Case No. BV20D07073

v Sharp [2017] EWCA Civ 408 that the failure to enter a pre-nuptial agreement does not result in a presumption of sharing.56.I was referred to a number of authorities that make it clear that matrimonial property can be divided unequally, even in the absence of special contribution. In S v AG [2011] EWHC 2637 (Fam); [2012] 1 FLR 651, Mostyn said at [8]:-“While matrimonial property will normally be divided equally, this is not an invariable rule. The reason for this is that sometimes the matrimonial property in question will not be the product of the endeavours of the parties within the social-economic partnership that is marriage….Sometimes one party brings assets in which become “part of the economic life of [the] marriage…utilised, converted sustained and enjoyed during the contribution period”….Even if there has been mingling, the original non-matrimonial source of the money often demands reflection in the award. Thus in S v S [2007] 1 FLR 1496, Burton J divided the matrimonial property 60/40 to reflect this factor.”57.Indeed, it is clear that even the matrimonial home may not be divided equally if unequal contributions to its acquisition can be demonstrated. In Vaughan v Vaughan [2007] EWCA Civ 1085; [2008] 1 FLR 1108, Wilson LJ said at [49]:-“I consider that the husband’s prior ownership of the home carried somewhat greater significance than either the district or circuit judge appears to have ascribed to it”.58.I was also referred to my own decision of FB v PS [2015] EWHC 2797 (Fam); [2016] 2 FLR 697, where the matrimonial home had previously been owned by the Husband’s parents and he had grown up there. I accepted that this justified a departure from equality.The factual issues59.There are certain factual issues that I must determine before I consider how my findings impact on the correct division of the assets in this case. The only evidence I heard was from the two parties. The first to give evidence was the Husband. He is clearly an immensely able and intelligent man, who had a stellar career, rising to the very heights of Firm H and earning very large sums of money in consequence. As with so many of the cases I hear, his determination to save tax has caused him nothing but difficulties. I find it quite remarkable that he transferred what is now £80 million to the Wife without any clear understanding of what was to happen thereafter. He accepted, in answer to questions from Mr Todd, that he made the transfers with free will and they had to be gifts to satisfy HMRC. He added, however, that the rationale was that the assets would then be put into trust by the Wife. It was clear that he expected to be able to live off the assets, even after they were placed in trust. I find that a difficult concept for a number of reasons. If it is a genuine discretionary trust, the trustees decide how to deal with the assets. A trust is definitely not a quasi-bank account of the settlor/the settlor’s spouse. Moreover, in this case, there was the added complication of the position of HMRC. In answer to the discretionary trust point, the Husband said that the Protector, namely the Wife, could sack them if they did not do what the parties wanted. Whilst true, the next trustees should, in theory, also exercise their discretion appropriately. Putting assets in trust is very different from transferring them from one bank account to another.60.He was asked about being a beneficiary himself. He said that Mr P told him he could not be a beneficiary at the time the trust was established, but he could be added later. He relied on an email from Mr P but that email only said that “further beneficiaries” could be added. If the Husband could not be a beneficiary on the date of settlement, I do not see how he could be joined later unless it was with the intention of misleading HMRC. Perhaps more importantly, it is the height of folly to transfer £80 million to a trust without having the exact legal position set out clearly and authoritatively. Moreover, he left himself with such little cash that he has had to ask the Wife to support him and pay his costs, during the currency of these proceedings. He accepted that he was not calling Mr P to give evidence, despite the written warning of possible adverse inferences being drawn from this failure. He then said that he was not disputing that he divested himself of all his interest in the assets. I have to say that the advice received at the time in relation to the Wife’s position was equally unclear. A memorandum from Firm M to her dated 20 June 2016 raises a number of issues but does seem to suggest that she can be a discretionary beneficiary, or a life tenant, so long as she remained non-domiciled. Having said that, she gave clear evidence to me that she did not wish to return to Country C even after the children finished their education, although I accept that she might have thought differently in 2016/2017. Moreover, I would have thought that it would have been necessary to consider her becoming deemed domiciled in due course. It does appear as though none of this was properly explored or considered by the parties.61.In any event, I accept Mr Todd’s submission that the Husband is now estopped from arguing that the money did not legally and beneficially become the property of the Wife. Equally, I am not going to make any findings that he acted under a mistake, given that he has abandoned the mistake/recission claim. He blithely says that he could have benefited from the money once it was placed in trust but I am not nearly so sure. He has not called Mr P of Firm M to give evidence, despite having been warned by the Wife’s solicitors that I would be invited to draw adverse inferences if he did not do so. There is therefore absolutely no evidence that the Husband could have been a beneficiary of the trusts. I take the view that he was giving the assets to the Wife without reservation of benefit as, if he had reserved benefit, the scheme would not have worked. He might, therefore, easily not have been able to be a beneficiary of the trusts. Parties must understand that saving large sums in tax comes at a price. If the Wife had transferred these assets to Jersey trusts, the money would have been gone forever. It is perhaps very fortunate for these parties that she did not do so. Moreover, if she had done so, the trustees would have decided who benefited, not the parties and certainly not the Husband. It is possible that they would have taken the view that it was the children who should benefit. For a man so astute in business, this whole transaction was a monumental folly.62.Earlier in his evidence, the Husband had told me that he did not feel it necessary to have a pre-nuptial agreement or a post-nuptial agreement at the time of the 2017 transfers, as he trusted the Wife and he did not consider it necessary. He added that there was never any intention that the assets should be shared between them. Mr Todd asserts that the refusal to have a nuptial agreement is clear evidence that the parties were opting for a partnership marriage but I do not agree. The Husband meant that he considered the marriage would work but, if it did not, he trusted the Wife not to be greedy and that she would only take a fair share. Indeed, suppose the marriage had broken down after only six months. It could not possibly be suggested, at least in this jurisdiction, that the assets, including the Husband’s pre- marital assets, would then all be divided equally. Mr Todd asked the Husband about the date of engagement. In this regard, I cannot accept the Husband’s response. It was put to him that, on 26 September 2003, he got down on one knee at BT and proposed to the Wife. He denied this happened but I am satisfied it did. After all, in a draft letter about tax to the Country D authorities dated December 2003, his lawyer specifically refers to his fiancé (sic); that he may be getting married again; and that the Wife and her three children will join him in Country D. I accept that no engagement ring was then bought. Indeed, the ring referred to as an engagement ring appears to have been bought after the marriage and the birth of X. I will have to factor these findings into my assessment of the date on which I should find settled cohabitation commenced.63.There was a significant amount of evidence directed to the exact quantum of the assets brought into the marriage by the Husband. It is right to say that the documents are slightly inconsistent and confusing. There is no doubt that, on 30 June 2003, the Husband reached an agreement with his first wife as to the division of their assets. Their assets were divided on a clean break basis. A document dated 29 May 2002 shows him retaining assets of C$48.5 million, which is said to be 60% but the June 2003 agreement shows his first wife receiving/retaining C$42.4 million and the Husband C$43.64 million. The Husband is adamant that this did not include his POC portfolio or shares in Firm H, Ibut the document does specifically refer to “retention of his vested and non-vested work-related entitlements of approximately $13,700,000”. Moreover, I find it difficult to understand why it would not include his Firm H assets. Having said that, Mr Bishop has taken me through his client’s detailed disclosure, which certainly appears to show that, on 30 June 2004, the Husband had assets of C$139,648,065. There is also a schedule dated 29 May 2002 which shows assets of C$103,285,797. In both cases, the Firm H share options and investments are shown as being very significant. Indeed, in the 2002 schedule, they amount to C$54.8 million, leaving other assets of C$48.5 million, which is close to the figure disclosed in the divorce. In the June 2004 document, the same figures are C$70.6 million for the UBS assets and C$69 million for the other assets.64.Mr Todd asked the Husband about his earnings in Country D. He was earning US$11 million per annum from his arrival there to the date of his retirement in 2007, after which he received a basic salary of D$1 million for a year. Mr Todd categorises this as total earned income during the settled relationship of US$45 million. The Husband responded that this ignores tax and the fact that he was investing heavily in Firm H stock, on which he said he had to pay 80% tax up front but which lost all its value in the financial crisis shortly after he left Firm H. My findings are that these last years in Country D were likely to have been the Husband’s best earning years of his career, given his promotion to such a position of importance. He lost a very significant share of his wealth during his first divorce and he would have been keen to have rebuilt his finances. It is impossible to do an audit but I am satisfied that there was marital accrual during this period.65.Unlike the Husband, the Wife is not well versed in the ways of business. I felt that, at times, she did tailor her evidence to suit her case today, rather than as the position was at the time. She did, however, tell me that she got engaged to the Husband on 26 September 2003. Her description of him getting down on one knee in BT was specific and I accept that it occurred. I equally accept that she lost her maintenance entitlement from her first husband by marrying the Husband. Nevertheless, it is clear that her first husband was not a wealthy man at the time of their divorce as she only got the former matrimonial home, then worth C$2.75 million but subject to a mortgage of (C$1.75 million), although it is right to note that the property did eventually sell for C$5.6 million. The proceeds of sale were not placed into joint names, consistent with what I find the arrangements to be, namely that, other than NN, these parties kept their assets separate. The Wife did, however, contribute to the family expenses from the proceeds of sale and from the sum of C$720,000 that she inherited from her parents. She did suggest to me that the parties did their investments together, referring in particular to investments in Investment B and Investment A, but this was not what she said in her Form E, where she said her Husband “has historically managed family finances and I have had very limited involvement”. I prefer the account in her Form E.66.Mr Bishop then asked her about BT. She told me that the Husband had said to her that “this is ours”. Mr Bishop was very critical of her for this, saying that she had not mentioned this previously and it was not in her statements, which, he said, would have been the case if it was true. I do not know if this was said, but I do not consider it would mean very much even if it had been said. It is the Wife’s case that BT has been matrimonialised because they stayed there during the marriage as a holiday home. I have already mentioned that the accommodation there was barely adequate. I am surprised that these parties were prepared to stay there for any length of time, even if the surroundings were wonderful. I am satisfied that they did not go there a great deal during the marriage. There was one trip whilst they were in Country D. They visited for approximately 6-7 weeks per annum during the period they were back in Country C before they moved to this country. Since they have been here, there was one trip to BT over Christmas/New Year but that is basically all. The Wife may have been there alone once or twice: she produced a schedule showing more trips than that, but the schedule proved to be inaccurate. The Wife was completely inaccurate when she said that she convinced the Husband to farm sheep there as well as cattle, as it transpired that there were some 12,000 sheep when he bought the farm. She then changed her evidence to say it was a different type of sheep that she had recommended to him. All in all, I found her evidence in relation to BT unsatisfactory.67.I do not have a valuation for the various buildings on the farm but it is absolutely clear to me that this is a working farm. It is most certainly not a significant matrimonial home. Of the value of the land at a gross figure of C$55,180,000, I doubt the properties capable of occupation are worth more than tens of thousands of pounds. The parties did have some vague idea of building a better home there but nothing ever came of it. The Husband bought the farm as a long-term investment because he considered that the demand for meat would increase significantly, thus increasing the value of the farm equally significantly. He was entirely right, notwithstanding the two natural disasters. The farm had been owned jointly with his first wife. He did not transfer it into joint names following his second marriage. All in all, I cannot be clearer that this farm was not matrimonialised. It was purchased before the marriage and has, in essence, remained the same throughout the marriage. A very small piece of land amounting to 81 hectares, with a better property, was acquired during the marriage, but the parties have never even stayed in that property and, out of a total land of 6,000 hectares, the addition land was inconsequential. The Wife was able to point to approximately 100 km of refencing being undertaken during the marriage. I accept that the fencing was a high quality product costing between C$20,000 and C$25,000 per km but I assume this was paid for out of the farm profits. In fact, much of it was destroyed by the natural disaster and will have to be rebuilt with the aid of the insurance money.68.The Wife was, of course, asked about the 2016/2017 transfers. Nothing that she said changed my provisional views of these transactions following the Husband’s evidence. She did say that, after the money was given to her, nothing further was said about the trusts. I do not accept her evidence in this regard. I find that the Husband did mention it once in 2018 but, as he said, she fobbed him off. I do not know whether she was considering divorce already at that point. She said she would have put the money in trust if he had asked her. For reasons that are unclear to me, he did not raise it again. She told me she did not like the lady from the trustees they selected, but I do not consider that makes any difference. She did concede that the transfers to her were pursuant to estate and trust planning. She further accepted that this was the reason why the money went into her sole name and not into joint names. She reiterated that the Husband controlled the financial side of things, which I accept. She said that she had been told that the Husband could not have been a beneficiary of the trusts. I accept that evidence as it seems inherently likely to me. She was then asked about changing her will to exclude him in early 2019. Given that the Husband had transferred the best part of £80 million to her only two years earlier, I do consider this was a very mean spirited thing to do, made worse by her not telling him. Mr Bishop, not unreasonably, asked her why she would not leave him half if this was, indeed, a partnership marriage where everything was shared. Her completely lame response was that the Husband would have contested it in any case so there was no point. I find that this action was completely inconsistent with her oral evidence, repeated on a number of occasions, that it was a partnership marriage from the very outset built on love and trust.69.She was then asked about NN. She said that it is a lovely home and I do not doubt that. She added that she can afford to stay there so why should she have to sell it. She was asked about the expenditure she has incurred. She said that the previous owner had completely redone the roof at the property before he sold it but the sealants were inadequate and, each time she repaired the roof, there was damp ingress again. I have to say the pictures of the damp are a sorry sight and the damage is not reflective of a superb estate worth £21.6 million. Moreover, the valuer refers to the damp ingress becoming worse between his two visits. The Husband blames the guttering not being properly cleared but I find it difficult to accept that so much damage could result from that. Either way, the work needed to be done although it appears it cost £70,000 in April 2021, which is a very small portion of the total amount spent on the property. I was told the total work done in 2021 cost around £930,000. It is clear that this included some fencing for Y’s horses; work to a dilapidated greenhouse; a new stable block; the fitting of security cameras; and planting trees following storm damage. I can well understand how these works would cost that sum. I accept Mr Todd’s point, however, that without an expert report telling me the effect of these works on valuation, it is impossible to say that any part of this money should be added back. Moreover, with the possible exception of the stables, given that I was told there were already stables at the property, it is difficult to say that any of these works was unjustified. The Wife’s defence that she could spend as she liked, as the Husband had given the money to her, is far more debatable.70.She was then asked about her expenditure on Y’s horse riding and eventing activities. I always find these arguments difficult. On the one hand, the amount spent at £450,000 is a huge sum of money. Moreover, the Husband was not informed. On the other hand, these parties have wealth of at least £130 million so why should their daughter not be able to indulge in what is, undoubtedly, a very expensive hobby. I accept that horse boxes are particularly expensive, even if the cost of £204,000 was considerably more than the figure of £120,000 to be found in the Wife’s Form E.71.The final issue was the spending on the Wife’s adult children in the sum of £900,000. Again, there are arguments on both sides. The Wife has accepted that the sum of £470,000 spent on one of her older children’s rehab should be added back. The Wife’s adult children are not independent and are still engaged in higher education. Moreover, they were children of the family from a very early age and the Husband undoubtedly took on considerable financial responsibility for them. On the other, they inherited approximately £3 million each from their father. The Wife has accepted that the Husband should have no further responsibility for them. They are, of course, no longer minors.72.Other than these matters, however, Mr Bishop was quite unable to put his finger on any item of expenditure that could truly be described as wanton dissipation, notwithstanding very careful consideration being given to the Wife’s disclosure by his team. In many cases, it is possible to show wanton dissipation. Examples would be giving money away to a new partner; or to friends and family; or spending huge sums on gambling, drugs or prostitution. I have encountered examples of all of these types of dissipation. Sometimes, it is necessary to say that you must take your spouse as you find them; in other words, the applicant cannot seek to benefit from the successes of their spouse but not share equally in their failings. I do not even need to consider that here as, despite the very high level of expenditure, there is nothing of that sort established.My conclusions73.I now turn to consider how all of this should be factored into the outcome of this case. The first thing that I need to deal with is the Wife’s contention that this was a partnership marriage. I reject that suggestion as having no basis in fact or law. This marriage was an entirely conventional second marriage in which the Husband brought significant assets to the marriage. The absence of a pre-nuptial agreement is not significant. We know from Sharp that the failure to enter a pre-nuptial agreement is not evidence of an intention to share. If this marriage had broken down six months after it had been celebrated, this court would undoubtedly have dealt with it on the basis of needs, albeit with additional consideration for what the Wife had lost in terms of entering the marriage. She could not possibly have mounted a claim to share equally in the Husband’s pre-marital wealth. Indeed, I am clear that this remained the position immediately before the transfers to her in early 2017. After all, the Husband did not put assets in joint names, other than NN. Moreover, as the matrimonial home, NN occupied a central part in the marriage and it was entirely right that it was conveyed into joint names. Although the Husband paid for it, it became and remains matrimonial property.74.There is, however, no doubt that the 2017 transfers changed the position. It is accepted that the Husband divested himself of his interest in the portfolio of assets that he transferred to the Wife, now worth some £80 million. There was no reservation of benefit as that would have defeated the tax saving scheme. The assets became the Wife’s. The only claim that the Husband could possibly have to them, at least following the dismissal of his mistake/recission claim, is in the context of financial remedy proceedings following divorce. Moreover, that would have been lost if she had transferred the assets into trust. I do, however, reject the suggestion that this money became the Wife’s separate property, entirely free of any claim by the Husband other than on a needs basis. It has long been clear in this jurisdiction that you cannot benefit from keeping assets in your sole name. The obvious example is the money-maker who generates significant assets during the marriage but keeps them in his sole name. The home-maker’s claim to share those assets is just as strong as if he had placed them in joint names. In the same way, if a money-maker transfers assets earned during the marriage into the name of the other, the money-maker can still make a sharing claim against those assets on marital breakdown. For it to be otherwise would be both discriminatory and entirely unfair.75.As the £80 million transferred to the Wife did not become her separate assets, I must decide what it did become. Mr Bishop urges me to find that it did not become marital property. He cannot be right about that. The assets are not held by the Wife on trust for the Husband as he had to give up all interest in them for the tax saving scheme to work. The only possibility is that they became matrimonial property. I am, however, equally clear that this does not mean that this matrimonial property is automatically shared equally. I have already set out the authorities that show that matrimonial property can be shared unequally. The source of the funds must and does remain a very significant feature. It could not be otherwise. The transfer cannot automatically give the recipient a half share without consideration of the section 25 factors. To do so would be just as wrong as allowing a money-maker to keep assets earned during the marriage without sharing them with the home-maker. I reject Mr Todd’s arguments that this is a return to pre-Lambert days. The distinction is that, at least in significant part, this is money that was generated before the marriage, not money generated during the marital partnership to which Lambert applies. I further reject his submission that this cannot be right as it would mean that the Wife is in a worse position than a cohabitee. I have not considered whether the transferring money-maker in that situation would have any arguments pursuant to a resulting trust, assuming there was no need to divest oneself of the money entirely for tax reasons. The point is that very different financial considerations apply depending on whether you are married or you merely cohabit. In general, marriage protects the home-maker. The fact that it may be different in this case does not make it wrong. Whatever I decide, the Wife is going to leave this marriage in an infinitely better financial position than she entered it.76.I have already decided that the BT land is non-matrimonial. There is absolutely no justification for sharing it, given that the Wife’s needs will be more than adequately covered by the end result of this litigation. I am equally clear that both parties’ shares in the farming business have become matrimonial as a result of the placing of “A” shares in the Wife’s name. Again, however, the source of the business, namely a pre-marital asset, is relevant, although, in the case of the shares, much of their value may well have been generated during the marital partnership.77.I now turn to resolve the few remaining issues as to the asset schedule. The first relates to the Capital Gains Tax on NN. If I was dealing with a needs claim, I am sure I would find that NN was in excess of the Wife’s reasonable needs. I am by no means clear that I would not say that she was entitled to two properties, namely a main home and a holiday home. It may be that the combined figure would get close to £20 million. It is, however, obvious that the Wife is going to exit this marriage with far in excess of £21.6 million, which is the value of NN. Indeed, the Husband’s open offer is £25 million. It may be that she will not be able to afford the property’s upkeep in the long term but that is a matter for her. She is very attached to the property and it should be transferred to her. It therefore follows that I should take the Capital Gains Tax at the lower figure, namely £342,762.78.The next issue is a very minor one, namely whether I should include chattels or not. The Husband has a watch collection and art at his rental property valued in total at £28,000. I am clear these sums should be excluded. The Wife has jewellery and handbags valued at £277,415. Whilst considerably higher in value than the figure for the Husband’s watch collection, I am again clear that this sum should be excluded. It might be different if the jewellery was worth millions. Moreover, I am reinforced in this conclusion by the fact that the contents of NN are worth £1,561,810. I propose to exclude those contents on the basis that they are going to be divided by agreement or, if agreement cannot be reached, by arbitration, a solution that I wholeheartedly endorse. The Husband’s case is that many of those chattels were pre-marital and should therefore be his. I do not know if he is right that the majority are pre-marital or if that would mean that he would keep more than half but that is his argument and it follows that I take the view that the only fair way to deal with this is to exclude all chattels, jewellery and watches from my assessment.79.I next turn to the issue of add-back. I have, of course, made a number of observations already as to this aspect. I am clear that I cannot describe any of the spending on either side as “wanton dissipation” of assets. The Wife has, undoubtedly, spent at a remarkable rate. It may have been, at least in part, motivated by a wish to enhance her financial claims but I cannot say what effect the spending on NN has had on its value. I am not prepared to categorise spending on one of the parties’ children as “wanton dissipation”, even when the other parent had not been informed. That leaves the spending on the wife’s adult children. They were children of the family and were young at the date the marital partnership commenced. I am satisfied that the Husband made a significant financial commitment to them, which he honoured. It is difficult to see why he should continue to have to fund them after the breakdown of his marriage to their mother. Moreover, the Wife accepted that he should not have to do so. She therefore spent £908,923 that should have come exclusively from her share of the matrimonial resources. This figure is, though, entirely matched by the sum of £915,547, which is the difference between the Husband’s spending on this litigation (£2,957,239) and that of the Wife (£2,076,202). Although he tries to justify this differentiation on the basis of him having the carriage of the litigation and the need to provide financial disclosure, there is no doubt that a considerable part of it relates to the unsuccessful mistake/recission claim that he abandoned. In any event, this litigation should not have cost £2 million, let alone £3 million. I have therefore decided to ignore all the add-back arguments on both sides and deal with this case on the basis of actual assets rather than notional ones.80.The Wife’s schedule of assets has a figure of £133,202,721. I have removed from this figure the amount of £397,771 included by her for the Husband’s costs of the mistake/recission claim. I also remove a sum of £156,624 which was “loaned” by the Husband to his adult son. I do not know if it will ever be repaid but, if you have the wealth of the Husband in this case, it is perfectly reasonable to provide such a sum for your adult son. It would be just as reasonable to write that sum off. Given that the Wife has spent over £900,000 on her adult children, there really cannot be any argument about this. The resulting figure for the combined assets is £132,648,326.81.I have already decided that the land at BT is not matrimonial and must be excluded from this figure when calculating the matrimonial assets. This reduces the total to £112,631,062. I must then decide how these matrimonial assets should be shared. I am quite clear that there should not be an equal division. I have found the transferred assets, amounting to some £80 million to be matrimonialised but they are most certainly not matrimonial acquest in the standard sense as they were not all earned during the marital partnership. To a significant extent, this money was pre-marital and has only been matrimonialised towards the end of the marriage. I would not go as far as to say that the assets are only matrimonial as a result of a technicality because there is no doubt that the Husband intended to transfer them to the Wife and he could not reserve any benefit in them to himself. Equally, however, I cannot ignore what Mr Bishop calls “the magnetic feature”, namely the pre-marital origin of most of this sum.82.I am clear, however, that an element of the sum of £80 million is not pre-marital. At least a part of this figure was generated between the date on which the parties entering into a settled relationship that moved seamlessly into marriage and the date of the Husband’s retirement. I have found that the parties became engaged in September 2003 but I am not of the view that the marital partnership should date from then. I have been referred to a number of authorities, cumulating in the recent decision of Peel J in