Case No. RS20D03594

.The law I have to apply47.I must apply section 25 of the Matrimonial Causes Act 1973, as amended, in deciding what orders to make pursuant to sections 23 and 24. It is the duty of the court to have regard to all the circumstances of the case. I must give first consideration to the welfare, while a minor, of the children of the family. I must then have particular regard to the matters set out in subsection (2), namely:-(a)The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity, any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;(b)The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future; (c)The standard of living enjoyed by the family before the breakdown of the marriage; (d)The age of each party to the marriage and the duration of the marriage; (e)Any physical or mental disability of either of the parties to the marriage; (f)The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family; (g)The conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it; and(h)The value to each of the parties to the marriage of any benefit which, by reason of the dissolution …of the marriage, that party will lose the chance of acquiring. 48.The overall requirement in applying section 25 is to achieve fairness. It was made clear in the seminal House of Lords decision of White v White [2000] UKHL 54; [2001] 1 AC 596 that there is to be no discrimination in financial remedy cases between a husband and wife. This was expanded upon in K v L [2012] 1 WLR 306, CA when Wilson LJ reiterated at [15]:-“what is unacceptable is discrimination in the division of labour within the family, in particular between the party who earns the income and the party whose works is in the home, unpaid.” 49.He went on to say that it is the essence of the judicial function to discriminate between different sets of facts and thus between different claims. I have to say that I prefer use of the word “differentiate” to “discriminate” but it is clear what he meant.50.In the case of Miller/McFarlane [2006] UKHL 24; [2006] 2 AC 618, the House of Lords identified three principles that should guide the court in trying to achieve fairness, namely:-(a)The sharing of matrimonial property generated by the parties during their marriage;(b)Compensation for relationship generated disadvantage; and(c)Needs balanced against ability to pay. 51.It follows that my first task is to assess the matrimonial property generated by the parties during the marriage. I must then decide in what proportions that matrimonial property should be shared, although the likelihood now is that it will be shared equally. There is no question of compensation for relationship generated disadvantage in this case. There may, however, be an issue as to needs if I decide that the matrimonial property is either very limited or that sharing it would be insufficient to provide for the Wife’s reasonable requirements, generously assessed, taking into account the resources available, the standard of living enjoyed during the marriage and any other relevant matter. 52.It is therefore necessary first to consider the principles on which I assess quantification of the matrimonial property. The first issue is the question of how the court goes about valuing pre-marital assets that should be excluded from matrimonial property as being an “unmatched” contribution and, therefore, not be subject to the sharing principle. I was referred to a significant number of authorities that analyse these arguments in great depth. There are two main different approaches. The first can be described as the “broad-brush” approach and was articulated by the Court of Appeal in the case of Hart v Hart [2017] EWCA Civ 1306; [2018] 2 WLR 509, in which Moylan LJ said at Paragraph [96]:-“If the court has not been able to make a specific factual demarcation but has come to the conclusion that the parties’ wealth includes an element of non-matrimonial property, the court will also have to fit this determination into the section 25 discretionary exercise. The court will have to decide, adopting Wilson LJ’s formulation of the broad approach in Jones, what award of such lesser percentage than 50% makes fair allowance for the parties’ wealth in part comprising or reflecting the product of non-marital endeavour. In arriving at this determination, the court does not have to apply any particular mathematical or other specific methodology. The court has a discretion as to how to arrive at a fair division and can simply apply a broad assessment of the division which would affect “overall fairness”. This accords with what Lord Nicholls said in Miller and, in my view, with the decision in Jones.”53.The second approach is to undertake a detailed calculation of the non-matrimonial property and then deduct the resulting figure from the overall assets to arrive at the matrimonial assets. Inevitably, this itself can be done in a number of different ways. The two most obvious are to be found in the cases of Jones v Jones [2011] EWCA Civ 41; [2012] Fam 1 and Martin v Martin [2018] EWCA Civ 2866, although even then there are a number of variations on the theme. The essential difference between the two approaches is that, at first instance, in Martin (then reported as WM v HM [2017] EWFC 25), Mostyn J used a straight-line approach to calculate the value of the non-matrimonial property. In other words, he calculated the number of years that a company existed before the marital partnership commenced and divided it by the total length that the company has been in existence. This gives a proportion of current value that can be excluded from the matrimonial pot. It has the benefit of simplicity. It does not require complex and expensive valuations many years after the event. Mostyn J said, memorably, that it resonated with fairness because “how could it be said that a day’s work in 1980 in creating this company was less valuable than a day’s work last week?”. The difficulty, of course, is that it does not reflect the situation in this case where the company was commenced in the 1950s but had only grown to less than 20 stores by 1997, as against exponential growth thereafter to a total of more than 100 stores on sale. For that reason, I reject that approach in this case. I consider it is far more likely to be of use in a case where it is one of the spouses who formed the business prior to the date of the marital partnership commencing, as opposed to a previous generation founding the company. 54.An alternative approach, found in the case of Jones v Jones, is to attempt to value the asset at the date the marital partnership commenced, with an appropriate uprating to that value to take account of things such as inflation that have taken place since. In Jones v Jones, the concept of the “springboard” effect was raised. In other words, although the value of the asset was low at the time, the foundations had been established from which significant growth in value proved possible thereafter. One difficulty with this approach is that I do not have a valuation of the business in 1997. All I have is an indicative valuation found in the memorandum by Mr D in 2006. It does have to be acknowledged that the Jones approach would, in this particular case, enable the court to consider the origins of the JVPs and the effect they had on the valuation of ABC Inc but I am clear that it also has weaknesses, such as the exponential growth in the latter years. Other cases have considered concepts such as active and passive growth. I remind myself that, in this particular case, the issue is set out starkly by the fact that it is the Husband’s case that the entirety of the proceeds of sale of ABC Inc should be excluded from the sharing principle because of the origins of the business long before the marriage. If I find that he is wrong about that, I will have to consider, in the round, the various approaches set out in the authorities. If I decide to go down this route, rather than the broad brush approach to be found in Hart, I will then have to come to a reasoned conclusion as to what proportion of the assets should be treated as non-matrimonial because of their origins. Whatever I decide, the result will clearly involve my making a number of findings of fact that are likely to lead me to a concluded view as to correct approach to adopt. 55.I was also referred to the cases on “matrimonialisation” and, in particular, the analysis by Wilson LJ in K v L (above) of Lady Hale’s observations in Miller that “the importance of the source of the assets will diminish over time”. Wilson LJ concluded, at [18] that the true proposition was that “…the importance of the source of the assets may diminish over time (my emphasis)”. He continued:-“Three situations come to mind. (a) Over time, matrimonial property of such value has been acquired as to diminish the significance of the initial contribution by one spouse of non-matrimonial property. (b) Over time, the non-matrimonial property initially contributed has been mixed with matrimonial property in circumstances in which the contributor may be said to have accepted that it should be treated as matrimonial property or, in which, at any rate, the task of identifying its current value is too difficult. (c) The contributor of the non-matrimonial property has chosen to invest it in the purchase of a matrimonial home which, although vested in his or her sole name, has – as in most cases one would expect – come over time to be treated by the parties as central matrimonial property”.56.Finally, I was taken to the cases on needs and, in particular, the decision of Roberts J in Juffali v Juffali [2016] EWHC 1684 (Fam). Needs do not exist in a vacuum. Roberts J identified a number of important principles:-“(i) The first consideration in any assessment of needs must be the welfare of any minor child or children of the family.(ii) After that, the principal factors which are likely to impact on the court’s assessment of needs are (a) the length of the marriage; (b) the length of the period, following the end of the marriage, during which the applicant spouse will be making contributions to the welfare of the family; (c) the standard of living during the marriage; (d) the age of the applicant; and (e) the available resources as defined by section 25(2)(a).(iii) There is an inter-relationship between the level at which future needs will be assessed and the period during which a court finds those needs should be met by the paying former spouse. The longer that period, the more likely it is that a court will not assess those needs on the basis throughout of a standard of living which replicates that enjoyed during the currency of the marriage.(iv) In this context, it is entirely principled in terms of approach for the court to assess its award on the basis that needs, both in relation to housing and income, will reduce in future in an appropriate case.”The evidence I heard57.In the end, I only heard oral evidence from the two parties. As it is his application, the Husband gave his evidence first. In answer to questions put to him by his counsel, Miss Bangay, he told me the intention was that each child should get a property. He did, however, say that he would expect future properties to come out of the Trust for the children, but that Trust had not been set up when Child A’s property was purchased. I have to say that I consider this to be a sensible approach. He said he intends to settle further assets into the Trust. He viewed the $50 million as a first tranche. Property W had been mentioned to Child B as it is available but Child B said it was not Child B’s kind of property and was not in the location Child B would like to live. It is a four bedroom town house. He was then asked about DEF Inc. He said that the trusts have “impaired” the interest, by which he meant written it off, as they took the view the business would never make enough profit to repay it. The difficulty, of course, is that the business is now making a profit and Mr I’s view is that the value of DEF Inc is sufficient to repay the interest. I cannot believe that the relevant trust would not be able to accept the interest, even though they had previously written it off. He was asked about his lawyer in City Y saying that he would soon expect DEF Inc to be sold. He said this was pure speculation, although he could understand why the lawyer might think that. He said that, initially, neither party could outvote the other so there would not have been a sale without agreement and he could stop a sale happening but that was not now the case. Whilst I accept that this is factually correct, I cannot see what difference it really makes as both the Husband and the PE Company want to maximise their return on the business. I therefore take the view that their respective interests remain entirely aligned. I do accept that one or other might, previously, have taken the view that they might do better to delay a sale. Such a position is not now available to the Husband, but, delaying a sale, would be a gamble and I cannot really see that the Husband is likely to be in any better position to assess future prospects than the PE Company. The Husband did then say that there are now more than 50 stores rather than the c. 30 reported by Mr I. Miss Stone made much of that in suggesting that Mr I had not been given the full picture but I am satisfied that the explanation is that a further fifteen or so stores were acquired when another business was bought a few years ago. 58.The Husband then said that the transfer of the shares in DEF Inc to the Trust for the children was the Wife’s idea. She denied that was the case and, in any event, the position after the breakdown of a marriage is very different when the available assets have to be divided between the two spouses. He was then asked about the tax authority of Country X. He was adamant that you cannot negotiate with that authority as they only deal on the basis of tax principles. I regret to say that I am clear that he is wrong about that as the documents all indicate that negotiation is exactly what occurs. Moreover, the without prejudice indication given by the tax authority is clear support for this being the case. I do not underestimate how difficult such negotiations may be but I am clear that “horse-trading” is exactly what is likely to occur. He was then asked about ABC Inc. I have to say that, throughout his evidence, he downplayed his role in the business to the extent that he gave a picture of his father, JR and Mr C, the Chief Executive who succeeded him, being entirely responsible for every achievement, whilst the Husband really just got in the way. I simply cannot accept this presentation. He made the fair point that he had joined the business after it had already been in operation for over 30 years and that JR had started it from scratch. That I accept. I also accept that it was well established with a nucleus of stores and staff in place when he took over, but I am clear that it was a small, albeit successful concern that was transformed during the Husband’s time at the helm. A clear example of this is that I asked him if he was the Chief Financial Officer before he was Chief Executive Officer and he made the point, which I am sure is correct, that it was not a sophisticated accounts department that he joined. It was basically just him. He did say that the JVC concept was created by his father, which I accept. He added that his father was keen to roll that out but the simple fact was that it had only been done on a modest scale before the Husband arrived. I am clear that it was the Husband who took this on and developed it successfully as he himself says on his website and as was said in the eulogy to JR to which I referred above. The Husband then said that JR never released his grip on the business as he did not want to give up control. He said that JR held the purse strings right to the end. There may be some truth in this in relation to capital value but I am clear JR was not controlling the company at this stage. After all, JR was in his mid 60s when he appointed the Husband as CEO. I do not accept JR was the key figure thereafter. The Husband then said that Mr C was appointed as CEO in the mid-2000s as the business was growing at a pace. By then, JR would have been in his mid 70s and the fact the business was growing at a pace can only have been down to the Husband. The Husband added that, after he went to business school, he realised he was not up to being the CEO, but one of the great qualities of a successful businessman is getting in others to take the project forward. Moreover, the Husband remained as Chairman. 59.He then told Miss Bangay that the yacht has made the property on the private island and the airplane somewhat superfluous. He said it was time to move on but he had not wanted to sell either of these assets during these proceedings as it would have been likely he would have been criticised for doing so. He said that “we cannot do justice to so many lovely places”. Miss Stone is critical of him in this regard but I consider she is wrong to be critical. It will, of course, be up to him if he does sell or not, but I found his justification for his approach persuasive. He added that he intended to get rid of his timeshare but he was happy for the Wife to retain the other one. Again, this seems sensible. He was then cross-examined by Miss Stone. She dealt first with the Pre-Nuptial Agreement. He said he relied on the spirit of the agreement, namely that the family trusts and the resources flowing from ABC Inc were non-matrimonial. He accepted that there were no valuations given for these assets. He also accepted that the Wife would have got no financial provision at all if the marriage had been dissolved whilst it was operative, if he had not given her any resources voluntarily. He stressed that its relevance was to establish the dynastic nature of the trusts. He did then accept that there had been a joint effort between himself and his father from the 1980s onwards when the business was “significantly enhanced”. He accepted that every single trust was set up during the marriage, other than the two trusts set up by JR and that, in general, both himself and the Wife were beneficiaries of these trusts, as were the children. He did, however, make the point that the trusts were discretionary. He accepted that the Wife is a principal beneficiary of the trust that holds the shares in DEF Inc. 60.Miss Stone then asked him about his role in the business. He said that, as CEO from 1993 onwards, he was working with his father until Mr C was appointed in his place but I do consider that answer is not a true reflection of the position. I am sure JR was still interested and that he would have been consulted as Chairman, but the Husband was the driving force. I accept the Husband was rolling out the model that JR had crafted but it was the Husband rolling it out. He then said that he “stuck to the knitting and not stuffing it up” but I am clear that is not a true reflection of the position either. He then said that it was an officer of the company who recruited the JVPs and found new stores. Even if entirely true, the Husband chose the officer, entrusted him and approved his selections, which were clearly very successful. He was asked about the memorandum by Mr D in 2006 which put an indicative value of between $210 – c. $260 million on the business. Miss Stone compared this to it selling a few years ago for a total in excess of $1 billion including the properties. I accept Miss Bangay’s point that the 2006 figure was not a valuation but an “indicative figure” but I do consider there is considerable force in the comparison. There was huge growth in this business under the Husband’s stewardship. 61.He was then asked about the eulogy spoken by JR’s friend at JR’s funeral. He talked about “JR and IR developing” the JVPs. The Husband’s response that the friend knew the Husband was in the audience is not an answer. He was speaking at JR’s funeral and would not have downplayed JR’s role. The Husband did, however, accept that he and JR were “a great team” or “a dynamic duo” but he continued to stress his father’s “heavy influence”. He was then asked about his website and he confirmed that it does say that it was the Husband who achieved so much in the business. He said that it was JR who got the name of ABC Inc from his travels but it was the Husband who implemented it, apparently following some resistance from the JVPs. He said a lot of the team was in place when he joined but he accepted he added to the team. He then repeated that the real growth occurred when Mr C took over; and that it was Mr C who brought in a lot of the new sophisticated management team. Again, I find that he underplays his own role. He did accept that he led the company during a period of rapid growth. He said there were 16 JVPs at the time of the marriage and they had got to 45 when he “sacked” himself, although Miss Stone suggested it was 60 stores by then. I cannot resolve that dispute but it does not matter. He was asked about the successful marketing slogan, but he said it was the idea of one of the JVPs. Again, however, he was constrained to accept that he oversaw its implementation. Gradually, the other stores adopted it and, said the Husband, he and JR thought it was a good tool for marketing but it did take some time for it to catch on. He then repeated that his achievement was that he didn’t “stuff it up”. I find that he did far more than that but, in any event, not “stuffing it up” is an achievement in itself. 62.He said that the eventual purchaser of ABC Inc did approach him in 2009 about a sale but the company had not been put on the market in 2010. I accept that. He added that he did cultivate the relationship with the purchaser for several years, which I also accept. He said that the JVPs were becoming difficult to manage. He wanted to sell. He said the board engaged Mr C to get it ready for sale, although that is not strictly correct as Mr C was appointed in 2005. I accept the board directed Mr C to prepare the business for sale. He then said that the business could not have afforded to pay out $340 million in the mid 1990s, which I also accept. He said he had lost quite a lot of money as well. For example, $12 million was lost in a venture which went into administration in 2019 and the other start-up company referred to above is $11 million down. He said he hoped it would be a success but I doubt it will ever be in a position to repay that money. Such business failures, which have to be balanced against the great successes, are exactly what happens to businessmen such as the Husband. He then said that he could not see why the boat could not be used by the Wife notwithstanding the divorce. He said she could use it if she wants. He said similar things about Property J, the property on the private island and the jet. He said that it would be a waste of money to rent a separate boat but the difficulty with that is that the other spouse almost always feels completely differently and I entirely accept that this is true of this Wife. He was asked why all these assets were held in a trust named after both spouses, namely the IR & OR Family Trusts. He said that this trust was settled on 4 July 2003 and it is commonplace to name it after the parents. I accept this evidence. He was then asked about the Z Street Property. He told me that he had a “fitted study” at the property. I was shown photographs of a room that did not look particularly grand. It did have both a desk for him and one for the Wife in a window nook. I really cannot see that the existence of this study is a good reason for the Husband to keep this property. He did accept that the redevelopment of the Z Street Property was a joint effort, although not 50/50. They each worked on different aspects as a team. It was to be the family home. He accepted that it had hardly been used to date due to the refurbishment and the various lockdowns. He said that Child D had stayed there for a few days at Christmas 2020 with the Wife and the other children. He had been there for ten days in November 2021 and the week before the trial, when he appears to have spent five days in the Z Street Property and three in Property J. 63.He said that Property W was not conducive for a young child to live in as it has an older demographic in the neighbourhood. It is a four bedroom property. One of the bedrooms is in an external bungalow. Miss Stone suggested that the Wife could not live, or even stay, there with all of the children. He seemed to accept that, saying that it was a temporary base whilst the work was done to the Z Street Property and that the older children could stay in the self-contained flat in the Z Street Property. He was asked about the costs of the boat. He said it had undergone a refit in 2020 at a cost of €330,000 as well as a further €70,000 in 2021 to get rid of unsightly marble interiors. It would cost around £300,000 per week to charter but it has not been rented out at all. Turning to the private plane, he said it was the second one he had owned. It was for travel within Country X. It did have annual running costs of £1,967,439 but it cost less after charters. The cost for 2021 was $1,745,042 but I do not believe this includes depreciation. He was unclear as to the charter costs, thinking it might be $12,000 per hour but he said the fuel alone costs $8,000 per hour. He was then asked about his expenses. He accepted that the schedule showed expenses of £4,255,931 per annum but this does not reflect the hiring out of the plane. A more accurate figure appears to be the sum of £3,144,640 for the year 2021. Miss Bangay, in her closing submissions, says that this figure is not reflective of the true position but I cannot accept that submission as it is only fair to include the costs of running Property J, the property on the private island, the yacht and the plane in a schedule of expenditure. The only item that I do accept is capable of deduction is the sum of $453,000 for running the family office. 64.Miss Stone then turned to the issue of the enquiry by the tax authority of Country X. I have already made some observations about this. She referred the Husband to references from Mr G to the hope that there would be “meaningful discussions” before Summer 2022 and that there was the “potential for a negotiated settlement”. There really is no answer to that. Nevertheless, the Husband insisted that he would have to pay somewhere between c. $40 million and c. $70 million but I consider that is quite wrong, given that the tax authority’s indicative position, admittedly without prejudice, is c. $40 million. I really cannot see how the liability can go above that figure unless it is handled incredibly badly on his behalf. He then accepted that CR, his sister, would be likely to pay 25% of whatever was the final figure as that had been the division of the assets. This must be right. He was asked about various points made by Mr H but I do not feel he was really in a position to respond to those points. I will have to do the best I can. He said he had invested c. $20 million in DEF Inc from non-matrimonial assets that originated from JR. Miss Stone did ask lots of questions about the pressure allegedly put on her client in relation to signing the DEF Inc Side Deed at the last minute. I do not propose to set out either the questions or the responses at this stage but will make some brief findings later in this judgment. 65.He was then asked questions by Miss Bangay in re-examination. In relation to some of the questions, she did not get the answer she had expected. I am clear that, in one respect, relating to whether he called a board meeting to obtain disclosure from the PE Company about DEF Inc, the Husband was wrong in his response, but I really do not think it matters. Miss Stone had been very critical of him in relation to the disclosure provided to the valuer but the valuer had been able to prepare his valuation, albeit it late in the day. Moreover, it does appear that Mr F was not as cooperative as he should have been, perhaps as a result of the dispute about the Side Deed. Miss Bangay asked about the money the Husband had received before the distributions in 2007. The Husband responded that he had received $150,000 per annum as salary and distributions from the Trust in addition to the salary. He said that this was as and when needed. His sister and he “ran them past” his father before they were paid. I accept that evidence. In that respect, JR did keep control of the family money prior to 2007. JR’s only requirement was that the payments would not harm the business. He accepted that the Wife moved out of the property in West London when he returned and that he did not suppose she would have moved out unless she knew he was moving in. Given that he controlled all the assets in Country X and the boat, I consider it was ungallant of him to move back to the property in West London, particularly as it was in her name. It would have been far better if he had rented somewhere else, given that they were being divorced. It is, of course, clear that he did not want the divorce and does not see the need for it but that does not mean that it is reasonable simply to return to her property. 66.The Wife then gave evidence. She told Miss Stone in her evidence in chief that she was a corporate wife who supported the Husband. She believed in him. She was hardworking and had to juggle her various commitments, running a home and five children and attending functions at his request, including one very shortly after the birth of one of the children. The Husband did do a lot of travel in the early years, namely two to three nights per week. I accept this evidence. I accept that the contributions of each spouse during the marriage were equal but that does not deal with the main issue, namely the undoubted fact that ABC Inc was established decades before the marriage. She was asked about the Pre-Nuptial Agreement. She said she thought it only lasted for three years or until the birth of the first child. Although she is wrong about this, given that this was my reading of the document until Miss Stone got me to consider it carefully, I cannot possibly criticise the Wife for her understanding. I am absolutely clear that there was to be a review after three years, or the birth of the first child. This review never happened as the parties basically just forgot about the document. She was taken to her schedule of expenditure for the ten month period ending at the beginning of October 2020. It was in the sum of £1,363,780. I do consider this to be a very high level of expenditure. She probably justified it on the basis of the costs of running the plane and the yacht but the two are not really comparable. She did explain that she had rented a property in the country during lockdown but that only amounted to around £59,000. She added that she had rented an unfurnished property in Prime Central London so she had to spend £260,843 in furnishing it. Child A’s medical treatment had cost £68,451 and the Wife had been paying school fees. The rental of the property in Prime Central London had been £209,476 during this period. Miss Stone then asked her about the art business. She said that she had always wanted to study art but the Husband had not been supportive. She could not run a studio at her property so she had rented premises. It was on a five year lease but she can sub-let. I was surprised that she had done this before the issue of Child D’s education had been determined but, in the overall scheme of things, the cost is not excessive. She was then asked about her future plans if the court ordered Child D to go to the school in Country X proposed by the Husband. She told me that, if so, she considered that she and Child E would go as well. Her base would be back in Country X as that would be the only way she could parent both of the children. She said, however, that she would still maintain a home in London given that one child is studying here and another is studying in mainland Europe.67.She was then cross-examined by Miss Bangay. She told Miss Bangay that she had made the decision to return to Country X if Child D went there. She said she had been giving it serious thought as to how they could parent two young children so far apart and she had decided it was impossible. She had been fairly certain even when Miss Stone and Mr Brooks had prepared their Case Summary but she was now completely certain. She said she knew in her heart that there was no other option other than to take Child E back as well. She had not issued an application for permission to remove Child E from the jurisdiction. They would need to discuss the right time for Child E to move. There was some suggestion that the Husband might oppose Child E’s removal but, although I am not hearing the Children Act proceedings, I doubt that the Wife would be forced to remain here with Child E against her wishes, particularly if Child D was back in Country X. Miss Bangay is critical of the way in which this evidence has emerged and she is entitled to be critical, although I do accept that, pending the receipt of the independent social worker’s report in January 2022, the Wife might have been confident of success in her application for Child D to attend the school proposed by her. The Wife accepted that she would not need a country property in this country if Child D and Child E are in Country X, which is clearly right. She said, however, that she would want a country property in Country X to be able to offer the same experience as Property J. I will make my findings of fact in due course but I cannot, at present, see that a property akin to Property J would be appropriate in Country X.68.She was asked about the two telephone conversations she is accused of having with the Husband in which it is said she attempted to put unfair pressure on him. The first was in relation to prospective changes to the privacy rules in relation to financial remedy proceedings. She said that she was concerned about changes to the privacy rules as the family are incredibly private and she could not see why they would want articles in the press that would affect them and the children. She denied saying it like the Husband said, saying there was no spite and vengeance, although she accepted she might have been emotional. I am satisfied the conversation was, essentially, as described by the Husband. She was also asked, later in the cross-examination, about the conversation prior to the application about signing the DEF Inc Side Deed. She said that the Husband called her to put pressure on her to sign. I accept that. She said that she got upset and was crying. I accept that. She denied saying she could not care about DEF Inc and that she would only sign if the Husband agreed to Child D remaining in this country but, again, I am satisfied that, in her distress, this is broadly what she did say. She was asked about her move to rented accommodation in Prime Central London and she said that the Husband made it clear that he was not moving out of the property in West London so she didn’t have a choice as it was not possible for them to remain in the same house. I have already indicated that I accept this was a reasonable position to adopt. She was then asked about her offer to purchase a country estate. She said that she liked the look of the property; went to visit it; and recommended its purchase. She accepted that it is set in 89 acres; that there are ten bedrooms in the main house; and that it has four other properties, which she said she would rent out. Miss Bangay was very critical of her for considering this purchase but, in the light of the other properties, particularly Property J, the boat and the plane, I cannot say that a purchase for £7.5 million was really unreasonable at that time. 69.She was then asked about the art business and her taking a five year lease. She justified this on the basis that she is able to sub-let, although in the current climate I would have thought it was by no means certain she would be able to find a tenant. The rent is £45,000 per annum and she has spent £100,000 equipping it. She denied that this was her putting down roots but I have already indicated that I consider it would have been better if she had waited until the decision as to Child D’s education had been taken. She then said that she would not intend to be here indefinitely and that there was no need for her to reside here if her children are not here. I have to say that I felt she responded badly to Miss Bangay’s legitimate questions and she became quite argumentative at times, although she also became understandably distressed at others. Turning to the Pre-Nuptial Agreement, she said that the Husband told her it was solely to please his father and I am sure she is right about that. She acknowledged that JR was the ruling patriarch and “a force”. She accepted that he wanted to protect his wealth and the family wealth. She said she didn’t have an understanding of the trusts. Indeed, she accepted that JR and KR controlled the assets at the time of the Memorandum written by Mr D. She added that she was not aware of the big distribution in 2007 when the Husband received $170 million out of the figure of $340 million. I was slightly surprised by that but have no reason to doubt it. She said that, at the time, there were more and more shops being opened. She is clearly correct about that. Each matrimonial home purchase was bigger but money was never discussed with her. 70.She said it was not her idea to put the proceeds of DEF Inc into the children’s trust. She did not know that the funds to start DEF Inc came from JR as it was not discussed with her. Miss Bangay then turned to the issue of the DEF Inc Side Deed. Not unreasonably, she said that she had to be guided by her legal team. She acknowledged that the loan to Child A in relation to Child A’s property purchase was intended to be written off at an appropriate moment. It follows that it must come off the assets schedule. Turning to the Trust for the children, she said that they had discussed placing a substantial sum of money into the trust openly and she agreed. She accepted that she received £4.4 million on the sale of Flat 1 in 2019. She said that the Husband told her that the receipt of this money would avoid his office having to send money over to her. She added that there had never been any constraint on her spending but I do not find that she had previously spent at the sort of rate she has spent since receipt of this money, although she has obviously previously enjoyed access to all the various properties, boats and planes owned by the parties. She said she had not provided a budget with her voluntary Form E as she had not known what the family had been spending. She was then asked about her schedule of expenditure from November 2019 to October 2020. She said she paid for Child A’s medical treatment. She had spent £47,000 on art, which I do not consider was unreasonable in the context of the wealth of this family. She could not remember how she spent £35,000 in cash but she was paying her cleaner and housekeeper in cash, which will largely explain it. The figure of £127,446 for the children included their school fees. She could not explain household/ groceries of £178,849, although she said that there had been renovations to the property in West London during that period. She spent money on her lawyers in the sum of £53,894 although some of that was medical bills. She defended the spending of £260,843 for furnishing her rented property in Prime Central London, saying she had had no choice. In the context of this case, it is not unreasonable to spend such a sum on furnishing a property, although it was largely wasted money. She was then asked about shopping of £148,623. She thought this was clothes, gifts and anything else not included elsewhere. She was asked about her clothes budget. She thought a reasonable budget was around £10,000 per month. She denied that, overall, this level of spending was, to quote Miss Bangay, “an extraordinary ramp-up” but I am satisfied that it was a considerably higher level of spending than she had been used to before. 71.She was re-examined by Miss Stone and she told me that the budget prepared for her by Pennywise, in the sum of £644,000 per annum did not include American Express spending although Pennywise had everything else. She made the fair point that she had not been able to spend properly on holidays during lockdown. She was asked about the Memorandum by Mr D which said that “IR is the key family member in the ongoing management of the family business” and that JR “is no longer involved in the day to day management of the family business assets” in 2006. All she could say was that the Husband was incredibly busy. She added that he would complain that his father would drop into the JVP stores and “aggravate” the JVP running it. I thought that this had the ring of truth. My assessment of the assets72.I propose to deal first with my findings as to the correct approach to the various disputes on the assets schedule. I will then deal with briefly with the Pre-Nuptial Agreement before deciding on the extent of the matrimonial property in this case. I will then deal with the issue of the DEF Inc Side Deed before coming to my conclusions as to the correct order to make in this case. The appropriate deduction for tax liabilities in relation to the enquiry by the tax authority of Country X73.I have already made a number of observations as to the tax authority enquiry. I accept that it has been ongoing for a long period of time and that it has been worrying the Husband considerably. I also accept that he has already spent around $2 million on legal and accountancy fees in Country X. I am also clear that the figures have fluctuated very considerably but this cannot be a criticism of the Husband as he has just provided the amounts given to him by Mr G. I am, however, clear that I cannot take the likely liability at the maximum sum sought by the tax authority, namely c. $70 million. I am clear that there will be a negotiation. The letters from Mr G make this clear. Indeed, it is made even clearer by the fact that the tax authority has asked for a further six months to consider the position put forward by the Husband’s advisors. Moreover, Mr G thinks the tax authority may ask for a further six months thereafter. It is, therefore, entirely clear that the points raised on behalf of the Husband have not been simply brushed aside by the tax authority. Finally, the fact that the tax authority has made a without prejudice indication, whatever its status, that it would accept c. $40 million, makes it very difficult to accept that the liability could be higher than this for two reasons. First, if it was thought by the Husband’s advisors that there was any danger of this, they would surely have immediately settled at that figure. Second, the reasoning for this offer is that, if they get their tax under one head, they would not pursue it under a different head, which is logical. 74.I have found it difficult to assess the likely amount that will finally be agreed. I cannot accept some of the points made by Mr H, such as the 50% deduction on the basis that the tax authority accepts that one point raised by the Husband’s team is a “reasonably arguable position”, although some of his other points seem to have more merit. Doing the best I can, I consider that there will be some further reduction from the without prejudice indication of c. $40 million. I assess the likely figure at c. $35 million, of which the Husband will be responsible for 75%, namely $26.25 million. I realise that this may be unfair one way or the other but it is the best I can do in the circumstances. The Husband’s assertion that I should deduct income tax on the basis that all the assets are removed from the Trusts by way of dividend for use by the Husband75.The next issue is the assertion by the Husband that I should deduct the sum of $37.783 million and c. $400,000 for tax on the basis that I should treat all the assets as net of all tax. In particular, to get all the money from the various trusts, he would have to pay tax on dividends to withdraw those assets over and above the loans that are due to him. Miss Bangay and Mr Sear rely on the speech of Lord Nicholls in White v White [2000] 2 FLR 981 at 996E when he said:-“Finally, Mrs White criticised the use of net values, arrived at after deducting estimates of the costs and capital gains tax likely to be incurred if the farms were sold. Mr White still owns and uses the farms. The farms have not been sold. Counsel submitted that use of net values in this situation should be discontinued. I do not agree. As with so much in this field, there can be no hard and fast rule, either way. When making a comparison it is important to compare like with like, so far as this may be possible in the particular case. In the present case, a comparison based on net values is fairer than would be a comparison of Mrs White’s cash award and the gross value of the farms. Under her award, Mrs White will have money. She can invest or use it as she pleases. Mr White’s equivalent as cash is the net value of the farms. The farms have to be sold before he can have money to invest or use in other ways. What will be his financial position if he is able to retain the farms or parts of them? Will he be better off financially? Dairy farming is currently languishing in the doldrums. On the evidence, there is no reason to suppose that the farms are likely to yield a better financial return at present than the investment return to be expected if Mr White sold up and invested the net proceeds.”76.It follows that, although the court usually operates on net figures, I must consider the specific circumstances of this case. Miss Stone and Mr Brooks make a number of fair points, such as that some of the assets are bound to remain in the trusts, and that using the trusts provides a huge tax advantage. In so far as there is any tax, they say it is likely to be a long way off before it has to be paid. They point to the fact that Property J, the property on the private island, the yacht and the plane are all owned by trusts without any disadvantage to the family. On the other hand, I cannot ignore the fact that the Husband is going to have to raise a significant amount of money to discharge his liabilities to the Wife. She seeks a lump sum of £57 million. The Husband only has around £10 million in investments in his own name so, if that was the lump sum, he would have to extract £47 million from the trusts. Although, overall, he is owed some £94 million, he is only owed £24,388,881 by GHI Capital, which is likely to be the source of much of the lump sum, although he could borrow against other trust assets. Moreover, he owes various trusts £38,796,647. Finally, it is always possible that the law will change in Country X to make it very unattractive to hold property assets in trust. I have already indicated that I do not consider it would be right to require him to change his tax status to assist or to use any benefits available via the children, unless, of course, the money was being given to the children outright. 77.Again, I take the view that I must do the best I can. There is a liability but it is uncertain both as to quantum and timing. I propose to take the figure at half the maximum of $37,783,658, namely $18,891,829. The treatment of the interest on the DEF Inc loan notes78.Mr I of ABCD valued DEF Inc on the basis that it was a going concern, with a significant EBITDA that, in consequence, could meet all its liabilities, including interest on the Husband’s preference shares. The fact that the trust has written off this interest is, I find, totally irrelevant. The interest has not been written off in the DEF Inc accounts and it is quite clear, given the valuation of Mr I, that it is now able to pay the liability. This means that the total value to the Husband of his interest in DEF Inc must include the interest on the preference shares. Indeed, given that Mr I was clear as to this, the only way that the Husband could have challenged this would have been to call Mr I and cross-examine him about it, which did not happen. It follows that I am clear that the value of DEF Inc must be included in the asset schedule at £26,740,512. In any event, if I had deducted the interest, it would just have increased the net proceeds of sale of DEF Inc by the amount of the interest deducted. Ironically, this would have meant that the Husband would receive slightly more for his interest, as the proceeds of the sale of the shares will be taxed as a capital gain at a lower rate than the interest. I propose to take the lower figure on the basis that the interest is paid in full. The future costs of the Children Act proceedings79. I am clear that I should deal with the parties on the basis of a level playing field going forward. The entirety of the Wife’s unpaid costs in the sum of (£1,291,341) have been deducted. This includes the unpaid costs of both the financial remedy proceedings and the Children Act proceedings. The same must apply to the Husband, so I deduct a further sum of (£147,413) in addition to the existing sum of (£563,925). If there is any subsequent saving in costs, it is likely to benefit both parties equally so it is entirely fair to deal with it on this basis.The treatment of the loan to Child A to purchase a home;80.Both parties agreed that the loan given to Child A in relation to the house purchase would be forgiven in due course. I am quite clear that this is what they agreed and this is what will happen. The loan of £2.6 million is therefore not an asset of the parties and should be removed from the schedule. The inclusion by the Wife in her schedule of the value of the Trust for the children81.In the same way, the parties agreed that the money put into the Trust for the children was to be exclusively for their benefit. In one sense, this was dynastic assets cascading down the generations. Again, the parties will derive no benefit from this money and the value of £27.5 million should be removed from the schedule. It may, however, be relevant to the arguments on non-matrimonial property that this sum has already been dealt with in this way.Two relatively small loans made by JR’s estate and a trust belonging to KR to the IR Holding Trust82.Miss Stone did not dispute that these loans are documented and outstanding. Her case was that they are “the softest of loans” as they are owed to JR’s estate and KR’s trusts. I do not accept that I should ignore them. It will be up to KR to decide how to leave her assets in her estate. She may leave them in part to the Husband although she may think he has had enough and leave them to CR or to the children of the family. Either way, they are legitimate loans and should be deducted from the asset schedule in the sum of £1.1 million.