ZZ21D58773 - [2025] EWHC 1659 (Fam)

At the hearing last December, I directed W to set out her allegations of conduct under s25(2)(g) in advance of the PTR. I made that direction in accordance with Peel J’s decision in Tsvetkov v Khayrova [2023] EWFC 130. As Peel J said in that case at [43], a party asserting conduct must prove:

Peel J suggested that this process should occur as early as possible. However in this case, W’s allegations of conduct had limped on without being properly pled. I hoped by making my direction the conduct case would either be dropped or properly articulated.

At the PTR, I was presented with an initial draft which was part conduct pleading and part allegations of non-disclosure. I gave permission for the document to be amended once Ms Hart’s report had been served. The amended document is a mixture of generalised complaint about non-disclosure and allegations of conduct. I will deal with each numbered allegation in turn:

I cannot in any of those paragraphs see any behaviour which amounts to conduct within the meaning of s25(2)(g). They are a series of allegations which largely amount to generalised non-disclosure and possibly in respect of paragraph 8 some species of ‘add back’. As to the ‘add back’, this was not pursued in submissions at the end of the case. It is quite clear that the whole of the LM1 funds are accounted for in the disclosed capital.

This leaves the issue relating to ABC. I can deal with this relatively swiftly. It is tied up with suspicions held by W about various changes to the structure of ABC and DEF. W was originally a shareholder in ABC and possibly DEF. I accept H’s account of the history of the changes which put simply amounted to a decision to put the family home in W’s name and ABC and DEF in H’s name. This occurred long before the breakdown of the marriage and was to protect the family home from the business’ creditors. There is nothing surprising about this decision nor do I see anything nefarious about the fact that various documents were executed by H to achieve this and that in those transactions he signed W’s signature. He admitted this in the witness box. I do not find this to be surprising and it is not unusual in my experience.

At some point prior to 2019, ABC entered into 16 hire purchase agreements with a hire purchase company. In August 2019, the hire purchase company issued termination notice in respect of those agreements because ABC had defaulted on payments. In September 2019 a statutory demand was issued against H and winding up proceedings against ABC later that month. In October 2019, H, ABC and the hire purchase company entered into a settlement agreement. The hire purchase agreement were given a £400,000 charge over DEF assets and H gave fresh guarantees for £2.015m. H failed to meet the payment schedule and further agreement was reached in February 2000. Under that agreement H was to sell equipment and a Porsche to reduce indebtedness.

In July 2020, H and YZ incorporated GHI. GHI was used as a vehicle for one decommissioning project, referred to as the P Project. I have no doubt that this was (a) a sensible way of channelling what would otherwise be ABC trade away from the hire purchase agreement and (b) that YZ had a real role in the deal. Even W agreed that YZ brought skills to the table which H did not have. In December 2020, the hire purchase company presented a further winding up petition against ABC. In January 2021, H transferred assets from ABC to DEF. He asserts that this was legitimate as DEF was a major creditor of ABC, this is borne out in the accounts. From the family’s perspective it saved valuable assets from being taken by ABC’s creditors. ABC was put into administration in November 2021.

The timing of the administration plainly caused W enormous alarm. The trading arm of the family business had disappeared. H had set up a new company, GHI, with YZ and ABC’s assets and operatives, now owned or employed by DEF, were seen on the P Project and at LM. This may have looked alarming, but it was not. H had traded through a difficult period and reorganised his ventures. The hire purchase company debt had been resolved and the future was rosy. W should not have raised conduct.

And so I now turn to the computation of the assets.