankly, none of this evidence assisted me in relation to the core issues in this case.   Lord Stevens was to tell me that there was a very difficult personal relationship between the directors of B Ltd and Mr Stiefel.  Much of what Mr Stiefel told me appeared to be based on incomplete knowledge and assumption.  The issue of the ownership of the shares in Zinc Limited is a good example.  W told me during the course of her oral evidence that she had never provided funds to Zinc to enable that company to purchase shares in B Ltd.  Initially she had owned 99.9% of the shares in B Ltd as its founder.  Zinc Ltd became a shareholder in September 2005 during the first stage of external funding. W's own shareholding at that point reduced to about 80%.  Over four further rounds of external investment, her interest in B Ltd was further reduced so that, by 2009, she held a 38% equity stake in the company.

127. Further, David Fletcher, the Chairman of Odey, was to tell me during the course of his oral evidence that his company had received an assurance from the B Ltd board that there was no connection between W and Zinc Ltd when Odey acquired some shares from Zinc in 2011.  I am entirely satisfied that W was telling me the truth when she denied any relationship or connection with that company.  I am also satisfied that neither she nor Lord Stevens made any representations to Mr Stiefel about selling shares in B Ltd twice.  W denies this and her denial is supported by Lord Stevens and Professor Kay who told me that this is something which Mr Stiefel himself had not surmised until the facts were explained to him by Professor Kay himself.

128. At the end of the day, I am left with the strong impression that much of what Mr Stiefel had to tell me about W's control of B Ltd (through Zinc or otherwise) was speculation on his part.  I do not find that it assists me very much at all on the issues which I have to decide, nor does it take H's case forward in any real way.

Mr David Fletcher
129. I heard next from Mr David Fletcher, the Chairman of Odey.  He had not made a formal written statement for the purposes of these proceedings but he had signed two letters which were in the written material placed before the court.  He was not called as W's witness; indeed, as she confirmed in an email, she had at the pre-trial review opposed his being called to give oral evidence.  I had directed him to attend as part of the case management directions I made on that occasion.  He subsequently wrote to the court and indicated that he was quite willing to attend, albeit it that he did not entirely understand the basis upon which his assistance was being sought.  I record in my judgment my thanks to him for his attendance.
 
130. The first of Mr Fletcher's letters is dated 5 December 2012 and was addressed to W in her capacity as the chief executive of B Ltd.  This was shortly after the hearing before Parker J in November 2012 when W's application to strike out H's application to set aside the consent order was dismissed.  In that letter, he confirmed that Odey began discussions with B Ltd in May 2012 with a view to providing financial support to the company for its discussions with the Ministry of Justice.  He explained that Odey's particular interest was in 'offender management' because of the company's belief that pressures on public expenditure created a potential worldwide market for tracking solutions in substitution for custodial sentences.  Under W's leadership, Odey considered that B Ltd might be capable of providing the basis for the development of such a business.  His letter continued in these terms:

"For these reasons, Odey would consider, subject to the structure and terms of a Ministry of Justice Contract being awarded, providing [B Ltd] with a proposal for the Board to consider for the financing of this contract.  Neither [B Ltd] nor Odey is able to estimate the likely requirement, if any, for such funding.  No commitment has been made either by Odey to provide this finance, or by [B Ltd] to accept it, and the terms would have to be negotiated between Odey and [B Ltd] when the requirement arose.

Odey would not make an offer to buy [B Ltd] or any or all of the founders' shares in [B Ltd].  Such a transaction would not be consistent with Odey's investment objectives.  We look forward to discussing the financing with you as the process advances and are willing for you to share this letter with your legal advisers."

131. Mr Fletcher's second letter was dated 22 June 2015 and was written shortly before his appearance to give evidence.  In that letter, which was addressed to W and H's solicitor and copied to me, Mr Fletcher queried the basis of the reliance which was being placed by the parties on his first letter.  He claims not to have remembered writing it although he did recall some discussions about W's divorce case "and the possibility of us helping rebut some untrue claims by stating the facts".  He explained that his lack of recollection did not mean he had not signed the first letter since he would frequently sign letters drafted by others in the normal course of his work.  As to any suggestion of "collusion" with W, he fully and firmly rejected any suggestion that he had been involved in anything underhand or improper.  When cross-examined by Mr Yates on behalf of H, Mr Fletcher said that Odey had about five hundred 'live' investments at any one time and he would often sign letters in this way.  He said that the purpose of the letter had been to restate clearly the circumstances of Odey's investment in B Ltd.  That investment had occurred in October 2011 at a time when the shares in the company were valued at £34.23 each.  That would have valued the company at about £15 million which was a far cry from what was being represented in the Daily Telegraph article which spoke of the company being worth "tens of millions".  He said he had no idea as to the provenance of the report and he had had no conversations with W prior to writing this letter about information she was being asked to provide in these proceedings.  He was unaware of what information had been provided to Odey by W and/or B Ltd in order to persuade the company to invest in B Ltd although he had seen Odey's own financial projections.  He explained that Odey would have undertaken the normal due diligence procedures before investing and would have reserved the right to appoint one of B Ltd's board members.

132. Significantly, Mr Fletcher confirmed that when Odey paid over the £3.5 million to B Ltd in October 2011, it was viewed by his company as an equity investment rather than a loan.  Odey received a share certificate and it was recorded as such in Odey's own accounts.  Odey had signed a subscription agreement. When Mr Yates put to him the description of the "investment" as it was reflected in B Ltd's own accounts, Mr Fletcher confirmed, again, that there was no doubt in his mind that Odey had acquired an equity stake in B Ltd at the time it had provided funding in October 2011 and it had been recorded in Odey's financial records as such from the outset.  He accepted that there was a technical glitch which prevented the company from formally completing the conditions of the investment since various changes were required to the B Ltd Articles before Odey was prepared to sign the shareholder's Deed of Adherence.  He accepted that W and B Ltd may not have been aware that this was how Odey had recorded its investment.  He was adamant that there had been no collusion between him and W and/or any other employee or representative of Odey in relation to the letter written on 5 December 2012.  He told me that he had met W once in the summer of 2011 and they might have spoken once or twice on the telephone after that meeting.  He was aware that Odey had written to the Ministry of Justice to support B Ltd's bid and to confirm that the company was willing to provide financial support to B Ltd in the event of it securing the government contract.

133. I found Mr Fletcher to be an entirely straightforward and honest witness as I would have expected for a man of his professional standing.  I accept that, as far as Odey was concerned, it had made a commercial investment in B Ltd from the outset, i.e. in October 2011 when its relationship with B Ltd was formalised beyond the exploratory discussions which had been taking place up to that point in time.  In relation to the content of the letter dated 5 December 2012, I accept that neither Mr Fletcher nor W were directly concerned in the drafting of the letter.  Nonetheless, it was, as I find, presented to H's lawyers in support of the case which W was then running in relation to Odey's involvement with B Ltd and it does not on its face reflect Odey's position in relation to its equity stake in B Ltd as it was explained to me during the course of Mr Fletcher's oral evidence.

Lord Stevens of Kirkwhelpington
134. I heard next from Lord Stevens.  Since June 2011 he has been the Chairman of B Ltd's board of directors and is well known as a former Metropolitan Police Commissioner.  His written statement is dated 4 March 2014.  In that statement he dealt with his knowledge about the company's financial situation in the early days of his involvement and the circumstances in which Odey came to be involved with the company.  He spoke of the financial difficulties with which the company was struggling when he joined the board and of problems he encountered in his dealings with Mr Stiefel with whom he had many telephone calls and discussions over KI's unwillingness to provide the balance of the cash funding which had been promised.  B Ltd was then losing about £100,000 per month in terms of its cash flow and, during the Summer of 2011, W had been involved in many discussions with potential investors with a view to replacing KI's financial backing for the company.  Whilst Lord Stevens told me during his oral evidence that he respected Mr Stiefel as a good businessman, his view was that he was witholding the funds earmarked for investment in B Ltd as a means of control and to give KI some standing in decisions made in relation to the process of governance of the company.

135. He told me that in 2011 he had been to see Mr Fletcher and Julian Wolfson at Odey's London offices when that company's funding of B Ltd had been discussed. He does not appear to have been involved in the treatment of Odey's investment in B Ltd's accounts; with board approval, he merely signed the accounts in his capacity as Chairman and had no direct discussions with Professor Kay as to how the figures were represented in those accounts.

136. On 20 February 2013 Lord Stevens had written a letter on behalf of the board to W at her home address in London.  I have referred to the contents of this letter in paragraphs 118 and 119 of my judgment and do not repeat them here.  When cross-examined by Mr Yates about the content of that letter, Lord Stevens told me that the board had taken legal advice following the hearing before Parker J in November 2012 and had instructed independent counsel for the purposes of the next hearing in May 2013 when the company was separately represented.  (It was at that hearing, on 22 May 2013, when counsel instructed by the company made the open concession that Odey had invested in B Ltd.)  He told me that W had had no part in the drafting of the letter dated 20 February 2013; the information relating to B Ltd had been provided in the form which appears in that letter since the company accounts for the year end 31 December 2011 were already in the public domain.  Those accounts show that the company was then holding cash reserves of some £1.53 million (i.e. the balance of the Odey funds paid in October that year, although there is nothing by way of further narrative in those accounts to alert the reader to the provenance of the funds).

137. Lord Stevens confirmed that it had always been the board's position since it became formally involved in the dispute between H and W in relation to their divorce settlement that it would not oppose the instruction of a single joint expert in relation to a valuation of W's shares in B Ltd at the time of the agreement in February 2012.  This offer was never accepted and the company was thus obliged to instruct counsel to attend the hearing on 22 May 2013 in order to oppose H's outstanding application for a production order against the company.

138.  He was adamant that he would never have been a party to the provision of information which was designed to mislead or 'dodge the question' and, in all his dealings with W as a fellow board member, he had been scrupulous to observe his fiduciary obligations to the company.

139. As to the so-called "Odey effect" on the value of the shares in B Ltd, Lord Stevens's evidence was that what Odey brought to the corporate table was a considerable amount of financial knowledge and experience, although he knew nothing specifically relating to 'back room' resources and researchers.  He told me that, at one stage, matters had deteriorated to such an extent that a board meeting was called: the company was unable to pay staff salaries when they were due the following week.  He recalled the directors offering to "put their hands in their pockets" in order to ensure the staff were paid.  The deal with Odey had provided the company with a vital source of cash flow and enabled the company to carry on trading and investing in the resolution of a number of technical problems which were occurring in the manufacture of its main product.

140. I accept that Lord Steven's evidence was truthful and that he was doing his best to assist the court about matters which, in some respects, were not his concern.  He clearly takes his obligations to B Ltd seriously and I do not accept H's overt criticism of him as a witness who would support W in any case she chose to run in these proceedings.  I can find not one scintilla of evidence of "collusion" between them and, by the conclusion of his cross-examination, Mr Yates was not seeking to frame his questions about the letters Lord Stevens had written on the basis that what he wrote was intended to be misleading.

Professor John Kay
141. Professor Kay is a Fellow of St John's College, Oxford, a visiting Professor at the London School of Economics, a Fellow of the British Academy and of the Royal Society of Edinburgh.  He was honoured with a CBE in the 2014 New Year's Honours List.  He had prepared a written statement dated 3 March 2014.  Much of his statement was redacted.  I suspect that the redacted material went to his opinion of the value of the shares in B Ltd and there was no permission or agreement in this case for expert valuation evidence.  What he did assist me with was the accounting treatment of the Odey investment.

142. Professor Kay has held shares in B Ltd as a private investor since 2008.  He had joined the board of B Ltd in September 2012 but appears to have been giving informal advice to the company for a period of time prior to his formal appointment.  He was brought in specifically to assist the company with a number of administrative matters including the termination of its corporate relationships with KI and with the former chairman, Mr Kanter, the completion of the 2011 accounts, and the finalisation of the company's investment agreement with Odey.

143. When he received the draft accounts for 2011 from the company's external accountants, he could see that B Ltd was technically insolvent.  He was aware that the company was preparing to bid for a number of contracts, including the Ministry of Justice tender, and he could see the disadvantage of filing accounts which showed a negative net worth on the balance sheet.  The reason for the deficiency was the fact that the Odey investment had been treated in the draft accounts prepared by Mazars as a loan to the company, repayable within twelve months.  This was because Odey had provided funds in contemplation of a formal equity investment but their terms had not been met within the required time frame.  Under the terms of the agreement, the monies received from Odey were repayable if the conditions precedent to an equity investment were not completed within 28 days.  Thus, in Professor Kay's eyes (and in the opinion of the company's external accountants), the monies were technically repayable on demand as at 31 December 2011 (the company's year end) and continued to be repayable on demand in September 2012 when his appointment to the board took effect.

144. Professor Kay was well aware of the continuing discussions which were ongoing with Odey.  He knew that the intention was that the Odey monies would be converted into equity, allowing the company to meet its liabilities and continue trading.  The ongoing discussions confirmed his belief that the equity investment would crystallise.  He told me during the course of his oral evidence that he had spoken to Julian Wolfson, Odey's appointment to the board of B Ltd, who confirmed that Odey was not likely to require the return of its funds.  Having spoken to Mazars, the company accountants, Professor Kay was of the view (shared by Mazars) that the shares which were due to be issued to Odey could not be shown as such in the 2011 company accounts since they had not been formally issued by the time of the preparation of the 2011 accounts in September the following year.  In these circumstances, it was his specific advice to the board that the Odey investment should be treated in the accounts as subscription monies which had been paid in contemplation of a subsequent equity investment albeit that the shares to which the subscription related remained unissued.  On this basis, and with the agreement of the partner at Mazars who was responsible for B Ltd's affairs, the accounts were drawn on the revised basis.  Professor Kay was aware by this time that W was in dispute with H in relation to the value of the shares in B Ltd.  He pointed out to her that the revised treatment of the Odey investment in the accounts might be to her detriment since the debt was removed and replaced by a positive cash balance thus displaying a stronger financial position than would have been the case on the basis of the original draft accounts.  She responded by telling him that "we should do what is best for [B Ltd]", or words to that effect.  He was not challenged in relation to that response and I believe that is more or less exactly what she told Professor Kay.

145. It became clear during Mr Yates's cross-examination of Professor Kay that he was unaware until very shortly before this hearing that Odey had in fact been issued with a share certificate in 2011 when they made funds available to B Ltd.  I heard a great deal of evidence about what was referred to as "crossing the 't's' and dotting the 'i's".  I learned that the change to the Articles (undertaken as a condition of the Odey investment) took longer than expected and that, to some extent, it suited both parties to leave matters in a state of some ambiguity.  Professor Kay told me that, despite holding a share certificate, Odey was never registered as a shareholder at that time.  In Professor Kay's view, they were more properly described as preferential creditors in respect not of a loan but of monies repayable on demand. 

146. Professor Kay was asked for his view about the "Odey effect" and the potential of its investment to transform the company's fortunes.  He did not agree that the investment had been either transformational or a pivotal event.  Had the availability of the initial investment and the agreement in principle to support the Ministry of Justice bid if the contract was awarded to B Ltd resulted in success for that bid, he agreed the Odey effect would have been transformational.  But that did not happen. The company did not secure the contract and the funds made available by Odey merely enabled the company to develop its products and carry on its business.  He had no knowledge of Odey's investment having acted as a magnet or prestige factor in terms of attracting other investors. 

147. I accept Professor Kay's evidence as entirely honest.  He was a courteous witness who dealt with all the questions put to him in a considered and careful manner.  I have no doubt that he was doing his best to present the position in relation to the company's internal accounting procedures in what he genuinely believed to be an accurate reflection of the true state of affairs at the time. However, I am left in real doubt as to the extent to which all this actually assists me with resolving the fundamental issues in this case.  My focus must be on the duty of disclosure imposed by law upon W at the time she concluded her agreement with H and the extent to which she complied with that duty of disclosure.  I accept that the circumstances of the Odey investment are relevant to an extent to her own state of knowledge and to the existence (or otherwise) of an intention on her part to mislead or hide information which might have been relevant to H's decision to do the deal.

148. It is to the law that I now turn.


H. The Law
149. In a recent case reported as KG v LG (No 2) [2015] EWFC 64, Moor J set out the law in this way:

50. Although I have been referred to a significant number of authorities, the law is in fact extremely straightforward and set out clearly in the leading case of Livesey v Jenkins [1985] AC 424 in which Lord Brandon said:-

"…in proceedings in which parties invoke the exercise of the court's powers under sections 23 and 24 (of the Matrimonial Causes Act 1973), they must provide the court with information about all the circumstances of the case, including, inter alia, the particular matters so specified.  Unless they do so, directly or indirectly, and ensure that the information provided is correct, complete and up to date, the court is not equipped to exercise, and cannot therefore lawfully and properly exercise, its discretion in the manner ordained by section 25(1).

…It follows necessarily from this that each party concerned in claims for financial provision and property adjustment (or other forms of ancillary relief not material in the present case) owes a duty to the court to make full and frank disclosure of all material facts to the other party and to the court".

51. There have been a significant number of authorities in this area since.  I need only mention three principles that have been drawn to my attention by Mr Amos. I accept the first two without reservation:-

(a) It is fundamental that any attempt to overturn a consent order on the basis of non-disclosure will not succeed if the disclosure would not have made any substantial difference to the order which the court would have made. This simply reiterates the point made in Livesey v Jenkins that the non-disclosure must be material.        

(b) The Applicant must act without delay once he or she has discovered the alleged non-disclosure.  The justification for this requirement is the overriding importance of finalising litigation promptly and conclusively (see Thorpe LJ in Burns v Burns [2004] EWCA Civ 1258).  Indeed, in Rose v Rose [2003] 2 FLR 197, CC J held that a delay of one year between the discovery of the alleged non-disclosure and the issuing of an application to set aside was wholly unreasonable and an additional reason why the application in that case was not permitted to proceed.  

52. The third principle advanced by Mr Amos requires at least some clarification.  Mr Amos submits that an applicant should not be able to rely on putative non-disclosure if such would have been avoidable by reasonable enquiry by her.  He relies on B v B [2007] EWHC 2472; [2008] 1 FLR 1279 per Sir M Potter, President.  He submitted with vigour that the Wife in this case had taken the conscious decision to abandon the exchange of Forms E in favour of negotiation.  The Husband had offered full disclosure and she cannot therefore now complain that she chose to settle without that disclosure.

53. Mr Posnansky QC for the Wife responds equally forcefully that, if that was the law, no case would ever settle again without exchange of complete Forms E and all supporting documentation.  He submits that a decision by parties to negotiate does not absolve them from their duty of full and frank disclosure.  In short, one cannot allow the other to settle on information that is materially in error.

54. The submissions of Mr Posnansky in this respect are correct. I remind myself that Livesey v Jenkins itself was a case involving a consent order.  B v B arose in very different circumstances.  A wife was attempting to set aside an order on Barder [1987] 2 All ER 440 principles, complaining about an allegedly inaccurate valuation of a matrimonial home.  In such circumstances, each party is in a position to test the valuation evidence by reasonable enquiry and cannot complain if they fail to do so.  A more pertinent example would be a case in which there is £100,000 in a bank account that happens to be in the joint names of the parties.  It is not disclosed by either party.  If the Wife knows that the account exists, she can make reasonable enquiry herself (as she is a joint holder of the account) and cannot complain if she fails to do so.  It is just possible, however, that she might not know about the account.  If that is the case, she cannot make reasonable enquiry herself and she must rely on her husband's disclosure being full and frank.  

55. In this particular case, the Wife did not have access to the trust deeds or accounts.  She was reliant on the Husband making full and frank disclosure in that regard.  Her solicitors did ask questions but both parties (not just the Wife) decided to abandon the formal Form E procedure and negotiate.  In doing so, the duty of both parties to provide full and frank disclosure did not disappear.  A husband cannot simply rely on an offer to provide full disclosure in a future Form E.  He has to provide sufficient disclosure to give the wife a proper picture of his financial resources.  In such circumstances, a Wife is entitled to rely on the information that is provided. 

56. I therefore have to decide three things:-

(a) Whether or not the information provided was full and frank?

(b) If it was not, was the deficiency material?

(c) If so, has there been unreasonable delay in making this application such that it would not now be right for it to proceed ?"

Sharland v Sharland; Gohil v Gohil
150. That summary of the law (which I respectfully adopt as entirely accurate) now has to be seen in the light of the decisions of the Supreme Court in the appeals of Sharland v Sharland [2015] UKSC 60 and Gohil v Gohil [2015] UKSC 61.

151. In Sharland, the parties had reached a settlement in circumstances where one of the main issues in the case had been the value of the husband's shareholding in a software business which he had developed.  Both parties instructed valuers who provided valuations on the basis that there were no plans to float the company by means of an Initial Public Offering (IPO).  The husband had represented to the court that there was no IPO "on the cards today".  Under the terms of the settlement, the wife agreed to receive 30% of the net proceeds of sale of the company, whenever that took place, together with further assets including £10 million in cash and property.  As a result of various press reports, and before a consent order was sealed, she became aware that the company was being actively prepared for an IPO.  It was anticipated that this would value the company at a figure significantly in excess of the valuations prepared for the purposes of the court hearing.  The wife immediately invited the judge not to seal the consent order but to resume the hearing in respect of her application for financial remedy orders.  The judge found that the husband's evidence had been dishonest and that, had he disclosed the true state of affairs, the court would have been like to adjourn the wife's claims to establish whether the sale of the company was likely to have gone ahead.  By the time the hearing resumed, the IPO had not gone ahead and was no longer in prospect.  The judge declined to set aside the consent order on the ground that he would not have made a substantially different order, applying the principle set out above in Livesey (formerly Jenkins) v Jenkins.

152. The Court of Appeal upheld the judge's order and the wife appealed to the Supreme Court which unanimously allowed her appeal.  The consent order would not be sealed and the wife's application for financial relief was remitted to the Family Division of the High Court.

153. Lady Hale, as Deputy President, delivered the leading judgment.  Having set out the principles (i) that it was impossible for parties to oust the jurisdiction of the court, and (ii) that the court nevertheless retained the power to achieve finality through a clean break order from the foot of an independent assessment of the section 25 criteria 11, her Ladyship went on to consider the duty of the parties to make full and frank disclosure of all relevant information to one another and to the court.  In Livesey, the House of Lords had made it clear that the parties' duty of full and frank disclosure continued after they had reached agreement on their financial arrangements.  This was because "unless a court is provided with correct, complete and up to date information on matters to which, under section 25(1), it is required to have regard, it cannot lawfully or properly exercise its discretion in the manner ordained by that subsection", per Lord Brandon of Oakbrook. The wife in Livesey had failed to disclose her engagement to another man before the agreement was put into effect by means of a sealed court order.  This was not a case where she had deliberately set out to deceive either the husband or the court.  As Lord Hailsham observed, "I do not think she was fully aware (though she should have been) of the vital nature of the information she was witholding…" (p 430).  Thus, there was neither a misrepresentation nor deliberate non-disclosure.

154. Similarly, in Dietz v Lennig Chemicals Ltd [1969] 1 AC 170, a case referred to by Lady Hale in Sharland, a consent order reached in a civil claim brought by a widow against her deceased husband's employers was set aside because, prior to securing the court's approval to its terms, the claimant widow remarried.  The House of Lords held that the defendant employers were entitled to have the consent order set aside as their consent had been induced by an innocent misrepresentation that the claimant was a widow at the date of the order.

155. The next question was whether, in the light of that, the consent order should be set aside. Sharland involved a case of deliberate misrepresentation or fraud.  However, in Robinson v Robinson (Practice Note) [1982] 1 WLR 786, Templeman LJ said,

"In the Family Division, as has been said many times, this power to set aside final orders is not limited to cases where fraud or mistake can be alleged. It extends, and has always extended, to cases of material non-disclosure…. [T]he power to set aside arises when there has been fraud, mistake or material non-disclosure as to the facts at the time the order was made."

In Livesey, Lord Brandon had concluded his judgment with "an emphatic word of warning".  At pages 445 to 446, his Lordship said this:

"It is not every failure of frank and full disclosure which would justify a court in setting aside an order of the kind concerned in this appeal.  On the contrary, it will only be in cases where the absence of full and frank disclosure has led to the court making, either in contested proceedings or by consent, an order which is substantially different from the order which it would have made if such disclosure had taken place that a case for setting aside can possibly be made good.  Parties who apply to set aside orders on the ground of failure to disclose some relatively minor matter or matters, the disclosure of which would not have made any substantial difference to the order which the court would have made or approved, are likely to find their applications being summarily dismissed…".

156.  Lady Hale's analysis of the position in Sharland is set out in paragraphs 29 to 35 of her judgment.  I set these out in full not least because of the clarity of her Ladyship's exposition.

"29. It follows that the majority in the Court of Appeal in this case were correct to say that matrimonial cases were different from ordinary civil cases in that the binding effect of a settlement embodied in a consent order stems from the court's order and not from the prior agreement of the parties.  It does not, however, follow that the parties' agreement is not a sine qua non of a consent order.  Quite the reverse: the court cannot make a consent order without the valid consent of the parties. If there is a reason which vitiates a party's consent, then there may also be a good reason to set aside the consent order.  The only question is whether the court has any choice in the matter.

30. This may well depend upon the nature of the vitiating factor.  We know from Dietz that innocent misrepresentation as to a material fact is a vitiating factor.  The court set aside the order because the misrepresentation had induced the defendants to agree to the settlement.  We know from Livesey that in matrimonial cases innocent non-disclosure of a material fact is a vitiating factor.  The court set aside the order because the undisclosed fact undermined the whole basis on which the order was made.

31. Although not strictly applicable in matrimonial cases, the analogy of the remedies for misrepresentation and non-disclosure in contract may be instructive.  At common law, the general effect of any misrepresentation, whether fraudulent, negligent or innocent, or of non-disclosure where there was a duty to disclose, was to render a contract voidable at the instance of a party who had thereby been induced to enter into it.  This has now been modified by the Misrepresentation Act 1967, which empowers the court to impose an award of damages in lieu of rescission for negligent or innocent misrepresentation.  This does not, however, apply in cases of fraudulent misrepresentation, where there is no power to impose an award of damages in lieu.  The victim always has the right to rescind unless one of the general bars to rescission has arisen.

32. There is no need for us to decide in this case whether the greater flexibility which the court now has in cases of innocent or negligent misrepresentation in contract should also apply to innocent or negligent misrepresentation or non-disclosure in consent orders whether in civil or in family cases.  It is clear from Dietz and Livesey that the misrepresentation or non-disclosure must be material to the decision that the court made at the time.  But this is a case of fraud. It would be extraordinary if the victim of a fraudulent misrepresentation, which had led her to compromise her claim to financial remedies in a matrimonial case, were in a worse position than the victim of a fraudulent misrepresentation in an ordinary contract case, including a contract to settle a civil claim.  As was held in Smith v Kay (1859) VII HLC 749, a party who has practised deception with a view to a particular end, which has been attained by it, cannot be allowed to deny its materiality.  Furthermore, the court is in no position to protect the victim from the deception, or to conduct its statutory duties properly, because the court too has been deceived.  In my view, Briggs LJ was correct in the first of the three reasons he gave for setting aside the order 12.

33. The only exception is where the court is satisfied that, at the time when it made the consent order, the fraud would not have influenced a reasonable person to agree to it, nor, had it known then what it knows now, would the court have made a significantly different order, whether or not the parties had agreed to it.  But in my view, the burden of satisfying the court of that must lie with the perpetrator of the fraud.  It was wrong in this case to place upon the victim the burden of showing that it would have made a difference.

34. In my view, the second and third reasons given by Briggs LJ for setting aside the order flowed from the first.  Sir Hugh Bennett had been clear that the misrepresentation and non-disclosure as to the husband's plans for the company was highly material to the decision made in July 2012.  Indeed, it could not have been anything else.  It had coloured both valuers' approach to the valuation of the husband's shareholding.  That in turn had coloured the wife's approach to the proportionality of the balance struck between her present share in the liquid assets and her future share in the value of the husband's shareholding.  Sir Hugh may have been right to say, with the benefit of hindsight, that had he known the truth then he would have waited to see what transpired.  But in doing so, he would have had to bear in mind the husband's ability to manipulate the timing and manner of any offer to the public in a way which suited him best.  Be that as it may, it is enough that Sir Hugh would not have made the order he did when he did had the truth been known.

35. It being clear that the order should have been set aside, it is also clear that Sir Hugh should not have gone on to re-make the decision then and there on the basis of the evidence then before him.  The wife was entitled to re-open the case, when she might seek to negotiate a new settlement or a rehearing of her claims when all the relevant facts were known.  Thus, in my view, Briggs LJ was also correct in the third reason he gave for allowing the appeal.  The wife had been deprived of a full and fair hearing of her claims. …"

157. Gohil v Gohil [2015] UKSC 61 also concerned a case of fraudulent non-disclosure in relation to a financial consent order.  In making his financial presentation to his wife and the court, Mr Gohil, a former solicitor, had asserted that all of his ostensible wealth represented assets which he held on behalf of his clients.  He produced a balance sheet which he said was representative of his personal assets.  Once his liabilities were set off against those assets, he claimed to have a net deficit of just over £310,000.  Despite misgivings that her husband had not disclosed the full extent of his wealth, Mrs Gohil was persuaded to settle her financial claims at an FDR hearing.  The deal was struck in 2004.  Under its terms, he was to pay her a lump sum payment in full and final settlement of her claims (which he eventually paid) together with periodical payments (which he stopped paying after about four years).  The consent order which was approved by the court contained a recital recording the wife's suspicions but stating that she had agreed to compromise her claims in order to achieve finality.  Some three years later, in 2007, the wife applied to set aside the consent order on the basis of Mr Gohil's fraudulent non-disclosure.  He was charged with serious money-laundering offences dating back to mid-2005.  A period of imprisonment followed his subsequent conviction.  It was evidence which had emerged during the criminal proceedings which provided Mrs Gohil with the material on which she made her application to set aside the matrimonial consent order.  Following a lengthy contested hearing Moylan J set aside the 2004 consent order on the basis of findings that Mr Gohil had been guilty of serious non-disclosure and the result would undoubtedly have been different had the court been in possession of the full facts.  Mrs Gohil was permitted to rely upon the fresh evidence she sought to adduce on the basis that she had satisfied the well-known criteria set out in Ladd v Marshall [1954] 1 WLR 1489.

158. Mr Gohil appealed and his appeal was allowed on the basis that the judge at first instance had incorrectly applied the Ladd v Marshall test.  The effect of the order made by the Court of Appeal thus prevented Mrs Gohil from asking the court to revisit the capital provision made for her under the terms of the 2004 consent order.  She appealed to the Supreme Court which unanimously allowed her appeal and reinstated the order made by Moylan J.

159. Of the recital in the consent order recording Mrs Gohil's original suspicions about her husband's financial disclosure, the Supreme Court held that it had no legal effect whatsoever.  Lord Wilson of Culworth delivered the leading judgment.  Leading counsel for Mr Gohil had relied on a recent Court of Appeal decision in a civil case called Hayward v Zurich Insurance PLC [2015] EWCA Civ 327.  The claimant alleged that he had sustained an injury at work as a result of the negligence of his employers.  Their defence included an allegation that he had not been truthful and had exaggerated the extent of his injury.  The claim was settled.  Some five years later, the insurers received fresh evidence that the claimant had in fact made a full and complete recovery before settlement was achieved.  They sought to reclaim most of the award in an action for deceit.  The Court of Appeal held that their claim must fail.  Having pleaded in the original action that the claimant's presentation of his injuries had been dishonest, they could not be said to have relied on that presentation when they decided to enter into a settlement with him.  Permission has been given to the insurers to appeal that decision in the Supreme Court.

160. Whatever the outcome of that appeal, Lord Wilson was clear that the reasoning in Hayward had no application to a case in which the dishonesty takes the form of a spouse's deliberate non-disclosure of resources in financial proceedings following a divorce.  The duty of each spouse to make full and frank disclosure of his or her resources is owed to the court (see Livesey) and without it the court is disabled from discharging its duty under section 25(2) of the Matrimonial Causes Act 1973.  In the absence of full and frank disclosure, any order it makes is to that extent flawed: see paragraph 24.  As his Lordship made equally clear, "one spouse cannot exonerate the other from complying with his or her duty to the court".

161. As Lord Neuberger's judgment demonstrates, materiality is still an ingredient in any application to set aside a consent order where the non-disclosure alleged does not amount to deliberate fraud.  Mr Gohil's egregious conduct might well have been at one end of the scale, but what of a situation where the failure to disclose a particular fact or set of circumstances is not deliberate but merely accidental or negligent (i.e. something which the relevant party ought to have known he should have disclosed but failed to do so) ?  At paragraph 44, his Lordship said this:

"The ultimate question in these proceedings is whether the 2004 order should be set aside, and that turns on whether the husband had been guilty of material non-disclosure in the proceedings leading up to the hearing at which the 2004 order was made.  If there had been such non-disclosure, but it had been accidental or negligent, the wife would also have to establish that the effect of the non-disclosure was such that the 2004 order was substantially different from the order which would have been made (or agreed) if the husband had afforded proper disclosure – see per Lord Brandon in Livesey v Jenkins [1985] AC 424, 445. However, as the non-disclosure alleged by the wife in this case is said to be intentional, then, if there was such non-disclosure, the 2004 order should be set aside, unless the husband could satisfy the court that the 2004 order would have been agreed and made in any event – see per Lady Hale in Sharland v Sharland [2015] UKSC 60, paras 29-33.  In other words, where a party's non-disclosure was inadvertent, there is no presumption that it was material and the onus is on the other party to show that proper disclosure would, on the balance of probabilities, have led to a different order; whereas where a party's non-disclosure was intentional, it is deemed to be material, so that it is presumed that proper disclosure would have led to a different order, unless that party can show, on the balance of probabilities, that it would not have done so."

162. The issue of whether or not there has been non-disclosure is a question of fact which involves an evaluative assessment of the available admissible evidence: see para 49 of Gohil per Lord Neuberger. Part of that evaluation involves an assessment of the degree of culpability which should properly be attributed to the non-disclosing spouse.  In an earlier case involving non-disclosure (not referred to in either of Sharland or Gohil), Thorpe LJ had this to say:

"During the course of argument there has been some debate as to whether a distinction is to be drawn between the various vitiating factors including: fraud, mistake, misrepresentation, duress and material non-disclosure.  The authorities suggest that in other fields fraud stands alone, such is the public interest in its suppression.  However the duty of full and frank disclosure that operates in ancillary relief is distinctive.  In almost every case the application to reopen will rest on an allegation of material non-disclosure.  Litigants are invariably informed of the duty. I find it hard to conceive of non-disclosure, material because of its significant scale, that was unwitting or unintentional.  At some level of consciousness the party in breach of the duty acts in the hope or with the intention of diminishing the other party's allocation.  Thus differing degrees of culpability depend upon either the scale of the undisclosed assets or the lengths to which the offender has gone.  But distinctions important in other fields, such as the distinction between innocent and false misrepresentation, do not seem to me to have much validity in ancillary relief litigation.  In practice there is probably but a single vice, namely intentional non-disclosure achieved either by active concealment or passive failure to mention." see para [44](ii) in Shaw v Shaw [2002] 2 FLR 1204, 1217.

163. The issue as to whether an objective approach, a subjective approach or one that has subjective elements should be adopted in determining whether or not a party would have agreed to a consent order being made had full and frank disclosure been made and whether, with or without the additional disclosure, had the agreed terms been put before the court, it would have made the order because in the court's view it was in the range of fair orders, was considered at some length by Charles J. The case concerned a situation where a husband had failed to disclose during the course of negotiations which led to a consent order that he was in discussion with new employers in relation to a position which would have provided him with a significantly higher level of remuneration.  Charles J's judgment, reported at [2008] 2 FCR 527, [2009] 1 FLR 201, recorded his findings that the husband was in breach of his duty in his failure to disclose the likelihood of his imminent move but he refused the wife's application to set aside the order on the basis, inter alia, that the district judge would have approved the order had the parties reached the same agreement on the basis of the enlarged information.  The Court of Appeal reversed that decision and allowed the wife's appeal. In Bokor-Ingram v Bokor-Ingram [2009] EWCA Civ 412, [2009] 2 FLR 922, Thorpe LJ said this at para 12:

"The judge considered the duty of disclosure at some length in the context not only of the leading cases of Jenkins v Livesey (Formerly Jenkins) [1985] 2 WLR 47, [1985] FLR 813 and Robinson v Robinson (Practice Note) [1982] 1 WLR 786, (1983) 4 FLR 102 but also in the context of the Dreyfus v Peruvian Guano Company [1889] 41 Ch D 151 test and Part 31.6 of the Civil Procedure Rules 1998.  In our view, this insertion of the duty of disclosure in ancillary relief proceedings was unhelpful and unnecessary.  The duty of disclosure in ancillary relief proceedings was well stated by Sachs J, as he then was, in the case of J v J [1955] P 215, [1955] 2 WLR 973.  The standard there set has never varied.  As his Lordship expressed it at 288 and 984 respectively:

'… it is as well to state expressly something which underlies the procedure by which husbands are required in such proceedings to disclose their means to the court.  Whether that disclosure is by affidavit of facts, by affidavits of documents or by evidence on oath (not least when that evidence is led by those representing the husband) the obligation of the husband is to be full, frank and clear in that disclosure.'

164. Later, at para 18 of his judgment, Thorpe LJ said this:

"The court's duty under s 25 of the Matrimonial Causes Act 1973 is to have regard amongst other things, to '(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future…'. The fact that the contract had not been signed by [the date of the consent order] was irrelevant to the question of whether the negotiations had to be disclosed.  Disclosure was essential to enable the court to assess the husband's future prospects.  The duty to disclose extends beyond what is certain on the date that the order is made to any fact relevant to the court's review of the foreseeable future.' [my emphasis]

165. Thus, it is not for a litigant to judge the ambit of the duty to disclose or the consequences of disclosure; any information which is relevant to outcome must be disclosed.  Also in play in these types of set aside applications is the important principle of the public interest in the finality of litigation.  That this case has gone on for as long as it has after a marriage of such short duration, and at such significant financial as well as emotional cost to these parties, is little short of a tragedy in human terms.  However, we are where we are and it falls to me to reach my findings and conclusions so that each can now move on in whatever direction the outcome of this case dictates.


I. Findings and conclusions
166. I have rehearsed the evidence which was before the court at some length because I am keenly aware of the importance of this case to each of the parties in terms of outcome.  H carries a heavy sense of grievance; he believes he was duped by W into an unfair settlement.  That sense of grievance and injustice has only been exacerbated by her actions (as he sees them) over many months when she resisted making full disclosure of the true position in relation to Odey whilst, between May 2012 and May 2013, he sought through his lawyers to establish the facts.

167. W, for her part, is appalled by the prospect that she should be accused of fraud.  She is concerned not only for her personal reputation but for the consequences and potential impact upon her commercial standing in the business community.  In this context, it is important to remember that the subject matter of the allegations of non-disclosure in this case go to the manner in which she was operating her business in circumstances where, in addition to her duty of disclosure to H and the court, she had contractual obligations of confidentiality to B Ltd and its board of directors.   Very frequently in cases involving applications for financial remedy orders such as these, courts will be dealing with individuals who are daily at the centre of sophisticated corporate activities which will inevitably involve commercially sensitive information and decision-making which has, or may have, the capacity to influence share value in the wider sense.  Such is the modern coal face of today's entrepreneurial world. Are all these dealings to be exposed to the glare of forensic scrutiny on the simple basis that the individual concerned is engaged in contested matrimonial proceedings ?  At one end of the scale, the answer will be obvious.  Even where the answer is less obvious, the duty of confidence which exists between the court and the parties as established in Clibbery v Allen will usually mean that disclosure is the safest route in cases of doubt.  The information remains entirely private and confidential as between the parties and the court and the party making the disclosure will not be exposed to the risk that any order flowing from an agreement or court order made at the conclusion of contested proceedings may be liable to be set aside in the future.  In cases of extreme commercial sensitivity, the information can, if the court considers it necessary, be protected by means of an injunction.

168. Here, as H accepts, part of W's function as the CEO of B Ltd was to go out into the wider business world to seek ongoing funding for her company.  It was part of her raison d'être in that role and it was a function she appears to have discharged with significant success.  The annual reports or circulars which she sent to shareholders made regular references to her achievements in raising committed funding for the company.  It was a start-up (and loss-making) technology company whose very existence depended on the financial lifeblood provided by its external "angel" investors.

169. Despite the wealth of sophisticated analysis which has been laid before the court as to the precise nature of the Odey investment, I take the view that this case is relatively straightforward.  I have to look at the reality of the situation: per Glidewell LJ in Thomas v Thomas [1995] 2 FLR 668 at 678 and Moylan J in SK v WL Ancillary Relief: Post-Separation Accrual) [2011] 1 FLR 1471 at 1475.  In my judgment, the spotlight in this case is properly focused on the First Appointment on 6 February 2012, the disclosure which was then available to the parties and the court, and the negotiations which took place on that day.  Both parties arrived at court with first class teams of lawyers.  Each had come armed with lengthy questionnaires and schedules of issues which might have suggested that any possibility of settlement on that day was remote.  However, the parties took a view and decided to call a halt to the litigation.  I have already alluded to the fact that one of W's principal objectives was to secure the return to her control of the shares in B Ltd which H then held.  She herself accepts as much.  For her part she was willing to abandon her arguments about the extent of the marital acquest and her right to a share in that.  It had been a very short marriage which had ended in the midst of much rancour and unhappiness.  Each wanted to move on without the prospect of lengthy and expensive litigation hanging over their heads.

170. As part of their bargain, H agreed to transfer to W his 4.5% shareholding in B Ltd.  To those shares he had attributed a value in his Form E of £225,000 on the basis of £11.59 per share.  W's own shares had been valued by her at £162,000 on the basis of £1 per share, the value she had received when, the previous year, she had sold 50,000 shares to finance her divorce litigation.  Both parties were plainly prepared to take a view in respect of this differential as being an "unknown" which could be absorbed without further enquiry into the deal they were proposing to strike.

171. In terms of H's state of knowledge at that time, he had the full company accounts for 2009 and 2010 together with a profit and loss sheet for the six months to June 2011.  To the question in her Form E, "If any of the figures in the last accounts are not an accurate reflection of the current position, state why", W had provided no response.  At that point in time, she was fully aware that Odey had injected £3.5 million into the company and, regardless of the manner of its treatment (or proposed treatment) in the draft company accounts, there was the prospect of significant further funding from that source should B Ltd succeed in its bid for the contract with the Ministry of Justice.  All the evidence I have read and heard points to the fact that, despite the fact that formal terms had not been agreed, Odey was likely to have supported B Ltd in meeting the ongoing costs of its contractual obligations had it won that contract. 

172. The funds which had already been invested (which, on W's case, were "monies held to the order of Odey") in B Ltd by Odey might well have represented a significant increase in B Ltd's notional share value.  Mr Fletcher's evidence is that Odey received a share certificate in return for what it considered to be an equity investment in the company.  Professor Kay confirmed that to be the case despite the fact that he had been unaware of that fact at the time and the shares were not then registered in Odey's name.  Whatever W's view may have been about the ability of Odey to demand repayment of its "investment", she was clearly anxious to avoid that possibility and accepts that neither she nor B Ltd's board of directors did anything to crystallise the position in relation to those funds to the possible detriment of the company.  Happily, matters were resolved and, by February 2013 when Odey signed B Ltd's Deed of Adherence, the shares were formally allocated.  There had never been a formal loan agreement between Odey and B Ltd and, as W herself confirms, the discussions with Odey which took place prior to October 2011 when the cash injection was received envisaged that there would be an equity investment.  That is the nature of the transaction which the Chairman of Odey thought he was undertaking at the time.

173. Whether or not a formal share valuation would have returned the figures for which H now contends had that exercise been conducted in February 2011, the fact of the matter is that in all likelihood Odey's recent investment / injection of cash in B Ltd would have been a potentially material factor in any such valuation exercise.  Throughout the course of the negotiations which took place on 6 February 2011, H remained in ignorance of that development.  He was unaware of both the investment / cash injection and the identity of the investor.  He says that had he been aware of those facts, he would never have agreed to surrender his shares as part of the overall deal which was agreed on that occasion.  W points to the fact that the so-called "Odey effect" is pure illusion in terms of its impact on the fortunes of B Ltd.  She relies on the hard figures represented in the company's accounts.  B Ltd was a loss-making making entity in 2011 and it has yet to make a profit to this day.  Nevertheless, the shares in the company have continued to rise in value over the currency of this litigation.  That fact, in itself, cannot be a reason for setting aside the consent order since the focus of the court's enquiry must be on the extent to which W had complied with her disclosure obligations at the time agreement was reached.

174. The transfer of the B Ltd shares by H to W has to be seen in the context of the overall terms of their settlement.  His state of knowledge at the time, as I accept, was informed both by the representations she had made in her Form E and from the foot of his own enquiries, those enquiries having resulted in his valuation of £11.59 per share..  In her Form E, W had attributed to her own shares a value which would suggest the company was worth no more than £½ million in very broad terms.  In the weeks between signing off on her Form E and the negotiations at the First Appointment, no further representations had been made which might have alerted H to the investment / cash injection into the company by Odey.  It is perfectly true that there was no legal or other requirement on W during that window to make any such representations or to update her disclosure.  She is quite entitled to rely on her legitimate expectation at the time that any further issues or questions going to valuation would be the subject of further directions at the First Appointment.  However, in my view, her duty in relation to disclosure continued as the day spent in negotiations progressed.  It would have become clear by a certain point in those negotiations that the court was not going to be asked to make further directions since the agreement, once approved by the court, would operate to halt the litigation in its tracks.

175. W says to me that each agreed to "take a view" and that, in any event, the "anti-embarrassment clause" was there to protect H in the event that she were to sell her shares prior to 31 December 2013.  She says that the figure of £5 million in paragraph 5(i)(a) of the consent order (the notional disregard in relation to calculating the sum due to H in the event of a sale) was a reflection of the higher value which H had attributed in his Form E to his own shares in B Ltd, a position which H accepts.

176. I do not accept, as W suggests, that the reference in one of the shareholder circulars to the appointment of Julian Wolfson to the B Ltd board was sufficient to put H on notice of Odey's involvement with B Ltd.  Notwithstanding H's experience as an equity investor, W's knowledge of the facts was what gave rise to her obligation to disclose the information about Odey to H.  It was not for him to piece together the position from fragments of information which may or may not have been either in the public domain or disclosed to him as a shareholder of B Ltd.

177. I remind myself about the principles of law which I must apply.

(i) The duty of each spouse to make full and frank disclosure of his or her resources is owed to the court and without it the court is disabled from discharging its duty under section 25(2) of the Matrimonial Causes Act 1973.  In the absence of full and frank disclosure, any order it makes is likely to be flawed if the undisclosed fact or facts is/are material to outcome. 

(ii) In these circumstances, one spouse cannot exonerate the other from complying with his or her duty to the court.

(iii) The court cannot make a consent order without the valid consent of each of the parties. If there is a reason which vitiates a party's consent, then there may also be a good reason to set aside the consent order. 

(iv) Even innocent misrepresentation as to a material fact can be a vitiating factor if the undisclosed fact was material to the decision which the court made at the time and/or if it undermines the basis on which the order was made.

(v) Any information which is relevant to outcome must be disclosed; it is not for a litigant to judge the ambit of the duty to disclose or the consequences of disclosure.

(vi) The duty to disclose extends beyond what is certain on the date that the order is made to any fact relevant to the court's review of the foreseeable future.

(vii) The court's duty under s 25 of the Matrimonial Causes Act 1973 is to have regard amongst other things, to '(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future…'. The fact that negotiations which might lead to the existence of a material matter or event remain uncrystallized or subject to further negotiations is irrelevant to the question of whether the negotiations have to be disclosed.  Disclosure is likely to be essential to enable the court to assess one or other, or both, of the parties' future prospects.

Was the information provided by W full and frank ?
178. Thus, in answer to the first question which I must ask myself (was the information provided by W full and frank ?), on the basis of the totality of the evidence which I have read and heard, I find that it was not.  But I am not prepared to go as far as finding that this was a deliberate fraud or deception perpetrated by W.  Having listened to her evidence very carefully over the course of more than two days in the witness box, I am persuaded that she believed at the time that she had properly complied with her obligations of disclosure in the representations she made in her Form E.   I am not prepared to find on the basis of the evidence before me that settlement was achieved at the First Appointment because of her anxiety to rush through an agreement so as to avoid having to disclose any further information about B Ltd as was suggested to her by Mr Yates.  In my view, it was incumbent upon her to disclose the existence of Odey's involvement with, and financial support for, the company prior to allowing H to commit to their agreement in ignorance of that fact.  But I absolve her of any deliberate attempt to mislead him or the court on that occasion.

179. Where I believe W's conduct does properly attract censure is her response to the enquiries which were subsequently raised on behalf of H.   Much time and expense would have been avoided had she responded openly and at an early stage to his solicitors' questions.  I accept that their initial letter sought the answers to a significant number of questions and required her to produce documentation which was confidential to the company.  Nevertheless, despite the constraints under which she was put by the demands of the B Ltd board and her obligations of confidentiality, her responses were, in my judgment, unhelpful at best and misleading at worst.  I understand that, having concluded their agreement, she was extremely reluctant to become further embroiled with H in yet another round of litigation which was likely to be expensive and time-consuming (as it has proved to be).  However, the rearguard action which she fought over many months to suppress his challenge to the consent order was, in my judgment, misplaced and gave rise to some exquisitely nuanced presentations which have not withstood the forensic scrutiny to which they were exposed.  I find that she placed undue reliance on the terms of her employment contract in order to avoid some of the more penetrating questions which were asked of her.  In this respect it is not without significance that her contract specifically provided for the provision of confidential information "where this is required by law".  Once Parker J had ordered her to provide the information, there could have been no justification for anything other than a full and frank exposition of the position.

180. Her solicitors' initial response, sent on her instruction, contained a specific denial that Odey had made an investment in B Ltd.  The same letter spoke of her hope that Odey would make a proposal but what Odey was then being asked to do was to provide financial support in the event that the bid for the Ministry of Justice contract was won.  It specifically stated, "There has been no injection of cash".  That, in my view, was thoroughly misleading as even W herself accepts.  I do not regard as a sufficient excuse her explanation that she did not read the letter with sufficient care before it was sent out.  As I have seen for myself, W is a woman who has a meticulous eye for detail and who is careful in the extreme about her choice of words.

181. Again, in response to H's first questionnaire on 4 January 2013, she specifically stated that "other than this offer of potential support in relation to the Ministry of Justice bid, Odey had not made any other investment or agreement with [B Ltd]".  She further denied that any legal documentation had been prepared or exchanged in relation to any investment.  We know now from the evidence adduced during the hearing that a share certificate had been issued to Odey at the time it made funds of £3.5 million available to B Ltd.  I accept that Professor Kay did not know about that fact until very recently.  Whether or not W knew is unclear to me but someone at the board's direction must have dealt with the administration and issue of that share certificate even if the shareholding was not formally registered until February 2013.

182. On 5 December 2012, Mr Fletcher's letter contains these words: "Odey would not make an offer to buy [B Ltd] or any of the founder's shares".  I accept that W had no part in drafting that letter but she produced it as part of her response to H's allegation that she had not made full and frank disclosure of all the circumstances surrounding Odey's involvement with B Ltd.  As a statement of fact, it may well be true but, in my view, it requires context by further elaboration if it is to avoid being labelled a misleading statement.

183. Lord Steven's letter of 13 May 2013 made no reference to any loan from Odey to B Ltd although it did refer to another loan of £150,000 from an American company.  There was further reference to an approved share option scheme for company employees but nothing more to shed light on the true state of affairs which were then the subject of enquiry in the context of this application.  The first open admission of an investment by Odey in B Ltd did not come until the dissemination of the note prepared by Mr Erskine of counsel for the hearing on 22 May 2013.

184. Finally, I have stepped back and asked myself whether W's evident reluctance to disclose the full circumstances of Odey's financial relationship with B Ltd once the challenge was raised by H should cause me to reconsider my finding that she did not have any dishonest intent at the time of the First Appointment.  It was a great shame that W did not respond with a full narrative explanation at the time she was asked about the article in The Daily Telegraph.  What I find to be her actively misleading responses in subsequent documents have led in no small part to a ten day final hearing with a further hearing to deal with the judgments of the Supreme Court in Sharland and Gohil.  I am prepared on balance to accept that she was desperate to disengage from further litigation with H; that fact can be collected very easily from the numerous attempts which have been made to settle this case from the foot of the open offers which have been exchanged.  As the situation in relation to Odey's investment in B Ltd crystallized in February 2013 when the company signed the shareholder's Deed of Adherence, she probably felt the tide pulling against her.  H was to issue his application for disclosure against B Ltd within less than three months.  The cat was seemingly out of the bag by the time of the hearing before Parker J in May 2013.  Notwithstanding all these matters, I do not believe that W had a guilty intent to deceive either H or the court at the time of the First Appointment in February 2012.  Whatever occurred subsequently is not sufficient, in my judgment, to contaminate my initial finding or to cause me to reflect on its fundamental soundness.

Materiality
185. Thus, I turn to the second question I must ask myself:  was W's failure to reveal Odey's financial relationship with B Ltd at the time of the First Appointment material to outcome in the sense of enabling the court properly to carry out its statutory function of considering the fairness of the terms embodied in the consent order ?

186. I have no hesitation in finding that non-disclosure to be material.  First, the order was presented to the court as a consent order to which both parties had given their full agreement.  Its terms brought to an end significant legal rights which each had against the other to bring financial claims and seek orders.  Those rights were dismissed by the court in order to give effect to the clean break which each wished to achieve.  H was deprived of the opportunity of deciding whether or not to agree to the terms proposed on the basis of a fully informed decision.  He was not provided with the disclosure of information which he says would have been highly material to his decision to accept or reject the terms proposed, or to insist upon a renegotiation of those terms.  In such circumstances, it is difficult to see how he can be said to have given full consent.

187. Secondly, his evidence throughout was that he would not have agreed the package of terms reflected in the consent order had he realised the potential value of his shares.  I accept his evidence on this point.  It seems to me that, in this context, it matters not whether the Odey investment in B Ltd had been "transformational" in the window between October 2011 and February 2012.  In his eyes, as an experienced venture capitalist, Odey's involvement had the potential, if not the guarantee, to make his personal investment in B Ltd significantly more valuable than the notional figure he had presented in his Form E.  Because of W's far greater holding of shares, it also had the potential to increase her personal wealth to a point where the net benefit passing from H to W under the terms of the consent order became an unfair adjustment to their respective capital positions.  That factor alone is one which would have had to be weighed by the court in deciding whether or not to make an order in the terms sought.

188. In my judgment, the 'anti-embarrassment clause' is not a sufficient defence to the failure to disclose.  It provided that H might benefit during a limited period of time to any uplift in value secured by W over and above £11.59 per share in the event she were to dispose of her interest in B Ltd.  Any such uplift over and above that "floor" would be shared by H.  That clause was part and parcel of the agreement they reached but I do not accept that its limited reach was intended to provide W with a shield to any set aside application in the circumstances which have since occurred.  If H was to elect to limit his recovery in respect of the shares to this extent and for this period, it follows that he was entitled to make that election from a position of full information.  He did not have that information and, in my judgment, this clause stands or falls as an integral part of the consent order.  189. Because I have rejected the argument that W's failure to disclose on 6 February 2012 (or, in any event, prior to 10 April 2012 when the consent order was sealed) was deliberate and intended to mislead H, and in accordance with the guidance given by Lady Hale in Sharland, it falls to H to satisfy me that the effect of the non-disclosure was such that the terms of the consent order were substantially different from the order which would have been made (or agreed) if she had revealed Odey's involvement at the time.  

190. In my judgment, H has discharged that burden without difficulty.  Disclosure was, in my view, essential in order to enable the court to assess what each party's financial position was likely to be not only in the immediate aftermath of the making of any order but in terms of the court's review of the foreseeable future.  Odey had, by the admission of its chairman, acquired an equity stake in B Ltd in return for its £3.5 million of funding.  It had undertaken due diligence as part of its decision to invest and that due diligence had persuaded Odey to invest at a price of slightly more than £33 per share.  H's evidence was that that sort of bench-mark valuation would be highly persuasive in terms of share value to an experienced equity investor.  Given his many years of professional standing in this field, it seems to me that I can properly attach significant weight to that evidence.  I accept that Odey was a "major player" in its field and it is highly unlikely that, having completed the process of due diligence, the company would have been persuaded to invest at an artificially inflated price at the request of a struggling young technology company which had yet to make a profit.  That information was plainly relevant to outcome and is thus material in the context of the present set aside application.

191. I do not ignore the fact that, for the purposes of the negotiations, W was also prepared to take a view and stand back from the claims which she had hitherto been proposing to run.  Her case in relation to H's own alleged non-disclosure and her entitlement to a share of the marital acquest (whatever it might have been determined to be) was never tested, far less adjudicated upon.  I am certainly not encouraging any proliferation of the issues in this case but, in my view, the potential undervalue of both parties' shares in B Ltd is a fundamental obstacle to the integrity of the 2012 consent order.

192. For these reasons, the consent order dated 10 April 2012 will be set aside.


I. The way forward
193. On behalf of H, Mr Yates invites me to move straight to the stage of considering H's open position in terms of substituting a different order for that made by District Judge Gordon Saker on 10 April 2012.  That was the course taken by the Court of Appeal in Kingdon v Kingdon [2010] EWCA Civ 1251, [2011] 1 FLR 1409 where the solution to redressing the imbalance between the parties caused by the non-disclosure was relatively straightforward.  It was a course which was referred to by Lady Hale in Sharland as an example of active and effective case management.

194. Both parties have made open offers in this case.  I intend that all remaining issues should be dealt with as swiftly and economically as possible both in terms of further expense to the parties and use of valuable court time.  However, I am not prepared to substitute a different order at this stage without allowing further time for sensible reflection once each of the parties has had an opportunity to consider and reflect upon my judgment.  W is unrepresented but may well wish to seek further advice in the light of my findings.  The parties may together decide to agree upon terms which will bring this long running saga to a final conclusion.  Costs will inevitably be an element of any further proposals which are put forward.

195. I propose to relist this matter for further directions on the first available date next term which is convenient to the court and to both parties.  I suggest a time estimate of half a day.  By that stage, there will have been time for reflection.  If agreement can be reached, I shall use that opportunity to consider making a fresh order in substitution for the order which I have now set aside.  If there is no agreement, I shall hear any arguments in relation to costs and will consider what further and proportionate case management directions may be required in order to bring this litigation to a final conclusion.


Order accordingly

1
The order was sealed on 10 April 2012
2 Wife asserts in her form E that her assets were just under £800,000.
3 W also owned in her sole name a smaller property (a former chapel) adjacent to the house in Oxford which she let to a friend who looked after the main house in the parties' absences during the week in London.
4 W's oral evidence was that on occasions these updates would be sent more frequently than once a year.  It all depended upon whether or not there had been developments about which shareholders needed to be notified or whether the company was engaged in another round of fund-raising.
5 The company's year end has historically been 31 December.
6 W has produced an email dated 19 July 2012 from a third party who dealt with public relations on behalf of B Ltd.  Whilst it was suggested to her that this email appeared to show that she had been sent a draft of the article in order that she could approve the contents prior to publication, I am satisfied that W was truthful when she told me that the (published) magazine had been sent to her in order that she could disseminate it to a targeted audience as part of the campaign to publicise the company. 
7 The actual sum was £3,499,000 but I propose to refer in this judgment to the rounded up sum of £3.5 million.
8 The Forms H with which I have been provided show H's total costs to be £645,160 and W's to be £297,300 as at 22 June 2015 when the hearing commenced.
9 This was the share price which was referred to a document which was not formally admitted in evidence.  H had obtained one of W's recent shareholder updates from a disgruntled former employee of B Ltd.  Whilst its provenance as an Imerman document was accepted by H, W nevertheless waived her privilege as to its contents insofar as there was a reference to this particular share price.
10 The company accounts for B Ltd show losses of c. £800,000 in December 2010 and £1.3 million in December 2011.
11 Section 25 of the Matrimonial Causes Act 1973 (as amended)
12 His Lordship had held that Mr Sharland's non-disclosure undermined the basis on which his shareholding had been valued and therefore the ability of Mrs Sharland to address the proportionality of agreeing a discount below her claimed 50% against the receipt of a larger share of the other family assets.