C v C, Court of Appeal - Family Division, November 22, 2018, [2018] EWHC 3186 (Fam)

Resolution Date:November 22, 2018
Issuing Organization:Family Division
Actores:C v C
 
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Case No: BV16D14589

Neutral Citation Number: [2018] EWHC 3186 (Fam)

IN THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 22/11/2018

Before :

THE HONOURABLE MRS JUSTICE ROBERTS

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Between :

(POST-SEPARATION ACCRUAL: APPROACH TO QUANTIFICATION

OF SHARING CLAIM WHERE NON-MATRIMONIAL PROPERTY)

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Richard Castle (instructed by Mishcon de Reya LLP) for the Applicant

Patrick Chamberlayne QC (instructed by Stewarts Law LLP) for the Respondent

Hearing dates: 25 July to 27 July 2018 and 16 November 2018

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JudgmentThis judgment was delivered in private. The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the children and members of their family must be strictly preserved. All persons, including representatives of the media, must ensure that this condition is strictly complied with. Failure to do so will be a contempt of court.

Mrs Justice Roberts :

Introduction

1. This is an application by a wife for financial remedy orders. She is represented in these proceedings by Mr Richard Castle instructed by Mishcon de Reya LLP. The husband is represented by Mr Patrick Chamberlayne QC. His solicitors are Stewarts Law LLP. Decree nisi was pronounced as long ago as October 2016 but has not yet been made absolute. For the purposes of this judgment, it will be convenient to refer to the parties as ``the husband'' and ``the wife''. I intend no disrespect to either in doing so.

2. The single issue in the case is the extent to which there should be a departure from equality of division of the assets on the basis of the husband's post-separation endeavours and his creation of what he asserts to be non-matrimonial property. In this context there was initially disagreement between the parties as to the correct application of the legal principles articulated by the Court of Appeal in the judgments delivered by Lord Justice Moylan in Hart v Hart [2017] EWCA Civ 1306, [2018] Fam 93 and Waggott v Waggott [2018] EWCA Civ 727, [2018] 2 FLR 406.

Background

3. The background can be simply stated. The parties are now in their mid-forties. Both are educated professionals although the wife has, since 2010 devoted her time and energies to caring for their two young children who are now 9 and 6 years old. The parties met in 2003 and started to live together some three years into their relationship. They married in May 2008 and separated in June 2016 when the husband, at the request of the wife, moved out of their matrimonial home. Because of the manner in which the husband presents his case in terms of a forensic account of the post-separation assets, the precise date of separation has been an issue, albeit one which has not been pursued during the hearing. The wife's petition seeking dissolution of the marriage was issued in May 2016 following a letter from her matrimonial solicitors to the husband in April that year advertising her intention to issue divorce proceedings. Her Form A followed in November that year. This was thus a marriage of some 8 years albeit a committed relationship of more than 10 years.

4. For the last sixteen years the husband has worked in increasingly senior positions within an investment bank. He is now one of the Bank's senior heads of department and leads a team in London trading a significant portfolio of equity assets which includes some volatile and high risk stocks. Over the years he has enjoyed increasingly substantial annual remuneration packages which have included a significant element of deferred equity participation or RSUs (Restricted Stock Units). As a result, the family has built up reserves of capital whilst enjoying a good standard of living in central London. Leaving aside issues of presentation to which I shall come, the agreed asset schedule in this case (as it was presented when the case was opened) shows the assets available for distribution at the end of this marriage to be just under £25.36 million (on the husband's case) and £27 million (on the wife's case). For these purposes, the husband has excluded the very recent 2018 awards, none of which have yet been earned or vested.

5. For the first four years of their marriage, the parties lived in rented accommodation. In January 2012 they purchased their first, and only, matrimonial home in central London. Following the purchase they carried out a substantial programme of renovation. The property has an agreed value of £5.1 million and is subject to a mortgage of just under £2 million. At the time of purchase the parties took some tax advice about structuring the ownership so as to enable them to take advantage of the husband's status as an American citizen and his entitlement to the US lifetime gift allowance. The property was purchased in their joint names but, as a result of a declaration of trust executed at the same time, the beneficial interest in the property is now held by the wife. During the marriage the husband diverted a substantial tranche of capital into the wife's name. In accordance with the tax advice they received, she has since discharged the mortgage from those resources save for two recent payments which the husband has made to reduce the debt secured on the property by some £100,000. There is an issue as to the tax consequences of those payments to which I shall come shortly.

6. Notwithstanding the breakdown of the marriage and the demands of his current role in the Bank, the husband has continued in his role as a `hands on' father to their two children. The parties have come to an arrangement whereby, with the assistance of the children's long-term nanny, the two children divide their time between their parents' two homes spending about five nights each fortnight with their father. Since leaving the former matrimonial home, he has been living in rented accommodation.

7. It is agreed that the future housing needs of both parties are similar. The annual rent on his current home in central London is £214,500 per annum. Whilst both parties would have wished to retain the London family home at the conclusion of these proceedings, the husband has now accepted that the wife should keep it on the basis that she will discharge the mortgage debt from the award which she receives at the conclusion of these proceedings.

8. Prior to the parties' decision that the wife should not return to full-time work at the end of her maternity leave following the birth of their elder child, she was working as a director at an investment bank. Her evidence is that, in 2006 when the parties started living together, she earnt US$1.3 million, a figure in excess of the husband's income at the time. In terms of her future earning capacity, she accepts that at some stage she will probably wish to consider a return to some form of paid employment but this is unlikely to be on a full-time basis. The husband contends that, whilst she will never need to work again even on the basis of the division of capital which he is proposing, she could resume her previous professional career if she wished to do so.

9. The husband's income in 2016/2017 was £7.77 million gross, £4.287 million net. His receipts this year (including the RSUs vesting from previous awards) will be £3.124 million. The wife does not seek to extend her sharing claims beyond 2017 but there is an issue as to whether she should be entitled to a 50% share of the income earned during the year of separation and the 12 months thereafter.

The parties' open positions

10. The wife made an open offer on 24 May 2018. In addition to the transfer of the former matrimonial home, she seeks a series of lump sums equal to 50% of the husband's future receipts from the RSUs awarded for the performance years 2014 to 2017. In the event of a settlement which avoided the need for a final hearing, she agreed to limit her claim to those RSUs awarded in 2015 and 2016. In other words, her entitlement to share would end in the year during which the parties separated. All other assets (including pensions) would be equalised by means of an in specie division and a balancing lump sum payment. In terms of child support, she seeks (i) periodical payments for each of the children in the sum of £25,000 per annum together with the costs of employing their nanny until 2023 (c. £51,000 per annum) and (ii) school fees with extras and education costs to the end of a first degree.

11. The husband accepts that the marriage was one of equal contribution. His first open offer was predicated on the basis of the ring-fencing of his post-separation assets of some £6.5 million. His revised offer dated 20 July 2018 contained a simplified solution. He now proposes a 60:40 division of the assets in his favour which, with a balancing lump sum payment of £1.78 million, leaves in the wife's hands assets with a value of c.£10.2 million. This proposal represents a very small departure from a full exclusion of his post-separation assets which the parties agree would result in a 66:34 split in his favour. Support for the children is agreed at £25,000 per annum per child but the husband seeks from the wife an equal contribution to the ongoing costs of their private education.

12. As the case was opened, the parties were some £3.37 million apart in terms of outcome.

The husband's arguments in support of a departure from equality

13. The husband relies on several factors to justify his position that he should retain an enhanced share of the assets. Some are general points of dissatisfaction about the manner in which the litigation has progressed over the last two years. (In general terms, he asserts that the wife and her solicitors have taken...

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