Case No. BV20D07073

14.The petition for divorce is dated 1 April 2020. A decree nisi was pronounced on 30 September 2020. It has not, as yet, been made absolute. The parties filed their respective Forms E on 7 August 2020. In the Husband’s Form E, he deposed to net capital of £22,856,538, which consisted, largely, of half the value of NN and the land at BT, albeit that the latter has since been valued at a much higher figure. He puts his income needs at £409,400 per annum and his capital needs at £5.5 million. He describes an excellent standard of living. He says that the magnetic feature of the case is his “overwhelming and unmatched contribution by way of pre-marital wealth”. He adds that there has been no material increase in his wealth since he retired in 2007. He said that the advice he received at the time of transferring his assets to the Wife in March/April 2017 was flawed and there was a fundamental mistake that the scheme would work. Again, I will return to this later in this judgment.15.The Wife’s Form E puts her net wealth at £83,039,015, which includes the assets transferred to her by the Husband. She puts her income, essentially from these assets, at £5.15 million. Her income needs going forward are said to be £1,766,580 per annum for herself and £585,000 for her five children. The figures include a substantial increase in the future as compared to her “current outgoings” which is largely accounted for by a figure of £707,508 per annum for “investment manager fees” to manage her portfolio of assets. She did say that the transfers to her in early 2017 occurred as a result of an estate planning exercise to take advantage of her non-dom status and she confirmed that there was discussion of establishing two offshore trusts, named Hugo and Louis. She describes the standard of living enjoyed by the parties as being very high. She makes references to NN in this regard. She says she contributed to the marriage by the proceeds of sale of her former matrimonial, albeit that the Husband had repaid the mortgage, and by reference to an inheritance she received from her parents, which she puts at C$626,000.16.An interesting and positive development was that the parties agreed that the First Directions Appointment should go through the Arbitration process. It was heard by Nicholas Cusworth QC on 29 September 2020. He does happen also to be a deputy High Court Judge but he was not sitting as such. There is a recital in the document produced following the arbitration in which it is said that the Wife does not seek financial provision for her eldest three children. Various directions were made for SJE valuations of NN and BT, as well as in relation to tax liabilities. Mr Cusworth could not list a final hearing as he was not sitting as a judge and therefore did not have jurisdiction to do so. Both parties were to file statements as to the transfer of the assets to the Wife in early 2017.17.On 2 November 2020, Knight Frank produced a valuation of the land at BT in the sum of C$55,180,000. It does have to be said that this was far in excess of the figure of C$19,705,000 included in the Husband’s Form E.18.The Husband’s first witness statement was dated 23 November 2020. He sets out much of the history of his business career that I have already covered earlier in this judgment. He did say that he was earning C$1 million as early as 1987 and C$5 million by 1993. He owned 20% of the business prior to the Firm H buy-out. By 2002, his remuneration package was C$11 million per annum although he says that quite a large proportion of this was by way of deferred shares and stock options. He said his total assets in 2002, following his divorce from his first wife, amounted to the equivalent of £47.3 million today. By June 2004, he said the assets had increased in value to £57.225 million. The family came to the UK as they both felt the children would be better served by a British education. He then deals with the transfer of assets in April 2017. He said that he was told that he could be added as a beneficiary of the trusts after they had been established and then benefit from them, although he accepts he could not have been a beneficiary at their inception. He says he was advised of this by Mr P in a telephone call, following an email from Mr P which merely says that “beneficiaries” can subsequently be added. He has not called Mr P to give evidence. He does accept that the Wife had to hold the assets for a “reasonable” period of time before they could be placed into trust to avoid him being deemed to be the settlor. He says that the Wife understood exactly what was to happen and they had jointly selected the trustees after a “beauty” parade. There was talk of setting up trusts again in May 2018 but nothing happened. The parties executed mutual wills to leave their respective assets to each other and the children but the Wife unilaterally changed hers to exclude him in early 2019 without his knowledge at the time. He ends the statement by saying that he had no intention to share the assets. He exhibits the file from Firm M that does make it clear that the intention was, in due course, for offshore trusts to be established to benefit the two children, X and Y.19.The Wife’s witness statement is dated 22 December 2020. She says that the marriage was entirely a relationship and partnership of equals. They could have executed a pre-nuptial agreement before they married, to protect the Husband’s pre-acquired wealth, or a post-nuptial settlement at the time of the April 2017 transfers but they deliberately did not do so as the Husband agreed that “what is mine is yours”. The estate planning exercise was entirely at the Husband’s instigation. It was done for tax reasons and the lack of a post-nuptial settlement was a calculated decision. If his advisers were negligent in advising the Husband to undertake the scheme, his remedy should be against his advisers. She is clear that the Husband was advised that he should not be a beneficiary of the trusts. She asked, rhetorically, why he did not pursue the establishment of the trusts in 2018. He was only able to enter the plan due to her non-dom status. Her contribution was integral and essential.20.A private Financial Dispute Resolution hearing also took place before Nicholas Cusworth QC on 3 February 2021. Very regrettably, no agreement was reached. Concurrent with these financial remedy proceedings, there have also been extensive proceedings in relation to the children. Indeed, I am told the proceedings in relation to Y are ongoing. The most recent order, as I understand it, was made on 27 July 2021. X was to live with both parents and spend equal time with them when not at boarding school. Both parties undertook to support and rebuild Y’s relationship with her father.21.The matter came before me for post-FDR directions on 10 February 2021. I made various directions as to add-back schedules, as the Husband was asserting unjustified excessive spending by the Wife; narrative statements; valuation evidence and the like. The Husband had formulated Chancery Division proceedings seeking recission of the transfers made to the Wife in March/April 2021 on the ground of mistake. I directed that there be a further hearing to determine a preliminary issue as to whether it was necessary to determine this dispute. There is no secret that, at the time, I had real reservations as to whether such satellite litigation was justified, given that there is full power in the Matrimonial Causes Act 1973 to redistribute assets in accordance with what is fair and just. I also directed that this final hearing be set down with a time estimate of ten days as it obviously had to cater for the Chancery Division arguments if they were to proceed.22.Thereafter, both parties made open offers. The Husband’s was first in time and is dated 24 February 2021. The letter characterises the case as being one where the Wife’s award should be formulated on the basis of her reasonable needs. This is predicated on his contention that, in effect, the entirety of the assets were pre- acquired by him and therefore not matrimonial. He offered a sum of £25 million to meet the Wife’s needs, on the basis that NN be sold and the net proceeds divided equally. She should then keep such part of the other assets as brought her assets to £25 million but return everything else to the Husband, although she could keep her jewellery and cars. A sum of £25,000 per annum periodical payments per child was offered. The Wife responded in an open offer dated 26 February 2021. There should be a simple 50:50 division of everything and she would return to the Husband such proportion of the assets as would bring him up to equality but she wished to receive NN as part of her 50%.23.On 3 June 2021, Gurr Johns valued the chattels at NN at £1,561,800 and those in the Husband’s rented property at £26,500. The Wife’s jewellery was valued at £277,415. Fortunately, I have not been troubled by questions relating to chattels. It is agreed that they will be divided by agreement and, if there is no agreement, the issue will be arbitrated, which is extremely sensible.24.On 13 July 2021, the Wife’s solicitors wrote a letter to the Husband inviting him to accept that the gifted assets belong in law to the Wife. The letter was sent in the run up to the hearing, listed before me on 30 July 2021, as to whether the Husband should be permitted to proceed with his claim for recission of the 2017 transfers. By then, very expensive and complicated pleadings had been drafted by some of the most experienced and able Chancery Division practitioners. As it turned out, both parties appeared to agree in their Case Summaries that, given the way that the Husband wished to argue the case, the claim for recission would have to proceed. I gave a short judgment in which I reiterated my view that the court has full powers of redistribution pursuant to the MCA 1973 but that, as the Husband wished to argue that the transfer of the legal ownership of the assets to the Wife should be rescinded such that the assets did not become matrimonial property, the claim would have to proceed. My order therefore directed that, by consent, the Husband’s application for mistake and recission should be listed for hearing as part of the final hearing.25.As it turned out, on 25 November 2021, the Husband’s solicitors wrote to confirm that he did not intend to pursue his claim for mistake and recission but, rather, would advance his arguments solely in the context of the MCA 1973. He said that he continued to rely on the same factual matters. In consequence, Mr Richard Todd QC, who appears on behalf of the Wife with Mr Richard Sear, submitted to me that it must follow that the Husband accepts that the transfers had the effect of gifting these assets to the Wife without any reservation. They therefore became her property as of right, albeit subject to any MCA claim for a lump sum in the Husband’s favour.26.The Husband’s second statement is dated 24 September 2021. It relates to his add-back arguments. He relies on an email that the Wife sent to Mr P of Firm M in January 2019 asking him to change her will to exclude the Husband as a beneficiary as she was intending to divorce him in a couple of months. He then asserts that, to support her needs case, the Wife has spent “wildly and recklessly”. He contends that the total family spend in 2018 was £1,367,635. He argues that the spending rose to £1,494,681 in 2019; and £2,365,537 in 2020, excluding any legal costs or his rent. He claims this is intentional and wilful overspending.27.The next statement filed was from a former employee of the parties at BT, namely Ms Q, dated 25 November 2021. Before referring to the statement, I have to note that a Civil Evidence Act Notice has been served by the Wife’s solicitors in relation to this statement as Ms Q says she is too unwell to give evidence, even by video link. In consequence, Mr Tim Bishop QC, who appears on behalf of the Husband with Mr Thomas Harvey, argues that I should ignore the statement completely, given that he has not been able to cross-examine the witness. In any event, at this point, I merely note that Ms Q says that she was employed at BT for 22 years from 1994. She says that the Husband and Wife spent a lot of time there from 2008/9. They were part of her family. She adds that, in her view, the Wife was an integral part of the farm and a respected member of the community. In essence, this statement is filed in support of the Wife’s claim that, as a result of her involvement at the farm and the fact that the parties stayed there as a matrimonial home, BT has become matrimonialised. I am quite clear that I can deal with this on the basis of the evidence of the parties alone without needing to refer further to the evidence of Ms Q.28.The Wife’s add-back statement in reply to that of the Husband is dated 1 December 2021. She starts by saying that the money transferred to her is already hers and that, in consequence, this is not a needs case. She then says that the Husband has always been excessively frugal. NN had been neglected such that it was in serious need of repair. The budget contained in her Form E had been prepared by an accountant who had studied her bank statements to calculate her expenditure. The rise in spending from 2018 to 2019 was only £127,046. The rise the following year was largely expenditure on the children and NN. She exhibits a number of photographs of the property showing parts of it in poor condition. For example, there are pictures of damage to upstairs rooms in the main house by water ingress; damage to roofing tiles; damage to a floor due to flooding; and photographs of out buildings in poor condition. She said that she spent £120,000 in 2020 on the leaks but this was only a temporary fix and the work had to be done again. The main water pipes burst twice and flooded the kitchen, the basement and a cloakroom. The pipes needed to be replaced and the insurers refused to pay. She also had works to do to the external buildings, the courtyard and the like. The further works undertaken in 2021 cost £930,000. She added that there are other projects still to be completed. She said that it is essential to have staff to run the NN estate. She did increase their hours and their pay. She had to improve security following threats from a former employee’s associates and this cost £118,000.29.She then moved on to deal with Y’s hobby of horse eventing, which has cost in total £450,000 as well as the cost of building new stables for her. Apparently, Y is riding at a high level. Her horses therefore have to be first rate and are very expensive. One cost £40,000 and her main horse cost £150,000. A saddle cost £20,000. Y needed a horsebox which cost £204,000 as she has to be able to sleep in it due to her eventing, on occasions, taking place a long way away such that she has to stay overnight. The Wife has paid for her elder son’s rehabilitation at a cost of £120,000. Therapy cost £30,000. She has also had to support her other children in education. Her younger son’s support came to £60,000. She replaced her Bentley as it was old and unreliable. She made the point that she has, on request, transferred over £4 million in assets to the Husband during this litigation for his expenditure, which is primarily his costs and his rent. He had, at that point, spent £586,000 more than her on the litigation. Moreover, the mistake and recission claim cost hundreds of thousands of pounds before it was withdrawn.30.On 10 December 2021, the Husband filed his section 25 statement. He says that, by the time he began cohabiting with the Wife, he was 32 out of 35 years through his career. He says that the Wife’s adult children from her first marriage do not need her support as they inherited approximately £3 million each from their father. He accepts that his adult children will benefit from his ex-wife’s estate and from his interest in BT. He says that, at the time of his first divorce, the assets were C$86 million but that excluded a significant amount of capital in Firm H shares and other employment related awards (the “POC portfolio”), which he said were worth C$54.8 million. During the hearing, we examined the documents and it appears that he was wrong about the Firm H shares as they were included at C$13.7 million. It did, however, appear that he was right that the POC portfolio was not included, although the reason is unclear. He added that, by the time the parties married, he had assets that, uprated to today’s values, would be worth £155 million, which is more than the actual assets in the case. He makes much of the point that he did not transfer assets into joint names prior to 2017, other than NN, which had a special place as the parties’ matrimonial home. He argues that it is a fiction to say that he intended to share his wealth in 2017. If that had been the case, the assets would have been transferred into joint names. He complains about the costs of running NN and the inequity of the Wife saying she should remain in that property, whilst she proposes that he moves into a semi-detached property, albeit in Central London. Other than one role as a non-executive director, he has not worked since 2007. He reminds the court that the value of his shares and options in Firm H collapsed during the economic crash in 2008/2009, saying the price has not remotely recovered to its 2007 levels even now. He says he will return to Country C after the children have completed their education here.31.He complains that the Wife says she has spent around £1 million on NN without consulting him in any way. He acknowledges that it is a rare, luxurious and magnificent property. He then contends that BT hardly featured in the marriage. He had acquired it in early 2002 before he commenced a relationship with the Wife. Until July 2008, the family was in Country D and, since 2011, they have been here. He says that the Wife has only been to BT twice since then. He complains that the Wife has purchased two Bentleys in 2021 for £291,839. The assets he transferred to her in 2017 are now worth £80 million. He says he has lost five excellent investment opportunities by not having access to that money during the pandemic, claiming that he would have invested in online businesses that he foresaw would do very well, partly due to working from home. All I would say in that regard is that he made much in his evidence of not undertaking active trading but rather that he invests in stock for the very long term. He repeats his case as to add-back and adds that the Wife’s spending in 2021 was £2,337,000 or around £1 million more than the family spent in 2018. He also claims that it was the Wife’s failures to clear the gutters at the property that led to the ingress of water.32.The Wife’s section 25 statement is dated 10 December 2021. She repeats her case that the parties twice rejected nuptial agreements, both prior to the marriage and again at the time of the 2017 transfers, on the basis that it was a partnership of equals. She denies that the 2017 transfers were solely a tax saving scheme. She reminds the court that she had obtained a property via her first divorce that sold for C$5.6 million, albeit that the Husband had paid the mortgage off. She later inherited C$626,340 from her parents. Expenditure on NN had been neglected prior to the marriage breaking down. It is this expenditure which is largely the reason for the increase in her spending. She says that sheep farming at BT was largely her idea, although it is fair to say that the Husband produced evidence that there were already 12,000 sheep at BT when he bought the farm. She responded to this that Merino sheep were her idea, as they had them at the farm she had owned with her first husband. Finally, she says that she contributed her non-dom status to the marriage.33.I heard the first PTR on 20 December 2021. There had been difficulties as to the production of the valuation report of the farming business at BT. I do not consider that I need to dwell on the reasons for that but I made various directions to ensure the report was finalised in time for the hearing. In relation to the mistake and recission claim, I recorded that it was discontinued and that the letter from the Husband’s solicitors dated 25 November 2021 was to be treated as a notice of discontinuance. The order went on to say that, for the avoidance of doubt, both parties remain entitled to rely on the factual matters in issue in relation to the 2017 transfers, which both parties assert are important circumstances of the case. There was to be a further PTR fixed given that the final hearing was not to commence until 9 May 2022.