Case No. BV20D11362

58.By the standards of these cases, the oral evidence was brief and concise. In opening, Mr Marks submitted that the case could have been dealt with on submissions but I take the view that he was not right about that, given that I have to make findings as to the Husband’s case as to post-separation endeavour. The Wife gave evidence first. She told Mr Marks that her Husband was a really good salesman. She said he thinks creatively and is very persistent and very persuasive. She was asked about the investment in the trading company and she insisted that she had been told that everything was on the line. I accept that is what she was told. She thought the stock options that he did have could only be cashed in at certain times and not in December 2017, which I am sure was correct. She said that the investment in the trading company did make her nervous as all their eggs were in one basket. She said that the thought of losing your family home was worrying, particularly as they had three children. She added that she did trust him though. She said she only became aware of the much higher value of the business when her solicitors received the email from H’s brother in May 2022 but she was not surprised by the price as the £600 million figure had previously been mentioned as the aspiration for value in 2025. She was, however, surprised by the fact that a couple of months earlier, she had been told she would have to apply for benefit as everything was about to be lost. This fear of losing everything had made her extremely worried as she did not know how she would support the children. I accept all this evidence.59.Mr Bishop then cross-examined her. She denied that the parties had enjoyed a relatively modest standard of living during the marriage, saying that the standard was not modest by Danish standards. She accepted that the majority of the marriage had been spent living in Denmark, other than 18 months in Austria, two and a half years in a provincial city in England and the time in London at the end of the marriage. She said that she moved because the Husband’s job required it. She stressed that the burdens on her were higher as the Husband spent more than 100 days each year away travelling. She acknowledged that the MBO was an exciting possibility and that they were both enthusiastic. The risk was for the children. She was pretty sure the company cost DKK 5 million, which the Husband had said in his earlier statements and Form E. I accept that is what he said, but I find that the total price was actually DKK 4 million and his share was DKK 2.8 million. She added that they had raised more than £310,000 and she was told it would have ruined the family if the trading company failed, as they had nothing else. I am sure that is what she believed. If they did have other money, she did not understand why the Husband cashed in his pension and paid 60% tax to do so. She said she did not know what he would have done if she had not supported it. He would, of course, have been unable to obtain the mortgage without her agreement and, on the balance of probabilities, I find that he needed that mortgage. I cannot see why he would have taken it out if that had not been the case. Moreover, it meant that the family home was in jeopardy if his income ended. 60.Mr Bishop turned to the issue of batch contamination. She said she had discussed the severity of this risk with the Husband. She was adamant that she had not been told that there was £5 million outside the company at the time of the batch failures. I accept that evidence. She said she did not have access to his bank statements and there was nothing to indicate that amount of capital in his first Form E. He had just told her they had nothing; that they would be going bankrupt; and she would have to apply to the Municipal for benefits. I accept all that evidence. She said she had no information about specialised therapy. Whilst she said she could not contradict what he was saying, she did wonder why Mr S was not giving evidence for him. Mr S still works for the trading company. The Husband had stepped down in 2020 but, even in 2019, he had reduced his working days to three per week. Thereafter, he worked one day per week. I am absolutely clear that the Wife was a truthful witness, doing the very best she could to assist me. 61.The Husband then gave evidence. In answer to questions from Mr Bishop, he told me that, during the marriage, they did talk about his job but the Wife was not a sounding board. He would talk but would not get dialogue back. I am minded to accept this but it makes no difference to the case. When the MBO took place, he told the Wife and X Co that the only way the business could survive would be to sack 1/3rd of the employees. He said that he bought nearly 70% of the shares and paid DKK 2.8 million. He did not accept that Mr S was doing most of the work once he became CEO, but I am clear that he cannot be right about that, particularly as he was ill for quite a bit of the relevant period. He said that there were three strands to his work for the business. The first was what he described as “strategic/visionary”. The second was building good people into the organisation. The third was to undertake major negotiations. He said that, after he resigned as CEO, he was still doing between 5 and 40 hours per week. He was heavily involved if a major decision had to be taken. At the time of the MBO, there was very little specialised therapy work done in the trading company, although it may be of significance that there was some. He said that they were asked for samples by customers and they just handed them over in the hope of getting a patent at a later date. He explained that specialised therapies are disruptive technologies and gave the reasons why. There were only a handful of such drugs approved in 2018. He said that the trading company could offer specific research showing the benefit of the product in developing such therapies. The forecast is that this research will generate £8 million per annum in 2025. Turning to the purchaser, he said that the sale did not revolve around EBITDA and multiples. The trading company was a strategic acquisition for the purchaser. It was one of a number of companies they had acquired in a relatively short time-frame. The purchaser is expecting specialised therapy to work in ten to twenty years. It is hugely important and they wanted their place in the market. He added that the purchaser was not interested in the product manufacture but this cannot be correct as the Press Release says that “the product is a critical component in the manufacture of innovative products, particularly for modalities such as specialised therapies and vaccines.” I simply do not see why they would want the business if it was not to manufacture the product that the purchaser could then use. After all, they can undertake the other research themselves.62.He was then cross-examined by Mr Marks. He told me that he did start talking to an investment bank about a sale of the business at the end of 2019. He began talking to others in May 2021, which was when the trading company was approached by F Co who were interested in a potential acquisition of the trading company. The presentations of the investment banks were given in June 2021. He was asked why they had been given completely different figures for EBITDA to those given to Mr Taylor. For example, it was said they were given £13 million for 2021 and £17.8 million for 2022, whereas Mr Taylor had been given £7.66 million and £9.3 million respectively. The Husband suggested that the business had developed between the dates when Mr Taylor received the figures in October/November 2020 and those given to the investment banks in May 2021. He said quite a lot had been going on and it was an “exploding” business, where the figures can change greatly over a short time. Even if true, he had not arranged for Mr Taylor’s figures to be updated, even when he was challenging Mr Taylor after his report had been received. He did say that, in the early part of 2021, they did not know how much of the product the new plant was going to be able to produce once it was up and running, which I do accept may be a fair point. He said they did have this information by May 2021. They had not had any failed batches by then, whereas they had previously anticipated at least one or two batch failures. He accepted that the brief to the investment bankers was for an expected sale in 2021, which did not proceed due to the production line becoming contaminated. This may be relevant to the post-separation endeavour point. The sale was resuscitated in April 2022, as soon as a successful batch had been produced and it had resulted almost immediately in a number of offers to buy the company.63.He accepted that the MBO was a risky venture, albeit with significant potential upside. He agreed that he had described it in his first Form E as “entirely risk laden”. He said that there was a real risk of the business not surviving. He was confident that he would have bounced back quickly from such a set-back, but I am not confident he would have found it quite so easy despite his undoubted skill sets. This is perhaps shown by the concern he expressed for the future in 2021. He accepted that he had asked for significant clarification of the Taylor report. He denied that this was all designed to drive down the valuation, saying they were questions to clarify points, but I am clear that attempting to reduce the valuation was the main objective. The crucial question was then put to him, namely that he had not once mentioned the new venture into specialised therapy to Mr Taylor. His response was lame to say the least. He said he did not believe it was odd that Mr Taylor had not mentioned these therapies in his report, but he then said he did not know why Mr Taylor did not question them about it. I am clear as to the reason for this. Mr Taylor had not had it drawn to his attention at all, so he was unable to ask questions about it. The Husband then said it did surprise him it was not in the report. Equally, he was not surprised by the valuation as it was in line with the M Fund offers and the deal done between Mr T and Mr S. The problem with this is that the figure is so much at odds with those being put forward by the investment bankers. This was compounded by the fact that the indicative figures suggested by the bankers had not been disclosed to the Wife’s advisers at the time, notwithstanding the offer he had made to settle the litigation by paying the Wife £20 million on 14 April 2021, only some two months before. 64.Mr Marks retuned to the question of the financing of the MBO. The Husband repeated that he had cashed in his pension before the MBO. He accepted he paid quite a lot of tax. The difficulty with this is that, overnight, Mr Marks produced a document that showed that the pension was not cashed in until the following year, 2018, when 60% of the value was paid in tax. He then accepted he had got it wrong, saying he could not remember and that he was suffering from depression at the time. I really cannot understand any of this. I can just about see why he would pay all that tax if he was desperate for the 40% of the value to invest in the MBO, but I cannot understand why he would do it the following year after the MBO had completed. Again, however, it is not relevant to anything I have to decide. He accepted that he had increased the mortgage and I am clear that this can only have been because he needed the money to invest in the MBO. 65.He was then asked about the very strong wording used in late 2021 about the likely failure of the trading company. He was referred to his then solicitors’ letter dated 3 December 2021, which talked about a threat to the very survival of the business. He said the batch failures had the potential, if they extended for a very long time, to be fatal. He was then referred to other expressions, such as a reference to “what future, if any” the company had. He said it was a potentially terminal threat. He was referred to his statement in support of his adjournment application which said that “there is a very real risk that the company will have to shut down”. He replied that the situation was a very serious threat to the company, but he was in distress when the statement was written, by which I assume he was attempting to suggest that this was the reason for any exaggeration. He then accepted that the Wife did not know that he had £4.5 million outside the business and that she had asked for disclosure, which he had not provided. He was referred to paragraph [23] of his statement which had said that, if the trading company shares became worthless, the family would be deprived of the vast majority of their financial resources and he would be concerned that he would not be able to meet his own financial needs, let alone those of the Wife and children. It was put to him that these were threats and he responded that it was a threatening time. He said he was in distress and this was his perspective. He agreed that he had told the Wife that she would have to apply to the Municipality for state benefits. All of this does him little credit but, again, it does not go to the issues I have to decide, other than that the Wife was just as at risk from a failure of the business as he was. 66.He was asked about the report prepared for the trading company dated 9 January 2020 about specialised therapy. It was pointed out to him that he was not one of the authors of the report, which included the CTO, Mr M, and Mr S. He said that it was his idea from the beginning of 2019. He added that, in 2018, the total spent on specialised therapy in the worldwide pharmaceutical market was only $X billion out of trillions of pounds of expenditure. He said that, after the M Fund approach, he thought they should dig into this. He was again asked why he had not given this report to Mr Taylor if it was so important. His response was that Mr Taylor had full access to him and Mr S, but not everybody could see what he could see. I take the view that it is impossible to see why Mr Taylor would have asked for the report without being pointed in the right direction. The Husband denied it was withheld. Mr Marks did not really know whether to put to him that it had been deliberately withheld or that it just wasn’t important. All that I can say is that, if it was as important as the Husband contends, it was definitely withheld. Mr Marks was also able to point out that, when Mr Taylor asked, on 31 December 2020, “what else needs to be taken into account”, the minutes of the subsequent meetings contain not a word about specialised therapy. The Husband’s only response was that Mr Taylor dealt with what he saw as important. He said in re-examination that the January 2020 document would have been exhibited to the Board Minutes, but this was subsequently checked and it was not. He then said that the trading company’s four main competitors have not gone into specialised therapy. He could not remember when such work was first included on the trading company website. Mr Marks ended his cross-examination by putting it to him that it was the same company that was acquired via the MBO that was sold to the purchaser. He said that this could not be further from the truth, as it was a totally transformed company. I will have to make a specific finding as to this. I do proceed, however, on the basis that, overall his evidence has been very significantly undermined by the various reliability issues that I have referred to above.