Case No. FD19F00071

and all his funds which had been transferred into the Foundation did not enter the equation. H calculates that the effect of the order was to leave W with about £4m, being half the value of the London home and half the Majorca home, on the (false) assumption that the proceeds had been preserved. 46.H has obtained permission to appeal the order dismissing the application for the return of the investor visa money by way of a retrial. That retrial is to be heard very shortly. If he succeeds, the value of W’s award from the Russian court will reduce by some £1.3m plus penalties accruing at 0.1% per day. 47.W’s response to the Russian order was to apply for permission under Part III, which I granted. The purpose of Part III48.I have well in mind the principles set out in Agbaje v Agbaje [2010] UKSC 13 and Zimina v Zimin [2017] EWCA Civ 1429 which I summarise as follows: The Supreme Court in Agbaje made clear that the court must have regard to the legislative purpose of Part III whenever it is considering exercising its powers, namely: [71] To take up some of the points made in the preceding paragraphs, the proper approach to Part III simply depends on a careful application of sections 16, 17 and 18 in the light of the legislative purpose, which was the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where there were substantial connections with England …(emphasis added). [72] It is not the purpose of Part III to allow a spouse (usually, in current conditions, the wife) with some English connections to make an application in England to take advantage of what may well be the more generous approach in England to financial provision, particularly in so-called big-money cases. There is no condition of exceptionality for the purposes of section 16, but it will not usually be a case for an order under Part III where the wife had a right to apply for financial relief under the foreign law, and an award was made in the foreign country. In such cases mere disparity between that award and what would be awarded on an English divorce will certainly be insufficient to trigger the application of Part III. Nor is hardship or injustice (much less serious injustice) a condition of the exercise of the jurisdiction, but if either factor is present, it may make it appropriate, in the light of all the circumstances, for an order to be made, and may affect the nature of the provision ordered. Of course, the court will not lightly characterise foreign law, or the order of a foreign court, as unjust. [73] The amount of financial provision will depend on all the circumstances of the case and there is no rule that it should be the minimum amount required to overcome injustice. The following general principles should be applied. First, primary consideration must be given to the welfare of any children of the marriage. This can cut both ways as the children may be being supported by the foreign spouse. Second, it will never be appropriate to make an order which gives the claimant more than she or he would have been awarded had all proceedings taken place within this jurisdiction. Third, where possible the order should have the result that provision is made for the reasonable needs of each spouse. Subject to these principles, the court has a broad discretion. The reasons why it was appropriate for an order to be made in England are among the circumstances to be taken into account in deciding what order should be made. Where the English connections of the case are very strong there may be no reason why the application should not be treated as if it were made in purely English proceedings . The full procedure for granting ancillary relief after an English divorce does not apply in Part III cases. The conditions which can be attached to leave, together with the court's case management powers, can be used to define the issues and to limit the evidence to be filed, as was done by Munby J in this case. This enables the jurisdiction to be tailored to the needs of the individual case, so that the grant of leave does not inevitably trigger a full blown claim for all forms of ancillary relief. 49.The principles established in Agbaje have since been summarised by the Court of Appeal in Zimina v Zimin at [47]: i) The legislative purpose is to alleviate the adverse consequence of no, or no adequate financial provision having been made by a foreign court in a situation where there are substantial connections with England. ii) The duties under section 16 and section 17 together impose two interrelated duties i.e. to consider whether "in all the circumstances of the case" England and Wales is an appropriate venue and, secondly, whether an order should be made "having regard to all the circumstances" including the matters in section 25(2)(a)-(h) of the Matrimonial Causes Act 1973. iii) Part III cannot be used to 'top up' foreign provision in order to make it equate to an English award; it follows that mere disparity will be insufficient to 'trigger' the application of Part III. iv) No element of exceptionality is required and neither injustice nor hardships are preconditions. The order need not be the minimum amount required to avoid injustice. v) In considering quantum the court has a broad discretion subject to three principles: a. Primary consideration is to be given to the needs of any children; b. It is never appropriate to make an order which gives a claimant more than she would have been awarded had all the proceedings taken place within this jurisdiction; c. Where possible the order should have the result that provision is made for the reasonable needs of each spouse. 50.I turn to consider whether England and Wales is the appropriate venue for the application and first consider the connection which the parties have respectively to England and to Russia, being the first two matters set out at section 16(2) of the Act. 51.The parties decided in 2010 to leave Russia for England. They have had their main home here since then. They bought their own property in London. They took out British citizenship. W and S have lived nowhere else during the last decade. Indeed, W has not visited Russia since 2015. S has had nearly all her education in England. 52.Neither party speaks much English and they communicate in Russian with each other. They have retained their Russian citizenship and H has spent much more time in Russia than in England. He does not own his own home in Russia and he stays in a rented flat in Moscow. 53.W’s family lives in Russia, H’s in Ukraine and Russia but their wealth, according to H, is in neither country. H has been at pains to dispossess himself of ownership of his Russian assets of any significance. H’s business activities are largely in Russia and Germany but conducted through entities which he says that he does not own but which are owned by ND. 54.The Russian order did not lead to any redistribution of the family assets. It has not been complied with in any way of which I have been told - s.12(2)(e). 55.H says that W could and should have claimed within the Russian proceedings. Her case is that this would have been futile as most of H’s assets would have been excluded from the court’s scrutiny and/or would remain in the current ownership. On the other hand, there is property in this country which would satisfy the large part of her claim - s.12(2)(g). 56.The effect of the Russian order in the current circumstances would be to give W one half of the value of the matrimonial home (i.e. about £2.5m) from which she would be expected to repay one half of the proceeds of sale of the villa (approx. £1.5m) so as to leave her with just £1m to house herself and S and to live off. I appreciate that H will say that this is W’s fault for having spent the Majorcan proceeds, but that is the reality, unless I were to find, which I do not, that the Majorcan money should be added back. If H’s appeal to recover £1.3m plus penalties for the sum loaned for the investor visa and penalties succeeds, W and S will be left with nothing either to live in or to live off. 57.H says that this is a Russian case and that the English court should not interfere. I disagree. W has long severed her links with Russia and the entirety of the parties married life has been spent in England. I regard there as being ‘substantial connection with England’, certainly greater than with Russia and it is appropriate for an order to be made by this court. As I have made plain, the Russian order does and did not provide adequately for the needs of W and S. H’s business activities58.H says that he established his investment business in 1992 and by 1998 had created a public construction and investment organisation practicing in the Moscow region. The details of his subsequent activities are set out at length in his first statement and are summarised at a schedule that appears at D276. Although headed “Investment and Profit 2005-2019” the schedule sets out business activities which with one exception produced profit only in the period up to 2014. 59.What is particularly striking about the schedule is that almost half of H’s wealth is said to have come from one project, a housing complex known as KK which produced some $20.6m paid over three years into the Bank of Cyprus. H says that it was these funds which were the source of the £1m for W’s investor visa and indirectly for the purchase of the second matrimonial home at £8.5m plus costs. This project was completed and paid for by 2009. 60.The second biggest profit earner was KP, producing some $7.6m. This was the result of a project into which H invested some $7m before the parties met and the profit was received in 2012 after they had met. Two garage developments produced $2.4m over a period of time up to 2008. 61.It is unnecessary to go through H’s statement and schedule in great detail. W makes the fair point that H’s disclosure makes it impossible for the figures to be challenged because there is an absence of underlying documents. That said, none of the figures have been challenged and they show, on the face of it, that the majority of H’s wealth was earned before 2010 and insofar as it was created afterwards was largely done on the back of investment made before 2010. While some of the profits did come in after the parties had set up as a couple, it was the minority of what H has made. 62.A large amount of time and money has been spent on W’s attempt to show that there has been a significant marital acquest. Unless W’s share of that acquest exceeds a needs-based award she will not receive a sharing award. 63.W has sought the assistance of Ms Hall of Smith and Williamson. I have seen her “report” albeit it is not evidence as I refused to allow expert evidence. It was provided to me by W and as I made clear its status does not amount to it being more than an aide memoire for W’s legal team to cross examine H. Both it and the evidence I have heard confirm to me that I was right not to permit the instruction of a SJE to value the acquest. I formed that view for a number of reasons. 64.A fundamental difficulty with the exercise is one that arises commonly with property development businesses. As one project is completed, the proceeds are gradually reinvested in another venture. Projects often take many years from the acquisition of land/buildings until development is completed. H had been a property developer long before he met W. If traced back, a significant but unquantifiable amount of the current value of all his projects would be found to originate from previous projects. Those in turn would have originated from projects before then. Much of what now exists will, if traced back, be found to originate pre-marriage. It is impossible for the court to do any sort of reliable assessment. 65.W accepts this, but says that it is as a result of H’s failure to give proper disclosure. I agree that H’s disclosure of documents relating to his business interests, including those which he has placed in the Foundation, has been very poor. I do not for one moment accept that he could not have produced much more and his saying that he has tried but that the Foundation or his son have been uncooperative is a smoke screen. But, even if he had produced information, I am confident that I would be still left with the problem set out in the preceding paragraphs. 66.Ms Hall’s attempt to calculate the value of the marital acquest by looking at the profit that has been obtained during the marriage fails, in my view, to ask the right questions. This is not a criticism because she is doing the best that she can, but the profit is built on the bedrock of what has been invested and the investment is a combination of old money, i.e. pre-marital money, together with new money earned by the use of old money. It is an exercise that is doomed to failure. 67.A further problem is that some of the profit that has been earned during the marriage has been used to fund the purchase of the matrimonial home and the Majorcan property. These are assets which I am fully taking into account in my award. Their value rests with the parties. If I was to adopt the approach of Ms Hall without taking into account this factor I would be double counting. 68.W, in effect, asks me to disregard H’s schedule, but, it sets out in tabular form what is to be found in H’s statement. W does not challenge what H has said about his premarital endeavours but says that he has earned much more since then. 69.I cannot be satisfied that sufficient has either been earned or preserved during the marriage to entitle W to the making of a sharing award. While I am satisfied that H did earn income and make profits during the marriage, a large amount was spent by H and W on property in London, Majorca and Cyprus. Big sums were put into what turned out to be failed investments. A very high standard of living was maintained. These will have only reduced what might otherwise have been an acquest. Whatever the deficiencies in H’s disclosure, the bedrock for any conclusion of a significant acquest is absent.