ZZ21D58773 - [2025] EWHC 1659 (Fam)

Mr Finch and Ms Younis have worked hard during the trial to produce an agreed ES2, which has changed during the course of the hearing. My findings on the value of the parties’ resources are as follows:

I turn now to the value of DEF. Ms Hart valued the business net of tax at £4,673,908. She valued it on a net asset basis and used the cost price for the value of assets on the fixed asset register. She did this because at the PTR the parties had reached an impasse as to what values should be taken and how the valuations were to be obtained. The fixed asset register contains plant and equipment taken by Ms Hart at a value of £2,974,366, watches with a value of £793,450, office equipment at £27,918, cars at a figure in excess of £3m and number plates with a value of £360,000. There are a number of problems with the figures used by Ms Hart at my direction. The first is that the cost price of many items of plant/machinery are recorded as the figure paid by DEF to repay outstanding hire purchase debt, the second is that the value of cars and watches are understated and third the number plate figure includes H’s number plate, which is in fact held directly by H. H provided Ms Hart with estimates of the value of the watches, cars and number plates. These were generally much higher than the purchase figures. In cross examination, H suggested that some of his figures were too high. I do not accept this. I take the figures he gave to Ms Hart. Mr Thorpe on behalf of W says that I should adopt the sale price of the machinery as shown on the DEF website. I accept that proposition. Adopting the figures set out in ‘Fixed Asset Register FINAL’ presented in closing by Mr Thorpe KC and Ms Younis, my findings as to the value of the fixed assets are that the value of the plant is £3,943,500, the investment watches £824,500, the vehicles £3,519,381 and the number plates £87,000. Making those adjustments to the cost price in the fixed asset register and taking into account the taxation consequences which Ms Hart explained adjusts the value of the fixed assets upwards by £1,312,770. Mr Molyneux KC has provided me with a recalculation of Ms Hart’s valuation taking this adjustment into account which gives a valuation of DEF at £5,671,615.

After circulation of this judgment in draft, Mr Molyneux KC and Mr Finch raised an issue in respect of an HSBC mortgage charged on the business premises at GH in the sum of £679,487. Mr Molyneux says that the existence of this loan was known and acknowledged by both parties at various times during the course of the proceedings. However, it was not included in the company accounts as a liability and therefore ignored by Ms Hart. H has now provided a letter from the company accountants dated 9 June 2025, after submissions were made, which says in terms that the value of the company value is overstated by omission of the mortgage liability. Mr Molyneux KC has provided me with a recalculation of the business taking into account this liability. In a different case, I might have been persuaded to take this into account, despite the issue being raised so late in the day. However, in this case the reliability of documents produced by H in respect of the business has been to say the least deficient. Mr Thorpe KC reminds me that in oral evidence H maintained that the reason no management accounts had been produced was because the HSBC mortgage had been repaid. In addition, Mr Thorpe reminds me that there were serious deficiencies and discrepancies in the paperwork demonstrating payment of tax. While it would appear that this mortgage has been overlooked, there are so many issues relating to the true value of DEF which have been deliberately obscured by H that I will not take this liability into account. I therefore make no deduction to my finding of the value of DEF at £5,671,615.

Is this unfair to H? No, it is not. DEF had over £1 million in revenue in 2024. It has traded for a further 5 months. I have no figures for what profit may have been achieved through this revenue, because H has not given them to Ms Hart. H gave evidence that there were about 250 items of stock at the yard. This is significantly higher than the number on the register which is not much above 100. Historically DEF or ABC rented machinery to third parties. This has stopped. I have no idea what rental income might be achieved from the stock of machinery and Ms Hart has not been able to investigate this. If anything, taking a figure of c.£5.6 million is unfair to W and not to H.

H’s accountant says that there are likely to be penalties and interest of £410,678 arising on H’s failure to include the tax on the LM1 transaction in the return he made this year. H has given no cogent explanation of his failure to make this return and to pay the tax. It was reckless of H not to make provision for this tax liability from his receipt of £20 million. I find he did so in the belief that it would somehow help him in these proceedings. I will therefore ignore this liability in my computation of the assets.

Mr Molyneux KC and Mr Finch say that I should take into account £5,304,043 as a potential liability arising from the liquidation of ABC. This is the total of unpaid creditors and costs. This issue arises because the liquidators have asserted that £9.5 million worth of assets were improperly transferred from ABC to DEF. The liquidators reported the issue to the Essex Police who investigated but took no action. In his statement in answer to the application for a freezing injunction, H downplayed this issue and said:

H relies on an email from Mr Frank Brunby, a partner in the insolvency team at the firm of solicitors he instructs in this case. He, in turn, refers to the liquidator’s report dated January 2025 which refers to a possible claim against H. In answer to this, Mr Thorpe KC for W refers to expert evidence obtained by the liquidators in November 2021 from Wyles Hardy & Co. That report indicates that the total claim referable to incorrect valuations for the purchase of assets by DEF from ABC would amount to no more than £57,000.

I bear in mind the findings I have made about H’s approach to disclosure generally and I draw an inference from H’s statement quoted above and the Wyles Hardy & Co material that this is not a liability which will ever eventuate. If I am wrong, I bear in mind that I have been conservative in other areas of evaluation, in particular for the value of DEF. I also bear in mind that the decision I will reach below gives H a substantially higher proportion of the total assets and that in all the circumstances of the case it is appropriate that H should meet this liability in the very unlikely circumstances of it eventuating.

To recap, the assets as I find them, ignoring the tax penalties and interest are as follows:

I will have to decide how to divide this marital estate of £30.4 million after a marriage of 15 years with an additional 5 or 6 years of committed pre-marital relationship. I will turn first to the open positions.