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MF v SF [2015] EWHC 1273 (Fam)

Moylan J determines a financial remedies application in a case dominated by the wife's suspicion of the husband's business dealings.

The husband (H) had first consulted matrimonial lawyers in December 2011, and between then and the final hearing in February 2015 had been made redundant by his previous employers (TS), which also owned a number of loans to H, and whose managing director had also offered to buy out his shares in a related company.

It was the wife's (W's) case that:

Excluding the disputed value of the ABC 2011 shares, the loans to TS, and W's reattribution case, the total assets were worth between £2.6 million and £3 million [51]. 

During proceedings W had also instructed commercial solicitors in relation to XPS and allegations that H was in breach of the shareholders agreement. The result was that the total costs incurred by both parties (already included in the above figure) was £980,000 [24]. Both parties sought awards in relation to costs [35].

It fell to Moylan J firstly to determine the effect the wife's allegations would have on the quantification of the family's assets, and secondly the impact of the wife pursuing them should have on the division of assets.

W's case rested on TS's senior managers, and particularly the Managing Director PM, being part of a conspiracy to deliberately misrepresent H's financial position over a number of years. Moylan J, however, found PM to be a transparently honest witness [57]. Indeed, W accepted in her oral evidence that he was an 'honourable and very decent person' [57], and the judge found that this was not a new opinion [209].

On this basis, Moylan J held that it was 'abundantly clear' that H's redundancy was genuine [87], and that W should have accepted the letters shown to her to confirm this. Slight inconsistencies that W pointed to in the information provided, and a lack of documentation kept by a company with a very small management team, did not carry the sufficient weight to begin to make out W's case.

In relation to the loans, W questioned why some loans had be assigned to TS from other lenders, why they were inconsistently referred to as interest bearing or non-interest bearing, and why those loans from TS had been written off in the company accounts but apparently remained owing.

Moylan J was clear the money had been lent up to February 2012, and that there was no evidence that it had been waived at any time since [96]. The judge also accepted that a loan being written off in the company accounts only indicated an opinion on recoverability, and did not represent a release or write-off.

This was notwithstanding H not communicating with W in relation to the loans, even when he was under a duty of full and frank disclosure. Further, W as a shareholder of XPS had equal rights to the information on loans received through the compnay. Moylan J found that the 'extreme nature of W's lack of trust' in H had made it impossible for him to work with her in relation to financial decisions [103]. H had at all time acted appropriately and in the interests of the parties in his financial dealings [104].

It was held that the involvement of commercial solicitors by W was a demonstration of the difficulties of discussing financial decisions with her. Her solicitors raised no issues in relation to dissipation of assets, but instead sought to pursue claims against H for failing to pay monies owed by the company to W. Moylan J 'struggled to identify any benefit to the family of the case advanced… and found none' [111], given that the family's total assets remained unaffected. His Lordship warned that had any such commercial action been taken during proceedings, then it would have been to the detriment of the family [112].

The remaining issue on quantification was the value of H's shares in ABC 2011, which was essentially a property-owning company. W's case was that H's interest should be valued on the basis of gross asset value, as indicated in a previous version of the shareholder's agreement, and an undisclosed further agreement that must have been entered into. W valued the shares at £6 million net.

H valued the shares, on a net asset basis, at approximately £157,000.  PM had made an offer of £2.644 million gross for H's interest, which W characterised as further evidence that PM had a secret agreement with H to provide him with further funds and income after final order.

Moylan J accepted that it would be nonsensical for the shares to be valued on a gross asset basis [179]. This would mean that H received nearly 80% of the company's value for a 13.14% interest [155]. The communications between H and the company also indicated that all parties to the agreement were working on a net basis. Further, the operation of the shareholders agreement and a cap mechanism within it was internally inconsistent if a gross asset basis was to be used [177]. H and PM had trusted the individual who drafted the shareholders agreement to reflect their intentions, which he had failed to do [180]. PM's high offers were simply another indication of his goodwill towards H and the family.

In relation to the add-back, W failed to demonstrate that H had dissipated any resources [188], let alone wantonly. This left a total capital value, including pensions, of 'just over £3 million' [201].

Equal division of the pension assets had been agreed, and W sought equal division of the capital. H agreed with this in principle, save that he sought adjustments to reflect that W should have accepted an earlier, higher offer from PM to buy the ABC 2011 shares, and to reflect W's substantially higher legal fees.

PM had previously made an offer for the shares that was approximately £350,000 higher (net) than the one left open at trial. Moylan J was satisfied that W's conduct had led to a loss to the family of this amount [304]. Given that her case was 'plainly unsustainable from the outset', as she accepted that those involved form TS were honest, [207] it would be inequitable to disregard such behaviour [222].

In relation to the disparity in costs, H had incurred £363,000 in total, while W had incurred £618,400 [24]. Relying on RH v RH [2008] 2 FLR 2142, Moylan J found that W's costs were grossly disproportionate, although a figure of £450,000 for her, as the applicant, would not have been [226]. £168,000 therefore represented the disproportionate element.

In relation to costs more generally, Moylan J reflected that this was 'one of the more extreme cases in my experience as a family lawyers over the last 35 years', but included the final valuation of costs liability as part of his overall award.

Taking each of these adjustments that H sought individually would have resulted in an award of £1.5 million net to H, and £700,000 net to W. Despite her conduct, the judge concluded that this was too great a departure from equality [233]. Considering the section 25 factors in the round, he awarded £900,000 to W and £1.3 million to H, after their liabilities had been met (a 43%/57% split on the gross figures).

Summary by Samuel Littlejohns, barrister, 1 Hare Court

Neutral Citation [2015] EWHC 1273 (Fam)

The Combined Court Centre
Oxford Row

4th February 2015


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MF (Applicant)
SF (Respondent)
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Transcribed from an audio recording by
J L Harpham Limited
Official Court Reporters and Transcribers
55 Queen Street
Sheffield S1 2DX
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MISS SAXTON (instructed by Lake Legal) for the Applicant:
MISS HARRISON QC (instructed by Slater and Gordon) for the Respondent
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4th February 2015

1. This is my judgment determining the Wife's financial remedy application.  The Wife is represented by Miss Harrison QC; the Husband is represented by Miss Saxton. 

2.  Before summarising the issues in the case, I propose to summarise the factual background.  In setting out that background I include some disputed facts which I will address, to the extent necessary, later in my judgment.

Factual Background
3. The Husband is aged 53 and the Wife is aged 45.  They met in the early 1990s and married in 1995.  They separated in July 2012.  They have two children, now aged 17 and 14. 

4.  During the course of the marriage they lived in a number of properties.  The final matrimonial home was sold in July 2013 for £1.35 million gross, approximately £810,000 net.

5.  The Wife is a beauty therapist.  She gave up full-time work when the parties elder child was born.  Since then she has occasionally provided beauty treatments at the matrimonial home on an informal basis.  She has not undertaken this since the end of the marriage.

6. The Husband is a chartered accountant.  He Started working as Finance Director for a group of companies called the TS Group ("TS") in 1993.  TS is a private family company owned by or on behalf of the M family.  In 1993 EM was running the company.  He was succeeded as Managing Director by his son PM, on a gradual basis between 2002 and 2007.  The company is involved in property development.  One of its more significant investments was in Europe, called Z Centre. 

7.  The Husband's final position in TS was as Finance Director, formally, of Z Centre Asset Management Ltd.  He received a very substantial level of remuneration totalling, up to, between £500,000 and £600,000 per year gross, part paid by way of direct salary and part, a substantial element, paid by way of consultancy payments to a company owned jointly by the Husband and the Wife called X Property Services ("XPS").

8. The Husband's shareholding in a company called ABC 2011 Limited has been a major issue in the case.  On 26th March 2010 the Husband received a joint interest in 192 shares held by PM in a company.  This was under a Joint Ownership Equity scheme ("JOE").  It appears that EM had previously promised a number of employees involved in the European project, but not including the Husband, that when TS's interests in that project was realised they would benefit.  The Husband persuaded PM that he should also be rewarded in some way.  This led to him receiving the joint interest to which I have just referred.

9.  In January 2011 the Husband exchanged his JOE interest for shares in a new company called ABC 2011 Limited.  The Husband received 13.14% of the issued shares and PM received the balance of 86.86%.  These shares were issued to the Husband at a value of £4.2 million.  This is the value referred to by TS, for example, in their Replies dated 21st February 2013 and also by the Wife's expert accountant in her first report of 5th April 2013 (at paragraph 35).

10. There are two shareholders agreements relating to these shares.  The first is dated 31st May .  At that time RT, a chartered accountant who has had considerable involvement in aspects of this case, was employed by Ernst & Young.  The solicitors instructed to draft the agreement were Addleshaw Goddard.  RT became employed by TS in April 2012.  The second shareholders agreement is dated 20th December 2012.  There is also a deed of rectification dated 16th July 2013. 

11.  Between May 2011 and February 2012 TS lent the Husband approximately £1 million.

12. In September 2012 the Husband was made redundant by TS.  This is one of the elements of the history which the Wife does not accept.  She asserts that the Husband's redundancy was not "genuine".  How it was said not to be genuine was never clearly explained.  The allegation is wrapped up in a more general allegation made by the Wife that the Husband, "Is colluding with TS and has reached an agreement with them that post divorce he will receive a substantial settlement from them."

13.  Following the Husband being made redundant he was paid, either directly or through XPS, a gross total of approximately £610,000, net approximately £410,000.  Of this £220,000 was paid in September 2012.  £173,000 was paid to XPS which was then largely spent by the Husband on completing a development project.

14. The parties set up XPS in 1998 and its subsidiary, IHC 2833 Ltd., in 2003 (I will refer to them as "XPS").  XPS has engaged in property development.  The parties entered into a shareholders agreement on 26th April 2010.  However, in fact, both before and after this agreement these businesses were managed by the Husband to the effective exclusion of the Wife.  Of relevance, also, is the fact that in December 2006 XPS entered into a 10 year interest rate swap agreement with HSBC.

15.  The value of XPS has been the subject of expert evidence in these proceedings.

16. Between September 2009 and October 2010 XPS borrowed £300,000 from Mrs. T, the Wife of  RT.  Interest is payable.  On 31st July 2013 the loan was assigned to TS.  It currently stands at approximately £368,000 with interest accruing. 

17.  In addition XPS borrowed £425,000 from TS, interest free, in July 2013.  The Husband's case is that this sum was borrowed to procure the discharge of the swap agreement which, given the loss of XPS's consultancy income, was causing XPS considerable financial difficulties.

18. On 20th May 2013 the Husband obtained new employment with a company called ST Investment Ltd. in London.  His initial salary was £250,000 per year gross.  This increased in January 2014 to £254,000.  In addition he received a net bonus of £30,000 in March 2014.  His current net income is approximately £12,100 per month or £145,000 per annum.

19. In 2006 the Husband set up or bought a bicycle shop which has traded as F Company Sports Ltd.  This was initially modestly successful but it has been making losses over the past 3 years: £22,000 in 2012, £35,000 in 2013 and £51,000 in 2014.  The company overdraft has been guaranteed by the Husband up to £35,000.  As at 20th November 2014 the overdraft stood at £35,500.  In addition, the Husband invested £150,000 in F Company which he borrowed from RBS.  Of this, £120,000 remains outstanding.

20.  The latest balance sheet for F Company is dated 31st October 2014.  This shows total net assets of approximately £117,000.  By far the largest asset is stock valued at £164,000.  If the shop were to cease trading it is clear to me that the amount likely to be received in respect of the stock would be significantly lower than the figure of £164,000.

21. The parties agree that the marriage was in difficulties for some time before they separated finally in July 2012.  It was clear from the Wife's evidence that she became suspicious about the Husband's financial affairs prior to that date.  This may, in part, have resulted from the fact that the Husband ran XPS and generally took financial decisions with little involvement from the Wife.

22. The Wife's matrimonial solicitors' costs total £556,000, of which she has paid £503,000, in part by borrowing £150,000 from her parents, leaving £53,000 unpaid.  The Wife has also incurred costs in instructing commercial solicitors, Hewlett Swanson, and their costs are £62,400.  In total, therefore, the Wife has incurred costs of £618,000. 

23.  The Husband's costs total £363,000 of which he has paid £211,000 leaving £152,000 unpaid.

24.  The parties have, therefore, between them spent £980,000 on legal costs during the course of these proceedings.  I will have to address later in this judgment the extent to which this level of expenditure has been justified or has been proportionate.

25. Turning to the issues in the case: the parties have raised a broad range of issues but the major ones are as follows.

26.  The Wife's case is based principally on there being, what can only be described as, a broad-ranging conspiracy between the Husband and TS, through its Managing Director PM and its Group Tax Director RT.  They are said to have conspired or colluded from about the middle of 2012 to deceive the Wife and subsequently the court as to the Husband's true financial position.  The specific elements are:

(i)  Falsely pretending to make the Husband redundant in September 2012 whilst reaching a secret agreement with him that he will receive a substantial settlement and/or consultancy work in the future;

(ii)  Asserting that the Husband owes TS approximately £1 million, when he does not;

(iii)  Asserting, falsely, that the value of the Husband's shares in ABC 2011 should be calculated by reference to net asset values when the full agreement between the Husband and PM provides otherwise.

27. In addition, the Wife seeks to reattribute to the Husband the sum of £137,000. 

28.  The Wife's open offer, made on 15th January 2015, proposes that the Wife should receive total capital resources, excluding a 50% pension share, of approximately £3.8 million.  This offer is based on the Husband's shares in ABC 2011 being worth £6 million net. 

29.  The Wife's primary case appears to remain that the Husband's shares in ABC 2011 are worth at least this amount, if not more.  However, based on the current offer made by PM, of approximately £2.66 million, an alternative case is advanced on her behalf.  On this case, the Wife seeks a total of £1.28 million, being half the asserted capital resources of £2.56 million, plus a 50 percent pension share, giving a combined total of £1.67 million.  In addition, the Wife seeks maintenance of £50,000 per year, £30,000 for herself and £10,000 for each child, her maintenance being on an open-ended basis.

30. The Husband's case is that the capital resources total £3.1 million, less potential liabilities in respect of F Company.  He submits that there should be a notional equal division, i.e. approximately £1.5 million each, but that to arrive at a fair outcome there should be a number of additional adjustments in his favour.  He proposes total maintenance of £36,000 per year plus school fees and proposes that a term should be imposed in respect of the Wife's maintenance.

31. The adjustments sought by the Husband in his favour are sought to reflect, in particular, the Husband's case as to litigation conduct and costs. 

32.  The first is the sum of £177,000.  This represents half of £354,000, said to be the difference between the offer made by PM to purchase the Husband's ABC 2011 shares in January/February 2014 and his current offer.  It is submitted that the earlier offer was unreasonably rejected by the Wife and that, as a result, the parties have lost the sum of £354,000.

33. The second adjustment sought is in respect of the disparity between the parties' costs, namely £618,000 against £363,000.  During the course of her submissions, Miss Saxton was working on the basis that the Wife's costs were £556,000.  On that basis she is seeking an adjustment of £93,000 from the Wife's notional half share to reflect this disparity.

34. The third adjustment is the sum of £27,500, being half of the costs paid to TS in respect of their costs of providing information. 

35.  Both parties, in addition, have made submissions in respect of the costs of these proceedings.  The Wife seeks a substantive order in her favour based on a number of grounds.  The Husband seeks an order that the Wife pays £150,000 towards his costs.  I will address costs at the conclusion of this judgment.

36. Turning now to the parties' resources. 

37.  The agreed assets comprise the following:

(a) The remaining net proceeds of sale of the former matrimonial home, now, £424,000.  The balance has been spent, principally if not entirely, on the parties' legal costs.

(b)  The net equity in a property in Spain of £366,000. 

It is agreed that the Wife should be awarded both these assets.

(c)  A berth in Morocco with a notional value of £35,000.  What it will ultimately realise is somewhat speculative as it has been on the market for sale for some time.

38.  (d)  A property at 1 England Avenue.  This has not been valued.  At the commencement of the hearing the gross value ascribed to this property in an agreed schedule of assets was £180,000.  On this value, it currently has a negative equity of £73,000.  The property is rented but the costs, mortgage and service charge exceed the rental income by approximately £4,000 per year. 

39.  During the course of the hearing, it became apparent that the Wife did not in fact agree the value at £180,000.  An estimate of value from an internet site was produced by the Wife. 

40.  This issue was raised far too late and in a very unsatisfactory manner.  I cannot base any finding on the internet estimate.  I propose to use the value which appeared in the agreed schedule which, in my view, gives a sufficient indication of the likely value of this property.

41.  Miss Harrison further submitted that, in any event, I should not make a deduction in respect of the negative equity because it is a liability which may never crystallize as the property is not going to be sold.  In my view that argument is flawed.  I have to draw up an asset schedule for the purposes of determining what award is fair.  As a general principle, in any such schedule, I have to include both assets and liabilities as they now stand.  There is nothing in respect of this liability which justifies departing from that general principle.

42.  (e)  XPS has been valued by the parties' respective accountants by reference to the extent to which the parties' directors' loan account is likely to be repayable.  Based on the current offer made by PM (referred to below) the accountants agree that the amount recoverable by the parties will be between approximately £1.5 million (in the event of the business being liquidated or if the properties are sold in one lot) and £1.9 million on the basis the properties owned by the business are sold over time and subject to the tenancies.

43.  (f)  The parties have other assets totalling together £21,000, £5000 for the Husband and £16,000 for the Wife (if her jewellery is included).

44.  (g) The parties have agreed liabilities including unpaid costs of, respectively, £160,000 for the Husband and £203,000 (or possibly a bit more) for the Wife.  The liabilities relate, very largely, to the costs of these proceedings.

45. The net assets as listed above total between £1.9 and £2.3 million.

46.  The Husband's pension has been valued at £786,000.

47.  The combined total is between £2.7 million and £3.1 million.

48.  The disputed assets and liabilities are as follows:

(i)  £17,000, said to be due from the Husband in respect of a property development in Spain called La Corta;

(ii)  The Husband's liabilities, of £35,000 and £120,000, in respect of F Company;

(iii)  The value of the Husband's shares in ABC 2011 Ltd;

(iv)  Whether there are, and if so their extent, loans due from the Husband and/or XPS to TS;

(v)  The Wife's reattribution case in the sum of £137,000.

49. I propose to deal, very briefly, with the La Corta debt and F Company.  As to the former, the Husband has produced an email which States that he owes £17,000.  I accept that he has this liability.

50. As to F Company, I consider it probable that the Husband will have a liability in respect of his guarantee and the outstanding loan which together total £155,000.  The evidence does not enable me to determine anything other than an approximate figure of what his net liability will be when set against F Company's assets.  I propose to include a liability of £75,000 in respect of F Company on the basis that it will cease to trade shortly.

51.  Deducting the above sums gives total capital resources, ignoring the other disputed issues, of between £2.6 and £3 million.

Proceedings and Final Hearing
52. These proceedings were commenced in September 2012.  I do not propose to set out the detail of their progress since then.  It is clear to me that they have taken this long because of the pursuit by the Wife of the issues raised by her and referred to above. 

53.  I deal with the substantive issues raised by the parties below.  In doing so, I do not propose to address many of the myriad details and points raised in the evidence and the submissions.  I have, of course, taken all the evidence and the submissions into account when determining those issues and when exercising my discretion but it would be disproportionate to seek even to record them all in this judgment. 

54.  At this hearing I have read all the documents to which I have been referred.  I have heard extensive oral evidence from the Husband, the Wife, PM, RT and the parties' respective accountants, Mr. Wilkinson on behalf of the Husband and Mrs Howe on behalf of the Wife.  The accountants have both provided a number of written reports and a number of schedules setting out what is and what is not agreed between them.

55. In determining the factual issues raised, I have weighed both the written and the oral evidence.  I have also sought to analyse the way in which these issues have developed for the purposes of addressing the Husband's case in respect of the adjustments he seeks to an equal division of the family's capital resources.  I have done this in order to seek to look at the case, as it developed, from the Wife's perspective to determine whether her conduct has been such as to justify making the adjustments sought by the Husband and, if so, to what extent.

56. I deal at some length with the major issues raised, in particular, by the Wife.  However, before doing so I propose to set out my assessment of the witnesses.

The Witnesses
57.  The key witness in respect of the Wife's allegations is PM.  I found him a transparently honest witness.  Indeed, one of the inconsistencies at the centre of the Wife's case is her approach to PM.  She said in her oral evidence that he is an honourable and very decent person.  Yet her case depends on his being involved in presenting a false case, as was also made clear during her oral evidence, when she agreed that he has to be in on the collusion. 

58.  I accept PM's evidence that he and/or TS were not in any way involved in collusion (to present a false case), in particular, in respect of the Husband's redundancy, the value of his shares in ABC 2011 or in respect of the loans said to be due to TS.

59. During the course of his evidence PM described TS as being a small private company run on an informal basis.  He explained that they do not, for example, keep minutes of meetings.  At one point in his oral evidence he said that he did not recall a particular email but that he did recall discussions and principles.  I accept his evidence on these matters as well as on the other issues as referred to above.

60. I found the Husband to be a generally reliable witness.  There was nothing in his evidence which suggested that he was putting forward a false or inaccurate case.

61.  The Wife was also an honest witness.  However, it is clear that her whole approach to these proceedings has been governed by her suspicion of the Husband which developed before the parties separated.  She has a deep distrust of the Husband such that she has, in my view, been unable to bring any sensible objectivity to this case.  From her perspective events are described as "strange", "odd" or "bizarre" because she believes the Husband, in collusion with RT and PM, has been acting to diminish or defeat her claims.

62. It was not at all clear to me during the course of the hearing that the Wife appreciated the seriousness of the allegations she was making against PM and RT.  Her case amounts to an allegation that they have sought to pervert the course of justice by giving the court false evidence.

63.  The Wife's suspicions are, in part, founded on a belief that the Husband was planning for the parties' divorce for some considerable time before they separated.  She relies on the fact that he consulted his present solicitors on occasions from December 2011.  She also relies on the Husband making, what has been called, a salary sacrifice (of £100,000) for the year 2012/2013.

64.  In or about April 2012 the Husband asked TS to reduce the salary he was paid by £100,000 and, instead, pay this into his pension.  The Wife alleges that this was a tactical step designed to prejudice her in subsequent divorce proceedings.  The allegation clearly first requires the Husband to have anticipated that the parties would separate in 2012 but, more importantly, it would also require the Wife to have been prejudiced by this  step.  I fail to see how the Wife sustained any significant prejudice as a result of the salary sacrifice.  The Husband's total gross income directly and through XPS remained approximately £445,000, even after the salary sacrifice.  The sacrifice was also only for one year. 

65.  Although I accept the Husband's evidence that he considered this a sensible tax efficient step, given that the top rate of income tax was then 50%, the important factor is that, even if the Husband's ability to pay maintenance might have been reduced in the period July 2012 to April 2013, this would have had no significance in the longer term.  This is an example of how the Wife builds on a point and develops it out of all proportion.

66. RT was somewhat defensive during the course of his evidence.  This may well reflect the fact that he was largely responsible for preparing the shareholders agreements which have been the subject of some scrutiny.  In addition to being defensive, RT also, at times, demonstrated what I considered to be an unexpected self-confidence touching almost on arrogance.  He was in my view more confident of his evidence than was justified. However, despite these weaknesses I accept the core elements of his evidence and I have no doubt that he was a truthful witness.

67. As with many cases, the evidence given by the witnesses was not always consistent.  In particular, for example, the Husband, PM and RT gave different accounts as to the number of meetings there were when dealing with the Husband's redundancy.  The Husband says there were two meetings (on the 12th and the 18th), PM and RT only recall one.  I refer to this in order to make plain that I have taken these differences into account when assessing the evidence and reaching my conclusions as to the reliability of the witnesses.


68. Turning now to the first substantive issue which I propose to address, namely the Husband's redundancy.

69.  The Husband asserts that he was made redundant in September 2012 and was paid, directly or through XPS, a gross total of over £600,000. 

70.  The Wife's case as advanced in her statement is that: "I simply do not believe that [the] redundancy was genuine."  The following reasons are advanced in support of this contention:

(a)  At no point prior to the parties' separation in July 2012 did the Husband give any indication that anything was other than "good" at TS;

(b)  The timing of the redundancy "seems terribly convenient";

(c)  Why, if TS's business was so bad, did they award the Husband shares only to make him redundant a year later?'

(d)  Why did the Husband accept a redundancy package without legal advice or negotiation?  "He would not simply have walked away lightly if the redundancy was genuine", given that he was wedded to the company and had a very close relationship with the M family and RT.

(e)  The Wife finds it "bizarre" that TS paid the Husband significant sums before any compromise agreement was signed;

(f)  In summary, the Wife relies on what she says was: "The quite bizarre way that [the] alleged redundancy was dealt with and how substantial amounts of money were released to him without the signing of a compromise agreement."

71. The Wife then adds what she describes as "shocking and unexplained revelations."  These comprise: that the Husband had entered into a loan agreement with TS; that he had borrowed the further sum of £425,000 from TS; and that Mrs. T's loan to XPS had been assigned to TS.  Other matters are relied upon, such as the Husband's expenditure following his redundancy, suggesting that he had more confidence in his future than the evidence would suggest was justified; the absence of proper records; and, as I have described, inconsistent evidence about the number of meetings and what happened at one meeting.

72. In her oral evidence, the Wife reluctantly agreed that TS will probably not employ the Husband again in the future.  But, she said, he might still act as a consultant in the future.  She "could imagine that this could happen."

73. I have reached a clear conclusion in respect of this issue.  The Wife's case bears no scrutiny.  The points relied on by her do not support the conclusion that the Husband's redundancy was not genuine.  Rather, they reflect her suspicion and distrust.  They do not begin to support a conclusion that TS and the Husband contrived to create a fictitious redundancy.  This would have required TS to pay in excess of £600,000 for no reason.  Why would TS pay this sum if the Husband was not being made redundant?  The Wife's case has no answer to this simple question.  Further, the Husband has been employed by another employer full-time, at a substantial salary, since May 2013.

74. I accept the evidence of the Husband, RT and PM that the Husband was shocked when he was told he was being made redundant.  I also accept the Husband's evidence that he considered the financial package he was being offered was reasonable and one which he should accept.  He accepted what PM said about the business and about the reasons for his being made redundant, as it was reasonable for him to do because, as everyone appears to agree, PM is an honourable person.

75. I, frankly, agree with the word used by PM to describe this allegation, namely "ludicrous".  Although, in my view, I do not need to address this issue further I propose, additionally, to deal with some of the evidence from 2012, in part (as I have said earlier in this judgment) to look at it from the Wife's perspective at that time.

76.  The Wife's solicitors were first told that the Husband was being made redundant by letter dated 21st September 2012.  The letter refers to a meeting said to have taken place on 18th September 2012, at which the Husband had been handed a letter dated 13th September, and to the Husband having been advised previously on 12th September that he was under threat of redundancy.  The Husband was said to be shocked at this development.

77. The letter dated 13th September 2012 is clearly from TS.  It is a letter to the Husband and written by RT as Group Tax Director and Family Trustee.  The letter is headed "Circumstances Surrounding Redundancy" and reads:

"Further to our recent discussions I can confirm that we have made a decision to reduce the activities of the group and as a consequence are looking to significantly reduce costs.  We have established that, by reducing the roles and recognizing the future requirements, we can cut costs by £2 million per year and therefore we have sought to reduce these costs as quickly as possible.  The key cost reductions are as follows ..."

It then identifies three points, reducing costs from property letting agents, closing one office and retaining only one of a five member property team.

"Finally, we recognise that in light of the reduced activity and a need to further reduce costs that the senior financial resource needs to be reduced and as such the role of FT, FC and Treasurer will be combined with a salary commensurate to the future role offered.  This means that costs can be reduced by a further £600,000 per annum.  This means that your role along with two others in the financial team will become redundant and we serve notice to you of our intentions. 

Likewise we have notified you that we intend to terminate the arrangements with X Property Services Ltd. with immediate effect.  In the case of the consulting contract there is no notice term so we can cancel with immediate effect, however believe that 6 months notice is more appropriate.

It is with great regret that we take these actions and the family fully recognises the great job you have done over the last 20 years and hope that you will understand the reasons for this decision and would wish you the very best for the future in your own business endeavours.

We will of course help with the references and recommendations as much as we can.  We will also pay the full notice period of 2 years with immediate effect unless you conclude that it will be preferable to receive some of the pay in a different tax year. 

In the case of your share interest in ABC 2011 Limited you will be aware that the current value is extremely low at the moment and the shareholders agreement provides for an option to acquire your shares in the event of termination of your employment and we will therefore need to discuss this when we meet."

78. The letter from the Husband's solicitors states that he proposes to use the first £150,000 paid to meet interest payments and other corporate obligations of XPS.  Reference is made to the importance of maintaining XPS.

79. The Wife's solicitors responded by letter dated 3rd October 2012.  The letter raises a wide range of questions including seeking copies of minutes and other documents.  It is a letter which appears designed, in part, to seek to establish whether a fair procedure was followed as though this was an employment case.  It also refers to the "apparent" (I emphasise) "termination of your client's employment", seemingly ignoring the clear terms of the letter from TS as quoted above.  It also seeks an undertaking that redundancy monies be held by solicitors until resolution of financial matters.  No specific justification for this latter request is advanced.

80. Pausing there, the letter from TS of 13th September makes clear why the Husband, along with others, is being made redundant and that he is being made redundant.  I fail to understand why the contents of this letter were not accepted.  There is nothing in it which indicates that it might be part of a conspiracy to create a false picture, namely to assert that the Husband was being made redundant when in fact he was not.  However, the contents of that letter were not accepted and the Wife has relied significantly on inaccurate information, which was then provided, as to the manner in which the Husband was to be paid the sums due on his redundancy.

81. On 4th October 2012 the Husband's solicitor sent a summary and schedule (provided by RT) of what the Husband had received and would receive.  It is a summary of the terms of the proposed settlement in respect of the Husband's redundancy.  They include converting his existing loan, in excess of £1 million, into an interest-free loan which will be repayable when the Husband's shares in ABC 2011 are realised.  Importantly in my view, given that this document emanates from TS, it is asserted that the shares have "minimal value", which mirrors what was said in the letter dated 13th September 2012.  The reference to minimal value is in the context of TS being entitled to exercise their right to buy the shares, "But we are prepared to extend those terms to 5 years from now."

82. The letter was inaccurate as to the monies the Husband had by then received.  It stated that he had received only £64,500.  He was said to be entitled to a further £185,000 and that XPS was to be paid £172,350, but neither until April 2013.  In fact, by 4th October 2012, XPS had already been paid this sum.  The schedule, itself, refers to "Consultancy Paid" (my emphasis) but this entry appears under a column headed April 2013.

83.  The errors were corrected by letter dated 30th October 2012 in which it is also said that the monies paid to XPS have been used to complete the development of two townhouses.  In addition, an apology from TS is provided for any confusion caused by the previous information supplied by them.

84.  That, in my view, should have been the end of this issue.

85. On 20th December 2012 the Husband and TS entered into a compromise agreement. This states that the Husband's employment "Terminated by reason of redundancy on 30th September 2012."  The Husband's total compensation is £441,000 which excludes the payments made to XPS.  It is also provided that the 2011 shareholders agreement will be amended to permit the Husband to retain his shares for a further 5 years.

86.  The Wife's case, of course, requires that this document is also false.  One of the issues relied on by the Wife is the absence of other documentary evidence from TS.  I will deal with this issue later in this judgment.

87. It is abundantly clear that the Husband's redundancy was genuine and that it should always have been accepted as genuine by the Wife.  As I said above, it is not clear to me that the Wife appreciates the effect of her allegations.  If the Husband's redundancy was not genuine the Husband, PM and RT would have been engaged in a broad-ranging conspiracy from at least September 2012.  They would have had to agree to present a false case to the Wife and subsequently to the court.  The conspiracy would have encompassed the preparation of false documents including the letter of 13th September 2012, the summary and schedule and the document headed "Proposed Terms of [the husband's] Exit."  They would have had to have been false because they were predicated on the Husband being made redundant, when it is the Wife's case that this was a false presentation and that he was, in fact, not being made redundant.

88. I do not suggest that such a situation could not arise.  But what is the evidence which supports such an allegation in this case?  Frankly, it is mere groundless suspicion and I reject it.  The points relied upon by the Wife neither individually nor collectively bear the weight necessary to establish her case and in particular do not begin to undermine the assertions made in the documents provided by TS in September 2012 which make it clear that the Husband was being made redundant and the reasons for it.

89. The next issue I propose to address is that of the loans.  As with other issues raised by the Wife, she relies on inconsistencies such as whether interest is or is not payable and the absence of documents.  She also relies on the fact that a loan made to the Husband by TS in tranches between 1996 and 2005, and ultimately totalling £1.075 million, was later assigned to the Husband's EBT sub-fund.

90. Turning to the specific loans.  As referred to above, between May 2011 and February 2012 TS lent the Husband approximately £1 million.  The Wife alleges that the loan is not repayable or raises questions about whether it is repayable.  This allegation rests on a number of points.  For example, that the Husband asserts that the loan was initially subject to interest while the ABC 2011 accounts (for the year ended 31st December 2011) refer to that part of the loan which had by then been provided, namely £783,000, as being interest free.

91.  In Mrs Howe's report dated 7th July 2014, she refers to the fact that provision was made in respect of this loan in the accounts for the year ended 31st December 2012.  TS asserted in replies dated August 2013 that this did not reflect a write-off or any release of the Husband's liability but reflected a concern over its recoverability.  Mrs Howe questions the validity of this concern and as a result asserts that "In my view the loan write-off in the accounts would suggest that the Husband is indeed being released from his obligation to repay the loan."

92. This view or suggestion requires TS's direct assertions to be rejected.  These included by letter dated 15th May 2013 in which TS sets out "outstanding loan balances".  This letter lists the sums said at that date to be due from the Husband to TS which then totalled £1.072 million.  £1.009 million was due in respect of monies paid in the period up to February 2012, £53,000 in respect of a car loan and £10,000 in respect of cash held by the Husband.  Further, the Husband's P11D for the year ended 5th April 2012 includes a loan interest benefit, referable to the sums totalling £1 million which he had received.

93. The Wife's solicitors, by letter dated 9th January 2014, boldly assert that TS's attempts to "reduce the value of shares by deduction of loans" are rejected.  This is on the basis that the loan agreement came after the Husband was made redundant; that the loan to XPS was made without the Wife's knowledge and was not reasonable; and, finally, that the veracity of the transfer of the loan from Mrs. T is not accepted.

94. The assertion that the deduction of the loans was an attempt to reduce the value of the shares was entirely misconceived.  All TS was seeking to ensure was that its loans, if loans they were, were repaid.  The other reasons put forward for rejecting the loans are inconsequential.  Whether the loan to XPS was reasonable or known to the Wife was nothing to do with TS.  I can also see no basis for the assertion that the veracity of the loan being transferred could be questioned.  Why would this undermine the existence of the loan?

95. In her closing submissions Miss Harrison refers to the absence of any loan agreement or share pledge, as required by the shareholders agreements, and to the loan agreement dated 21st September 2012 being inconsistent.  It provides for interest, when it was agreed that interest would not be payable.  It also has, what can only be described as a strange clause, referring to the borrower ceasing to be part of the group.

96. Addressing this loan, first it is clear that TS lent the Husband in excess of £1 million in the period up to February 2012.  Does the evidence establish that at some point since February 2012 TS has agreed to waive this loan?  In my judgment none of the points advanced by the Wife support such a conclusion.  I can again see no reason why TS, through PM and RT, would lie about this.  Nor why, if there was an agreement to waive this loan, this would not have formed part of the Husband's redundancy agreement.  To repeat, I can see no reason why TS would lie, for example, in the letter dated 15th May 2013 which sets out the outstanding loan balances.  Accordingly, I find that the Husband owes TS £1.072 million.  I have added the sums of £53,000 and £10,000 as I also accept that they are loans which are repayable.

97. The Wife accepts that the other loans, being the £425,000 lent in July 2013 and the T loan assigned to TS, are loans which remain payable.  In fact, TS has agreed to include these loans as part of the consideration for PM's purchase of the Husband's ABC 2011 shares.

98.  I should, perhaps, also address the Wife's assertion that these loans or their existence were "shocking and unexplained revelations".  This is, in my view, an assertion without substance.  As to the latter (the T loan), the Wife alleges that the Husband "denuded the finances" by repaying RT and assigning the loan to TS.  This is an illogical assertion as he could not have done both.  In respect of the T loan, the Wife sought to raise questions about it, again based on the lack of documents.  It was suggested that this was not a commercial arms length arrangement.

99. None of these points address the core issue of whether Mrs. T had lent XPS money and why, if she had, it is not a debt which would need to be repaid.  The evidence demonstrates, and it is indeed accepted, that she lent XPS £300,000.  There was clearly some talk at some point about Mrs. T being given preference shares but it is equally clear that this never happened.  There is no evidence to suggest that this was not a debt which remained repayable.

100. What of the Wife's complaint that she did not know in advance about the assignment of the loan to TS?  This, with respect, is of no consequence as it was largely, if not entirely, a matter for Mrs. T and TS.  In fact, in my view it is an example of why PM is correctly described as a very decent man.  He did this to help the Ts and the Husband and the Wife.

101. The same applies to the loan of £425,000.  The schedules produced by the Husband demonstrate the potential liquidity problems facing XPS in 2013.  Paying off the swap agreement with the sum of £425,000 significantly addressed these problems.  The Wife has questioned why TS would have lent XPS £425,000 at this time when they were already owed a significant sum by the Husband.  The simple answer is that this is, yet again, an example of PM being a very decent person.  As he explained in his evidence he wanted to help the Husband and the Wife.  He had known them for a long time and the Husband had done a great job for the M family.  He did not want to see them get into financial difficulties. The Husband had asked him for help and he agreed to lend him the money to help them out.

102. The Wife's assertion in her statement that there is no evidence of the necessity to discharge the swap liability is unfounded.  On this and on other issues the Wife criticised the Husband for failing to consult her or failing to inform her about what he intended to do.  There is of course an obligation on parties engaged in financial proceedings to give full and frank disclosure.  Further in this case, the parties were joint shareholders of XPS. 

103.  However, in my view, the extreme nature of the Wife's lack of trust in the Husband would have made it impossible for them to work cooperatively in managing XPS or making other financial decisions together.  When I asked the Wife whether she thought they could have worked cooperatively together she said that she would have listened to everything she was told and would then have taken and heeded advice.  This answer highlights the problems and costs which would have resulted. 

104.  I will give an example of the likely consequences if this course had been followed.  First, however, I should make clear that there is no evidence other than that, in his management of XPS, the Husband has acted appropriately and in the interests of these parties. 

105.  The example I give is what resulted from the Wife taking advice from commercial solicitors.  In July 2013 the Wife instructed a separate firm of commercial solicitors, Hewlett Swanson, to act on her behalf in connection with issues arising out of the XPS shareholders agreement which, as I have said, was signed by the Husband and Wife in April 2010.  Their costs are approximately £62,000. 

106.     Their first letter is dated 29th July 2013.  This requires the Husband, within 14 days, to procure that XPS (i) pays the Wife £418,000; and (ii) pays into a designated joint account £512,000, so that the Wife can withdraw her entitlement of £256,000.  It is asserted that these payments are required to remedy breaches by the Husband of clauses in the XPS shareholders agreement.

107. As to the former sum, this is based on an analysis of the director's loan account for 2011, 2012 and 2013.  Because drawings above £150,000 should, pursuant to the agreement, have been distributed in equal proportions it is calculated that the Wife is owed £418,000..  As to the latter, this is based on the agreement requiring consultancy payments to be paid from XPS into a joint bank account.

108.  This letter wholly ignores the fact that the affairs of XPS had never been conducted by the parties in accordance with that agreement.  The Husband, as I have described, had effectively managed the business with little reference to the Wife.  There is, I repeat, no evidence to suggest that he has managed it otherwise than properly and appropriately when assessed from the perspective of the financial interests of the family as a whole.  There is also no evidence that the Husband unreasonably spent the sums drawn from XPS or the consultancy fees paid into XPS.  The letter wholly ignores this aspect as well, namely how the money had been spent.  I will deal separately with the Wife's add-back claim.

109. The case advanced by Hewlett Swanson is not a claim based on dissipation.  This can be seen, by way of example, because the payments made by the Husband and included in the analysis include tax payments.  It is claim solely based on alleged breaches of the shareholders agreement.  A brief answer from the Husband's solicitors led to Hewlett Swanson asserting that, if XPS could not pay its debts, being the sums due to the Wife, it must be insolvent.  As this was the responsibility of the Husband, he was liable to the Wife and/or XPS for misfeasance, negligence and/or breach of fiduciary duty.

110. A meeting took place on 11th September 2013.  This was attended in person by the Husband.  The Wife was represented, it seems, by four people from two different firms neither of which were her matrimonial solicitors.  During the course of this meeting one of the Wife's legal advisers suggested that the Wife had a valid claim of approximately £1 million against the Husband and XPS. 

111.  I have struggled to identify any benefit to the family of the case advanced and the proposals made through Hewlett Swanson.   I can identify none.  Indeed the requirement that XPS should immediately pay £674,000 to the Wife was (a) completely unrealistic, and (b), if attempted, would have been to the financial detriment of XPS and the family as its assets would have had to have been realised, effectively, by a fire sale.  The assertion that XPS might be insolvent was also, clearly, not in the interests of the family.  This was followed up with a request for the appointment of an insolvency practitioner to advise the Board.

112. Fortunately, none of the steps referred to in the correspondence or at the meeting were actually taken.  If proceedings had been taken or an insolvency practitioner appointed, I have no doubt, as I have just said, that these would have been to the detriment of the family, especially as XPS is now worth a considerable sum.  This expensive diversion demonstrates clearly to me that there was never any prospect of the parties being able to co-manage XPS.

Value of Husband's ABC 2011 Shares
113. Turning now to the value of the Husband's shares in ABC 2011. 

114.  The Wife's case, at the outset of this hearing, was that the Husband's shares are worth £8.5 million gross, £6 million net.  This is based on the shares being valued by reference to the second shareholders agreement (without reference to the deed of rectification) and to an undisclosed commercial agreement between the Husband and PM to the effect that the maximum value of the shares would not exceed £10 million.

115.  In Mrs Howe's report of 7th July 2014 she gives an average value of £8.2 million based on the value of a subsidiary, ABCL, (ignoring debts to other M entities) and based on a fair value of an interest rate swap liability rather than its actual liability.

116. The Wife's case, briefly summarised, is that PM has agreed to pay the Husband an amount for his shares that is not based on net asset values.  The value is to be calculated by reference to gross property values or gross proceeds of sale pursuant to the terms of the shareholders agreements (excluding the deed of rectification) and an undisclosed agreement under which a ceiling is imposed.  Under these agreements the Husband can, and on current values would, receive a sum very considerably in excess of 13.14% of the net asset value of the company.  This factual conclusion is said also to be supported by the content of emails written by RT in January 2011 and other documents, principally a shareholders agreement checklist.

117.  The Husband's case is that the shares are worth £157,000 or thereabouts based on net asset values but that PM has offered to purchase them for a sum very substantially in excess of this, namely (now) approximately £2.664 million gross.

118. During the course of these proceedings PM has made a number of offers to purchase the Husband's shares in ABC 2011.  As referred to above, in September 2012 the value of the shares was referred to in documents emanating from TS as being of "minimal value".  This is said by the Wife to be part of the false evidence advanced by TS to diminish or defeat her claims.

119.  By letter dated 25th November 2013 PM offered £2.85 million.  The letter explains why a sum considerably in excess of their actual value is being offered.  In part this is so as to give the family the ability to repay the sums due to TS.

120.  This sum was increased to £3.15 million in January 2014.  This offer remained open for acceptance until 15th February 2014. 

121.  In her statement dated 3rd December 2014 the Wife says that she did not accept the Husband's then offer, which was based on accepting the TS offer, "for the simple reason that I do not trust MF."  She adds that she believes the Husband will sell his shares at an undervalue for the purposes of these proceedings and "ensure that he would receive full value for himself."

122.  A further offer appears to be made in July 2014 of £3 million.  The final offer was made through RT's statement dated 15th of January 2015.

123. These offers have clearly, and I would add perversely, encouraged the Wife in pursuing her case in respect of the value of the shares.  Why, she has asked, would PM offer more than they are worth?  PM was obviously deeply offended by the suggestion, only directly put to him by Miss Saxton, that he might be colluding with the Husband to pay him more money in secret.  When answering questions from Miss Harrison he poignantly asked whether, to use his word, "charity" was proving to be the right way, the very good offers he had made having been turned down.

124. Turning now to consider this issue in more detail.  The Husband received his shares in ABC 2011 in exchange for his JOE interest.  It is clear from the evidence that PM left RT to deal with the implementation of the agreed proposal that the Husband should receive these shares.  When PM was asked how much involvement he had had, he responded "Not a lot" because he had left it to RT and the lawyers.

125.  ABC 2011 was set up in 2011.  The Husband received 13.14% of the issued shares and PM received the balance of 86.86%.  In January 2011 ABC 2011 acquired 85.94% of the shares of ABCL for £19 million and 6.45% of the shares in COE Ltd. for £23.2 million.  The latter interest was sold in May 2011 for £23 million.  At that time ABC Ltd owned 4 investment properties which, according to a schedule prepared in January 2011, were worth £234.5 million.

126. ABCL had also entered into interest rate swap contracts given a fair value in the 2010 accounts of £31 million.  These contracts have featured significantly in this case because of their impact on the net asset value of ABCL and accordingly on ABC 2011.  They are currently valued at, very broadly, £71 million.  Fluctuations in the value of these swaps have a significant effect on the net asset value of ABC 2011.

127. I now deal with the 2011 emails which form a fundamental part of the Wife's case as to the value of the Husband's shares.  On 21st January 2011 RT sent an email to PM which was forwarded to the Husband.  A spreadsheet was attached to that email.  This refers to the "proposed" entry into ABC 2011, giving the Husband's shares valued at £4.24 million and PM's shares valued at £28 million.  It is transparently clear that these values are based on net values.  If the Husband's proposed shareholding had been based on the gross values of the properties held by ABCL, as appearing in that schedule, the Husband's shares would have been valued at £31 million, i.e. 13.14% of £234.5 million. 

128.  The email also refers to £10 million as "the top end" and, importantly, to "possible outcomes" and "possible" values.  I refer to the use of this language because these references are wholly inconsistent with the Wife's case.  The email further states: "In terms of future growth in value I have been thinking about whether it is fair that ABC picks up the effective costs of [the husband's] growth given some is arguably a bonus ..."

129.  The schedule refers to the Husband's "current values".  The JOE value is put at £4 million or £7.95 million (depending on the value of Z Centre) to which is added "Bonus due from ABC" giving a "value in its entirety" of £6 million or £9.9 million.

130. In an email dated 23rd January 2011, again from RT to PM and again forwarded to the Husband, RT refers to further discussions he has had with PM.  The email states, "You will see that with these arrangements the value of ABC needs to hit at least £35 million before (the Husband) achieves the £6 million we had discussed as the correct benchmark.  The email refers to "the value you and he (PM and the Husband) have discussed and I know you are comfortable with ...".  It also refers to a cap of £10 million.

131.  The Wife's case places very considerable reliance on the use of the word "benchmark" and the references to a "cap".   However, as quoted above, the email also refers to the value of ABC needing to hit £35 million before the Husband achieves £6 million.  This is, again, entirely inconsistent with the Wife's case, given the then gross values of the properties.  As is the content of the same spreadsheet, which now includes on the second page, what values could (my emphasis) be achieved by the Husband.  The values, which "could be achieved", are dependent upon differing values of what is called old ABC, in other words ABCL.  The spread of values is between £3.8 million to £10 million.  These values are, again, clearly based on the net asset value of ABCL.  They appear under the heading "Potential values to [the husband]."  All these elements are contrary to the Wife's case.  On her case it is, frankly, impossible to understand why these figures would have been included, nor why the values which could be achieved by the Husband are said to be dependent on the value of ABCL.

132. On 24th January 2011 the Husband, in an email to RT, says that he and PM have worked out that he is £1.75 million worse off capped, so he asks "can we leave it as it is". 

133.  At about the same time RT sent an email to PM in which he commented that the arrangements should not be rushed so that PM had enough time to consider them.  The email also refers to the buyout being capped at £8 million, save when the value of Z Centre exceeds Euros 1.5 billion, in which event the Husband should be entitled to Euros 10 million (later referred to as £10 million). 

134.  The email specifically states that the Husband could not retain an interest in the future growth in Europe.  The email records the Husband acknowledging that: "his growth would come from ABC."  It again states that, to achieve £10 million, ABC has to hit £72 million: "so achievable in the future".  The email also records:

"From [the husband's] perspective I think he is concerned that the value he obtains could be lower than sitting with the [Europe] arrangements.  He understands the risks but also would like the ability to get to £10 million, if possible, so long as the values move in the right direction …

From [the husband's] perspective I think he is very pleased with your offer and wants to be fair but also wants to ensure that he is not prejudiced …

[The husband] also wanted to understand how long we could hold a buyout for and I said as long as you wanted, but you could also provide some loans against some element up front if you both agreed.  I said there was nothing to stop you permitting a loan against the shares if you wanted."

135. Unless these comments in the emails were false, they demonstrate that, at that date, there was, at least a belief, that through growth at ABC, the Husband's shares could become valued at £10 million, although there were risks.

136.  They also critically undermine the Wife's case that the shares should be valued by reference to gross property values or by reference to a side agreement (providing for between £6 and 10 million).  If either of these were correct, there would be no need to address net values or achievable values at all, for the simple reason that the value of the Husband's shares, if based on gross property values or proceeds of sale, would already be worth considerably in excess of £10 million Pounds (as referred to earlier in this judgment).  Further, I can see no prospect that they would ever have become worth less than this. 

137.  It does not seem realistically possible to suggest that the alleged conspiracy had been commenced by January 2011.  Indeed, this is not part of the Wife's case.  However, unless the conspiracy had started by then, or unless the final agreement departed fundamentally from the terms being discussed in these emails, it must have done.  In fact, as I have already said, the Wife seeks to rely heavily on the emails.  It is clear to me from these emails that the Husband's shares were being valued by reference to net asset values.

138. On the 16th of February 2011 Ernst & Young sent to Addleshaw Goddard answers to their shareholders agreement checklist as follows:

"PM has 86.86 shares in ABC 2011 and [the husband] 13.14.  If a sale takes place to a third party does the £10 million cap on proceeds to [the husband] get ignored and gross proceeds split 86.86%, 13.14% or is there an underlying commercial agreement that the shares owned by [the husband] should never entitle [the husband]to more than £10 million proceeds on any sale?"
"[The husband] will never get more than £10 million."

"The amount payable on a buyout is described as 90% of the current value of ABC 2011, (a) presumably this is a valuation of all the properties owned by the ABC subsidiary accompanies?"
The answer is yes.

"And (b) is it right that [the husband] gets 90% of this value when his shares only represent 13.14% of the equity?"

"[The husband] gets 90% of 13.14% of the value."

139. A draft shareholders agreement was prepared by Addleshaw Goddard on 1TS March 2011.  This was returned on 8th March 2011.  The draft, at that stage, included a comprehensive Cap clause, defined by reference to the value of Z Centre.  Depending on the value of Z Centre (in the range £1.3 billion to £1.55 billion or above) the value of the Husband's shares was capped at between £8 million and £10 million.  Under the definition of ABC sale it is commented that the "primary driver" is the sale of ABC 2011.

140.  In a note to clause 3.5 it is commented that market value is calculated by reference to ABC.  The question is asked "Is this correct?"  The answer is: "No, it should be by reference to ABC 2011."  Despite the comment, no substantive changes were made to the agreement at all, as a result of which the value of the shares remained by reference to ABC and the properties owned by ABC (not to ABC 2011).

141. The first shareholders agreement was signed on 31st May 2011.  The value ascribed to the Husband's shares is, in some circumstances, defined by reference to "Entire Market Value" or "Sale Value".  Entire Market Value is defined as being the open market value of the properties owned by ABC or any of its subsidiaries.  Sale Value is defined as the value calculated by reference to an amount equal to 100% of the total proceeds received in relation to a sale, being a sale of more than 50% of ABC's assets at the date of the agreement.

142. "Transfer Value" or "Market Value" (which apply in other circumstances) are defined as an amount equal to 100% of the Entire Market Value divided by the aggregate number of issued shares multiplied by the number of the Husband's shares.  The "Come Along Value" is defined as an amount equal to 90 percent of the Entire Market Value divided by the number of shares "subject to a maximum amount equal to the Cap".  The Cap is also referred to in the clauses dealing with Market Value, Sale Value and Transfer Value. 

143.  As referred to above, there had been a clause dealing with a Cap in the draft from March 2011.  By the date of the first shareholders agreement ABC's interest in Z Centre had been sold.  There was, thereafter, no connection between ABC and Z Centre.  It is not difficult to conclude that this was why the Cap clause itself had been removed from the agreement.  Despite this, references to the Cap remained in other clauses in the agreement.

144. Under the provisions of the shareholders agreement the Husband is entitled to require PM to acquire all his shares at any time after 31st December 2013 and at any time following an ABC sale.  An ABC sale is defined as a sale of more than 50% of the assets owned by ABC at the time of the agreement.

145.  It can be seen, and this is a major part of the Wife's case, that the value of the Husband's shares under this agreement is based on the value, or the proceeds of sale of 50%, of the properties owned within the group.  An immediately apparent illogicality is that the amount received by the Husband on a sale depends on what percentage of the properties has been sold.  For example, if it is 51%, the value of the Husband's shares is calculated by reference to only 51% of the value of properties.  Whereas, if the Entire Market Value definition applies the value of the Husband's shares is calculated by reference to 100% of the value of the properties.

146. Under the agreement the Husband is entitled to obtain a loan of up to a maximum of £5 million.  A loan of £1 million can be obtained at any time.  The relevant clause requires the Husband to entire into a share pledge and a loan agreement.  It also provides that the loan will bear interest.

147. On 20th December 2012, following the Husband's redundancy, a new shareholders agreement was effected.  A number of amendments were made.  References to a Cap were removed but otherwise the clauses dealing with the definition of value were not changed.  The definition of ABC sale was changed to a sale of more than 50% of the properties owned by the group but this made no substantial difference.

148. The leaver provisions are deleted.  Under the 2011 agreement, in the event of the Husband being a "good leaver", he was required to offer his shares to PM at a price per share equal to the Market Value.  The Husband was clearly a good leaver.  He could, therefore, have been required to offer his shares for sale to PM.  This did not happen.  The Husband explained in his evidence that he sought to delay the date on which his shares were acquired by PM because of the impact of the swap contracts.  The value of the swaps had moved from £31 million to £60 million between December 2010 and December 2011.

149. It is self-evident that PM did not require the Husband to offer his shares, as he could have, in accordance with the 2011 agreement.  If the Husband's case is correct, this was a concession on the part of PM.  If the Wife's case is correct, this must have been part of the conspiracy.  Given the value of the properties held by the group, the Husband's shares would then have been valued at £31 million (by reference to the definitions in the 2011 agreement and absent there being any separate Cap agreement).  Further, absent any undisclosed side agreement, it is difficult to see, on the Wife's case, how PM would benefit from delay as it would seem likely the properties would only increase in value from 2011.

150. The clause dealing with the Husband's entitlement to obtain loans was also changed in the 2012 agreement.  It refers to the Husband having borrowed just over £1 million and gives him the right to borrow up to £5 million provided the Market Value of the shares (as defined) exceeds the total aggregate value of the loans.  Given that the definition of Market Value had not changed, this appeared to give the Husband the right immediately to borrow up to £5 million. 

151.  The default date, at which PM acquired the right to purchase the shares from the Husband, was changed from 31st May 2016 to 30th September 2017.  As with the good leaver provisions (and the changes made to them), it is difficult to see this, on the Wife's case, as other than a puzzling step on the part of PM.  By further postponing his right to purchase the shares, surely he was simply increasing their likely value.  On the Husband's case, he was seeking to postpone the date to give more time for the value of the swap contracts to improve.  Against this background, the issue of how the date of 30th September 2017 came to be agreed, an issue explored during the course of the hearing, is an insignificant detail.  It is the effect of any postponement which is important.

152. With the Husband's replies to questionnaire, dated 21st February 2013, TS supplied a schedule setting out its calculation of the value of the Husband's shares.  These had moved from £4.4 million, as at 25th January 2011, to nil; in fact a negative value of (£193,000) was given as at 31st December 2012.  The main reason for this reduction in value was the increase in the swap's liability from £32.5 million to £60 million.

153. On 5th April 2013 Lesley Howe produced her first report.  This was, in part, in response to a report dated 17th August 2012 prepared by Mr. Wilkinson of BDO.  That report had valued the Husband's shares, without a discount, at £66,000.  It had also commented that, due to a high level of volatility in certain items in the balance sheet (principally the interest rate swap liability), the value of the Husband's shares would change on a daily basis.

154.  In her report. Mrs Howe values the Husband's shares by reference to the shareholders agreement.  Applying the definition of Entire Market Value she arrives at the figure of £38.52 million, being 13.14% of £293 million.  She also notes that the Husband is entitled to borrow up to £5 million and states: "Arguably the value of his shares must exceed £5 million, though as yet this has not been tested."

155. I do not understand how the fact that the Husband might be able to borrow this sum provides a secure foundation, even arguably, for concluding that the value of his shares might exceed £5 million.  However, of greater significance, is Mrs Howe's conclusion that the shares are worth £38.52 million.  She expresses concern about this conclusion: "Even though it appears to be a strict interpretation of the shareholders agreement".  Her concern derives, in part, from the fact that, even at 31st December 2011, £38.5 million equated to a very significant percentage of the company's stated net assets, something approaching 80%.  She suggests that the views of PM and/or Addleshaw Goddard should be sought including "ultimately the value that PM would be prepared to ascribe to the Husband's shares for the purposes of a future buy back."

156. The methodology used by Mrs Howe to calculate the value of the Husband's shares is obviously understandable as she based it on some of the terms of the shareholders agreement.  Equally understandable was her concern as to whether this could be right, given the extraordinary imbalance it created between the percentage of the Husband's shareholding in ABC 2011 and the percentage of the value of the group that he would thereby be obtaining.  Her suggestion that the views of PM and/or Addleshaw Goddard be sought was equally understandable.

157. Those views were sought through a questionnaire.  The replies are dated 4th June 2013.  The answer is given in an email from RT dated 24th May 2013, in which he replied to an email dated 22nd May from the Husband's solicitors.  The latter email broadly identifies the points made by Mrs Howe and requests that he seeks PM's views and "Provide us with his understanding of the basis of how the Husband's shares would be valued."

158.  I propose to quote RT's reply at some length.  He starts by saying that he has discussed the note and request with PM and he, PM:

"Has requested that I remind you that we have already committed a great deal of time and effort to this matter and would prefer to spend our time trying to restore the value of the companies to a more acceptable level to all concerned, but he has also requested that I respond on these specific points you have raised.

I will need to go through the specific agreement but I can provide you with the precise understanding of both TS and [the husband] at the time of signing the arrangement as well as the clear arrangements on appropriate valuations at the time [the husband] swapped his JOE interest for shares in ABC 2011 which resulted in the need for the shareholder agreement.

The reference to market value was requested by [the husband] to Addleshaws in respect of the properties to provide certainty on the property valuations, which can be subjective, but it was certainly not expected that the shares be valued only by reference to properties ignoring debt.  You will certainly be aware that all debt is secured against the properties so none can be sold without settlement of the debt also. 

I do, however, recognise it could have been worded with more clarity.  To provide evidence you will know that the percentage of [the husband's] shares received in ABC 2011 was calculated by reference to the net value of the group taking account of the properties as defined in the shareholders agreement (less liabilities) to the company including full reference to the swaps liability.  Had we not done that and applied the approach the Wife's lawyers are suggesting would mean that [the husband's] shareholding would be less than 2 percent which you will note it is not.

Further, if the shareholders agreement permitted [the husband] to exit only by reference to gross assets the group would have been obliged to notify HMRC of the fact and [the husband] would have been taxed at 50 percent on the deemed uplift which comes from ignoring the debt.  No such notification was made and nor has [the husband] accounted for the tax because of course it is not due because the share value is net of debt not just gross assets. 

It is of course a matter of common sense, common practice and commercial reality that shares are valued in a company by reference to all assets and liabilities of the company as well of course the market conditions. 

I can assure you that this is the intention and legal obligations of both parties and was and still is the position.  We believe that [the husband] can confirm that position to you for you and that there is no need to seek any further clarification from Addleshaws. 

I can also confirm that as a partner at Ernst & Young I assisted in this and it was definitely clear to all parties when executed.  This is also supported by the actions of all parties since this date and indeed is consistent with [the husband's] own instructions and explanation given to BDO when he asked them to value the group for the purposes of the shares.

To provide some comfort to you I can confirm that the position for PM will be that the value of the shares will be calculated by all assets as defined less all liabilities including bank debt and swap liabilities.  At the current time we expect [the husband's] value to be less than the debt he owes the group so we will ensure the monies from PM are used to repay the group debt as provided in the agreement.  Then of course we expect the remaining debt to be settled in line with the loan agreement, which as you know we have the capacity to call immediately.

I trust that [the husband] can confirm these points and as you will know from the agreement it is for the shareholders to agree a value in the first instance, which I am sure we will do in due course hopefully when the value is greater than zero."

159. This email could not be clearer.  In it PM is stating his understanding of how the Husband's shares in ABC 2011 are to be valued.  It makes clear PM's case that the intention of both parties was that the shares were to be valued by reference to net value.  Given the Wife's view of PM as an honourable and very decent person there was in, my view, no good reason for this evidence to be ignored or dismissed, as it clearly was.

160. During the course of her submissions, Miss Harrison sought to rely on the fact that the 2011 emails were not disclosed until May 2013 (having been provided to the Husband's solicitors in September 2012) and the schedules not until 22nd July 2013.  This point might have some force save for the fact that none of the evidence, once provided, caused the Wife to deviate from her substantive case as to the value of these shares.

161. On 16th July 2013 the Husband, ABC 2011 and PM entered into a deed of rectification of the shareholders agreement dated 20th December 2012.  This changed the definition of Entire Market Value to the open market value of all the shares in ABC 2011 on a cash free/debt free basis.  The other definitions, in particular of ABC Sale and Sale Value, were not changed.

162.  The Husband signed this deed following brief discussions with RT on 15th July 2013.  RT sent an email stating "We will forward the addendum to the SPA for signature which confirms the basis of share value which we all recognise is correct."  The email also indicates that TS is prepared to make an offer to buy the shares on a "favourable" basis provided the loans are repaid.

163. In replies made by TS on 19th July 2013, it is asserted that it was agreed by all parties (i.e. PM and the Husband) that the shareholders agreements contained "an error regarding the value of the shares and should deal with net assets (in the same way that [the husband] received his percentage shares at the outset) and not just the value of the properties."

164. As referred to above, on 25th May 2013 an offer was made to purchase the Husband's shares in ABC 2011 for £2.85 million.  The loans due from the Husband and from XPS were to be deducted.  They totalled approximately £1.8 million, giving an estimated balance after tax of £400,000.

165. On 9th January 2014 the Wife's solicitors wrote to the solicitors instructed by TS in reply to this offer.  The letter states that:

"The Wife rejects your client's attempt to amend the shareholders agreement.  This conduct is plainly a device to reduce the value of the shares and we will invite the court to make findings of fact to that effect at the final hearing."

"It is our client's case that the shares should be valued in accordance with the shareholders agreement, without rectifications, and once we have had all the outstanding evidence referred to in our second letter of today we will invite our expert, Mrs. Howe, to revalue the shares."

166. The case, as advanced in this letter, clearly ignores the concerns specifically raised by Mrs Howe about the effect of valuing the shares in accordance with the 2012 agreement.  It equally clearly ignores the assertions made by PM (as conveyed in the email of 24th May) and the other evidence provided by TS, or provided by PM, as to his view of the value of the Husband's shares.  Further, no explanation has ever been suggested as to why PM would engage in such a device purely to benefit the Husband to the detriment of the Wife.

167. TS's solicitors replied on 17th January 2014.  In the course of their letter they state:

"Finally, and perhaps more importantly, our client takes grave exception to your client's assertion that the rectification of the shareholders agreement represents some sort of device to reduce the value of the shares.  The suggestion that the liabilities which are secured against the properties are illusory is simply preposterous.  The percentage of shares which [the husband] received took full account of all debt, including swaps in the group.  We believe that this is by far the most relevant fact for the parties to consider."

168. On 17th January 2014 the case came before Mr. Justice Holman.  His Order records that he

"Clearly explained to and warned the Wife that she is running a high risk that the value of the shares and/or the amount receivable by the Husband for them from PM will later be less than the sum currently on offer of £2.85 million."

The risk being run by the Wife could not have been set out more clearly.  In fact, later at court and confirmed by email, the offer was increased to £3.15 million, approximately £2.27 million net.

169.  TS's solicitors and TS understandably comment that the Wife "appears to have no grasp of the reality of the situation which she and her Husband face and the ruinous consequences for them of her approach within this litigation."

170.  As referred to above, the offers made by TS appear to have fuelled the Wife's suspicions that they were hiding something.  In a letter dated 16th December 2014 from TS, PM's position is expressed in the following terms:

"We should also say at the start that as a group we are a very small team with limited time available and believe that the parties have treated our very generous offers with little respect.  In this regard it is fair to say that PM is very offended and has lost patience with the situation where we were trying to leave our ex-FD solvent.

However, we now feel that all goodwill has expired and we wish to make it clear that our previous generous offers will not be repeated as our goodwill has been abused and we are minded now only to pay the market price for the shares when we can.

Based on our calculations we believe that the current value is substantially less than £1 million and as you know the total debt due to us is around £2 million."

171. Following the hearing before Mr. Justice Holman, the Husband's solicitors wrote to the Wife's solicitors on 6th February 2014.  This made an open offer to settle the case on the basis that PM's then offer was accepted.  The letter expressly provides that it would be relied on in respect of costs (under the FPR 28.3(7)(b)-(e)).  The letter states:

"[The wife] must appreciate that unless she identifies the pot of gold she is searching for then the figures are as they are.  It is, to borrow a phrase from the courtroom last week, a moment of exceptional importance for the family. 

[The wife] can either continue to look for reasons not to trust [the husband] or can work constructively to identify ways in which her concerns might be allayed.  For example, she may wish to accept this offer subject to the disclosure on the hard drive not revealing any further assets.

We make clear that [the husband] is prepared to consider any reasonable and cost proportionate proposal of this type which you may wish to put on the agenda for discussion."

After referring to the Family Procedure Rules it continues:

"To be absolutely clear, [the husband] will argue that [the wife] should bear the impact of the difference between the value of the assets at trial and the value that can be evidenced from the schedules attached to this offer.

In addition, when the exhaustive search reveals no hidden assets, he will argue that the costs incurred in such should be met by [the wife] alone."

172. Mrs Howe's second report is dated 7th July 2014.  This relies heavily on the emails dated 23rd and 24th January 2011 and the share swap spreadsheet calculations.  In addition, she relies on an email dated 31st January 2011 which relates not to the Husband but to another participant in the JOE scheme.  Further, this addresses that person's interest being acquired in exchange for the promise to pay an amount commensurate with the value they would have obtained under the JOE arrangement.  This is a completely different situation to the Husband's.

173.  Based principally on these emails, the shareholders agreement and the checklist Mrs Howe expresses the opinion that the value of the Husband's shares:

"… should be in accordance with the documentary evidence that has been obtained in these proceedings that reflect the tenor of the original proposals I believe were agreed between PM and [the husband]."

Accordingly, she concludes as follows: "In my view, as a minimum, the amount that  [the husband] should expect from the disposal of his shares would be £6 million".  This is based on the use of the word "benchmark" (that the Husband's percentage was calculated on the basis that ensured the benchmark figure could be delivered) and on the email of 31st January 2011 (which related to someone else and a different situation).

174. This conclusion is despite the evidence from PM and despite the contents of the emails and spreadsheets as referred to above.  It also ignores that, as referred to by Mrs Howe herself (at paragraph 186B), the Husband's interest in ABC 2011 was being calculated on the basis that ensured the benchmark figure of £6 million could (my emphasis) be delivered: "could" not "would".

175. Alternatively, Mrs. Howe concludes that, by application of the shareholders agreement, the Husband is entitled to £37 million.  She implicitly acknowledges in her written report what she explicitly agreed in her oral evidence, namely that this result would be a "Nonsense".

176.  However, by reference to the shareholders agreement checklist (in which it is said the Husband will never receive more than £10 million) Mrs Howe concludes, again implicitly in her written report but explicitly in her oral evidence, that there must be an undisclosed agreement between the Husband and PM under which the Husband's shares are to be valued at a maximum of £10 million and a minimum of £6 million. 

177.  In fact, given the value of the properties held by ABC, the value of the Husband's shares, if valued in accordance with the "strict definitions" in the agreement (as proposed by Mrs. Howe) would have always comfortably exceeded £10 million.  When I sought to obtain Mrs. Howe's views on what seemed to me to be something of a conundrum in the way she was presenting her contentions, she was unable or unwilling to offer an opinion.  The conundrum is simply that, it could merely have been agreed that the Husband's shares would be valued at £10 million, rather than preparing the detailed shareholders agreements.

178. To repeat, in her oral evidence Mrs. Howe made clear that she accepts a valuation based on gross property values is a nonsense without a cap.  Accordingly she concludes that there must be an undisclosed secret agreement which implements a cap as an "underlying commercial agreement", being the words used in one of the questions posed in the shareholder's agreement checklist. 

179.  My conclusion can be simply stated.  It is abundantly clear from the evidence that PM and the Husband intended and agreed that his shares would be valued by reference to net asset values.  PM made plain that he would never have agreed to give the Husband a percentage of the gross property values which would have been, to use his words, "absolutely ludicrous" because of debt and swaps. 


180. What then of the terms of the shareholders agreements?  In my view their content is a reflection, first, of the fact that the Husband and PM completely trusted RT.  They signed what he asked them to sign on the assumption that they contained what had been agreed.  Secondly, their inadequacies reflect, very largely, RT's approach to their drafting.  He clearly did not pay them the attention they deserved and they do not contain what the Husband and PM agreed.  Indeed, I would adopt Mrs Howe's description of "nonsense" and PM's word of "ludicrous" to describe the consequences of applying the terms of these agreements.  Absent any secret agreement, their effect makes no sense at all.  There is also no evidence which could possibly justify my concluding that there is a secret agreement which would moderate the effect of the agreements.

181. As for the deed of rectification: the suggestion that the Husband was in a strong position to challenge this is unsustainable.  First, he was not in a strong position because at about the same time he was seeking to borrow £425,000 from, effectively, PM and on very favourable terms.  Secondly, as the Husband said in his evidence, how could he advance a case which he knew to be wrong.

182. What is the value of the Husband's shares?  They, plainly, must be valued by reference to net assets values.  As a result of an order I made at the pre-trial hearing, the accountants prepared a schedule setting out their respective cases for the value of the Husband's shares based on net asset values.  This was further explored in oral evidence.  Given my conclusions as to the Wife's alternative case and given this evidence, I consider it sufficient to determine that the value is no more than £1.7 million.  This was the alternative figure being advanced by Mrs. Howe based on net asset values. 

183.  Because this figure is substantially less than PM's current offer, it is not necessary for me to decide further.  If it was, I would reject Mrs. Howe's reliance on the asking price for one of the properties.  An asking price is not a proper foundation for the determination of value, absent evidence as to whether it might be achieved.  In fact, the evidence is that no offer has been made at all, let alone at that price.  Further, I would reject her contention that there should be any adjustment in respect of preference share dividends.  In my judgment the full amount should be deducted.  The fact that an adjustment has been made in the accounts does not mean that the full amount is not due, if the resources are available.  These items alone would reduce the value to a figure significantly below £1.7 million.

184. It will follow from the above that the current offer from PM must be accepted expeditiously.  This will result in the value of XPS being between £1.5 and £1.9 million, as referred to above, with all the loans written off.  It will also result in any potential liability arising from the EBT being written off.

185. I have not referred to Mr. Wilkinson's evidence because he has valued the Husband's shares solely by reference to net asset value.  I have also not referred to the Wife's case that the Husband is entitled to borrow up to £5 million against his shares.  It defies logic that the Husband should seek to borrow such a sum against shares valued at substantially less.

Add-Back Case
186. The final resources issue I propose to address is whether I should add back £137,000 as sought by the Wife.

187.  In Vaughan -v- Vaughan [2008] 1 FLR 1108 Lord Justice Wilson (as he then was) said at paragraph 14:

"A notional reattribution has to be conducted very cautiously by reference only to clear evidence of dissipation in which there is a wanton element."

Is there in this case clear evidence which establishes dissipation with a wanton element?
188. A schedule has been produced on behalf of the Wife which seeks to justify the reattribution of £137,000.  In my judgment it fails to demonstrate that the Husband has dissipated any resources.  It focuses on the way in which the Husband has drawn funds from the XPS directors loan account, in a way which reflects the claim which was advanced through Hewlett Swanson.

189. Dealing briefly with aspects of the schedule.  I do not consider that it was unreasonable for the Husband to continue to support F Company; the alternative would have been liquidation.  I also do not consider it unreasonable for the Husband to have purchased furniture after he left the matrimonial home.  The suggestion that he should have requested items from the home, having regard to the circumstances of this case, is wholly unrealistic.  These together reduce the add-back to approximately £70,000.

190.  The schedule further wholly fails to put the Husband's expenditure (to which have been added assets sold by him) into the context of what was being spent for the benefit, in broad terms, of the family.

191.  I am, accordingly, not persuaded that I should add back any sum because I am not persuaded that the Husband has dissipated resources through excessive expenditure.

192. The Husband's net income is £145,000 per year.  This does not include any discretionary bonus he might receive.  Last year he was paid a net bonus of £30,000.

193.  The Wife has no earned income.  She is currently entitled to Child Benefit of £1,700 and Child Tax Credits of £6,300 per year.

194. Does the Wife have an earning capacity?  The Wife has only provided occasional beauty treatments at the family home for over 15 years.  She has not worked at all for the last 2 years.  In my judgment, whilst she undoubtedly has an earning capacity, it will take some time, perhaps a matter of months, for this to be realised at all and a greater period of time, perhaps a year or so, for it to be fully realised. 

195.  At present I propose to ascribe an earning capacity of £5,000 net per year, starting in about 6 months' time.  This would result in a current annual income for the Wife of £13,000.  I recognise that this is, to some extent, imprecise because I have not been told what impact such earnings would have on Child Tax Credits.  I also recognise that this income will change once the elder child goes to university.

196. The parties' respective needs have featured very little during the course of the hearing.  I was shown some property particulars with little elaboration.  There was no significant investigation of the parties' income needs.

197.  I am satisfied that the Wife, and indeed if required the Husband, could purchase reasonable accommodation for, in the region of, £500,000.  The property at the bottom of the Wife's range was on the market for £465,000; this was at the top of the Husband's range.  This is significantly less than the value of the last family home but, in my judgment, properly reflects the parties' current financial circumstances.  The Husband has rightly not sought to contend that his housing need should be judged by London prices.

198.  The Husband's budget, including rent of £2,500 per month, totals £7,800 per month or £94,000 per year.  The Wife's annual budget totals £68,000 excluding rent.  School fees currently total £20,000.

199.  It will be apparent that, currently, the parties' combined incomes of approximately £160,000 (absent any bonus) are insufficient to meet their combined income needs of approximately £180,000.

200. Turning to the exercise of my discretion.

201.  The total capital resources, based on XPS being worth £1.9 million and including pension funds of £786,000, total just over £3 million.  I propose, for the purposes of determining my award, to take the higher figure for XPS because I propose to allow sufficient time for the assets within XPS to be realised to maximise its value. 

202.  It is clear, because this wealth has been created during the course of the marriage, that my starting point should be an equal division.  The Wife submits that this would be the fair outcome.  The Husband submits that I should make additional adjustments in his favour.

203. I now address this aspect of the case and, first, the Husband's argument that the Wife's conduct in rejecting PM's offer in January/February 2014 is such that he should receive an additional sum to reflect the difference between that offer and PM's current offer.

204.  The net difference, as advanced, is approximately £350,000.  This difference does not take into account the additional offer made in respect of the EBT, which clearly provides a further benefit to the parties.  I am satisfied that PM would have made such an offer in any event, once the problem emerged, as it did during the course of 2014.  However, I propose to take the figure of £350,000.  I am satisfied that the Wife's conduct in rejecting the earlier offer has resulted in a loss to the family of £350,000.

205. The question I must ask, as in respect of the other adjustments sought by the Husband, is whether, in fairness, I should reflect this loss in my award.  Is it conduct which it would be inequitable to disregard? 

206.  The risk the Wife was taking in rejecting PM's then offer could not have been made clearer to her.  Miss Harrison submits that the Wife faced an almost impossible task in establishing the true nature of the agreements reached between the Husband and TS including PM.  I disagree. 

207.  The contention that TS and/or PM would engage in a wide-ranging dishonest presentation was plainly unsustainable from the outset.  Having regard to the Wife's accurate assessment of PM, it is frankly inconceivable that he would permit or engage in any such deception.   This includes the Husband's redundancy and, importantly, the value he ascribed to the Husband's shares in ABC 2011 through his offers he made.  He would not, in my judgment, have been making offers which, in his assessment, were lower than the true value which he and the Husband had agreed should be ascribed to those shares.

208. From the outset the Wife's case has lacked any proper balance or objectivity.  During the course of this judgment I have referred to the fact that her case has ignored clear assertions being made by TS and PM.  I question whether any proper consideration was ever given as to whether these assertions might have been true.

209.  First, the Wife's case requires, and is based on, very serious allegations against PM and RT.  Was it likely that PM and RT were lying?  During the course of her oral evidence (as referred to more than once above) the Wife agreed that PM is an honourable and a very decent person.  This is not a new opinion. 

210.  In a letter from her solicitors dated 17th October 2012 they state: "We are advised by our client that TS Group and the M family generally are very well-respected".  Before then stating, somewhat inconsistently, that: "They are surprised therefore with the manner in which the alleged redundancy has been handled". 

211.  Given that this was, and is, the Wife's opinion of PM it would seem to me, based on this alone, unlikely that he would have participated in or permitted such a broad conspiracy so as to enable the Husband to mislead the Wife and the court as to the true position concerning the value of the shares, the redundancy and the loans.

212. Another alternative, I suppose, could be that RT was conspiring with the Husband without PM's knowledge.  The Wife touched on this in her oral evidence when she said she did not believe PM was fully aware, even though she accepted in answer to questions from Miss Saxton that it involved "his" money and so he had to be in on the collusion.  Frankly, any such contention is unsustainable. 

213.  PM participated in the meeting at which the Husband was told he was being made redundant, a redundancy which the Wife (as she said in her oral evidence) simply does not believe was genuine.  He signed the deed of rectification and was otherwise clearly sufficiently involved to know in general terms what was happening.

214. The lack of balance or objectivity in the Wife's case is also demonstrated in respect of the provision of documents.  The absence of documents relating to those matters about which the Wife is suspicious fuel those suspicions.  The absence of other documents does not.  For example, the absence of any written agreement with XPS under which it was receiving annual consultancy payments of up to £420,000 from TS goes unremarked.  In my view, this absence demonstrates a level of informality in TS's dealings, at least with the Husband.

215. The Wife has persisted in relying on the absence of documents or records which, so it is said, it might be expected TS would have.  This is raised by Mrs Howe and elsewhere.  In respect of the Husband's redundancy, TS was specifically asked to provide all minutes, correspondence and emails in which the Husband's redundancy was raised or discussed.  TS replied to this request in November 2013.  A similar question had in fact already been asked on 3rd October 2012 and answered on 12th October 2012, when it was said, specifically, that there were no minutes or further correspondence. 

216.  In its November 2013 reply TS said:

"By way of context, TS is a family owned and run business and has a very small office team.  Decisions are taken by the small core management team and very little is documented.  Of the 13 Staff members employed in the business at the time of [the husband's]' departure 6 of them were notified of redundancy at that time.  There are no documents which are requested but the compromise agreement into which [the husband] and the company entered is to be found at attachment 2."

The documents which had been requested included all minutes of meetings, memoranda, correspondence or emails relating to the Husband's redundancy.  I have already referred to PM's evidence about the way TS is run.

217. The absence of other records or minutes, despite these assertions, is said to be suspicious and to support the conclusion that TS and PM are hiding evidence and giving and creating false evidence and documents.  In order for this to be correct both RT and, critically, PM would have had to have been actively involved in a conspiracy from at least September 2012.  A conspiracy to assert that the Husband had been made redundant when he had not.  A conspiracy to assert that the Husband's shares were worth less than they are.  A conspiracy secretly to have agreed with the Husband that in some way he would be paid further sums by TS and/or PM at some point in the future when these proceedings were concluded.

218. This could not have been a passive conspiracy.  Both these individuals would have had to have assisted the Husband in presenting a false case from this outset.  I take, as one example, the assertion in the redundancy settlement summary that the Husband's shares had a "minimal value".  Either this is what TS believed or it was a false assertion to assist the Husband in advancing a false case.  It is not suggested, as it could not be on the Wife's case, that this was a tactical assertion on the part of TS to seek to deprive the Husband of his proper entitlement.  I could also refer to the letter from TS dated 13th September 2012 headed "Circumstances Surrounding Redundancy".  This, too, would have had to have been a false letter.

219. I might add that, if there was a conspiracy between PM, the Husband and RT, it was a particularly inept one.  The conspiracy would have had to have commenced at about the date the parties separated and certainly no later than the Husband's false redundancy.  It would have been inept because the changes made to the 2011 shareholders agreement in the second agreement (in 2012) did not include any changes to the clauses dealing with valuation.  The Husband's shares continued to be valued by reference to the properties' open market values or total proceeds received on a sale.  As at 31st December 2012 the properties were valued at £277 million giving a value for the Husband's shares, based on the definition of Market Value, of £36 million.  The failure to amend these provisions would have been a surprising oversight if the conspiracy was intended to give a false presentation of the value of the Husband's shares.

220. I recognise, of course, that conspiracies can be ineptly implemented.  Indeed, it could be said that false cases often unravel for this very reason.  However, the ineptness would also include the deliberate failure to disclose the existence of a side agreement as referred to by Mrs Howe in her evidence.  Absent any such side agreement, placing a cap or ceiling on the value of the Husband's shares, they would be valued at £36 million.  The conspiracy requires the existence of such an agreement and, as such, it would manifestly have been in PM's interest to have disclosed it and/or to have incorporated its terms into the amended agreement in December 2012.

221. In my judgment the Wife's case on this and the other key issues has been advanced on a speculative and unfounded basis.  Miss Harrison has sought to establish a case to seek to explain the Wife's rejection of PM's offer in early 2014.  In my view the truth emerges from the Wife's statement when she asserts that she did not accept the Husband's offer made at that time, based on an acceptance of PM's offer, because she did not trust the Husband.  It was not the merits of the situation which were being assessed.

222. The Wife should have accepted that offer.  Mrs Howe's report had raised legitimate questions but they had been answered in May/June 2013, in the long email from PM and in the other documents provided at or about that time.  It would not in my judgment be fair to ignore the consequences of that conduct when exercising my discretion because, in my judgment, it is conduct which it would be inequitable to disregard.  Accordingly, I propose to make an adjustment in the Husband's favour.  I will consider what adjustment globally along with the other issues raised by the Husband.

223. I next address the adjustment sought by the Husband in respect of the disparity between the parties' costs of approximately £250,000.  The Husband has also raised an issue about the costs incurred by TS.

224.  As to the former, namely the sum of £250,000, I have been referred to J -v- J [2014] EWHC 3654 (Fam) which also refers to RH -v- RH [2008] 2 FLR 2142.  To adopt the phrase used by Mr. Justice Singer in RH -v- RH are the Wife's costs in this case "grossly disproportionate"?

225.  Absent any adjustment, the effect of an equal division of the parties' net wealth would be that the Husband would be paying half of the difference between the parties' respective costs.  Would this be fair?  In my judgment it would not because the Wife's costs are grossly disproportionate.  There is, in this case, a disparity of costs which reflects the unjustified approach taken by the Wife as referred to above. 

226. I am, at present, only considering the issue of disparity.  It is a gross disparity but, in my experience, it is not unusual for the effective applicant, in this case the Wife, to incur costs which are greater than those of the respondent.  For the reason that the applicant spouse can be engaged on seeking to establish, by a legitimate level of investigation, the true financial picture.  If, for example, the Wife's costs had been, say, £450,000 I would not have acceded to the Husband's submissions.  I, therefore, take the sum of £168,000 as comprising the disproportionate disparity.  I will also address the extent of my adjustment in respect of this issue when I consider the award globally below.

227. The final issue which will impact on my capital award is that of costs.  Both parties seek orders for costs against the other.  I do not propose to address the parties' detailed competing contentions.

228.  In my judgment the parties' respective positions can be best be measured by reference to the way in which their respective cases have been advanced at this hearing.  The Wife has vigorously pursued all her contentions. 

229.  The Family Procedure Rules 2010 deal with costs in Rule 28.3: Starting at sub-paragraph (5):

"(5) Subject to paragraph (6) the general rule in financial remedy proceedings is that the court will not make an order requiring one party to pay the costs of another party.

(6) The Court may make an order requiring one party to pay the costs of another party at any stage of the proceedings where it considers it appropriate to do so because of the conduct of a party in relation to the proceedings.

(7) In deciding what order if any to make under paragraph 6 the court must have regard to..."

There are then listed a number of factors which include:

(b) any open offer to settle made by a party;

(c) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(d) the manner in which a party has pursued or responded to the application or a particular allegation or issue;

(e) any other aspect of a party's conduct in relation to proceedings which the court considers relevant; and

(f) the financial effect on the parties of any costs order.

230. It will be apparent from my judgment that it was not reasonable for the Wife to pursue her allegations of a conspiracy or collusion to present a false case involving TS, PM and RT.  She raised, pursued and contested this core part of her case in a way which I have described as being speculative and unfounded.  I have acknowledged that, for a period, the Wife was entitled to rely on Mrs Howe's first report but only for a limited period because the concerns raised by Mrs Howe were in my view answered decisively by RT and PM.

231. Apart from that short period, the Wife has pursued her case and her allegations in a wholly disproportionate manner.  It is, I regret to say, one of the more extreme cases in my experience as a family lawyer over the last 35 years.  Having come to that conclusion, it would be perverse if I did not make an award of costs in the Husband's favour.  He seeks the sum of £150,000.  I will deal with this when determining my award, along with the other adjustments referred to above.

232. First my capital award: an equal division of the non-pension assets, after allowing for the parties' liabilities as referred to above, would give each party approximately £1.1 million, namely half of £2.2 million.

233.  The Husband seeks adjustments totalling approximately £400,000 (being half of £350,000 and £168,000 and a costs order of £150,000).  This would leave the Wife with £700,000 and the Husband with £1.5 million, excluding pensions.  Despite the Wife's conduct, I consider that this would effect too great a disparity. 

234.  In my judgment, standing back and giving appropriate weight to all the section 25 factors, a fair award is to provide that the Wife should receive net capital resources - net meaning after payment of her liabilities - of £900,000 and the Husband just over £1.3 million, a gross difference of just over £400,000.  This will require the Wife to receive a balancing lump sum payment after she receives the net proceeds of sale of the former matrimonial home and the Spanish property.

235. In arriving at this figure I have substantially discounted the adjustments sought by the Husband.  To order otherwise would have resulted in too great a disparity in outcome and would have given insufficient weight to the other section 25 factors.

236.  I will also make, as agreed, an equal pension sharing order.

237.  The overall effect is that the Wife will have capital resources of approximately £1.3 million and the Husband of approximately £1.7 million, a division of 43% in the Wife's favour and 57% in the Husband's.

238. Finally, I must deal with my income award.  The Husband's income, after deduction of school fees (which will reduce next year), will be £125,000.  He will have significant rental costs of living in London.  The Wife's income currently totals £13,000.  As referred to above, it is not clear what the effect on Child Tax Credits would be of her earning an income of £5,000.

239. In my judgment a fair award is the annual sum of £50,000 as sought by the Wife, £30,000 for herself and £10,000 for each of the children.   This will enable both parties to meet their respective needs within the available resources.  In respect of the award for the wife, this will be for 6 months, to give the Wife time to utilise her earning capacity.  It will then reduce by £5,000. 

240.  To seek to avoid future dispute, I propose to provide that if the Wife earns between £5,000 and £15,000 then the maintenance will reduce by 50 pence for each net pound earned and if she earns above £15,000 net then the maintenance will reduce pound for pound.

241.  I must also address the possibility that the Husband might earn a bonus.  I propose to provide that the Wife is to receive 25% of the Husband's bonus if it exceeds £15,000 net up to a maximum of £50,000.

242. The final issue I need to address is the duration of the Wife's maintenance.  The Wife under my award will have approximately £400,000 in excess of her housing needs (of £500,000) and a pension fund of just under £400,000.  In due course these resources will be sufficient to enable her to adjust to the determination of maintenance without undue hardship.  The term proposed by the Husband is when he reaches the age of 60 in 2021.  I consider that inadequate and I will provide for the wife's maintenance to determine in 2024.  Given the duration of the term, I propose also to make a Section 28(1A) bar which means that there will be no power to extend that term.