FD21F00033 - [2025] EWHC 1891 (Fam)

B Trustees contend that, unless and until Z Limited provides the documents necessary to enable a proper valuation, the parties and, indeed, the administration of the estate, “will be in limbo”. They further assert that, without the documents sought by the application, there can be no fair hearing of the Inheritance Act claim. The central point made by B Trustees is that without the documents, and the subsequent valuation, the court would necessarily be proceeding in ignorance of the true value of the estate’s principal asset.

I have referred above to the submission that it could be seen to be in YB’s interests for the valuation of Z Limited to be taken as being as low as possible. There is no basis on which, in this Judgment, it would be appropriate for me to find that YB is deliberately suppressing the provision of documents in order to acquire the shares owned by the estate at an undervalue. However, putting the matter as neutrally as I can, it is obvious that there is the potential for conflict and that YB is not in a position where he can exercise obviously independent judgement about what documents should be produced.

On behalf of B Trustees, Mr Weale forcefully submits that, “much of [YB’s] evidence in opposition to [the application] consists of [YB’s] opinion as to what is (and what is not) relevant to the purposes of a valuation”. Mr Weale goes on to point out, as is manifestly the case, that YB is not an expert and that his opinion in relation to the valuation exercise “is both irrelevant and inadmissible”. Whilst I do not need to go so far as to dismiss YB’s opinion as being irrelevant, it does seem to me that it is not in any way determinative of the matter which I have to decide and I certainly cannot treat his opinion as of much weight. Evidentially, opinion evidence from anyone other than a court appointed expert, is of little value to the court.

What I do have is the evidence from the extremely experienced expert MN to the effect that he (i.e. MN) needs these documents in order to prepare his valuation. The documents sought by these applications derive from a list prepared by MN (at a time when he was working for another Valuer, “V”). I am told that B Trustees had hoped that there would be a collaborative exercise which would, if adopted, enable him to make a more targeted request for information and documents. I am not going to descend into the arena of the arguments that have ensued since then, but it seems to me that MN’s ambition was a sound and sensible one. In his two statements, MN has clearly explained in detail why each category of documents that has been requested is necessary. He explains that the nature of the valuation exercise will require him to consider in detail “cash flow generating potential” which in turn requires detailed information related to Z Limited’s assets.

With the benefit of his very considerable experience, MN has explained why each of the items in the original list of documents is necessary for the purpose of valuing the shares. In his second witness statement, MN has explained why the objections asserted by Z Limited are without merit. YB has asserted that this would be a “monumental task”. MN’s response is that “this information is critical to the running of a [redacted] business” and “is either readily available or can be quickly compiled with our client’s cooperation utilising simple information request templates”. MN has provided information request templates to assist with this task. Importantly, MN observes that it would obviate the need for disclosure of a significant number of underlying documents. In my judgement, this is important.

YB complains, as I have said above, that the task would be “monumental” if he has to provide all of the information sought. When MN provided YB with a request information template, which MN says would make this task very much easier, YB’s response was to complain that he cannot be expected to compile documents, he can only be expected to produce documents that already exist. It seems to me that YB can, here, be put to his election. He can cooperate with the template that MN has requested, taking what appears to me, at least on the evidence presently before the court, to be the easier route, or he can submit to the “monumental” disclosure exercise. If I accede to these applications, and if YB were to elect the “monumental” route then, it seems to me, he only has himself to blame if, in fact, he could short circuit the process in the way described.

The only admissible opinion evidence that I have in respect of the necessity of this application is that of MN. YB, of course, does not (and could not) put himself forward as such. In particular, MN explains that Z Limited’s annual reports and financial statements are inadequate because they are historic and do not constitute a fair representation of the cash flow potential of Z Limited. MN has provided a detailed explanation as to why, in his experience, the documents requested are necessary. No expert competing evidence or opinion has been put forward to counter this. However, in an attempt to answer YB’s objections, B Trustees have produced a focused list of further information which would, it is said, be sufficient for MN’s purposes. This is reflected in paragraph 3 of the draft order. The one thing that MN seeks, if he is to go down this much reduced route, is some mechanism whereby he can ensure that the accuracy of the information supplied can be tested. The suggestion is that Z Limited would be required to provide a sample of documents in order to verify the information provided. The irony is, it seems to me, that if Z Limited is unwilling to cooperate in providing this information, then the alternative could be full disclosure of all the documents originally sought. This would then leave MN the onerous task of extracting the necessary information. In my judgement it is noteworthy that YB is not volunteering co-operation, which would quite possibly result in saving of time and cost. As such, it would be in furtherance of the overriding objective.

On behalf of B Trustees, Mr Weale forcefully submits that, in circumstances where the proposed expert has provided a detailed explanation of why these documents are necessary, the court should have no hesitation in ordering their production, subject only to the application of appropriate confidentiality restrictions.

Ms McDonnell KC, on behalf of C, forcefully asserts that “disclosure of the documents sought is necessary in order to dispose fairly of the claim and to save costs”, for the purposes of CPR 31.17(3)(b). She aligns herself with B Trustees’ case in all material particulars.

Z Limited has gone to very considerable, and very well researched, lengths to resist this application. Their case has been immaculately presented by Mr Cloherty KC, to whom the court is extremely grateful.

The principal asset of the estate, and the subject of the application before me, is one half of the shares in Z Limited. Z Limited, although formerly half owned by the deceased and now part of his estate is, of course, a separate legal entity and must be treated as such, and I do so. It is the holding company for a prominent sector company [redacted] and, as Mr Cloherty forcefully reminds me on behalf of Z Limited, is not a party to these proceedings. He submits that these applications seek disclosure of “highly sensitive and confidential information” relating to Z Limited, which is not a party to these proceedings, as well as other third parties with whom Z Limited undertakes business.

In his very thorough skeleton argument, Mr Cloherty criticises V (for whom MN formerly worked) for failing to recognise various developments in Z Limited’s business. It seems to me that, far from being a factor to support Z Limited’s objection to a new valuation, it makes a new valuation all the more necessary, and renders a 2020 valuation potentially unreliable, or even dangerous. It is not for me to speculate what effect these trends have had on the value of Z Limited. However, I believe that these factors set out by Mr Cloherty support the case for the requested valuation, rather than his own case in resisting one. I do not know whether the factors that he relates will suggest a higher or lower valuation, or even the same, but I accept that these are dynamic changes that suggest that an out of date valuation is potentially deeply unreliable. And if I am right about that, then I do not see how a court can carry out its duty to compute the assets without an up to date and independent valuation.

Mr Cloherty states on behalf of Z Limited that the initial purpose of the valuations was “ostensibly said to facilitate the production of a valuation of [BB’s] shares for the purpose of the claim, in particular to assist the parties thereto to attempt to negotiate a settlement”. However, Mr Cloherty goes on to complain that the “real” purpose of the application is “not to undertake the kind of valuation necessary for the Claim, but instead the purpose of ‘otherwise seeking to realise the value of’ [BB’s] shares”. This, contends Mr Cloherty, is “obviously an impermissible use of the (intrusive) third party disclosure jurisdiction.” I agree that, if that is its purpose, such use would be impermissible.

I do not find that Mr Cloherty’s complaint about impermissible use is made out. I agree that one purpose of the valuation may be to assist a disposal of the shares at full value. But I am clear that the principal purpose of the valuation is to do what the law requires, namely to compute the value of the estate for the purposes of the claim brought by AB. Indeed, it seems to me that the court would be unable to carry out the necessary computation without the valuation that B Trustees seek.

I have not been provided with any acceptable alternative to the valuation proposed by B Trustees, and I reject the submission that the previous (out of date and made for different purposes) valuation is sufficient for the court’s purposes. In a contested financial remedy case in this Division, where there is a need to establish the value of a company owned by one of the parties, the notion that the court would tell the non owning party to accept the valuation produced for the owning party would be most unlikely to gain traction if that valuation is challenged. That is why the court appoints a single joint expert to resolve such issues.

Moreover, as I have already stated above, Z Limited does not have expert evidence to counter the significant expert evidence put forward by MN. Put simply, MN asserts that he cannot carry out a valuation for the court without certain evidence and documents. It is to be remembered that MN’s principal duty, if appointed by the court as an expert, is not to B Trustees, nor to the wife and children, but to the court. As is known to all of the lawyers in this case, the expert’s declaration in such a report makes this absolutely clear. I find no evidence at all to support any assertion that MN is in some way misleading this court, or is saying that he needs things that he does not need. To be clear, MN’s integrity has not been challenged in this way, and I accept, in the absence of any evidence to the contrary, that he needs the documents and information that he says he needs in order to carry out the valuation.

I agree that it would, indeed, be an impermissible use of the third party disclosure jurisdiction if the real purpose is to maximise the value of the estate’s shares rather than to enable the Court to discharge its duty pursuant to The Inheritance Act as discussed above. It is, however, clear to me that the principal purpose of the proposed expert valuation is to arrive at a proper computation of the value of the estate’s shares in accordance with the court’s duty pursuant to The Inheritance Act, as discussed above.

It has been made clear that the claim made on behalf of AB will be resisted, at least in part, by the existence of a prenuptial agreement. It would be inappropriate in this Judgment for me to express any opinion in relation to the importance of that prenuptial agreement to the claim brought by AB. That is an analysis that will be conducted by another judge at a later hearing. I believe, however, that this is not a Crossley type of case [2007] EWCA Civ 1491). In Crossley it was said that:

In a case where the husband and wife divorced but had each signed a prenuptial agreement, which indicated that 'neither party should apply to any court in any jurisdiction for any order for financial provision of any kind based on the marriage...', and where the wife had made an application for ancillary relief, the judge had a discretionary power to require a party to show cause why a contractual agreement should not rule the outcome of an ancillary relief claim, not just when the contract was made post-separation and in contemplation of an application, but also when the contract had been made prenuptially or postnuptially, but before the breakdown of the marriage.

In that childless, short marriage case, the prenuptial agreement was found to be of such overwhelming importance that the case was subjected to a limited summary approach. That was a very unusual case and the facts of the instant case plainly do not allow such a summary outcome, for the instant case involved a 14 year marriage which produced 3 children and where a considerable amount of the wealth was probably (without making a finding about this) generated during the course of the marriage. The duty of the court, even where there is a properly executed prenuptial agreement (and I have not heard any argument as to whether this was such an agreement or not and express no view on that) is fully to compute the assets and then to carry out its discretionary exercise taking account of all the statutory factors. Of course, when exercising its discretion, the court will have regard to “all circumstances of the case” and it is clear that one of the important issues in this case might be the prenuptial agreement. In due course the court may find that the pre-nuptial agreement is of “magnetic” importance to this case. However, I am clear that any suggestion that the prenuptial agreement limits the ambit of the enquiry or the duty of the court to compute the assets would be incorrect and I reject it.

Mr Cloherty forcefully contends on behalf of Z Limited that Z Limited owes confidentiality duties to third parties. He goes on to assert that “protection of [Z Limited’s] confidential information is thus as much in the interests of the estate and its beneficiaries as it is in the Company’s interests”. I am very sympathetic to this argument, it arises frequently in the Family Division. Mr Cloherty asserts, and I accept without reservation, that YB “well understood the unique confidentiality and reputational sensitivities that were critical to [Z Limited’s] continued success”.

Ms McDonnell, on behalf of C, addresses this confidentiality point in short order: “All that is being proposed and sought in these applications is an entirely confidential valuation exercise by a valuer with particular expertise in the industry in which [Z Limited] operates”. I agree with that concise submission.

I would add this: the Family Division frequently deals with matters of intense confidentiality. For example, the court is often invested with information that could, quite literally, affect the share price of a publicly quoted company. The court frequently has to deal with circumstances where there is an imminent IPO, where disclosure of information could wreck the IPO completely, alternatively artificially inflate or reduce the price of shares. The court is used to having sensitive information and to dealing with it. It seems to me that it would be plainly wrong to allow the confidentiality issue to interrupt the court’s statutory requirement to carry out a computational enquiry and I am not prepared to allow it to do so in this case. I have listened very carefully to the excellently crafted submissions on this issue and I shall take every protective measure that I reasonably can to ensure that confidentiality, especially of non parties, is respected and protected. Once the parties have had an opportunity of digesting this Judgment, it may very well be that I will need to hear further submissions in relation to confidentiality issues. It may very well be that anyone receiving information in this case should be required to sign a confidentiality agreement and that I should restrict the people that will receive information and specifically identify who those people should be. Plainly, we are not in a position to do that at the moment and it is something that will have to be considered once the parties have had the opportunity to put forward their own reasoned suggestions.

On occasions I have, as the Judge, been asked to sign confidentiality agreements. I know that some of my judicial colleagues think that inappropriate, and I respect that. From my own perspective, if it reassures people for me to sign something confirming that I have no intention of doing what I would never do anyway, it does not seem too onerous and, if it helps, then in my judgement that makes it worthwhile.

On the subject of confidentiality, and its obvious importance to YB, Mr Cloherty goes on to assert that “this is doubtless one of the reasons why [BB’s] and [AB’s] pre-nuptial agreement provided that [BB’s] shares would always remain his ‘separate property’ and be immune from any marital claim”. As any family lawyer advising in the field of pre-nuptial agreements will know, there is no such thing, at least as the law presently stands, as “immunity from any marital claim”. On the contrary, reliance by Judges on pre-nuptial agreements without a full consideration of the factors set out in s25 of the Matrimonial Causes Act 1973 has been specifically proscribed by the Court of Appeal. See, for example, Brack v Brack [2018] EWCA Civ 2862:
“Where there was a valid pre-nuptial agreement, which provided that the wife had contracted out of a division of the assets based on sharing, a court was likely to regard fairness as demanding that she receive a settlement limited to that which provided for her needs. That would not be the outcome in every case because the court remained obliged to consider all the factors under the Matrimonial Causes Act 1973 s.25(2) and all the circumstances, the first being the welfare of any children.”
Accordingly, and with the greatest of respect to the careful way that his case has been put, I must reject Mr Cloherty’s submission that BB’s shares “would always remain his separate property and be immune from any marital claim”. No such immunity exists. Having rejected that submission, I am in no doubt that the court must do in this Inheritance Act claim by a widow what it does in a financial remedy claim pursuant to a divorce and compute the assets.

It will be obvious to the lawyers and accountants who work on this case that confidentiality is paramount. Any breach of that would not only be a grotesque breach of professional duty, and quite possibly a contempt of court, but would also be likely to impact adversely on the share valuation, something that no one involved in this case would wish, least of all AB or her advisors.

The need to resolve this case confidentially and without court proceedings is paramount. A contested case would probably be heard in open court, although that is of course a decision for the trial Judge, something about which I say no more, for obvious reasons. The valuation that gives rise to the instant application is intended to serve the negotiation process. I accept and adopt the submission made by B Trustees that the parties “will be in limbo” without the documents necessary to enable a proper valuation.

Mr Cloherty further complains that “a [redacted] new start-up incorporated just a few months ago” will be the accountants chosen by B Trustees to carry out the requested valuation in place of V, who were originally instructed. I can deal with this point in short order: I am told, and it is not disputed, that the valuation sought will be carried out by MN, formerly of V but now with the new “[redacted] start-up”. I understand that MN now works for RST, the entity which Mr Cloherty calls the “[redacted] start-up”. I can overcome this problem quickly and easily by requiring MN to give undertakings to permit access to the papers in this case only to certain named individuals and to be the person in charge of the valuation process. I am of course willing to hear submissions on this issue.

I am satisfied that the threshold conditions warranting disclosure have been met. I find that the documents of which disclosure is sought are likely to inform and therefore support the case for the applicant. Indeed, I go further: I find that the court cannot properly carry out its duty to compute the assets without the documents sought.

I agree that the court can impose conditions pursuant to s34 of the Senior Courts Act 1981. I agree that the court can only order production of documents that actually exist. I find that MN has attempted to short circuit, and accordingly reduce the costs of, the disclosure process by inviting the response to questions that he has drafted and producing the schedules that he has. If Z Limited refuse to answer questions reasonably put then they will have to take the more expensive and the more elongated route. That may well sound in costs, if it results in increased costs for the Estate, but that is a decision for another court on another day.

Given all that has been said in this case about confidentiality and the risk to value if that is breached, my preliminary view was that this Judgment should, for the time being at least, remain private. I have been persuaded that it would be of assistance to prepare an anonymised and redacted public version of this Judgment and the parties having agreed its contents I am content to approve it. My original Judgment of course remains private and confidential to the parties and their legal advisors.