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Z v Z and Others [2016] EWHC 1720 (Fam)

Roberts J considers the quantification element (‘Stage II’) of her decision in W’s Part III MFPA 1984 application following a concluded agreement in Russia and where the assets had been generated were nearly exclusively non-matrimonial.

The wife's Part III MFPA 1984 application followed a Russian divorce, and Russian financial remedies proceedings that were concluded by agreement and included broad finality clauses. In Z v Z & Others [2016] EWHC 911 (Fam), Roberts J had determined that it was appropriate for the English court to make financial orders in this matter, and Her Ladyship stressed that the two judgments must be read together as part of a single decision. Crucially, the Russian proceedings, even if contested, would not have been able to consider the Kensington House, a property that W lived in in London but which was held by a trust, a structure not recognised by Russian law and therefore which could not form part of a Russian award.

It was agreed between the parties that this was a 'needs case', but H argued that W's needs had to be assessed in light of:

1. The delay in W's application (the Russian order having been finalised in 2009).
2. The non-matrimonial source of H's wealth.
3. The agreement that W gave to compromise all her worldwide claims, including those against trust property (and the reliance that H and his family had placed upon that finality).

In relation to the delay, Roberts J found that there had been a tactical element in the timing of W's claim, and that she had deliberately waited until her flat in Moscow had sold before she made her application so as to increase her connections to this jurisdiction. This resulted in a more conservative assessment of W's future needs [52], [102]. However, no finding was made that W had deliberately delayed in the expectation that H's financial position would improve and therefore that she made have a greater claim in 2015 than in 2009 [53].

In relation to the source of H's wealth, Roberts J noted that 'the provenance of the wealth against which she is claiming is gifted or inherited wealth, none of which is the product of marital endeavour' [54]. H's wealth was derived from his father, Dr Z, as it had been throughout the marriage. Having referenced H's submissions on N v F (Financial Orders: Pre-Acquired Wealth [2011] EWHC 586 (Fam) and Vince v Wyatt [2016] EWHC 1368 (Fam) [26], Roberts J held that this factor should also act as a limiting factor on the assessment of W's needs [54].

The previous agreement between the parties (reduced into an order as part of the Russian proceedings) was not sufficient for the English court to make no financial provision for W. The existence of the agreement was an important factor, and meant that Roberts J could not simply consider what an English court would have done had the divorce proceedings occurred here in 2009 [78]. Roberts J analysed the relevance of Granatino v Radmacher (formerly Granatino) [2010] UKSC 42 in Stage I of her judgment, and noted in the Stage II judgment that the Radmacher test required more than a simple assessment of whether the division of the visible assets on their values at the time looked fair at the time [90]. The Russian court had been unable to consider any remedies in relation to the Kensington House [72] and had not investigated the circumstances of W's occupation [73]. There was, therefore, a concern as to whether W's housing and income needs would be met at such time as she was no longer granted occupation of the Kensington House [74]. Her Ladyship distinguished the situation in De Renee v Galbraith-Marten [2016] EWCA Civ 537, where there had also been proceedings concluded by agreement in an overseas jurisdiction on the basis that there was potential for continued unfairness in the present case, and that the parties in De Renee had received full and relevant advice on all possible remedies throughout the Australian proceedings [68] – [70].

Outcome

Ahead of the hearing, H had agreed to pay the rent on the Kensington House so as to allow W to remain living there until their youngest child completed tertiary education. Roberts J therefore considered W's needs outside of this, in light of W having 'substantial' connections to the jurisdiction [82], albeit that there had been a tactical element to her delay, and the assets that W had already received in the Russian proceeding [85].  W had accepted, it was found, that she would not have any claim for ongoing spousal maintenance, and had formally compromised such a claim in Russia [91].

H's case was that W could step down her housing need following the youngest child completing tertiary education (in 2022), and that she would be able to meet her housing need from her own resources by that time [105]. Roberts J accepted that, although the position may have been different under an English divorce, it would not be appropriate for W to remain in the Kensington House indefinitely, and indeed that transferring the property to her risked providing her with an outcome that would exceed what she could have received from purely English proceedings [111], [127].

Against a background of H's assets of £33 million [8], Roberts J found that W would need a housing fund of £2.5 million (on present figures) to rehouse in 2022 [126]. Having reviewed her budget. Roberts J found that her income needs were £138,847 [123]. This would leave H's standard of living significantly greater than hers, although no party had sought parity in this regard, which was appropriate give the delay and the award W had already received in Russia [118]. These needs existed as a matter of fact independent of W's compromise of her spousal support claims, although the compromise was a relevant factor in considering how far these needs were met [124]. Roberts J took no account of W being able to exercise an earning capacity to help meet her own needs, on the basis that she had on going obligations to the children and that her language difficulties in England would limit her employment opportunities [126].

Taking account of the £4.685 million of assets already held in W's name, Roberts J calculated W's shortfall against the Duxbury fund she would require to meet her future income and housing needs. In doing so, Roberts J allowed for the fact that W's housing fund would also generate income that could be retained for the six years until she has to rehouse [131]. Treating W's investment flats as liquid capital (as opposed to income streams) [130], this left W with a shortfall of £1,148,480 on her Duxbury fund for her future needs (having accounted for the assets she already retained and the housing fund she would need from this). Roberts J found that, given the scale of his wealth, it was fair and reasonable for H to meet this shortfall [132].

The children's needs were found to be £35,000 pa each, as W had contended, but Roberts J held that W's requested level of extras was too high, even in light of the fact that W and H would be unlikely to be able to agree on individual items of provision in the future [139]. H was therefore also to pay for such tuition as is agreed to be considered necessary by the children's schools, on top of his agreement to meet any private medical bills not covered by the insurance he provided [139].

Roberts J concluded the judgment with a strong steer that, although any costs applications would be considered, they might be inappropriate in light of the needs-based nature of her assessment.

Summary by Summary by Samuel Littlejohns, barrister, 1 Hare Court

_______________________

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: FD14F00368
Neutral Citation Number: [2016] EWHC 1720 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 13/07/2016

Before :

MRS JUSTICE ROBERTS

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Between :


Applicant

- and - 

Z
First Respondent

Codan Trust Company Limited
Second Respondent


Kopt Development Limited
Third Respondent

(APPLICATION FOR FINANCIAL RELIEF AFTER FOREIGN DIVORCE: STAGE II: QUANTUM OF AWARD)

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Mr Richard Todd QC and Mr Nicholas Yates (instructed by Vardags) for the Applicant
Mr Lewis Marks QC and Miss Katie Cowton (instructed by Stewarts Law LLP) for the First Respondent

The Second and Third Respondents did not appear and were not represented

Hearing dates: 8th, 9th 10th and 13th June 2016

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Judgment
Mrs Justice Roberts :
1. This is my final judgment in relation to an application brought by a former wife pursuant to Part III of the Matrimonial and Family Proceedings Act 1984 ("the 1984 Act").  Over the course of 4 days between 8th and 13th June 2016, I dealt with what has been referred to as "the Stage II" hearing of the application.  My earlier judgment in relation to "the Stage I" hearing in March 2016 is reported as Z v Z & Others [2016] EWHC 911 (Fam).  In that judgment, I determined that it was appropriate for the English court to make an order, or orders, for financial provision for the applicant under Part III of the 1984 Act.  Because of an inadequate time estimate, there was insufficient time in the context of that hearing to deal with quantum and/or the nature of the financial relief to which she should be entitled.  In order to utilise the court time which had been set aside for the March hearing, I agreed to deal with matters on the basis of a split hearing. 

2. As I made plain in my earlier judgment, there has been a considerable overlap in the matters which I have had to consider in respect of sections 16, 17 and 18 of the 1984 Act.  To an extent, there has been further ventilation of the same, or very similar, evidence and legal submissions during the course of this Stage II hearing.  Since my earlier judgment was full in terms of the background and the events which triggered the current application, it is essential reading for a full understanding of my decision in relation to the final disposal of the applicant's claims.  I adopt it and incorporate that judgment in full as an integral part of this judgment and will not repeat any of that information here, even by way of introduction.  These proceedings are part-heard and both judgments (when read together) reflect my findings and my decision.

3. Before moving on, I would say only this.  In terms of effective case management, proper consideration should be given to realistic time estimates at an early stage of these Part III claims.  The factual background to this particular case was, and is, complex.  The details in relation to the underlying offshore trust structures and the manner in which those structures have changed in terms of the beneficial interests of various family members was always going to be the subject of careful scrutiny and analysis.  Because of the interrelationship between various sections of the 1984 Act, it will always be in the interests of the parties and the judge trying this type of case to deal with both limbs of an application in a single hearing.  Much of the evidence will be common to both limbs:  the question of whether it is appropriate to make an order and, if so, the quantum and structure of the order(s) to be made.  This case has now occupied nine days of court time and several more in terms of judgment-writing.  Much of the same ground has been covered and re-covered.  Whilst the case has been immaculately presented by the legal teams, split hearings in cases such as this should, in my judgment, be avoided.

What has happened since the Stage 1 hearing?

4. Whilst Mr Lewis Marks QC and Miss Katie Cowton (instructed by Lady Ward) continue to represent the respondent, the applicant has been represented in this Stage II hearing by Mr Richard Todd QC and Mr Nicholas Yates (instructed by Vardags). I have already expressed my gratitude to both legal teams for the care and industry which have so obviously gone into both their written and oral presentations.  As in the Stage I hearing, both parties gave their oral evidence (which, in the applicant's case, was extensive) with assistance from professional interpreters.  Whilst each can converse relatively fluently in English, neither felt confident in dealing with the more technical (or legal) aspects of the case without that assistance.  Similarly, as in Stage I, there was no representation on behalf of, or appearance by, the second and third respondents, Codan Trust Company Limited ("Codan") and Kopt Development Limited ("Kopt").  The former is the corporate offshore trustee of the (Bermudan) BMT Trust, the ultimate owner, through Kopt, of the Kensington house which is central to the dispute between the parties in this Stage II hearing.

5. On 26 May 2016, Lady Justice King refused the respondent's application for permission to appeal my decision in relation to the Stage I hearing.  She held that such an appeal held no reasonable prospects of success on the basis that the interplay between sections 16, 17 and 18 of the 1984 Act would enable the respondent to raise each of the arguments advanced in support of his appeal at the Stage II hearing which she directed should take place in accordance with the agreed listing.

6. The other significant development in the case is an open offer from the trustees of the BMT Trust to "buy out" the applicant's annuity entitlement under the trust terms for a single accelerated payment of £1 million.  Since Codan holds limited assets apart from the Kensington house, it appears that the trustee intends to fund this payment (in part, at least) from the advance rental payment of just over £1 million.  That is the sum which the respondent has already paid in part-implementation of his offer to make the property available as a home for the applicant and the children for the next six years until their youngest child reaches his 22nd birthday by which stage it is anticipated that the tertiary education of all three children of this family will have been completed.

7. In accordance with directions which I made at the conclusion of the Stage I hearing, both parties have made open proposals in relation to the outcome of these proceedings.  I was presented with an updated schedule of assets which is, by and large, agreed subject to some enquiry during the course of cross-examination as to various changes in the respective financial positions of the parties.  In part, these changes are a reflection of the global costs bill of just under £2.2 million which has been spent on this litigation.  In broad terms, each has spent over a million pounds fighting this case to its conclusion.  This expenditure will inevitably have had a greater impact on the applicant's financial position since she has far fewer assets available to her.  Whilst we worked throughout the hearing on the basis that her remaining capital was in the order of £3.8 million , it appears that a final payment to her solicitors at the end of last week had reduced her asset base to just over £3.68 million.1

8. The respondent's financial position ('on paper' at least) has deteriorated between the two hearings by just over £7 million.  At the Stage I hearing in March this year, his personal asset base (including his trust interests) was said to be c. £40 million.  It is now put at just under £33 million of which all but £6.2 million (previously £4.74 million) is held within various trust structures.  (This figure takes no account of the present value of a helicopter which he bought some time ago and which he valued in his Form E at just over £540,000.)  In relation to two of those trusts (the BMT Trust which,  through Kopt, owns the Kensington house and the BMT Generations Trust which owns the yacht), the underlying trust instruments provide that he cannot benefit during the lifetime of his (now) 83 year old father, Dr Z.  Thus, whilst his liquid position has improved, the value of his trust interests has decreased by some £8.5 million.   Mr Marks and Miss Cowton point to an error in the earlier calculation of the sterling value of the respondent's interest in the Mezano Trust (his personal trust vehicle) at the time of his financial presentation at the Stage I hearing.  The Mezano Trust owns the property in Cyprus in which the respondent lives with his new family 2.  It is said on his behalf that the value of £13 million attributed to this trust was not correct because of an inaccurate currency conversion calculation.  In addition, funds were withdrawn from this source to pay for the acquisition of his purchase of a second property in Wycombe Square 3.  Similar conversion errors are said to have resulted in an overstatement in his updating disclosure of the underlying values of the assets held within the BMT Trust, the BMT Generations Trust and the BMT Legacy Trust.

9. It is also right to highlight the fact that, of the total trust assets under the respondent's control (now said to be £26.6 million), some £7.356 million is held within four separate trusts designated for the benefit of each of his current wife, his stepson and their two children.

10. None of these factors detracts from the respondent's concession that he has the resources to meet any reasonable order which this court might make at the conclusion of these proceedings, although he does not accept that I have jurisdiction to make an outright transfer of the Kensington house because of the absence of the necessary nuptial element in the BMT Trust which owns the property.

11. For present purposes, it is enough to note that all of this wealth flows from the efforts and industry of his father, Dr Z, and the sale in 2000 of his shares in one of Russia's largest mobile telephone providers which produced some US$600 million of which his shares were US$180 million.  The majority of that wealth has been channelled into charitable philanthropic trusts.  Dr Z retained only a very small proportion of that wealth for himself and his family.  The respondent's evidence is that, outside the main family trusts of which he is now the Protector and life tenant, his father's personal wealth is in the order of c. US$4 million.   Since Dr Z's generosity to his sons (and the respondent is now his sole surviving son) and extended family was a feature of married life for these parties and the source of funding for their lifestyle as a family, there is now no marital acquest which might have been susceptible to a sharing claim.  Such property as the parties owned in Russia at the time of the Russian financial settlement in August 2009 has been divided in accordance with the terms of the Russian order.  The applicant sold her apartment in Moscow in May 2014 and applied the sale proceeds towards the purchase of her two London investment properties.  The circumstances of that sale and its timing are matters to which I shall return in due course.

12. On her behalf, Mr Todd and Mr Yates accept that the basis of the applicant's Part III claim is anchored firmly to her needs.  However, they contend that those needs fall to be considered against the scale of the wealth which is now, or soon will be on his father's death, available to the respondent.  On his behalf, Mr Marks and Miss Cowton submit that all of the arguments advanced at the Stage I hearing come back into play for the purpose of that assessment, not least the very significant delay on her part in issuing her claim.

The open positions advanced by the parties for the purposes of the Stage II hearing

13. On 26 May 2016, the applicant formulated her open proposals for this Stage II hearing.  She sought the following:-

Housing

(i) the transfer of the Kensington house (with an agreed value of £4.75 million) from the BMT Trust net of any extraction costs;

(ii) in the event that a transfer of that property is not possible, a housing fund of £4.9 million net of acquisition costs;

(iii) in return for the provision of the Kensington house or the sum of £4.9 million in the alternative, the applicant was willing to forgo any claim to (a) the Wycombe Square flat owned by the BMT Trust, and (b) her right to any annuity from the Trust;

Spousal maintenance

(iv) a capitalised maintenance fund of £2.7 million based on a budget of £195,429 per annum, offset by the rental income of £24,200 per annum and a notional capital contribution of £2 million from her own resources.  She wished to preserve £1 million of her existing capital as a form of Besterman cushion against future contingencies;

Child maintenance

(v) £35,000 per annum per child until the conclusion of their tertiary education plus school/university fees and extras, accommodation, private tuition, medical expenses and insurance as further particularised in a number of schedules exhibited to her written evidence;

(vi) arrears of child maintenance in the sum of £784,908;

(vii) reimbursement of medical, school and nanny costs in the sum of £306,372;

Costs

(viii) payment of her costs on an indemnity basis in the sum of £1,120,865 together with the costs of the Stage II hearing.

14. Thus, in terms of funding an award at this level, the respondent and/or the trustees would be looking to find a sum of £9.8 million or the Kensington House plus £5.66 million, taking account of the tax payable on the extraction of the property from the Trust 4.

15. The response from the respondent came in an open letter dated 2 June 2016.  In that letter, he repeated his previous proposals advanced in April and November 2015 before the Stage I hearing.

Housing

(i) Kopt to be invited to grant to W a six year lease in respect of the Kensington property terminating on their son's 22nd birthday.  The annual rent of £156,000 would be prepaid in full;

Child support

(ii) £20,000 per annum per child for the two younger children still living at home with the applicant. (The respondent proposes to continue to make financial arrangements directly with their elder daughter who now lives away from the Kensington home in a rented flat which is paid for by her father.)  That level of support would continue to be provided until both children completed their tertiary education;

(iii) school fees and agreed extras on the school bill together with agreed extra tuition and extra-curricular activities;

(iv) the cost of the children's tertiary education, to be agreed in advance, as well as whatever term time allowance is agreed directly between the children and the respondent;

(v) private medical insurance for the children together with the reasonable cost of whatever medical or dental treatment they might need in future provided that this was not covered by private health insurance and/or not reasonably available on the NHS.

16. There was no provision in this offer for any spousal maintenance or contribution towards the applicant's legal costs.

17. That was where matters stood when the Stage II hearing commenced.

18. At the end of my Stage I judgment, I had encouraged the parties to negotiate from the platform of my finding that this was a case where it was appropriate for the English court to make an order for financial provision in the applicant's favour.  Having read their respective presentations in advance of this hearing, I expressed disappointment on the first day that very little adjustment appeared to have been made to their previous 'Stage I' positions.  I had already described the applicant's aspirations in my earlier judgment as "wildly ambitious" (see paragraph 156).  Whilst she had moved her position in relation to the transfer/retention of both the Trust's London properties (i.e. the Kensington house and the second trust property in Wycombe Square), I saw scope for further progress and encouraged both legal teams to continue to negotiate in the hope that a second, lengthy hearing could be avoided.

19. That judicious encouragement provoked a revised open offer from Mr Todd and Mr Yates on the morning of the second day of this hearing.

The applicant's revised open proposal

20. The applicant now seeks the following:-

(i) the transfer of the Kensington house;

(ii) a sum of £1 million in return for the extinction of her annuity under the terms of the BMT Trust;

(iii) child maintenance of £35,000 per annum per child until the conclusion of their tertiary education together with school/university fees and extras, accommodation, private tuition, medical expenses and insurance as set out in the various schedules appended to her written evidence.

(iv) On this basis, there would be no order as to costs.

21. Thus, she would be left with capital and property of just under £9.3 million.  If she retained the Kensington house as a home beyond the date when the children had left home (which she says is her intention), she would have an income producing fund of capital which they suggest will generate just under £180,000 per annum for the rest of her life.

22. Whilst this was certainly an improved offer, the respondent declined to accept it and/or to make a counter-proposal.  Thus, I commenced hearing the evidence on the basis of these two positions.

23. Much of the oral evidence (and the cross-examination of the applicant, in particular) was focused on the issue of her needs going forward.  Since the basis of the respondent's offer is the continuing provision of accommodation for the applicant and the children at the Kensington house for the next six years or so at which point his financial obligations towards her will cease altogether, an appropriate starting point is probably an examination of the manner in which Mr Marks and Miss Cowton contend that future needs are met without further financial provision in the form of a Duxbury fund.  Aside from the rent which the respondent has paid in advance for the proposed rental term, he has not made any payments in respect of spousal support since the Russian order was finalised in 2009.  The applicant has been meeting her own living expenses from the rental income she receives and by dipping into her capital reserves.  She contends that she has also had to provide a significant financial subsidy from those resources in order to meet additional expenses incurred on behalf of the children.

24. The case advanced on behalf of the respondent by Mr Marks and Miss Cowton is underpinned by a fundamental submission that any assessment of need must reflect the fact that all of the wealth in this case is gifted or inherited.  They contend that Dr Z created that wealth without contribution from the applicant or the respondent.  It was he who decided how it should be held, and to whom and when it should be gifted.  Not only does this eliminate any claim for sharing; on their case it also removes the case from what they describe as "even ordinary needs" (i.e. the manner in which her needs might fall to be assessed were the parties divorcing now in an English context). 

25. They submit that any assessment which I now undertake must be on the basis of needs restricted to take account of the following factors:-

(i) the provision she has already received under the terms of the 2009 Russian order;

(ii) the consent she gave in the context of the Russian order to the compromise of her claims on a worldwide basis, including any claims against trust property;

(iii) the absence of any vitiating factors in relation to that agreement;

(iv) the reliance which Dr Z and the respondent placed on that agreement over the ensuing years;

(v) the assets which would have been available in 2009 had the applicant sought to make any greater claim against the respondent at that point in time;

(vi) the delay of some five years between the compromise of her claims and the issue of her Part III application; and

(vii) the prejudice suffered by the respondent if account is now taken of the changes in his financial position during that period of delay.

By and large, these points echo those which were argued during the Stage I hearing: see my judgment at paragraph 77.

26. In support of their position, Mr Marks and Miss Cowton point to the decision of Mostyn J in N v F (Financial Orders: Pre-Acquired Wealth [2011] EWHC 586 (Fam), [2011] 2 FLR 533 where the court undertook a conservative assessment of need in the context of carving out provision for needs from non-matrimonial property.  More recently, they rely on the approval of the court given by Cobb J to a consent order which provided an applicant in a needs case with a modest sum of £300,000 against the background of very substantial wealth acquired over the course of many years after the end of a marriage: see Vince v Wyatt [2016] EWHC 1368 (Fam).  In that case, the court held the award to be appropriate even in circumstances where there had been no child maintenance and where the applicant had "struggled to maintain a home for [the children] in circumstances of real privation bordering on poverty".

27. In terms of delay and the resulting prejudice to the respondent, Mr Marks and Miss Cowton remind me what the Supreme Court said in Vince v Wyatt when the case travelled to that court in the context of the respondent husband's application to strike out the claim altogether.  At paragraph 32, Lord Wilson of Culworth said this:

"… there is a prominent strain of public policy hostile to forensic delay.  The court will look critically at explanations for it; and, even irrespective of its effect upon the respondent, will be likely, by reason of it and subject to the potency of other factors, to reduce or even eliminate its provision for the applicant.  Nevertheless it remains important to address its effect upon the respondent.  In some cases … a respondent can show that he has assumed financial obligations or otherwise arranged his financial affairs in the belief that the applicant would make no claim against him and that he has done so in a way which, even if it were possible, it would not be reasonable for him to put into reverse."

28. Given that I have already found in my Stage I judgment that there has been significant delay on the part of the applicant in prosecuting her Part III application, the matter which I shall need to address in this judgment is how that delay can and should properly be reflected in any award made for the benefit of the applicant in a case advanced on the basis of needs simpliciter.  I am unable to accept the submission made by Mr Todd and Mr Yates on behalf of the applicant that the delay in this case can somehow be air-brushed completely from the case on the basis of the explanations provided by their client.  Those explanations and the details which she sought to graft onto her case in relation to undue pressure or duress came at a very late stage in the day (see paragraph 12 of my Stage I judgment).  There was no complaint about pressure or duress in relation to the Russian agreement when Mr Harper resumed conduct of the case on her behalf in November 2013.  The correspondence passing between solicitors at the time contains no reference to possible non-disclosure on the part of the respondent, nor does it advertise in any material respect the case which she now seeks to run in relation to her health or her psychological inability to proceed expeditiously with any extant financial claims she wished to pursue in this jurisdiction.  Whilst I accept that this aspect of her case was touched upon at various points in her earlier statements, the full exposition in all its detail only came in the weeks leading up to the Stage I hearing after many months of ongoing litigation and case management.  In these circumstances, I keep well in mind – as I did during the Stage I hearing -  the need to assess the weight which can properly be attached to the applicant's case in relation to the reasons for the delay and the psychological pressures which she contends were operative during this period and preventing her from issuing her application.

29. I dealt with the aspect of delay in paragraphs 148 to 156 of my Stage I judgment in the context of its presence as a factor which has to be considered for the purposes of determining whether it would be appropriate for the court to make an order under the 1984 Act.  In the course of that analysis, I made reference to the detailed chronology she had provided in her witness statement in relation to the interventions at various points from health professionals.  These professionals included a psychiatrist (Dr Beniashvili, whom the respondent himself recommended), a psychotherapist and a counsellor (whom she continues to see on a weekly basis).  There was some implied criticism from Mr Marks during the course of his submissions that I had somehow relied on these medical interventions in my earlier judgment whilst having refused permission at the start of the last hearing to admit in evidence the content of the reports and/or letters which these individuals had (very late in the day, and in the absence of a Part 25 application) produced.  As I had intended to make clear in paragraph 151 of my previous judgment, I did no more than collect from the chronology of the applicant's involvement with these professionals over an extended period of time the extent to which she subjectively perceived the need for such support.  That chronology was not challenged in relation to its factual content.  I reminded myself about the various inconsistencies which I found there to be in her evidence although I found these did not contaminate the whole of her case so as to make her a generally unreliable witness.  Nevertheless, I went on to express concern that the evidence which appeared for the first time in her most recent 'Stage I' statement appeared to be an attempt to bolster her defence to the perceived deficiencies of the case she was previously advancing, particularly in relation to the aspect of delay (paragraph 124).  On balance I did not find either party to be a dishonest or untruthful witness although I was satisfied that each had to one extent or another manipulated the "spin" which they sought to put on their evidence in order to assist the presentation of their respective cases in this litigation (paragraph 131).  Having listened carefully to them again over the course of the Stage II hearing, that remains my view.

30. I have been able to observe for myself at first hand the demeanour which the applicant has displayed whilst giving her evidence over what is now the course of several days in the witness box.  She is, without doubt, an extremely anxious woman.  She worries constantly about all three of her children and, to be fair to her, not without reason since each in his or her own way has presented with various psychological difficulties and health problems.  I shall need to address in due course whether these concerns are overplayed or exaggerated in terms of the presentation of her case in relation to the children's financial needs.  However, I have no doubt that the applicant herself does not have the reserves of emotional resilience which would have enabled her to forge ahead with further English proceedings in the immediate aftermath of the Russian order.  I am satisfied that the prospect of further litigation with the respondent at that stage would have been a daunting and potentially costly prospect, both in financial and emotional terms.
 
31. However, that by itself is not an explanation for the degree of delay in this case.  I found in my earlier judgment that the applicant received no legal advice between the end of August 2009 and March 2012 when she consulted Francis Lindsay & Co.  The issues which she had with that firm have been well rehearsed in the written evidence and, by and large, are not contested.  It appears to be uncontroversial that this (much smaller) firm which she instructed in place of Withers in order to manage costs more effectively did not have the equivalent experience of dealing with substantial financial cases involving international trusts.  There was then a dispute about a legal bill and the proposed instruction of counsel at a cost of some £20,000.  The matter reached the desk of the Legal Ombudsman.  The applicant appears to have re-established contact with Mr Harper on 5 November 2012 and signed a formal retainer for his services on 25 November 2012.

32.  Initially, she said during the course of her oral evidence that she had contacted Mr Harper for reasons unconnected with her Part III claim.  She thought it was the receipt of a letter addressed to her from the solicitors acting for Kopt (the owner of the Kensington house).  That letter referred to the proposed changes to be effected by the forthcoming ATED 5 tax legislation and the need to have the property valued.  Fearful that this valuation might signal some intention on the part of the trustees to sell the property, she said she had contacted Mr Harper.  When it was pointed out to her that this cannot have been the reason for her approach to Mr Harper since she would not have received the letter before 8 November 2012 (it was dated 7 November 2012), the applicant told me that Withers had written to her at some point in 2012 to inform her that a restriction which she had registered against Kopt's property in Wycombe Square was still in force.  She thought that it might have been in the context of a discussion about that letter that she told Mr Harper about the letter from Speechly Bircham, Kopt's solicitors.

33. In any event, Mr Harper at Withers was formally reinstructed by 25 November 2012.  It is at this point that the chronology in relation to delay becomes important because Mr Marks and Miss Cowton invite me to find that the ensuing delay was caused as a result of the applicant's lack of success in finding a buyer for her Moscow apartment and was purely tactical.  It is common ground that she put the Russian property on the market for sale at the beginning of February 2013 on the basis of an asking price of US$8.6 million.  In that same month, the lien which her previous solicitors were exercising over her file came to an end when matters were resolved with assistance from the Legal Ombudsman.  It was suggested to the applicant in cross-examination that Mr Harper could do nothing further to progress her Part III claim at that stage because he must be presumed to have advised his client that her prospects of success in English litigation would be significantly enhanced if she had by then severed her remaining financial connection with Russia.  It is suggested that this was the reason why she began to market the Moscow apartment in February 2013 and why no further action was taken in relation to the Part III proceedings until after the sale of that property in May 2014 at a reduced price of US$6.2 million.

34. If this is what actually happened, the applicant could properly be said to have introduced an element of clear tactical delay into these proceedings.  Is that what she did ?  She told me that she had no such motivation and that Mr Marks had simply grafted onto the chronology various assumptions "to make a story which did not happen". 

35. Her evidence was that the Russian property market was highly volatile in the period after the Russian order of 2009.  There was much speculative marketing by vendors at vastly inflated prices.  She took the view that it made better sense to have her property investment in the central London market where two smaller flats would be much easier to let with a guaranteed income stream.  The Moscow apartment had taken so long to sell precisely because of the prevailing uncertainty in the Russian housing market at the time.  She had negotiated a sale at a price of just over US$6 million (as against 2009 valuation of US$5.1 million and an initial asking price of c. $8.6 million) but her purchaser pulled out of the sale at the last minute.  She was able to resurrect the deal about a month later and the property was finally sold at the end of April or the beginning of May 2014 for RUB 221.6 million (or US$6.2 million gross, or US$4.9 million net).

36. Thus, argues Mr Marks, Mr Harper's hands were tied for a period of almost eighteen months whilst attempts to sell the Moscow apartment were ongoing.  That, on his case, provides the explanation for why the applicant's first statement dealt with the issue of delay on an entirely different basis from that which is now being advanced.  The reason for the delay in making the Part III application in July 2014 (the date of her statement in support of the permission stage) were given as follows:-

(i) Following the advice she was given by her Russian lawyers, the applicant decided to take the deal which the respondent was then offering as the result in England was uncertain and she was unlikely to receive more in a contested Russian hearing because the Russian court would ignore the trust resources (paragraph 81.1);

(ii) Her English was very poor in 2009 which made it difficult for the applicant to understand the full context of the advice she was being given.  The difference in cultures and procedures between the two different legal systems compounded those difficulties (paragraph 81.2);

(iii) She felt "emotionally drained" as a result of coping with the consequences of the divorce and looking after the children. "I needed some time away from any legal proceedings to focus on my and the children's well-being" (paragraph 81.2);

(iv) For a long time she had hoped it might be possible to negotiate directly with the respondent and his father about her future financial security (paragraph 81.3);

(v) Following the decision of the Supreme Court in Agbaje, she had consulted another firm of solicitors with whose work she was not happy.  The dispute (which involved the Legal Ombudsman) took eight months to resolve (paragraph 81.4);

(vi) There had been communication with Kopt's solicitors in relation to the ATED valuation of the Kensington house which necessitated correspondence between her solicitors and the Trust's solicitors (paragraph 81.5);

(vii) the respondent had been controlling and manipulative in relation to finances (paragraph 81.6);

(viii) she had been obliged to prioritise dealing with the children's problems over and above the financial issues.  For three years she had tried to reach "a peaceful agreement" with the respondent and his father (as Protector of the BMT Trust) but she had not succeeded.  At all points, the respondent had sought to undermine her authority with the children.  She gave details of their youngest child's heart condition and the psychological difficulties from which their elder daughter suffered, leading to various incidents of self-harming (paragraph 81.7).

37. The issue of delay must also be considered in the context of the findings which I have already made in my Stage I judgment.  In particular I found that:

(i) the applicant's contributions to the family in terms of section 25(2)(f) of the Matrimonial Causes Act 1973 (a relevant consideration under section 18 of the 1984 Act which is interrelated to section 16) have been significant since the demise of this marriage;

(ii) to an extent, the applicant's own needs and the needs of these particular children may be said to be aligned insofar as the children (or any one of them) may need continuing support of a non-financial kind beyond their respective majorities (see paragraph 112);

(iii) in terms of any claim which the applicant might have wished to pursue in 2009 in the Russian court in respect of the Kensington house, she had no legal remedy in that jurisdiction absent an application of English law by the Russian court (paragraph 116). In the light of the expert evidence I heard, I found that the likelihood of the Russian court acceding to a request from her to apply English and/or Bermudan law to the division of any property was remote as a matter of practical reality.  In these circumstances she had no substantial basis for any realistic expectation that she could or would resolve the issue of any potential interest she might have in the Kensington house within the scope of the Russian proceedings which were ongoing in 2009 (paragraph 118);

(iv) the threat of a judicially instigated tax investigation was a matter of concern for her at that time (paragraph 117).

38. I am also prepared to accept that, notwithstanding the capital which she retained after the Russian divorce, she continued to feel financially insecure and potentially vulnerable in the years between 2009 and 2014:  there had been no satisfactory resolution in relation to her future housing needs in circumstances where her own capital resources were finite.  I accept her evidence that there had been ongoing communications between the applicant and the respondent in relation to her occupation of the Kensington house.  The respondent accepted as much although he told me that he had never given her any assurance that she could remain in the property once the children had completed their education in London.

39. The attack made by Mr Marks and Miss Cowton on the formulation of the applicant's present claim flows from their submission that she cannot now seek to take advantage of, or make a claim against, assets which did not exist, or were not available, in 2009 or 2010.  Had she prosecuted her claims in England at that point in time, the English court would have dealt with matters on the basis of the resources which were available then as part of its section 25 review.  Whilst the prospect of a Part III claim had been advertised by Withers several times in correspondence in 2009 before agreement was reached in the Russian proceedings, it did not reappear as an issue until some four years afterwards.  To quote from Mr Marks' and Miss Cowton's written closing submissions (para 19),

"The relevance of culpability in the delay (and we say there is culpability) is that it counts against provision being made at all and, further, that it leads to a still less generous appraisal of W's claims." [my emphasis]

40. They contend on behalf of the respondent that there is no solid evidence from the medical and other practitioners whom she consulted that she was unable to give instructions to commence these proceedings.  All that I have is her own assertion that this was the case.  They point to the fact that the ongoing process of receiving counselling is not, of itself, a proper excuse for the absence of due diligence in prosecuting her claims.  Despite the fact that the respondent's solicitors advertised in correspondence that they would wish to cross-examine her family therapist in respect of the matters about which she was consulted, that lady was unable to make herself available for cross-examination during the course of the Stage II hearing despite the fact that the applicant had been obliged to cancel an afternoon appointment in order to attend court herself.  Thus, I did not hear directly from any of the individuals who had, over the years, been assisting the applicant in relation to the catalogue of family problems which she has rehearsed in her written evidence.

41. The real reason for the delay on the respondent's case was the cynical attempt by the applicant in advance of launching her application to weaken her connections with Russia by selling the Moscow apartment and swiftly buying her two investment properties in London.  As Mr Marks put it to me, "It was that sale which fired the starting gun for this ambitious application".  He accepts that this is no more than a hypothesis but he nevertheless offers it to me as a hypothesis which is markedly more sustainable than any of the explanations advanced by the applicant. 

42. The applicant did not strike me as a woman who was either financially sophisticated or demonstrably devious in terms of her approach to this case or the evidence she gave.  I am prepared to accept that she has not one good word she can say about the respondent.  Her feelings of antipathy towards him are obvious and deeply held.  She lost no opportunity during the course of her oral evidence to denigrate his treatment of her and the children.  I struggled to find a single positive comment about the respondent from the entire course of her evidence. Should the depth and context of these feelings lead me into the territory of forensic manipulation into which Mr Marks invites me to find she trod?

43. In considering this question, I accept that the following factors have to be considered carefully.

44. First, Mr Harper is a solicitor who is well known both to this court and to the two legal teams instructed by the parties.  Throughout most of his involvement in the case as the applicant's solicitor, he was employed as a partner at Withers.  As such, he had considerable knowledge and expertise of trust issues in the context of matrimonial proceedings.  Throughout the course of his instruction in these Part III proceedings, both before and after the formal issue of the claim, there was never any suggestion of or reference to duress or undue pressure by the respondent as a reason for his client's psychological inability to progress matters.   They did not feature in any of the witness statements prepared by Withers, nor were they particularised in her Form E, other than to the extent I have set out above.  The statement of issues which was prepared whilst Mr Harper's hand was on the professional tiller was silent on this aspect of her case.  There was no consideration at the pre-trial review in December 2015 of the need for any medical evidence to support a case related to duress and its psychological consequences for the applicant.  The case management directions which I made on that occasion were anchored to entirely different matters.  It was only after the applicant transferred her instructions to Vardags in January 2016 shortly before the commencement of the Stage I hearing that these issues and medical evidence became a bone of contention in the case.  By the time she issued an application under Part 25 for permission to rely on medical evidence, the litigation had been up and running for almost two years.  There had been four substantive court hearings during the course of which the court had never been asked to consider directions in relation to this aspect of her case.

45. Further, I can find no reference in the evidence whatsoever from either Mr Harper or the Russian lawyers employed by the applicant in 2009 about the pressure under which she says she was put by the respondent.  I readily accept that this wife found the Russian proceedings stressful.  It is reasonably clear from what they have both said that, by the time of the agreement in 2009, they had lost the sympathy of the Russian judge who appears to have become frustrated by their inability to settle matters.  The applicant herself accepts that she took the deal which was then on the table in order to secure a degree of financial stability for herself and the children whilst (on her case) she returned to resolve issues of her future housing in London in England.  These are matters which I have covered already in my Stage I judgment.  I am prepared to accept that part of the pressure she felt in the Russian proceedings flowed from the judge's threat to involve the domestic tax authorities in what might have appeared to be tax evasion in relation to the trust arrangements (which I accept were brought to his attention informally).  However, that pressure was not operating on the applicant once the 2009 agreement was concluded.  On her own case, she needed a period or window of recuperation after 2009.  She had the support of Mr Harper during the period leading up to the agreement in Russia; she had been provided with extensive documentation about the trusts.  She had spent the best part of £200,000 on securing that advice.  Had she been left in a state of complete psychological collapse in 2009, as she alleges, it is difficult to see how Mr Harper would not have known about it and put down a clear marker on behalf of his client. 

46. In the meantime, relying on the clean break provisions across all jurisdictions which he believed he had secured within the context of the Russian agreement (and I am prepared to find that this was his subjective interpretation of what was reflected in the Russian order), the respondent and Dr Z put in place a tax efficient restructuring of the various family trusts.  Mr Todd and Mr Yates point to the fact that, by the end of 2013, a sum of some US$36.8 million had been distributed to the respondent.  By the beginning of 2014, Dr Z was putting further arrangements in place by way of a reorganisation of his trust structure.  In my judgment, it is not without note that these arrangements included financial provision on his death for each of the respondent's former wives, including the applicant.   By now his surviving son had remarried.  He was responsible for three more children (including his stepson) and a very young daughter whose health in early 2013 was of sufficient concern that she was taken to the United States for urgent medical treatment.  Indeed, part of the restructuring was undertaken, as I accept, to anticipate the possibility that, with his new family, he might need to relocate permanently to the United States in which event there would be (or might have been) adverse tax consequences for the Trust given his status as a potential beneficiary.

47. Mr Marks and Miss Cowton suggest that the real trigger for the applicant's current application in mid-2014 was a combination of her sale of the Moscow apartment and her becoming aware of the improvement in the respondent's position in relation to the trusts.  They point to the fact that she has never provided a proper explanation for the delay from February 2013 when the papers were released to Withers prior to the issue of proceedings.  The fact that the applicant's previous solicitors were exercising a lien on the file to that point in time would not, of itself, have prevented Mr Harper from getting on with matters since he had access to his previous file and knew the identity of the applicant's Russian lawyers.  On receipt of the papers, and no doubt on the applicant's instruction (or lack of instruction), he did nothing to instigate proceedings for a period of about 17 months. In these circumstances, I am invited to find that the knowledge which he would have had about the potential consequences of delay and the absence of any enduring connections with this jurisdiction prior to her purchase of the two flats must point towards advice which he would have given her.  This, they submit, is the true reason for the delay and her attempts now to embellish her case with a lengthy catalogue of complaints about her poor health is simply a façade.  To quote from paragraph 29 of Mr Marks' and Miss Cowton's closing submissions, they submit that:

"It is not invading privilege to say that any of the lawyers in this case (past or current) advising on this factual matrix: (i) 3+ years on from (plainly, on its face) a full and final Russian consent order which left her with substantial assets (ii) Russian client who (iii) kept very substantial connections with Russia – including a $8.6 million property in Moscow, and (iv) had no enduring connection with London – and no property here, would have advised her that she must at the very least get rid of the Russian property before issuing, and solidify connections here by purchasing property in London asap after that."

48. The applicant's oral evidence was that she had been attempting to sell her Russian apartment for more than four years although there is no specific reference to this in any of her statements.  The documents which she has produced show that agents became involved in the marketing exercise for the first time in February 2013.  She told me that from 2010 until 2013 she had been attempting to sell the property informally because "that is how it is done in Moscow".  She said, "I knew I needed money and had to sell the Moscow property.  It was depreciating and losing money."  When it was put to her by Mr Marks in cross-examination that she was fully aware that the retention of the Moscow apartment would be a problem for her in pursuing a claim in this jurisdiction, she said, "I am much simpler than you think.  It did not cross my mind."

49. It is an undisputed fact in these proceedings that the English litigation commenced just over 12 weeks after the sale of the Russian apartment.  Her statement in support of the permission application was signed the day before formal issue.  It is reasonable to suppose that the preparation of that statement following an attendance on the applicant was undertaken by her solicitors at least a week before issue, if not earlier.  Thus, in the context of a delay of more than five years, there is a striking proximity between the sale of the property and the issue of proceedings.  Against the background of what had already been a lengthy period of delay on her part, is this simple coincidence, as the applicant would have me believe?  Is it mere coincidence that it was at precisely this point in time that she felt strong enough psychologically to contemplate further litigation with the respondent after a delay of what had already been almost five years?

50. I recognised in my earlier judgment that the delay had to be seen against the background of the continuing concerns which were being expressed by Withers after the conclusion of the Russian divorce proceedings.  In particular, I referred to the letter which Mr Harper had written to the trustees' solicitors at the beginning of March 2013 putting them on notice that his client was concerned about the terms of her continuing occupation of the Kensington house (paragraph 150).   Nothing happened as a result of that salvo or after the reply from Harcus Sinclair on 21 March 2013 6  which included a reference to the fact that "your client's ancillary relief application has long since fallen away". As far as I can see from the chain of correspondence, Mr Harper wrote no further letters to either the trustees' solicitors or Kopt's solicitors after the first week in May 2013.  A long period of inactivity followed until whatever date it was upon which the applicant instructed them to prepare the application which was issued some 14 or 15 months later.  What is clear from Harcus Sinclair's letter of 21 March 2013 is that the applicant had no formal notice by that stage of any improvement in the respondent's financial position.

51. I take into account the fact that, whilst her sessions with her English psychotherapist had ended in 2013, the applicant continued to see her family counsellor throughout the six month period leading up to the issue of these proceedings (paragraph 151).  I also found that, after the instruction of Francis Lindsay & Co in March 2012 and her subsequent reinstruction of Withers in February 2013, she was actively engaged in seeking advice in relation to her claims (paragraph 152).

52. Taking all these matters into account, and despite what the applicant told me, I am driven to the inevitable conclusion that, on the balance of probabilities, she must be presumed to have received advice from Mr Harper that she would be standing on much firmer ground in relation to these proceedings if she did not own a substantial and valuable property in Moscow when her claims in this jurisdiction were launched.  I am prepared to accept that, having established family life in London at least for the foreseeable future, she may well have decided it would be a better financial investment to move her capital out of Russia at a time when the property market in that country was becoming increasingly volatile.  However, I am unable to accept that there was not at least an element of tactical delay in her procrastination and I agree with Mr Marks and Miss Cowton that such delay should fairly operate in a more conservative assessment of her future needs. 

53. The issue of financial opportunism is less obvious to me and I make no specific finding in this regard over and above what I have said at the end of paragraph 50 above.  Mr Marks submits that part of the delay can be explained on the basis that the applicant was waiting until such time as she knew that there had been a significant improvement in the respondent's financial position.  He points to the fact that, regardless of any formal disclosure, she would have known about his acquisition of the helicopter.  He points to the fact that his client has been prejudiced in these proceedings because of the changes to his financial position during the lengthy period of delay.  I am not persuaded that the applicant knew very much at all about the reorganisation of the trust structure over the intervening years.  She accepted in her evidence that she knew at the time of the Russian agreement that he was always likely to come into family money at some point in the future; she just did not know when.  Further, it has been her case throughout that, regardless of the structure within which the wealth was held, this was always "Z family money".  It had sustained their lifestyle during the marriage and it continued to sustain the respondent's lifestyle after its demise.

54. Thus there are two significant 'brakes' or limiting factors in this case in terms of an assessment of her needs.  First, there is delay.  Secondly, there is the fact that the provenance of the wealth against which she is claiming is gifted or inherited wealth, none of which is the product of marital endeavour.  In my judgment, it is only fair and a principled approach to take into account the fact that her claims in this jurisdiction are made against non-matrimonial property many years after the formal breakdown of the marriage in circumstances where there has already been a formal court-approved division of the assets which were acquired during the marriage.  I agree with Mr Marks that the post-separation nature of the claims is potentially a significant clog on the value and extent of those claims.

The scale of the resources available in this case

55. As to the extent of the Z family wealth against which she is bringing these claims, I accept that it is reflected in its entirety in the schedule of assets which has been drawn up on an agreed basis.  At one stage during his cross-examination of the respondent, Mr Todd had begun to explore whether or not full disclosure had been provided by the respondent.  This point arose as a result of the payment of a dividend to one of the corporate entities within the family structure and Mr Todd's enquiry as to whether or not the majority corporate shareholder received the same aliquot share.  The respondent's evidence was that the dividend was only payable to preference shareholders and not to ordinary shareholders.  On the basis of the evidence I have, I accept that this is not a case where there is further significant value in the trust structures which has been somehow kept beneath the radar in these proceedings.

56. I accept that the vast bulk of the $180 million generated by the sale of Dr Z's shares has been diverted towards charitable and philanthropic causes through the D Foundation 7.  The entire Z family, including Dr Z and the respondent, are excluded from any benefit.  Aside from the property he owns in Moscow, I accept that Dr Z's personal resources are now in the order of c. $4 million.  These funds provide for the income needs of himself and his wife, each of whom may have many more years of life in front of them.  This is not a situation where, outside the existing trust structure, the respondent is likely to inherit further substantial sums on the death of his parents.

57. In my judgment, the structure within which the respondent's personal wealth is now held is entirely transparent.  He has a total of some £2.85 million invested in property in London and Russia.  He is owed about £2.5 million by BMT Capital.  His cash position outside the trusts is less than £1 million.  Leaving aside the funds which are currently settled in the four trusts 8 which have been earmarked for the specific benefit of his current wife and children (including his stepson), he is a beneficiary of trust funds worth just less than £19.5 million.     Included in this figure is the value of the Kensington House which is owned by the BMT Trust through Kopt.  The respondent became the new life tenant and Protector of this Trust on 19 December 2014 during the currency of these proceedings but he is unable to benefit directly in terms of appointments out of the Trust during the lifetime of his father, Dr Z.  The global figure of £19.5 million also includes the value of the yacht which is owned by the BMT Generations Trust.  The Mezano Trust (which the respondent regards as his personal trust vehicle) holds just under £8 million which includes the value of the respondent's current home in Cyprus, a property which is considerably smaller than the Kensington House.

58. Having listened carefully to the evidence, I accept that the yacht was purchased, and has continued to be used, for the benefit of the entire Z family.  I am told that Dr Z derives particular pleasure from the significant use which he makes of the yacht.  Since he is now retired and is the generator of the wealth in this case, it seems to me that he is fully entitled to indulge that pleasure.  Other family members use the yacht and, whether or not the running costs come from an account operated by the respondent or on the basis of pro rata family contributions, it is all family money at the end of the day.  I was told during the Stage I hearing, and again in this hearing, that Dr Z still has considerable influence as to how family money is spent and has told the respondent that expenditure for the entire family should not exceed $2 million per annum.  Clearly, that limit has been exceeded in the past year alone, as the evidence demonstrates.

59. Nonetheless, the respondent accepts that, if the value of the trust assets (including the yacht) and the helicopter are taken into account, he has, or is likely to have, access to assets of c. £33.5 million.  He cannot benefit from the BMT Trust or the BMT Generations Trust during the lifetime of his father and the BMT Legacy Trust (which holds just under £1.2 million) has been designated by Dr Z as a fund for the benefit of various non-family third parties who have worked for him or otherwise deserved financial benefit on his death.  I have seen a copy of Dr Z's letters of wishes in relation to this Trust and I am satisfied that it is unlikely that the respondent will see any financial benefit from this source over the coming years.

The Law

The correct approach to the assessment of the applicant's claims in these Part III proceedings

60. I have already set out the relevant statutory provisions of Part III of the Matrimonial and Family Proceedings Act 1984 in my earlier judgment.  I repeat them here for the purposes of clarity.

61. Section 16 of the Matrimonial and Family Proceedings Act 1984 provides as follows:-

(1) Subject to subsection (3) 9, before making an order for financial relief the court shall consider whether in all the circumstances of the case it would be appropriate for such an order to be made by a court in England and Wales, and if the court is not satisfied that it would be appropriate, the court shall dismiss the application.

(2) The court shall in particular have regard to the following matters –

(a) the connection which the parties to the marriage have with England and Wales;

(b) the connection which those parties have with the country in which the marriage was dissolved or annulled or in which they were legally separated;

(c) the connection which those parties have with any other country outside England and Wales;

(d) any financial benefit which the applicant or a child of the family has received, or is likely to receive, in consequence of the divorce, annulment or legal separation, by virtue of any agreement or the operation of the law of a country outside England and Wales;

(e) in a case where an order has been made by a court in a country outside England and Wales requiring the other party to the marriage to make any payment or transfer any property for the benefit of the applicant or a child of the family, the financial relief given by the order and the extent to which the order has been complied with or is likely to be complied with;

(f) any right which the applicant has, or has had, to apply for financial relief from the other party to the marriage under the law of any country outside England and Wales and if the applicant has omitted to exercise that right the reason for that omission;

(g) the availability in England and Wales of any property in respect of which an order under this Part of this Act in favour of the applicant could be made;

(h) the extent to which any order under this Part of this Act is likely to be enforceable;

(i) the length of time which has elapsed since the date of the divorce, annulment or legal separation.

62. So far, so good.  I have dealt with section 16 and my reasons for finding that an order is appropriate in these English proceedings in my earlier judgment.

63. Section 17 of the 1984 Act enables the court to make a range of orders for financial provision and property adjustment, including an order varying a post-nuptial settlement under section 24(1)(c) of the Matrimonial Causes Act 1973: section 17(1)(a)(ii).

64. Section 18 of the 1984 Act lists those matters to which the court is to have regard when it exercises the powers given to it under s 17. 

65. Section 18 provides as follows:-

(1) In deciding whether to exercise its powers under section 17 above and, if so, in what manner the court shall act in accordance with this section.

(2) The court shall have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.

(3) As regards the exercise of those powers in relation to a party to the marriage, the court shall in particular have regard to the matters mentioned in section 25(2)(a) to (h) of the 1973 Act and shall be under duties corresponding with those imposed by section 25A(1) and (2) of the 1973 Act where it decides to exercise under section 17 above powers corresponding with the powers referred to in those subsections.

(3A)  ……

(4) As regards the exercise of those powers in relation to a child of the family, the court shall in particular have regard to the matters mentioned in section 25(3)(a) to (e) of the 1973 Act.

(5) ……

(6) Where an order has been made by a court outside England and Wales for the making of payments or the transfer of property by a party to the marriage, the court in considering in accordance with this section the financial resources of the other party to the marriage or a child of the family shall have regard to the extent to which that order has been complied with or is likely to be complied with.

(7) …..

66. The seminal authority on the application and interpretation of these sections is the decision of the Supreme Court in Agbaje v Agbaje [2010] UKSC 13, [2010] 1 AC 628 at 659.  Lord Collins of Mapesbury JSC delivered the judgment of the court which was handed down on 10 March 2010, just less than seven months after the Russian agreement and court order.

67. In considering the proper approach, Lord Collins said this at [2010] 1 AC 675 to 676:-

"71 To take up some of the points made in the preceding paragraphs, the proper approach to Part III simply depends on a careful application of sections 16, 17 and 18 in the light of the legislative purpose, which was the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where there were substantial connections with England.  There are two, interrelated, duties of the court before making an order under Part III.  The first is to consider whether England and Wales is the appropriate venue for the application: section 16(1).  The second is to consider whether an order should be made under section 17 having regard to the matters in section 18.  There are two reasons why the duties are interrelated.  First, neither section 16(2) nor section 18(2)(3) refers to an exhaustive list of matters to be taken into account.  Section 16(1) directs the court to have regard to "all the circumstances of the case" and section 16(2) refers the court to certain matters "in particular".  Second, some of the matters to be considered under section 16 may be relevant under section 18, and vice versa.  An obvious example would be that section 16(2)(e) refers the court to the financial provision which has been made by the foreign court.  Plainly that would be relevant under section 18.  So also the direction in section 18(6) to the court, in considering the financial resources of a party, to have regard to whether an order of the foreign court has been complied with would plainly be relevant in considering whether England is the appropriate venue.

72 It is not the purpose of Part III to allow a spouse (usually, in current conditions, the wife) with some English connections to make an application in England to take advantage of what may well be the more generous approach in England to financial provision, particularly in so-called big-money cases.  There is no condition of exceptionality for the purposes of section 16, but it will not usually be a case for an order under Part III where the wife had a right to apply for financial relief under the foreign law, and an award was made in that foreign country.  In such cases, mere disparity between that award and what would be awarded on an English divorce will certainly be insufficient to trigger the application of Part III.  Nor is hardship or injustice (much less serious injustice) a condition of the exercise of the jurisdiction, but if either factor is present, it may make it appropriate, in the light of all the circumstances, for an order to be made, and may affect the nature of the provision ordered.  Of course, the court will not lightly characterise foreign law, or the order of a foreign court, as unjust.

73 The amount of financial provision will depend on all the circumstances of the case and there is no rule that it should be the minimum amount required to overcome injustice.  The following general principles should be applied.  First, primary consideration must be given to the welfare of any children of the marriage.  This can cut both ways as the children may be being supported by the foreign spouse.  Second, it will never be appropriate to make an order which gives the claimant more than she or he would have been awarded had all the proceedings taken place within this jurisdiction.  Third, where possible the order should have the result that provision is made for the reasonable needs of each spouse.  Subject to these principles, the court has a broad discretion. The reasons why it was appropriate for an order to be made in England are among the circumstances to be taken into account in deciding what order should be made.  Where the English connections of the case are very strong there may be no reason why the application should not be treated as if it were made in purely English proceedings.  The full procedure for granting ancillary relief after an English divorce does not apply in Part III cases.  The conditions which can be attached to leave, together with the court's case management powers, can be used to define the issues and to limit the evidence to be filed, as was done by Munby J in this case.  This enables the jurisdiction to be tailored to the needs of the individual case, so that the grant of leave does not inevitably trigger a full blown claim for all forms of ancillary relief."

68. But a matter of weeks ago in mid-April 2016, the Court of Appeal was called upon to consider whether Parker J had been right to refuse permission to an Australian former wife who sought to make an application under Part III of the 1984 Act:  De Renee v Galbraith-Marten [2016] EWCA Civ 537.  That application was made in the context of previous Australian proceedings between the parties during the course of which various agreements had been reached some five years before the application was issued.  Those agreements were eventually embodied in a consent order which, unlike the position under English law, did not require the approval of the Australian court in order give its terms full legal effect.  The wife alleged that she had been placed under pressure by her former husband.  Parker J had refused her permission to proceed with a Part III application for two reasons.  First, the legal system and the principles which applied under Australian law were based on very similar principles to our own domestic law.  Secondly, the remedies open to the wife in Australia had already enabled her to ventilate her case on duress before an Australian judge (who had dismissed her application to set aside the consent order).

69. In their closing submissions, Mr Marks and Miss Cowton contended that the Galbraith-Marten case was "not wildly dissimilar" to the facts of this case aside from the fact that the competing jurisdiction was  Australia rather than Russia, and the wife in that case received AUS$172,500 as opposed to in excess of $10 million.  Delivering the judgment of the Court of Appeal, Lady Justice Black set out the background and Parker J's finding that "there was no gap which needed to be filled by the English court".   Having recorded the general law in relation to Part III applications and the fact that "the threshold for granting permission is not high" (para 20), her Ladyship turned to consider the errors of legal approach which were said to have been made by Parker J. In that case, the agreements reached by the parties covered, separately, spousal maintenance, child maintenance and capital provision for the wife who had been represented by lawyers throughout.  It was not by any stretch a "big money" case or even one involving substantial assets.  The marriage had been short.  The wife's spousal maintenance was to terminate when their child was 5 years old (a provision which the Court of Appeal found to be unsurprising (para 24)).  In terms of capital provision, the Court found that there was nothing in the material put before Parker J or the Court of Appeal which established that the provision made in the Australian agreements was in fact unfair (para 23) and hence the applicant had not made out her case that she was left in a situation of real need.  The Australian court had already rejected the wife's allegation of duress. The final nail in the coffin for that wife was her ability to proceed with a formal application in the Australian courts had she considered that the pre-litigation agreements were unfair and failed to meet her needs as they were at the time.

70. With respect to the parallels which Mr Marks seeks to draw on behalf of the respondent, this is a very different case.  I accept that Lady Justice Black said, at paragraph 24 of her judgment, that it could properly be assumed that the Australian wife's lawyers were looking after her interests at the time and, if they were not, that was a matter between her and them.   So, too, did she say that the fact that the wife had more need now would not be a reason to reopen a previous settlement which had been endorsed by the court and reflected in a consent order.

71. At paragraph 108 of my earlier judgment, I found that the evidence (including the applicant's own evidence) pointed firmly in the direction of her understanding that the BMT Trust, at least, was swept up in the definition of "property in trusts" as it appeared in the 'no further claims' provisions of the Russian agreement and order.  I further found that that understanding must have been informed by the advice she had received not only from Mr Harper but also from Mr Voronin (her Russian lawyer) who knew, at the very least, about the existence of the trusts.  I said,

"At the very least it is reasonable to assume, in my judgment, that in the discharge of their professional obligations as her legal advisers, either or both of Mr Harper and/or Mr Voronin would have warned the applicant about the risk of these trust assets falling into the relevant dismissal provisions of the Russian order."

72. In this case, as I have already found, there was no realistic possibility of the Russian court embarking on an application of English law so as to deal with the trust aspects of the case.  As I said at paragraph 116, "… in terms of any claim she might wish to pursue in the Russian court in respect of the Kensington House, I am satisfied that, absent an application of English law by the Russian court, the applicant had no apparent legal remedy in those courts".  A fundamental element of the applicant's future needs was the provision to be made for her housing.  She was then living in a trust property with the children of the family and her English lawyers had advertised the likelihood of a Part III claim before the Russian agreement received the assent of the Russian court.  I shall need to consider separately whether the capital provision which was made for her was adequate to deal prospectively with her housing needs once the arrangement in relation to the Kensington house came to an end.  It must be borne in mind that, at the time of the Russian agreement in 2009, there was no formal offer from the respondent which would have allowed her to remain in the property for a further 13 years in accordance with the terms of his present offer.  All she had by way of security at that stage was the assurance from the Trust's solicitors that, as a tenant, she would be given notice of any intended sale of the property although no such sale was then foreseen.  Only a matter of days after the Russian agreement was lodged in the Russian court, and on the very same day when the Russian court converted the agreement into an order, the applicant was required to sign an agreement with Kopt (as her landlord) extending her tenancy of the Kensington house for a further three years, terminating in August 2012 at which point their youngest child would have been 12 years old and only at the beginning of his secondary school education.  I accept, as I recorded in paragraph 141 of my Stage I judgment, that she must be presumed to have relied to an extent on subsequent assurances which I found that the respondent gave to her that she could remain at the Kensington property until the children were no longer minors. But no such provision appeared in either the agreement or the order.

73. There was no investigation by the Russian court at all into the circumstances of her occupation of the Kensington house.   Whilst the judge was aware that she lived overseas, he was given no formal disclosure in relation to the trust structure although, on an informal basis, he was made aware of its existence.  Mr Marks and Miss Cowton quite rightly point to the fact that the respondent's current entitlement to trust assets had not crystallised at that point in time.  There was a background of significant family wealth and what appears to be a common expectation as between the parties that he would in future benefit from further dispositions of that wealth.   However, the focus of the submissions made on behalf of the respondent, as in the Stage I hearing, is on the likely outcome in an English court had it been seised in 2009 of claims arising under the Matrimonial Causes Act 1973.

74. My finding at the conclusion of the Stage I hearing that this was a case where it was appropriate for the court to make an order under section 17 of the 1984 Act was borne out of a concern that the provision encapsulated in the Russian agreement and order might not have met the applicant's needs for housing and income once the Kensington house was no longer available for her occupation.  This is not a case where her needs have increased during the intervening period as a result of changes in her personal or financial circumstances.  As Mr Marks readily accepts, save for the impact of costs, her capital position has been largely maintained despite the fact that she lost money on one particular investment and paid her sister a sum of $100,000 for design services she provided in respect of the Moscow apartment prior to its sale.  The applicant accepts that her investment portfolio has performed well over the years (and she has paid some fairly heavy management charges to the professionals who have looked after the investments on her behalf).  In addition she told me that she has made a number of economies in her domestic expenditure in order to preserve as much capital as she could.

75. In essence, this is where Mr Marks and I part company in terms of the proper approach to these Part III claims, at least in terms of emphasis.  I have already made reference to this divergence of approach in paragraph 90 of my earlier judgment where I said this:

"In my judgment this interpretation of how matters should be approached for the purposes of the section 16 enquiry is unduly restrictive.  I have already referred to the terms of section 16 of the 1984 Act and the approach commended by Lord Collins in Agbaje.  Even if the terms of the agreement were fair in the light of the then prevailing circumstances, that fact, of itself, is not necessarily a bar to an effective Part III claim provided that the English court considers it "appropriate" in all the circumstances to make an order.  The tension here (as so often) lies in the twin objectives of achieving finality in litigation and fairness of outcome in circumstances as they are found to be at the time an application is made.  I have to stand back and survey all the circumstances of this case, including the particular factors listed in section 16.  Having completed that survey, I am obliged to dismiss the application only in circumstances where I am not satisfied by the conclusion of the case that it would be appropriate to make an order.  The financial benefit which the applicant has already received under the terms of the Russian agreement and order (and, by implication, the inherent fairness or unfairness of that order) will be directly relevant under section 16 (2)(d) and (e).  The delay of over five years in bringing her application will also be relevant under section 16(2)(i).  So too, on a holistic survey, is the availability in this jurisdiction of property in respect of which an order under section 17 could be made.  That section, by specific reference, incorporates section 24(1) of the Matrimonial Causes Act 1973 pursuant to which the court has power under section 24(1)(c) to vary an ante-nuptial or post-nuptial settlement made on them as parties to the marriage."  

Later, at paragraph 120, I said :

"I do not accept that I am confined in terms to a consideration of what an English court would have done in 2009.  In terms of my application of the law in this context, the Supreme Court has confirmed that the presence of either or both of 'hardship' or 'injustice' in any given case will be relevant considerations for the purposes of both section 16 and section 18 of the 1984 Act."

76. In the Stage I hearing, Mr Marks and Miss Cowton invited me to concentrate on what an English court would have done in 2009 had it been dealing with "English" matrimonial claims and an application of the section 25 factors 10 on the basis of the facts as they were known to be at that time.   For the purposes of this Stage II hearing, Mr Marks submits that my ruling that, as a matter of principle (i.e. under section 16), it is appropriate to make an award does not lead inexorably to the conclusion that an award is in fact made (under sections 17 and 18) when the merits are considered.  That consideration, he contends, includes a re-visitation of the section 16 factors such as delay and the provision which was made for the applicant in 2009.  Of course, since the conclusion of the Stage I hearing, there is now the offer of a further £1 million by way of a cash payment from the trustees.

77. On behalf of the applicant, Mr Todd and Mr Yates submit that, had an English judge been looking at these claims in the context of an English divorce, it is very likely that, in the absence of an extraction of the Kensington house from the BMT Trust at that point in time, their client's claims for lump sum provision would have been adjourned.  The English court would have had the ability to examine in close forensic detail the trust issues and the existence of family wealth as a specific resource which was available to these parties during the currency of the marriage as a result of Dr Z's generosity.  It would have been in a position to consider whether it was reasonably foreseeable that the respondent's (then) existing wealth was likely to be augmented in the not too distant future as a result of his father making further provision for his son, whether through tax efficient trust structures or by means of outright disposition.  They contend that the very existence of the trust property (i.e. the Kensington house) occupied, as it was, by the applicant and the children as a family home and the future arrangements in respect of that property would have been central to the court's enquiry as to her future needs.  In a similar way, the English court in 2009 could have considered claims for spousal maintenance and could have reached a balanced judgment as to whether the capital provision which a division of the Russian assets produced was sufficient to justify the termination of her future income claims in the light of (a) the further contributions which she would be making to the children's welfare under section 25(2)(f), and (b) the likely extent of any resources which might be available to the respondent in the foreseeable future.  It appears to be common ground as between the applicant and the respondent that the concept of spousal maintenance is not one which is generally recognised in Russian divorce proceedings.

78. I would have considerable sympathy with that submission if the exercise upon which I am now embarked was confined to that sort of stark retrospective enquiry at that fixed point in time.  However, in exercising my discretion in this case, I have to graft on to that enquiry a careful consideration of all the circumstances, including, specifically, the Russian proceedings and the order which flowed from them.

79. Where, then, does this leave me in terms of the correct approach to quantifying the applicant's claims in this case ?

Discussion and analysis

80. In my judgment, there are a series of separate steps which need to be considered in reaching a fair and principled decision in relation to this case.

81. First, and by way of overarching principle, I have to apply the relevant provisions of sections 16, 17 and 18 of the 1984 Act.  I do so conscious that the purpose of Parliament in drafting the legislation was to protect a former party to a marriage who has substantial connections with England from the adverse consequences of a foreign court order made in divorce proceedings in circumstances where that order made no, or inadequate, financial provision for that party or the children of the family.

82. The applicant was a former party to a marriage.  In my judgment, her connections with this jurisdiction are 'substantial' for these purposes.  Notwithstanding my earlier finding that there was a degree of tactical delay in the issue of her Part III application, there can be little room for argument that, by July 2014, London was her home and the centre of operations as far as family life was concerned.  Not only had it always been the parties' joint wish and intention that their children should be raised and educated in central London, the applicant's evidence (which I accept) is that she intends to make England her home for the foreseeable future.  She wishes to maintain a home in London so that she can continue to provide a family base as and when it may be required by her adult children when they visit with their partners and, in due course, her grandchildren.  I am satisfied that she has no current plans to return to Russia but is firmly grounded here in terms of her friends, her social life and the daily pattern of the children's lives.  It may be that one or more of the children will wish to study in an American university.  It may be that professional advice will be sought in another jurisdiction in relation to the children's medical treatment. Neither of those factors dilutes or weakens the attachment which this family in its present constitution has, and is likely to continue to have, to England which is a permanent home to all four of its members.  The fact that the respondent has framed his current offer in terms of the guaranteed provision of a family home in London throughout the children's minorities is further confirmation of that substantial connection and his acknowledgment of it.   Whilst his own connection with Russia has not been extinguished since 2009, the respondent's connections with his country of birth have certainly weakened over the passage of time.  He now divides his time between homes in Cyprus and Bulgaria.  He told me that he is anxious to ensure that his father, Dr Z, leaves Russia to relocate to Europe at some point in the future.  Whilst he retains a modest property in Moscow, the applicant now has no property or financial anchor in that jurisdiction despite the fact that she still has family members living in Russia whom she will doubtless wish to visit from time to time,

83. The next matter which I have to consider is whether an order should be made under section 17 of the 1984 Act having regard to the list of factors set out in sections 16 and 18 of that Act.  To an extent, that door has now been opened by my decision in the Stage I litigation.  However, in reaching my conclusions about the nature and quantum of that award, I have directed myself once again to the provisions set out in section 16 of the Act.  These I have folded in as part and parcel of an holistic consideration of the statutory guidance.  I remind myself that those factors are not intended to be an exhaustive list.  In shaping any award I might make at the conclusion of these proceedings, I am entitled to create a bespoke solution based upon all the circumstances of the case (my emphasis).

84. At the forefront of my consideration are the two younger children of this family who are now 15 and 17 years old.  Their elder sister is now 18 and, although she is attending college and living in a rented flat provided for her by the respondent, I accept the applicant's evidence that she returns home frequently and a bedroom is kept for her use at the Kensington house.  Each of these three children has experienced medical and other problems over the course of their lives.   The older daughter and the son have inherited the congenital heart condition from which their father suffers although, happily, he himself appears to be asymptomatic.  It is common ground that their youngest child and only son experiences the more severe symptoms of the two whilst their elder daughter's problems appear to be driven by psychological difficulties which she has experienced over a number of years.  I am told that she is progressing well academically and has aspirations to attend a university in  England. It is likely that the two younger children will wish to study in the US. In due course, I shall address their specific financial needs in the context of the competing budgets which are advanced by their parents.

85. The next factor of significance in this case is the financial benefit which the applicant has already received as a result of the divorce proceedings in Russia and the provision which was made for her under the terms of the Russian order.  I am satisfied that the terms of the Russian order have been implemented in full; each of the applicant and the respondent has complied with their obligations under its terms.  I bear well in mind that this is not one of those cases where the English court is starting from scratch with a blank piece of paper.  The Russian proceedings were properly and lawfully constituted; the applicant was engaged and legally represented in those proceedings.  Whatever the arguments about the circumstances in which her consent to that agreement was procured, it is unarguable that her lawyers did nothing outside the sanctum of legal professional privilege to dissuade her from signing up to its terms or preventing the court's formal endorsement of its terms.

86. Mr Marks and Miss Cowton have produced a helpful table in which they have set out what each of the parties received as a result of the Russian order in 2009.  The applicant retained a sum of c.US$5 million in cash which was the balance of monies extracted by means of loans from the trust structure which had been paid into her bank accounts.  The respondent retained his cash savings of c.US$120,000.  Thus, I accept that she retained what Mr Marks described as "the vast bulk of their cash".  In addition she retained the more valuable of their Russian properties.  I have already referred to the Moscow apartment which was sold in April/May 2014 together with a parking space for US$6.2 million gross.  In 2009, that property was valued at US$5,080,000 gross (US$3.4 million net).  The property which the respondent retained was then worth US$2,080,000.  (Although there has been no recent updating, his Russian properties now have a combined value of US$2,374,183 or £1,606,400.)

87. As to their respective positions in terms of future benefit from the trust structure, the applicant had the annuity provision which, on the respondent's death during her lifetime, would have given her an income for life of US$20,000 per month or US$240,000 per annum. (In my judgment, if nothing else, provision at that level for the applicant herself tells me something about Dr Z's expectation of the standard of living she should be entitled to enjoy in circumstances where she was widowed prematurely.)  The respondent's expectations were far greater in terms of future access to independent wealth although any benefits to which he might be entitled had not crystallised and were contingent on the death of his father, Dr Z.  It is the respondent's case that, whilst these future trust interests were not referred to on the face of the Russian order, they were clearly taken into account by him if not by the applicant.  From his perception, it is said that he would never have agreed to what was effectively a 4:1 split 11 in the applicant's favour had he not anticipated future financial benefit from the trusts and/or his father.  In parallel with the Russian order, he was also agreeing to discharge the substantial rental payments due to Kopt in respect of the Kensington house, together with the payment of the children's maintenance and private education in London.  Those financial obligations, submits Mr Marks, are not ones which he would or could have undertaken unless he knew he had financial expectations over and above the assets he then held in his sole name.

88. It seems to me that there is some force in the submission that both parties had, to an extent, marginalised any future consideration of the trust aspects of the case when agreeing to sign up to their Russian agreement.  For his part, I accept that the respondent, who had always relied to an extent on his father's bounty, must have had the hope – if not expectation – that this generous financial lifeline would continue during his parents' lifetime and that eventually the trust assets would pass to him on his father's death.  It is equally clear, in my judgment, that the applicant must have proceeded on that basis to an extent because, in terms of his future financial obligations to her and the children, she knew that he had no remunerative employment as such and was closely aligned financially with his father's affairs.  That assertion and his consequent ability to influence decision-making lies at the very heart of her case.  W's case was that she was postponing consideration of any future entitlement she might have in terms of continuing rights of occupation and/or the acquisition of a beneficial interest in the Kensington house to await her return to England.  She was well aware at the time that her English lawyers were 'up to speed' with the trust position.  They had already been sent the 'bible' of trust documents some six months before the date of the agreement and had advertised through correspondence the need to formalise the terms of her occupation of the property.  She confirmed in her oral evidence during the Stage I hearing that she was aware when she did the Russian deal that it was likely that the respondent was going to come into further family money in the future.  She also confirmed when she was re-examined by Mr Marshall QC (her leading counsel at the time) that she knew he was likely to benefit from assets held within the BMT Trust (which owned the Kensington house) although not "there and then".  She said, "I knew he would inherit from his father eventually". 

89. The real issue between the parties in this context is the extent to which the Russian agreement and order are binding in terms of a full and final settlement of all outstanding financial claims, including claims against trust assets wherever in the world they might be situated.  This was the crux of the respondent's argument at the Stage I hearing and I dealt with the Radmacher 12 arguments from paragraph 91 of my previous judgment. 

90. On one view there is significant merit in this context in the argument developed by Mr Todd and Mr Yates on behalf of the applicant that an English court would not recognise the Russian agreement as one which would survive the Radmacher test had this been a purely English divorce.  That test was formulated in these terms:

"The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement." (see para 75)

It is even more difficult to see how an English Radmacher test could have been applied in the Russian proceedings even if that court had been prepared to apply English law.  I accept that by this stage the applicant had been provided through Mr Harper with information about the trusts.  However there was no formal disclosure in the Russian proceedings of the nature or extent of the respondent's present or likely future entitlement to trust assets and, if applying English law, ex hypothesi the Russian court would have had to look at resources which included present and (likely) future trust benefits which might flow in the respondent's direction.  In this context, an application of the Radmacher test is wider than a broad assessment of whether the actual capital division of assets on the basis of their then values looked fair when viewed objectively.  Whilst I accept that the applicant was being advised by Russian lawyers at the time, they cannot be presumed to have any professional expertise in relation to the implications of his future beneficial entitlement to substantial wealth from this source.  The expert evidence which I heard during the Stage I proceedings was that Russian law as applied in matrimonial courts does not even recognise the legal concept of beneficial ownership or the holding of assets through the mechanism of a trust.  The broad canvass of an English divorce court, by contrast, would have entailed a careful consideration of these matters and they would have been taken into account to whatever extent was thought appropriate in 2009 had the proceedings been ongoing in this jurisdiction at the time.  Thus, whilst the provision which was made for the applicant on the basis of the assets which they held at that time would be likely to have survived a "fairness health check", both the applicant and the respondent were fully aware that the issue of her continuing occupation of the Kensington house had yet to be agreed.  The respondent's email, copied to his father, quite properly acknowledged that, in this context, she was an integral part of the children's lives and their needs required her presence with them in the family home for many years into the future.

91. As to the applicant's understanding about her spousal maintenance claims, I remain less convinced about the position in terms of the evidence which she gave me.  It is clear from the face of the Russian order that it purported to effect a clean break in relation to any future financial claims which she might have against the respondent for financial support in her capacity as a former spouse.  She told me during the Stage I hearing that she understood at the time that she was relinquishing these claims as part and parcel of the agreement.  I was careful to check with her that I had properly understood and recorded the response which she gave to that question through her interpreter which was "Yes absolutely; I understood I would not have claims for maintenance".  She was able to respond in English and she told me that she knew that this was the effect of the Russian agreement.  By the time we came to the present hearing, she was attempting to row back from that position.  She said that she had found it very difficult to answer questions in court given the degree of pressure which she felt.  She said she had misunderstood the question I asked when I sought her confirmation on this point.  I am afraid that I cannot accept that evidence.  She was not under any inappropriate pressure during the course of that hearing.  Of course I accept that litigation in the High Court over several days brings its own tensions and strains.  However, that particular aspect of her evidence was clear; it was repeated; and expressly clarified.  I agree with Mr Marks that this aspect of her case and her wish to retract the meaning or sense of what she said was not a case which could have been run had Mr Marshall, her previous leading counsel, been involved in this hearing.  There is no doubt in my mind that both my note of her evidence and the record contained in the transcript of that hearing is accurate.  In these circumstances, I have no difficulty in finding that, whilst she may have anticipated further litigation in England in relation to her occupation of the Kensington house despite the contra mundum clause in the Russian order, she had in 2009 accepted the capital settlement and the retention of the US$5 million in the full knowledge that her own maintenance claims were being swept up in that settlement.

92. In looking at the provision which was made for her in Russia, I have to bear well in mind that a substantive award in these Part III proceedings will not automatically follow a finding that she did less well in the Russian court than she might have done in this jurisdiction had the divorce proceeded in the English courts in 2009.

93. I have already recorded in my earlier judgment that, in the circumstances which prevailed at the time, it is difficult to see how the Russian order would have failed a basic "fairness" health check.  It left her with liquid assets (or assets which could readily be realised) worth c.US$8.4 million net and the provision of a very generous annuity for life in the event of the respondent's death.  It was a guaranteed package and, save for the annuity which is being dealt with in the context of these proceedings, it has been implemented in full.  There are no outstanding issues of enforcement.

94. It is clear following Agbaje that neither hardship nor injustice are necessary pre-conditions to an order under Part III although the presence of either factor may persuade a court that it is appropriate to make an order.  It is equally clear that the presence of either factor may influence the nature of the financial provision which a court orders.

95. Mr Marks and Miss Cowton remind me that the respondent has £32.9 million of which £10.2 million is not available to him during his father's lifetime.  The applicant has already received £5.1 million (on the basis of 2009 values) as well as the benefit of the Kensington house on a rent free basis.  They contend this provision is more than enough to meet her needs in the light of the respondent's offer to fund the new lease.  She has already taken her portion of the Z wealth in the Russian proceedings and they invite me once again in the context of these Stage II proceedings to reject her amended claims for what they are: a second (and impermissible) bite at the cherry.  At the time of the Russian agreement and order, there was only one trust – the BMT Trust – and all other trust interests which have been disclosed during the course of these proceedings post-date the end of their marriage and lack any nuptial element.  Although the respondent is now the beneficiary of the BMT Trust, he only became a beneficiary after the marriage was dissolved and the terms of the trust do not permit him to benefit from it during the lifetime of his father.  They accept that her occupancy of the Kensington house can be extended by the court but they submit that it cannot interfere with ownership.

96. This, they argue, is a powerful factor pointing to the fairness of the Russian order.  If the court cannot now extract the property from the trust by way of variation of a nuptial settlement, it certainly could not have done so were it seised of divorce proceedings in 2009.  Whilst the court can now put in place an order to incentivise the respondent (and the trustee) to extract the property on a voluntary basis (i.e. a lump sum 'unless' order), the assets which would be required to fund such a lump sum did not exist in 2009.  To an extent, this proposition is accepted by Mr Todd and Mr Yates who contend, as I have said, that an adjournment of the applicant's claims for lump sum orders would have been a highly likely outcome in any English proceedings in 2009.

97. It seems to me that the limited interest which the respondent had in the wider family wealth through the trust structure as it was set up in 2009 has to be seen against the background of a reasonably long marriage during the latter years of which this couple and their children lived, and lived well, on 'Z' family money.  As I have said, it is not suggested that the respondent supported his family independently of the funds which his father made available.  It seems to me that, to an extent, the churn of family money through the conduit of the respondent has, in one sense, been no more than a continuation of the pattern of Dr Z's bounty.  In my judgment, the submission which is made by Mr Marks and Miss Cowton about the post-separation nature of the wealth which the respondent now holds has to be seen in this context.  Of course, I accept, as I said during the course of the hearing, that it may well be that Dr Z would not have agreed to channel his wealth through the new (post-2009) trust structures had he not been assured that the terms of the Russian order represented a full and final settlement as between his son and former daughter-in-law. 

98. And so I ask myself whether this former wife is indeed suffering (or will in future suffer) hardship or injustice if no further order is made over and above the new provision which is now on the table in respect of the sum of £1 million offered not by the respondent but by the trustees. I bear in mind that there is no rule which says that I am restricted in the provision I can make in that she should receive no more than the minimum sum which is required to overcome any hardship or injustice.  Again, it all depends upon the facts of the particular case.

99. My starting point is the interests of the two younger children.  To the extent that there is hardship or injustice which falls on the shoulders of the applicant, it will inevitably rebound to the detriment of the children's interests for so long as she is involved in the provision of their primary or extended care.  Whilst the words of the statute require me to give first consideration to "the welfare while a minor of any child of the family who has not attained the age of eighteen" (s.18(2) of the 1984 Act), I am conscious that these children may well have a dependency to one degree or another which survives their 18th birthdays.  I am not precluded from folding that issue into "all the circumstances of the case" albeit that it may lose some potency as a "first consideration".

100. The respondent's current offer will see the children living securely in their family home until each is ready to embark upon adult life at the conclusion of their tertiary education.  It will require the applicant to discharge the general costs of living in that home with provision for child support throughout that period, but otherwise her occupation of that property with the children will be cost-free in terms of mortgage/rental payments.  His offer requires her to leave that home once the children have "grown and flown".  Mr Marks and Miss Cowton have sought to demonstrate by reference to a further schedule that she will have sufficient resources of her own at that point in time to purchase another more suitable home (albeit a cheaper property) and to live reasonably comfortably for the remainder of her life with the capital she now has together with the injection of a further £1 million from the trustees for the surrender of her annuity entitlement.  The applicant, in her turn, seeks to retain the property by means of an outright transfer from the trust through the variation of that settlement which she invites me to make under section 24(1)(c) of the 1973 Act.  If this is not possible, her original proposal contained an offer to accept a cash sum of £4.9 million which she would use to purchase an equivalent property in the same neighbourhood.  On the basis that she retains her existing "Russian" capital, she seeks no further provision in respect of a capitalised spousal maintenance fund.

101. On the basis of the evidence which is currently before the court, I cannot predict what these children's needs might be when that point in time comes.  I do not know; the applicant does not know; the respondent does not know.  The indications at present are that their elder daughter is beginning to come through her difficulties and her stated intentions with respect to her tertiary education is to attend a university in England for the three or four years of the next stage of her education.  She is living independently in separate rented accommodation now and appears to be coping well in that situation.  It is more difficult to predict what the future holds for the two younger children.  Each is functioning well in mainstream schooling.  Judging by the amount of additional tuition which the applicant is asking the respondent to pay for, the breadth and range of their subjects at school is extensive.  Whilst I accept that part of these tuition costs relates to extra help with preparing for important upcoming examinations, a significant element of the proposed tuition budget relates to learning new languages, including Japanese.  It seems to me that a young person who is capable of absorbing this additional language skill is likely to be a child who is equipped to make his or her own way in the world subject always to remaining well and in good physical health.

102. All agree that this is a needs case: it could not be otherwise in the circumstances. However, "needs" is an elastic concept which has to be considered against all the circumstances of the particular case with which the court is dealing.  Initially Mr Todd and Mr Yates sought to persuade me that their client's delay made little, if any, difference to an assessment of her needs.  Whilst there was some retreat from that position by the time we reached closing submissions, I do not accept that delay can be air-brushed out of the picture.  It will inevitably find reflection in the award which I make at the conclusion of these proceedings.  It is one of the factors which I am required to take into account: see s. 16(2)(i) of the 1984 Act.  As I have said, in my judgment, the manner in which the element of delay should be reflected in any final award is by the application of a much more conservative assessment of her current and future needs.  That will not be so in every case.  Sometimes, where the delay is insignificant or where there is a good explanation for any delay in issuing proceedings, the court may decide that its impact on a case will be minimal if, indeed, it impacts at all.  Here, delay is a significant factor and the applicant has already received significant provision in terms of the Z family capital which she received in 2009.

103. Is the revised (and reduced) proposal which the applicant now advances a sufficient recognition of those factors and therefore an appropriate reflection of her needs?  That is the issue which I have to decide.

104. In their opening submissions, Mr Todd and Mr Yates reminded me of the well known dicta of Ormrod LJ in Hanlon v Hanlon [1978] 1 WLR 592 at p 597:

"… for over 5 years – the wife has had the upbringing of these four children and has been working full-time as a community nurse.  She has maintained the house as well as she could during those years, and on any view she has taken a considerable load off the shoulders of the husband over a period of five years, and she will continue to take a large load off his shoulders from now until the youngest child leaves home – which of course will not necessarily by any manner of means be in five years' time.  A family like this will not simply dissolve completely on the 17th birthday of the youngest child.  In fact, of course, she will be, as the mother of this family, maintaining the nucleus of the home effectively for a considerable number of years, until the girls are married and settled on their own, and the boys are similarly married and settled on their own; that is what it really means in real life.  So in my view she has made a very large contribution to this family.  She has much less good prospects than the husband's so far as her future is concerned ….". 

105. By way of response, Mr Marks and Miss Cowton submit that the case can be readily distinguished even if it has an application now, having been decided some six years before the 1984 Act came into existence.  The essence of their case in relation to her future housing needs once the children have completed their tertiary education is that there should be a step-down and that she has sufficient resources now to afford to purchase suitable alternative accommodation at that stage.  In contrast, Mrs Hanlon was faced with the prospect of being unable to afford to buy anything at all if the family home was sold.  They submit that the dicta of Ormrod LJ has nothing to do with "scaling down" and has to be seen in the light of contemporary society mores where adult children can, and often do, lead independent lives away from their former family home long before the point of being "married and settled".   They argue that the Kensington house is simply too large and too expensive to represent her long term housing needs beyond a further six years when she is likely to be living in the property for most of the time on her own.

106. On behalf of the applicant, it is said that the real focus of the respondent's challenge to her housing needs is less to do with the size of the accommodation she requires and much more to do with the area in which she wishes to live. 

107. The alternative property particulars put forward by the applicant range in value from just over £4.65 million to £5 million.  With costs of purchase and stamp duty, she would require a housing fund of between just over £5 million and £5.52 million.  All of the properties are in central Kensington or Notting  Hill Gate.  They are either four or 5 bedroom properties; one is a four bedroom property with a separate one bedroom flat.  The particulars relied on by the respondent are in Fulham, Shepherd's Bush or Battersea.  All are four or five bedroom family homes with a more or less equivalent square footage in terms of area to the particulars relied on by the applicant.  None is as large as the Kensington house which has six bedrooms and is just under 3,400 square feet.

108. Mr Marks submits that whilst his sample is, from the applicant's perspective, situated in less opulent areas, all the properties are in respectable and established family residential areas within a short distance of her current home.  He says that a move away from central Kensington to a property costing in the region of £2 million to £2.25 million (gross cost £2.5 million) meets her needs at a time in her life when she would in all likelihood be looking to move to a smaller property in any event.  He submits it is a logical time for her to move in circumstances where her initial objections to a move now are based on the proximity of her current home to transport and the children's schools.  Under the respondent's proposals, her current domestic infrastructure will be kept in place until that need falls away.  Should she wish to stay closer to Kensington, a housing budget at that level will allow her to do so, albeit at the expense of the size of the property she can afford.  The choice will be a matter for her.

109. As the evidence developed during the course of the hearing, it became clear that neither party had made any thorough investigation or inspection of the properties reflected in the estate agents' particulars which I was asked to consider.    The applicant had been to look at the exterior of some of the respondent's properties.  He had actually been to view the interior of others. I can see for myself from the colour brochures with which I was provided that all of his particulars relate to reasonably substantial family homes which have been modernised and refurbished to an apparently high standard.  Each appears to have modern, up to date (if not state of the art) kitchens and bathrooms.  They are pleasant, light and airy properties which I am satisfied would provide the applicant with the space which she says she wants to accommodate the family after they have ceased to live at home on a full-time basis.

110. They do not bear direct comparison with the Kensington house.  That property is a five storey house with potentially five or six bedrooms, five of which have en suite bathrooms.  It is situated in prime central Kensington, slightly to the north of Kensington High Street.  The single joint expert describes its situation as "an exclusive and sought after residential location".  Whilst these matters are always a question of individual preference and taste, I can see from the internal colour photographs of the property that, whilst a large and comfortable family home, some of the internal specifications (such as the bathrooms and kitchen) may well require updating at some point in the future.  Without doubt, this home has represented a haven of security for the applicant during a difficult period in her life.  She tells me that she wants to retain this particular property as a long term home or, if that is not possible, she wishes to acquire something similar in the same area.  Mr Todd on her behalf says that she should be permitted to stay in the home which was developed to her taste.

111. If that submission was being made in the context of a clean sheet of paper and fresh English divorce proceedings, very different considerations might apply.  As Lord Collins acknowledged in Agbaje, there will be cases where the English connections of the case are so strong that a Part III application can be treated as if it were made in purely English proceedings.  That might well be the case where, for example, there had been no financial award at all at the conclusion of a foreign divorce in circumstances where the family's home had been London for many years.  Here, I have to bear in mind that a properly constituted Russian divorce and a consent order made in those proceedings are important features of the background circumstances of this case.  The outcome of the Russian proceedings was, by agreement, a substantial award of capital to the applicant.  As part of the agreement which underpinned that award, she recognised and acknowledged that she would have no further maintenance claims against the respondent.  Were she to receive by way of top up provision in these proceedings a transfer of the Kensington house, her global award would amount to c. US$17.7 million including the £1 million offered now by the trustees.  As Mr Marks and Miss Cowton point out, that is the equivalent of 103% of what they then had in 2009 if the current value of the Kensington house is included.  It seems to me that this outcome teeters perilously close to the impermissible step of making an award in these proceedings which is in excess of what an English court would or could have awarded at the time.  On one view, it constitutes precisely such a step. The most which Mr Todd and Mr Yates can reasonably point to in this context is the absence of certainty as to the nature and timing of any benefits which might come to the respondent with the likely result of an adjournment of her lump sum claims in 2009.  Even they do not contend for a hypothetical outcome in the English court would have left the respondent with nothing over and above his future expectations.

112. The applicant told me during the course of her oral evidence that she was unfamiliar with the areas which had been proposed by the respondent.  She said she had felt insecure and frightened when she ventured out of Kensington.  Even allowing for the fact that she is clearly an anxious personality, I am not persuaded that any of these areas can be characterised as unsafe or inappropriate areas devoid of the kind of amenities usually associated with areas occupied by professional families and others.  I would take a great deal of persuading that the alternative housing particulars relied on by the respondent were in areas where either the applicant or the children would be put at any greater risk in terms of their physical safety and comfort than the properties in Kensington relied on by the applicant.

113. The extraction or transfer of the Kensington house which the applicant seeks has to be seen in this context as part and parcel of a package since she has accepted the trustees' offer of £1 million in return for the surrender of her annuity.  Towards the very end of closing submissions, Mr Todd appeared to be contending that, if I were in doubt about the fairness of allowing her to retain the Kensington house, any dilution in her overall award should be reflected in a reduction in the lump sum to be provided by the trustees.

114. What, then, of her future income needs?

115. The applicant has produced a detailed breakdown of her budget with her written evidence.  She seeks the court's endorsement of an annual net need of just over £340,000 whilst the children remain dependant and living at home.  That figure is broken down as to £195,415 per annum for running the home and her personal expenditure and c.£148,000 for the children, including their school fees.  Her figures presume that the cost of her occupation of the Kensington house will be nil in that she will have no liability for either a mortgage or rent.  These figures represent a reduction in the sums which she was previously putting forward in respect of her future costs in that property since Mr Todd told me that, in the light of my indications at the conclusion of the Stage I hearing, there has been some attempt to trim her figures.

116. A degree of consensus emerged during the oral evidence as to further areas where savings could be made.  The focus of Mr Marks' challenge to her figures in cross-examination was the inclusion in her own budget of a significant element of expenditure which related to the children's needs.  In terms of food, groceries and holidays, he suggested that part of her proposed expenditure related to their needs.  In addition, he suggested that the sum of just under £21,000 which she was claiming for the cost of therapy could reasonably be reduced to £9,400 (or £200 per week) on the basis of a broad view of her needs in the future.  (£200 per week in fact produces £10,400 per annum rather than £9,400 unless Mr Marks and Miss Cowton have been working on a reduced number of sessions over holiday and other periods.)  The applicant herself accepted that the figure she had provided for dental work was not sustainable on an annual basis.  She had claimed over £17,000 per annum as the cost of taking accountancy and tax advice.  However, it appeared that this sum included a significant element of the charges which she was incurring in respect of the management of investments by her portfolio manager.  A sum of about £18,500 per annum was being claimed for the costs of tax and employing a litigation friend, someone who appeared to have been helping her with the absorbing and understanding the volume of legal documents which this case has generated over the past two years or so.
117. Taking these adjustments into account, the applicant's personal budget reduces to £124,462 per annum on the basis of the presentation advanced by Mr Marks and Miss Cowton.

118. Whilst I am not proposing to dissect in any forensic detail all the figures advanced by the applicant, it does seem to me that some of the cost of provisioning the home and paying for holidays is properly attributable to the needs of the children.  She had not included anything for holidays in their budget.  However, what she sought was just over £33,600 per annum for holidays and weekends for herself.  Whilst I am not persuaded that Mr Todd's repeated references to the respondent's " helicopters and yachts" is a fixed reference point for considering his client's needs, I cannot ignore altogether the fact that he has the resources to indulge his own interests in motor racing, flying and sailing whilst her spending patterns are much more modest.  She told me that, over and above the £3,000 per month which he has been providing for the children in cash terms, she has had to deplete her capital to make good any shortfall.  In my judgment, the particular circumstances of this Part III claim call for a more nuanced approach.  Whilst their marital standard of living is one of the factors which is engaged in this stage of the discretionary exercise, it has to be tempered by a consideration of both what she has already received and the significant delay in progressing with her claims to the prejudice of the respondent. There is no question of any suggestion of parity in this case, and the applicant does not pursue an award at that level.

119. However, her contributions to this family, and particularly the children, both past, present and future are a factor which I am required to take into account.  Their welfare, which requires a stable domestic economy in the home which they share with their mother, is my primary consideration.  They will not always be there, but there remains a significant period of time during which she will be their primary carer.  Even when that role ends, her continuing needs will reflect the job which she has done over many years to launch them successfully in life.  As I have already noted earlier in my judgment, there is no guarantee in this case that their particular needs may not continue to occupy at least part of her time and energies to a point beyond the end of the formal education.   We simply do not know at this stage of events.

120. In my judgment, it is not unreasonable for her to spend a reasonable sum of money on holidays and weekends away and she should have a reasonable allowance for food and groceries.  I am proposing to allow a sum of £15,000 per annum (£1,250 per month) for food and groceries and a further sum of £25,000 per annum for holidays and weekends away.

121. In relation to therapy, the applicant herself accepts that she is likely to need less support once the stresses and strains of this litigation are lifted from her shoulders.  If I am looking at this element of expenditure in terms of a Duxbury fund for life of a 45 year old woman, I am persuaded that an allowance of £200 (or the cost of two hours) per week is reasonable.  There may be periods when she needs no therapy; there may be periods when she needs some additional support.  I hope and expect that her anxiety issues will be addressed in part by the conclusion of these proceedings.  She will not face further litigation with the respondent.  Each will know where they stand and can plan for the future accordingly.   Accordingly, I propose to reduce her budget in respect of ongoing therapy by 50% to £10,440 per annum.

122. Further dental work may be necessary in future in addition to regular routine visits and I propose to allow an annual cost of £1,200.

123. I accept that she will need to pay for accountant's advice.  Given that she is likely to have investment income from several different sources in the coming years, I consider an annual allowance of £4,000 per annum is a sufficient sum for accountancy services and I am disallowing the costs claimed in respect of a litigation friend for reasons set out in the preceding paragraph.  The deluge of legal documents will no longer be a feature of her life.  That said, I do accept that she may from time to time require translation services in respect of formal documents and I propose to allow an annual cost of £1,000 for those services.  I make no allowance for tax.  Any tax payable on the income generated by her rental properties will be paid out of that income and tax, as an element of Duxbury provision is already allowed for in the calculation.  Thus, the appropriate reductions in the budget can be presented as follows:-

Applicant's budget

195,415

less deductions:

 

Food and groceries

( 1,998)

Holidays and weekends

( 8,607)

Therapy

(10,440)

Dentistry

( 4,800)

Accountancy/tax        

(13,215)

Litigation friend         

( 9,000)   on basis £1k for translation

Tax

( 8,508)

TOTAL ALLOWED           

138,847 per annum




124. On this basis, and rounding up rather than down, the appropriate income need to be attributed to the applicant going forward is c.£140,000 per annum.  The fact that she accepted, as I have found, that her legal claims for spousal support, such as they were, have been dismissed by the Russian court does not impact upon the existence of genuine income needs going forward.  It merely provides the platform for the submission advanced by Mr Marks and Miss Cowton that the capital she received under the terms of the Russian order was, and is, sufficient to address those needs.

My conclusions

125. Having considered matters carefully against the background of all the evidence which I have heard and read, I have reached the clear conclusion that the future housing needs of the applicant and the children can, and should be, met by the use of the Kensington house until their youngest child completes his tertiary education.  He will celebrate his 22nd birthday in May 2022 although I suspect that he will not graduate until the summer of that year.  The applicant can at that stage begin her search for her new home and I have no doubt that she will by then be in a much better position to know what she needs and what she is looking for in terms of both area and space.  She will have had time to consider her options because I suspect that during the preceding two or three years, the only full-time occupants of the Kensington house will have been mother and son.  Given everything I know about this case and taking account of all the factors set out in sections 16, 17, 18(2) of the 1984 Act, as well as those listed in section 25 of the 1973 Act, I am entirely persuaded that a step down in her accommodation needs at that juncture is both necessary and appropriate.  The provision of the Kensington house for her use and the use of the children on a rent free basis (i.e. at no cost to her) is entirely appropriate during the intervening period.  I would like to ensure that her occupancy of that home is maintained slightly beyond May 2022 and would encourage the respondent and Kopt/the trustees of the BMT Trust to agree to postpone the end of fixed term tenancy until the beginning of the new academic year in September 2022.  By that stage, their son will have completed his final year of a first degree. It will give her the summer months to make her arrangements for a move, although I hope and expect that she will have embarked upon the house-hunting process well in advance of a planned move.  She needs time to explore different areas or, if she is insistent on remaining in the area where she currently lives, to look at smaller properties in that area.

126. As to the sum she can reasonably expect to spend on a new home, I am satisfied that a sum of £2.5 million (inclusive of costs) in today's terms will buy her a family house in good condition and with ample space to accommodate the children albeit outside the immediate area of central Kensington.  By that stage, she will no longer be bound by the needs of the children in terms of schools and transport to and from their out-of-school hours activities. She will be making choices for herself, although I accept that those choices will continue to be influenced by her wish to be able to accommodate the family from time to time.  Whilst that figure is at the top end of the bracket for which Mr Marks and Miss Cowton contend, it will give her some additional flexibility which I am satisfied she should have.  Whilst these figures represent the current cost of buying in central London, I appreciate that I am looking some six years into the future and, in the light of very recent events, that future is looking unpredictable just now in terms of speculation about future property values.  Nevertheless, the central London property market has always been considered to be a good financial investment, even in times of market volatility.  She already has an anchor to that market in terms of the capital investment she has made in her two rental apartments (currently together worth some £1.28 million).  Whether she chooses to retain those investments or make a more substantial investment in a larger property by way of substitution will be a matter for her.  At present, and allowing for the cost of ground rent and repairs she is receiving a rental income of c. £24,200 per annum 13.  I accept that she has no real prospects of any future employment income.  I do not say that because she has no capacity to work but rather because her obligations to the children and her language difficulties would limit her employment opportunities.  It may well be in years to come that she would wish to find an interest outside the home and, if pursuit of that interest produced some income, so much the better.  But I do not take account of any future earned income as being available to make any significant inroads into her needs going forward.

127. I can see no justification for transferring to her a property worth some £4.75 million in the context of these Part III proceedings and in the context of a claim which the applicant now advances in the framework of a needs claim of £9.3 million.  That is not a step which could or, in my judgment, would have been taken by an English court in 2009.  I accept entirely that I am not bound to confine myself to a consideration of what would have happened in 2009 had these been English divorce proceedings.  No doubt Mr Todd and Mr Yates would say that if her lump sum claims had been adjourned in 2009 in the context of English proceedings, they would be entitled to resurrect those claims now on her behalf in the context of the different financial circumstances in which the respondent finds himself.   Indeed, in terms, that is the position in which I now find myself in terms of adjudicating this claim.  However, I have reached a clear conclusion that such an outcome in this particular case would not represent a fair outcome. On the basis of the respondent's current offer to continue to make the Kensington house available as a family home for the next six years without cost to the applicant, I am not prepared to extract the property from the ownership of the Trust even if the BMT Trust constitutes a nuptial settlement and the provisions of s. 24(1)(c) of the 1973 Act are engaged in this case, and I have significant reservations in terms of the nature of the rights which are, or may be, impressed with such a trust.  First and foremost, the provenance of the wealth in this case is an important factor.  So, too, are the applicant's contributions to the welfare of the family and I accept that these have been an important and valuable contribution from her side.  Nevertheless, the existence of the Russian agreement and the implementation of the terms of the subsequent Russian order, looked at in the context of the significant delay in this case – delay which was not the responsibility of the respondent who has now had to meet financial claims many years after believing they had been extinguished – all militate against an award which includes provision for housing which I have found to be in excess of her needs beyond 2022.

128. In terms of the structure of her award, Mr Marks and Miss Cowton have presented me with a sheet on which is captured a number of hypothetical scenarios.  These look at what her position might be now had she, in 2009, invested her £5 million in a house; what that scenario might look like now with the injection of the additional £1 million from the trustees; where she might be now if she had not spent over £1 million on legal costs; and how she might apply what capital she has left with the £1 million without further financial provision being ordered for her benefit.

129. This latter scenario would see her with, at best, a house worth £2 million (costing £2.164 million gross), an assumed rental income of £70,000 per annum to be set off against her Duxbury needs and a balance of £114,000 net per annum to meet her income needs.  These assumptions take as their starting point remaining capital of £3.8 million whereas in fact, with her costs paid, she only has £3,684,543. 

130. With assets under her control of £4,684,543 (which includes both the investment flats and the annuity payment 14), the applicant will need to give serious thought and consideration to how she structures that wealth so as to achieve both capital appreciation and an income yield.  She may decide to consolidate her investment in the central London property market; she may not.  It seems to me that the most straightforward (and the fairest) way to approach this exercise is to assume that, for these purposes, the two investment apartments represent liquid capital rather than an ongoing income stream. Because I foresee the need for a complete overhaul of decisions relating to her future, and regardless of the current position in relation to the assured shorthold tenancies which she has granted in respect of the two flats, I am proposing to treat them as capital assets for present purposes.  Every former wife who is awarded a Duxbury fund at the conclusion of divorce proceedings has a choice to make as to how that capital is to be invested.  The underlying assumptions of the Duxbury calculation are undisturbed and the court will not seek to be prescriptive in relation to any future investment strategy which such a wife chooses to deploy.

131. With assets of c. £4.685 million and a future housing need of £2.5 million, there is potentially some £2.185 million available for income generation.  This is approximately £1.385 million less than she would need on a Duxbury basis calculated on a net need of £140,000 per annum (i.e. £3.57 million).  However, in considering the extent to which the respondent should be required to meet this shortfall, I cannot ignore the fact that for the six years during which she will continue to live at the Kensington house, the sum of £2.5 million which I have earmarked as her future housing fund will be income-producing in one way or another.  Either she will invest that sum, or part of it, in a property in central London which she will let out, or it will fall in over the next six years as an accretion to her Duxbury investment fund.  In their calculations (Scenario D), Mr Marks and Miss Cowton have assumed a gross annual rental yield over that period of £70,000 on a property worth £2 million.  That, in turn, is fed into their Duxbury calculation to produce the annual income yield of £114,000 net per annum. 

132. Adopting that methodology, I have produced a Capitalise calculation which I propose to append to this judgment.  On the basis of an income need of £140,000 per annum and a rental income of £78,000 15 every year for the next six years, the capital sum she requires is £3,333,480.  She has capital of £2.185 million to apply towards that Duxbury fund.  The shortfall is £1,148,480.  I am entirely satisfied that the respondent has the means to pay that sum and that it is both fair and reasonable to require him to meet that shortfall.  Accordingly, I propose to order that he pays to the applicant a lump sum of £1,148,480 within 28 days of the date of my order.

Children's expenses

133. The applicant seeks ongoing provision in the form of periodical payments for the children in the sum of £74,000 per annum for each of the two children who remain living with her.  An analysis of her figures shows that part of the costs she is claiming (£9,560 per annum) relate to expenses she says their elder (independent) daughter will incur in respect of guitar, singing and drawing lessons.   By the conclusion of the case, the respondent accepted that a sum of £25,000 per annum per child would represent a reasonable contribution to the general expenses over and above the additional items or 'extras' which he is prepared to pay.

134. On behalf of the respondent, it is submitted that the issues relating to the appropriate level of child support have arisen in this case largely as a result of their parents' very divergent views about what Mr Marks calls "the wisdom and benefit of hot-housing the children".  He, with Miss Cowton, points to the fact that there is no evidence that these children need the degree of extra tuition which they are currently receiving.  The respondent offers to pay for the cost of any necessary extra tuition but points to the fact that he is already meeting a school fees bill of some £75,000 per annum in expensive private schools.  He seeks to limit his obligation in this respect to additional tuition which is recommended by the school.

135. The applicant, on the other hand, seeks provision of some £60,000 per annum (i.e. £30,000 per annum per child) just for extra tuition costs and asks to be left in control of how that money is expended.  She says that she finds it impossible to communicate with the respondent and asks me to build in provision at whatever level I deem appropriate in order to avoid the potential for further friction over this issue.

136. In addition, she seeks a sum in excess of £220,000 per annum for the children's medical expenses.   Of this sum, about £100,000 relates to a 'like for like' sum which she wishes to spend on obtaining medical advice in the US about the children's congenital heart problems.  That is the sum which the respondent has said he will spend on the two small daughters from his present marriage.  The applicant says a similar sum should be earmarked for their own children.  Whilst I decline to make any specific findings (because the medical evidence in this case will not allow me to do so), it does seem to me that there is no comparison between the symptoms experienced by his younger daughters and those experienced by his oldest daughter and his son.  Prognosis and treatment options appear to me to be entirely different.  Whilst I recognise and have every sympathy with the applicant's wish to ensure that her precious children are afforded the same prospects and benefits as the respondent's youngest children, I have to bear in mind that their son, at least, is receiving advice and treatment from the specialists at the Royal Brompton Hospital in central London.  That hospital's reputation is second to none in this country at least.  Their son is currently living an apparently healthy life in mainstream education and the respondent has offered to meet in full the cost of any medical treatment which he needs in future insofar as that is not covered by the NHS or private medical insurance.  By the time we came to closing submissions, the applicant was no longer pursuing her claim to a fund of £100,000 for medical treatment.

137. Thus, on this basis, I am left with competing positions of £25,000 per child per annum on the respondent's case with the additional support of educational and medical costs and £35,000 per annum per child with additional bolt-ons from the applicant's side.

138. I have scrutinised her budget and it does seem to me that, whilst there needs to be some provision for extra tuition, the costs advanced by the applicant are unrealistic in terms of the time available to these children outside their normal school hours.  I did wonder on occasions through the course of her evidence when these two young people had any opportunity simply to enjoy being teenagers.  I could not see that very much time at all was left in their busy lives for normal healthy socialising with their peers.

139. I take on board the fact that these are children of a very wealthy father who could afford to pay what the applicant seeks.  I have been told that he is keen that they should enjoy aspects of his lifestyle such as flying helicopters.  I accept that these parents are unlikely to have the personal facilities or resources to negotiate their way through to an agreed parental position.  In my judgment, an appropriate level of financial support for the two younger children of the family is £35,000 per annum per child.  I am including within that award provision not only for the cost of that part of the domestic food and grocery bill which relates to their needs but also a sum in relation to the cost of their holidays when they travel with their mother.  That sum will be index-linked and payable monthly in advance by banker's standing order.  I am satisfied that it is an order which the respondent can afford to pay notwithstanding his other financial responsibilities to extended junior (and other) members of the wider Z family.  In addition, there will be appropriate recitals in the order that the respondent will meet the cost of any medical treatment for the children, as advised by their treating clinicians.  The order will also record his agreement to meet the cost of any additional private tuition on the basis that (a) it is agreed in advance and/or (b) it is considered necessary by the school.  Over and above that provision, it will be for the applicant at her election to pay for any further costs of additional tuition out of the child support she receives for the children.

140. Finally, since I have made my award on the basis of a needs-based claim, I am hoping that there will be no further issues or applications in relation to the significant legal costs which have been incurred in these proceedings.  I canvassed this issue with Mr Marks during the course of his closing submissions.  In the event that I have to make further decisions in relation to costs, I shall, of course, do so but I would encourage each of these parties now to draw a line under these proceedings which have already occupied too much of their and the court's time.

Order accordingly

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1 That £3.8 million is made up of two London flats which she rents out as investment vehicles (together worth c.£1.28 million) and a portfolio of cash/investments which is managed by EFG.

2 The property in Limassol was purchased in 2014 for €2,024,000.  It appears in the Trust accounts with a value of US$2,469,280 as at 31 December 2014.

3 The Wycombe Square apartment was purchased in the respondent's sole name for £3.65 million with a mortgage of £2.31 million.  The deposit and purchase costs were funded by a distribution from the Mezano Trust.  It is his case that this property, adjacent to the apartment which is already owned by the BMT Trust, came onto the market at a time when Dr Z, his father, was exploring the possibility of a move to London.  Since his father's intentions have yet to crystallise with regard to a potential move from Moscow, the respondent accepts that it may not be economical to retain the property.

4 A report prepared by Mr John Mackay of Ernst & Young on the basis of joint instructions and dated 9 June 2016 contains a calculation of the approximate tax which would be payable in the event that the Kensington house were to be extracted from the BMT Trust and transferred to the applicant.

5 Annual Tax on Enveloped Dwellings

6 Although the date on that letter appears as "21 March 2012", it is accepted that it was written on 21 March 2013.

7 Whilst the Foundation has now closed, it was in operation for c. 13 years and distributed millions of dollars on an annual basis over that period.

8 The value of these four trusts is c.£7.35 million.

9 Section 16(3) concerns the jurisdiction which may arise under Council Regulation (EC) No 4/2009 and Schedule 6 to the Civil Jurisdiction and Judgments (Maintenance) Regulations 2011.  It has no application to these proceedings where the parallel divorce jurisdiction which was engaged was a non-European State.

10 This is a reference to section 25 of the Matrimonial Causes Act 1973 (as amended).

11 The actual division of the Russian assets left the applicant with US$8.4 million (79%) plus the annuity and the respondent with US$2.2 million (21%) plus his trust interests contingent on Dr Z's death.

12 Granatino v Radmacher (formerly Granatino) [2010] UKSC 42, [2011] 1 AC 534

13 137A CR produces a gross rental income of £26,004 per annum (£12,700 per annum net of tax).  In respect of Flat 43 at 152GR the figures are £25,740 per annum (£11,492 net per annum). 

14 i.e. £1,280,400 + £1m

15 The assumed rental yield follows the calculation in Scenario D and the figures have been indexed on an annual basis.  I have assumed that the applicant is not eligible for an English state pension because of her non-domiciled status.