Anthony David Culligan v Diane Liza Rosemin-Culligan

The husband appeals from the final financial remedy order made by MacDonald J (“the judge”) on 1 September 2025. The appeal principally concerns the judge’s division of the illiquid and liquid matrimonial assets between the parties which the husband submitted resulted in an unfair award in the wife’s favour.

The effect of the judge’s order was to share the parties’ capital resources equally between them by value, giving each party net assets (i.e. the gross value of the assets as found by the judge less liabilities including tax) with a total value of approximately £13.7 million. However, the assets allocated to the wife comprised £9.5 million of liquid (realisable) assets (net of liabilities) and £4.1 million of illiquid assets while the assets allocated to the husband comprised £4.1 million of liquid assets (net of liabilities) and £9.6 million of illiquid assets. As can be seen, the effect of this was that 70% of the husband’s share and 30% of the wife’s share comprised illiquid assets.

I describe the assets as liquid and illiquid but, as addressed further below, an important factor in the distinction is that the latter are risk assets in that, as found by the judge, the value which will in fact be realised is “subject [to] significant uncertainty” both in respect of timing and of amount. The relevant illiquid/risk assets are shares in a private company (Colendi Holdings Limited, “Colendi”) which were valued at £13.7 million net of tax. The husband’s case before the judge and his case on appeal was that the shares should have been equally divided between the parties so that each party equally bore the risk inherent in them. This would, broadly, require the husband receiving the additional amount of £2.74 million from the liquid assets, this being the equivalent of 20% of the value of the Colendi shares. For reasons addressed briefly below, the order provided for the wife to receive her share of the value received in respect of the Colendi shares through contingent lump sums supported by a Deed of Covenant between the parties.

The husband initially advanced ten grounds of appeal which covered a very broad range of issues. These included the judge’s approach to needs and to the parties’ respective earning capacities. However, at the hearing, the focus of his case was on the unequal division of the Colendi shares which, he submitted, resulted from the judge’s flawed approach to the issue of, what is known as, Wells sharing. This characterisation derives from the case of Wells v Wells [2002] EWCA Civ 476, [2002] 2 FLR 97 in which Thorpe LJ (giving the judgment of the court) identified, at [24], that sharing should achieve “a fair division of both the copper-bottomed assets and the illiquid and risk-laden assets”; or, as they were also described in that case at [22], “assets that are readily saleable at stable prices and assets that are both illiquid and risk laden”. I will deal briefly with some of the other grounds advanced by the husband but I propose to focus principally on that aspect of his case (which comprised grounds 2 to 6).

The husband was represented on appeal by Mr Thorpe KC, who appeared below, and Ms Cara Donegan. The wife was represented on appeal by Mr Southgate KC. I am grateful to all of them for their respective submissions.

The judgment below is reported at [2025] EWFC 1. It is a long and careful judgment but, regrettably, for the reasons set out below, I have concluded that the judge’s decision cannot be sustained.

The parties are in their 60s. They met in 1982, began cohabiting in 1985 and married on 4 February 1992. The date when the parties separated was not agreed (the husband said September 2020, while the wife said April 2022) but, either way, this was a marriage/relationship of approximately forty years. They have three adult children.

The wife is British. The husband holds dual British and US citizenship, having been born in the USA while his parents were working there temporarily. This was relevant because significant tax liabilities arose as a result of the husband’s US citizenship and a dispute arose as to whether these liabilities should be shared (the husband’s case) or whether they should be paid by the husband (the wife’s case). I return to this below.

The former matrimonial home was purchased in July 1993. It is a large property with 9 bedrooms and 7 bathrooms and had an agreed valuation of £7 million. It has been transferred to the wife pursuant to the judge’s order and the wife still lives there.

All the marital wealth was generated during the course of the marriage. It is only necessary to refer to two aspects which are relevant to this appeal.

The first relates to the manner in which the wife effected the sale of her interest in a company called Elsa Sports Group Limited (“ELSA”). As explained further below, it was structured in such a way that the tax incurred was increased by £1 million. This arose because, as found by the judge, the wife had sought to exclude part of the sale proceeds from being subject to the sharing principle by receiving it by way of consultancy fees over four years. The judge included the consultancy fees (net of tax) within the assets to be shared between the parties but he did not accept the husband’s case that his share of the assets should be increased to reflect the lost £1 million.

The second relates to a company called SETL Limited (“SETL”) and, in particular, its sale to Colendi in January 2023. This transaction had a critical impact on the structure of the judge’s award because he decided, at paragraph 110, that it was fair for the husband to “bear the larger share of the consequences of having, without consulting the wife, converted his shareholding in SETL Limited, representing close to half the matrimonial assets, into an illiquid minority interest in a multinational corporation”. He had previously described the effect of the sale as “rendering [a substantial matrimonial asset] illiquid and subject to increased risk”, paragraph 109.

The background to this transaction was as follows. A significant source of the marital wealth was the purchase by the husband in 2012 of approximately 1,000 Bitcoin at a cost of £10,000. The judgment below set out the subsequent history in respect of this investment:

“[10] … By 2017, the value of the husband’s bitcoin holding had risen to approximately £20M. Both parties accept that, over the course of the marriage, the Bitcoin has been sold off to fund a number of projects. In particular, to provide financial support for the husband’s company, SETL Limited, to provide financial support for the wife’s company, ELSA, to fund the family’s living expenses and to fund the renovation of the former matrimonial home and the acquisition of the husband’s property in the US …

[11] With respect to the companies supported with the proceeds of the sale of Bitcoin, the husband set up a peer-to-peer Bitcoin exchange called ‘Roolo’ and decided to focus on developing blockchain systems for banks. In 2015 Roolo became SETL Development Limited. That company was set up by the husband and three former colleagues from the City. The wife contends that the original intention was for the spouse of each of the founders to hold half that founder’s shares but that, whilst this occurred with respect to the other founders, she never received half of the husband’s shares in SETL Development Limited. At the beginning of 2019, SETL Development Limited was placed into voluntary liquidation and a new company, SETL Limited, was incorporated on 5 March 2019 (having briefly been called Launchpad 39A). On 5 May 2021, the husband and the other directors agreed to forego their salaries for two years from 1 April 2021 in return for 10M shares in lieu. The wife contends she was not informed of that decision. Between April 2019 and September 2022, the husband invested £2.7M in SETL Limited, funded from the sale of Bitcoin. Efforts to raise outside capital were not successful. The report of the single joint expert, Mr Rodwell, states that SETL Limited consistently recorded a net operating loss between 2020 and 2022 and that its net asset value decreased significantly each year from 2019 to 2022.”

The husband’s evidence before the judge, as to the background to the sale of SETL to Colendi, was that SETL was “running out of money such that he was required to lend it sums in late 2022”. He said that, if the sale to Colendi had not proceeded, SETL would have had to “close down”.

In January 2023, SETL was acquired by Colendi by way of a share swap. The shareholders in SETL acquired just over 28 million shares in Colendi, which was then equivalent to approximately 8% of Colendi’s share capital. The husband received 12.9 million of these shares which equated to approximately 3.6% of Colendi’s share capital. It can be seen, therefore, that the other shareholders owned approximately 54% of SETL while the husband owned 46%. Colendi has interests in a significant number of other companies in addition to SETL. The husband’s shares in Colendi are held on trust for him through a company called Colendi SETL Nominees Limited (“SETL Nominees”).

There was also an issue between the parties as to whether the husband’s interest in the Colendi shares could be transferred to the wife. They are held subject to the provisions of an agreement (between the husband, SETL Nominees and Colendi) which sets out that any proposed transfer is subject to the provisions of the Articles of Association and a Colendi Shareholders Agreement. The judge’s conclusion was that, in essence, whether a transfer could be effected was too uncertain to make it a realistic option. This was partly because none of the preliminary steps that would have been required had been taken and, also, because it was in any event unclear that it was achievable. As part of his appeal, the husband has sought to argue that, in fact, the only reason a transfer was not a realistic option was because of the US tax which he would incur as a result of the wife’s refusal to make a US tax election, as explained further below.

The wife’s Form A was issued on 21 June 2022. Forms E were exchanged on 6 October 2022.

The wife’s open offer was set out in a letter dated 12 November 2024. In it, she proposed, amongst other things, that she retain the former matrimonial home, that she receive a contingent lump sum equal to “15% net of the future benefits” derived by the husband from the Colendi shares, that the deferred consideration of £750,000 from ELSA should be shared and that the husband should be solely responsible for his tax liabilities.

The husband’s open offer was set out in a letter dated 4 October 2024. He proposed an equal division of the parties’ assets net of all tax liabilities to include the payment to the wife of a contingent lump sum equal to 50% of the net benefits received by him from his Colendi shares.

Three expert reports were prepared in advance of the hearing, one report from a tax expert dated 8 March 2024 and two from an accountant dated 30 October 2023 and 9 October 2024 valuing the husband’s shareholding in Colendi.

The tax expert dealt with the husband’s potential US tax liabilities on the sale or transfer of any asset and any means by which this could be mitigated. One means he identified of mitigating potential tax was for the wife to make an election available under the US tax code which required, among other things, that the parties were married at the relevant time. This would have led to her being treated as a US resident and subject to US tax during the period of the election as well as being responsible “for the entire joint US tax liability on a joint and several basis”. The benefit of the election was that transfers from the husband to the wife would not be subject to US tax and “can, where managed carefully, provide a mechanism whereby US income tax on eventual disposals of appreciated marital property can be avoided altogether”. The wife was opposed to making any such election but the judge decided that it would have been reasonable for such an election to be made.

The husband’s shares in Colendi were valued at £19 million. This valuation was based on transactions during a recent funding round in May 2024. The expert was clear that “the maximum amount that Mr Culligan can extract from the business currently is effectively £nil”. This was because of the company’s financial situation and the size of the husband’s shareholding. Further, it was “difficult to estimate the sustainable level of dividends that Colendi may be able to pay in the future” but it was “possible” that none might be paid for the next three financial years. He also suggested that, if SETL became “sufficiently profitable, it would not be unreasonable for the husband to receive his previously contracted salary of £300,000 per annum”. This was, however, in the context of:

“SETL has been loss making in each year from FY2020 to FY2023 and Colendi has had to support SETL with cash injections on an almost monthly basis. SETL’s latest cash flow forecast projects SETL receiving £50,000 in funding per month from Colendi throughout the forecast period, which runs to October 2025.”

The expert was not asked to value SETL absent its sale to Colendi. He did, however, record that, although SETL’s turnover had increased in each year from 2020 to 2022, it had made significant operating losses every year and had made further losses in the first six months of 2023. The directors had also foregone their salaries since 2019, receiving shares instead. In addition:

“SETL’s Net Asset Value (“NAV”) has also decreased significantly each year from approximately £3.5 million as at 31 December 2019 to approximately negative £0.4 million as at 31 December 2022. This is despite the business raising capital by issuing equity of approximately £2.7 million over the three year period.”

The judge heard evidence from the wife, the husband and the valuation expert.

As is often the case, the judge had to determine a range of issues which are not relevant to this appeal. I propose only to deal with those aspects of the judgment below which have been raised in the course of the parties’ submissions or are otherwise material for the purposes of this appeal.

Both parties relied on conduct. The wife raised a range of matters which she contended constituted conduct within the scope of s.25(2)(g) of the Matrimonial Causes Act 1973 (“the 1973 Act”). One of them was that the husband “engaged in secretive and unilateral financial actions” which included the husband’s conduct “during [the] acquisition of SETL by Colendi, in particular his failure to reveal his decision to take shares in SETL limited in lieu of salary and his failure to disclose the pending acquisition by Colendi” (emphasis added).

The judge decided that “it would not be inequitable to ignore the matters of conduct pleaded by the wife” and specifically rejected the wife’s case in respect of the husband’s conduct of his finances as being “secretive and unilateral”. His ultimate determination was that none of “the matters of alleged conduct relied on by the wife … are matters that it would be inequitable … to ignore when determining the fair distribution of the matrimonial assets”. He described it as “unfortunate” that a “significant portion of the hearing was taken up with evidence that came, broadly, under the heading of ‘conduct’ … where the allegations relied on by the wife … came nowhere near meeting the high threshold applicable”. I would add that the judge took into account this part of the wife’s case and her own conduct in respect of the sale of ELSA when ordering her to make a contribution to the husband’s costs.

The conduct relied on by the husband related principally to the sale of ELSA. As referred to above, the husband contended that the consultancy agreement had been a device procured by the wife so as to seek to exclude the amounts paid under it from the husband’s sharing claim (“seeking to disguise assets as future income”). The judge accepted the husband’s case:

“[67] The primary issue with respect to ELSA is whether the wife structured the sale of that matrimonial asset in such a way that £3M of the consideration paid for ELSA by YMK Holdings LLC, which would form part of the matrimonial assets available for division, became post marital income of £750,000 per annum over four years, which would not. Having regard to the totality of the evidence before the court, I am satisfied that the consultancy fee of £750,000 per annum over four years, paid to the wife under the consultancy agreement that accompanied the sale of ELSA, constituted deferred consideration for that sale of that company.”

The effect of structuring the sale in this way was to increase the tax payable by the wife by £1 million because the consultancy fees were subject to income tax rather than capital gains tax which would have applied if they had been part of the capital payable under the share purchase agreement. As a result of this finding, the judge added £1.6 million, being the consultancy fees net of tax, to the schedule of the assets to be divided between the parties.

The husband also relied on the payment to a director of ELSA of a fee of £1.1 million paid in connection with the sale but which the husband alleged was not “legitimate”. The judge’s finding in respect of this is not entirely clear. He concluded: “on the face of it, (it) is difficult to see why the wife would have agreed” to this fee “being paid to … a friend and director who was under a fiduciary duty to effect the sale”.

In his closing submissions to the judge, the husband sought an additional allocation of £750,000 to him to reflect, only, the additional tax payable as a result of the consultancy agreement. The husband’s case was that “a fair recompense for the consequent diminution of the matrimonial assets would be to allocate” to the husband the whole of the deferred consideration due under the share purchase agreement of £750,000 (i.e. to provide the husband with an additional £375,000). The judge rejected this:

“[76] … I am not however satisfied that, in addition to the total consultancy fee net of tax in the sum of £1.6M being added to the wife’s side of the asset schedule, the husband should be further awarded the totality of the deferred consideration in the sum of £750,000, particularly in circumstances where each party had agreed that that sum should be divided equally between them.”

The judge determined that the gross value of the husband’s share in Colendi was £19 million, accepting the expert evidence. As referred to above, this valuation was based on transactions during a funding round which had taken place in May 2024. The judge accepted the expert’s evidence that this provided “a reliable valuation” because it reflected “people putting their hands in their pockets” which was a “very good indicator” of value. The expert did not consider it appropriate to apply a discount because it was “likely that interests acquired in the current funding round are comparable to the husband’s interest in terms of size, rights and restrictions, and therefore properly reflect the view of investors on the value of non-controlling and non-marketable interests”. Accordingly, the amount paid by such investors “already had a discount for illiquidity priced in”.

As referred to above, it was also clear from the expert’s evidence that the husband’s shareholding could not be sold (it was “non-marketable”) and that the husband could not extract “any liquid capital” (because of the company’s financial position and the size of the husband’s shareholding). Additionally, there was no current prospect of dividends being paid by Colendi. Separately, the expert was unable to say when SETL might become profitable.

The judge decided that the parties should be equally liable for the US tax. He rejected the wife’s case, as recorded in the judgment at paragraph 77, “that the husband should bear the entirety of the US tax liability” (emphasis in original).

The judge found that the total wealth available for distribution was just over £27 million. This was net of tax and other liabilities. He also decided that both the wife and the husband had a “substantial earning capacity” and that “housing is the primary capital need of each party”. As to the latter, the judge did not accept the wife’s case that she needed the former matrimonial home given its size but he decided that it would be included as part of her share of the assets. As for the husband, the judge determined that his housing need could be met with the sum of £2 million. This was based on the husband having “evinced an intention to move” to the US and build a property there at a cost of £2 million. The latter finding was challenged as part of this appeal on the basis that this was not the husband’s evidence and that he and the wife’s housing needs in London were broadly the same.

The judge then addressed, from paragraph 85, the issue of “Fair Distribution”. The “starting point is that it is accepted by both parties … that there will be a broadly equal division of the assets”. He then noted that the “substantive disagreement” between the parties was how such a division was to be effected when “a significant portion of [the] assets [was] illiquid and, on the wife’s case, [carried] increased risk”. The judge observed, at paragraph 100, that the need to consider a clean break, as provided for by s.25A of the Matrimonial Causes Act 1973 (“the 1973 Act”), presented “a particular challenge” because “close to half the matrimonial assets available for distribution, in the form of the husband’s Colendi holding, are illiquid and carry with them a level of risk”.

This led the judge to consider Wells v Wells. He noted that it did “not mandate the equal division of all assets” but rather that, “sharing is achieved by a fair division of ‘both copper-bottomed assets and the illiquid and risk-laden assets’” (judge’s emphasis), quoting what Thorpe LJ had said in that case, at [24]. He also noted, at paragraph 101, that the “guiding principle at all times … remains fairness”.

The judge then referred to Versteegh v Versteegh [2018] EWCA Civ 1050, [2019] 2 WLR 399 (“Versteegh”). He summarised the effect of that case, at paragraph 103, as being “that ‘Wells sharing’ will be a last resort and should only comprise a minority element of the award” (emphasis added). He then repeated this:

“[104] The view of the Court of Appeal in Versteegh that Wells sharing will be a last resort and should only comprise a minority element of the award was expressed in the context of illiquid and risk laden assets that could not be valued accurately or at all.”

He also noted that “considerations of fairness operate both ways” before adding, as relevant considerations:

“if the illiquid or risk laden asset has been built up from matrimonial funds in an open manner during the course of the marriage and is capable of being reliably valued, there may be a stronger argument for the risk and the potential reward to be shared more equally. To this end, the circumstances by which the asset in question came to be illiquid or risky, and the reliability of any valuation that can be achieved in respect of it, may also be relevant when evaluating whether and, if so, to what extent it is fair for the illiquid or risky asset to be shared.”

In deciding the manner in which the Colendi shares should be shared, the judge decided that the shares themselves could not be shared (see paragraph 16 above). He decided, therefore, that the wife’s share of their value should be received by her by way of “a contingent lump sum” of the “value” received by the husband.

I set out the judge’s subsequent analysis in full (emphasis added):

“[106] I am accordingly satisfied that a contingent lump sum is the only reliable means of reflecting the wife’s share of the matrimonial assets comprised of the Colendi shares in so far as it is necessary to do so to achieve fairness. However, I am further satisfied that whilst maintaining fidelity to the principle of fairness the portion of her award that is comprised of a contingent lump sum should be kept as small as possible.

[107] This is not a case in which the Colendi shares cannot be valued. Whilst valuation is more art than science, for the reasons set out above I am satisfied that this court can place weight on the valuation of the husband’s Colendi shares provided by the expert in the sum of £19M. However, the question of whether and to what extent it is appropriate in this case to share that illiquid and risky asset with the wife, i.e. whether and to what extent so called ‘Wells sharing’ is appropriate on the facts of this case, remains. In this case, the need to consider ‘Wells sharing’ arises not from an inability to value an asset but rather from the size of the illiquid or risk laden asset relative to the “copper bottomed” matrimonial assets in the case. Certain of the other disadvantages of ‘Wells’ sharing’ an illiquid or risk laden asset are therefore nonetheless relevant.

[108] The contingent lump sum dependent on the Colendi holding would have a number of the disadvantages for the wife associated with ‘Wells sharing’. It would prevent a clean break at this point in time for the purposes of s.25A of the 1973 Act (requiring that which a clean break seeks to avoid, namely two people who have fallen out having to continue to co-operate closely in respect of financial matters), would leave the wife dependent on an illiquid asset to which a risk attaches and in which it is difficult to deal, would place the wife in a position in which it is difficult to provide her with any solid protection with respect to a contingent lump sum comprising a not insignificant element of her award and would leave the wife with a lack of certainty with respect to when the Colendi shares could be realised and potential future costs consequent thereon (in circumstances where the husband’s co-operation in these proceedings with the provision of information has been less than fulsome and has led to punitive costs orders being made). Further, whilst it has been possible to value the Colendi shares in this case, that valuation is a snapshot and the future value of the asset is also the subject of significant uncertainty.

[109] Against this, and as I have noted, in circumstances where it is also onerous for the party in whose name the illiquid or risky asset is held to be left with all or a greater share of that asset, the fairness of that outcome must also be considered. On the evidence before the court, I am satisfied that the wife was not consulted by the husband before he dealt in the way that he did with the substantial matrimonial asset that was SETL Limited, rendering that matrimonial asset illiquid and subject to increased risk. However, the Colendi shares comprise an asset that was built up within the marriage from other matrimonial assets, in the first instance Bitcoin and thereafter SETL Limited. Whilst there was a dispute as to the extent it was necessary for the deal with Colendi to be structured in the way that it was in circumstances where, contrary to the husband’s justification for a nominee holding, multiple small shareholders are listed on the Colendi register and other companies which have invested by way of shares owned directly, the wife did not appear to contend that the husband had structured the deal with Colendi in a deliberate attempt to defeat the wife’s claim. Indeed, as I have noted, in cross-examination, the wife was keen to emphasise that she had not used the word “dishonest” to frame her contention with respect to the husband’s approach. Finally, and as I have already observed, I am satisfied that fairness demands that the husband have sufficient liquid funds after he has cleared the liabilities for which he is responsible to rehouse himself.

[110] In my judgment, the combined effect of the matters set out above is that there must be some sharing of the illiquid Colendi asset, although the wife’s share should be kept to the minimum amount required to ensure fidelity to the principle of fairness. In addition to the difficulties inherent in ‘Wells sharing’ summarised above, I am satisfied that it is fair for the husband to bear the larger share of the consequences of having, without consulting the wife, converted his shareholding in SETL Limited, representing close to half the matrimonial assets, into an illiquid minority interest in a multinational corporation.

[111] The wife acknowledges by her open offer that it is likely to be necessary to include a contingent lump sum in her favour. This is a realistic position. The court must maintain fidelity to the policy of effecting a clean break where possible. However, it must also maintain fidelity to the principle of fairness. As I have noted, the need to consider ‘Wells sharing’ in this case arises not from an inability to value an asset but rather from the size of the illiquid or risk laden asset relative to the other “copper bottomed” matrimonial assets. There is, in my judgment, simply an insufficient amount of the latter to achieve a fair division between the parties without relying to some extent on sharing the Colendi shares if the husband is not to be left with very limited or no liquid funds to house himself. It would also not be fair to leave the husband with insufficient liquid assets to fund a property in which to live. In this case the illiquid asset in question is, unlike the position that pertained in Wells v Wells, capable of being reliably valued at £19M. Within that context, with respect to the quantum of such ‘Wells’ sharing I am satisfied that the appropriate figure is 30%. This will permit a division of assets that properly balances the need for sufficient housing provision for the husband with the need to avoid the wife having to bear too [great a] share of the illiquid assets, with the risks and difficulties consequent thereon.”

It can be seen, in summary, that the judge’s determination of a fair division of the assets was based significantly on the husband not having “consulted” the wife before SETL was acquired by Colendi and the judge’s assessment that this had rendered a “matrimonial asset illiquid and subject to increased risk”. The other factors identified by the judge were the husband’s need for housing and the “need to avoid the wife having to bear too [great a] share of the illiquid assets, with the risks and difficulties consequent thereon”. As to the former, earlier in his judgment the judge had said that “to achieve fairness in this case, the husband will need to have left over a sum for securing housing after having settled his share of the liabilities”. This can be contrasted with his conclusion that “the portion of [the wife’s] award that is comprised of a contingent lump sum should be kept as small as possible”.

The parties’ respective submissions were, in brief summary, as follows.

The focus at the hearing of Mr Thorpe’s submissions was that the judge had been wrong to make 70% (£9.6 million) of the assets (£13.67 million) retained by the husband shares in Colendi as against 30% (£4.1 million) of the assets (£13.66 million) retained by the wife. Either the judge should have reflected the illiquid and risk nature of the shares in Colendi by awarding the husband more than 50% of the total assets or, as sought by the husband, his equal division of the assets should have included an equal division of the Colendi shares. He challenged the judge’s reasoning for the division he effected which, Mr Thorpe submitted, was flawed and resulted in a division of the liquid and illiquid assets which was unfair to the husband.

Underpinning the judge’s analysis and determination was a flawed approach to the issue of Wells sharing, based on the judge wrongly considering that he was constrained by Versteegh to view Wells sharing as a “last resort” and one which “should only comprise a minority element of the award”. This was, Mr Thorpe submitted, not what Versteegh had decided. In addition, the judge had been wrong to base his division of the Colendi shares on the fact that the husband had not consulted the wife prior to the sale of SETL, when the judge had rejected the wife’s case that this had amounted to conduct. Further, contrary to the judge’s decision, the shares in Colendi were no more illiquid than the shares in SETL had been and they were not “subject to increased risk”. The husband’s case, supported by the expert evidence, was that the sale of SETL to Colendi had, at least potentially, created very significant value. In summary, the husband contended that the matters relied on by the judge did not justify the very significant imbalance in the division of the Colendi shares as part of the parties’ respective shares of the matrimonial assets.

A subsidiary submission made by Mr Thorpe was as to the effect of the wife refusing to make a US tax election on the manner in which the Colendi shares could be shared. He submitted that this was the only reason preventing the shares themselves (or the beneficial interest) being transferred to the wife because of the tax which would be incurred absent such an election. The judge had been wrong when he decided that there were other obstacles which made this an unrealistic option.

As to outcome, although the husband contended that other aspects of the judge’s decision were wrong, Mr Thorpe did not seek any separate adjustment in respect of them. He relied on these grounds, if required, in further support of his case that there should be an equal division of the value received from the Colendi shares. These grounds included that the judge should have made an adjustment from an equal division in favour of the husband to reflect the losses caused by the wife’s conduct in respect of the sale of ELSA.

An equal division of the Colendi shares, at the net value as determined by the judge, would require the wife receiving an additional 20% of that value, namely £2.74 million, with the husband receiving a balancing lump sum from the wife. Mr Thorpe submitted that the only practical way of achieving this, as the other provisions of the order had all been implemented, was for the former matrimonial home to be sold with the husband receiving the relevant percentage from the proceeds of sale (the relevant percentage being £2.74 million as a percentage of £7 million less costs of sale, being 40.4 % of that sum). If the property sold for more than the value agreed for the purposes of the hearing below, he submitted that any additional amount should be shared equally.

Mr Southgate submitted that the judge’s decision to share the Colendi shares unequally between the parties was not flawed or wrong as suggested by the husband. He submitted that the judge did not mean literally that Wells sharing should be a “last resort”. The judge had clearly appreciated that no particular outcome was mandated and that, as he had said, the objective was to achieve a fair outcome. The use of this expression (“last resort”) was, Mr Southgate submitted, a common, albeit perhaps unfortunate and clumsy, shorthand for the desirability of and statutory steer towards a clean break so that the parties were not left joined together financially in any material way if that could be fairly achieved. The judgment had to be read as a whole and Mr Southgate warned against undertaking a close textual analysis rather than an overarching assessment to determine whether the judge had fallen into error.

He submitted that the judge had reached a balanced decision which, as the judge had said at paragraph 110, was the result of “the combined effect of the matters” to which he had referred. It was a decision which was well within the proper scope of his discretion. The judge had, broadly, applied the approach referred to in Martin v Martin [2018] EWCA Civ 2866, [2019] 2 FLR 291 (“Martin”), at [93]. He had been entitled to decide that the expert valuation was “reliable” and was one on which he could place significant weight. This was a matter which was expressly referred to in Martin as being an important factor for the purposes of determining what “overall allocation of the parties' assets by application of the sharing principle … effects a fair balance of risk and illiquidity between the parties”.

The judge had also been right to rely on the “disadvantages for the wife associated with Wells sharing”, as set out in paragraph 108 of the judgment. There was a clear asymmetry between the parties’ respective positions including because the husband worked in the business and was “inside the tent”. In contrast, the wife would be entirely dependent on the husband for information when he had been criticised by the judge in respect of his “approach to this litigation” and the provision of information. The judge did not simply leave the husband with 100% of the Colendi shares, as he might have done, but had made an order which included an element of Wells sharing.

There were, Mr Southgate submitted, ample reasons which justified the husband retaining 70% and the wife 30% of the value obtained from the Colendi shares. These included the matters referred to by the judge in both paragraph 108 and paragraph 110 of his judgment. The husband had not consulted the wife before the sale of SETL and the effect of the sale was that the husband owned a very small percentage of Colendi’s shares as against a significant percentage of SETL shares. He submitted that the wife was disadvantaged by this transaction including because the Colendi shares were more illiquid and subject to greater risk than the SETL shares had been, as set out by the judge. In summary, the judge had sufficiently explained why he considered his award was fair and achieved a fair balance in the distribution between the parties of the different types of asset.

As for the inclusion of a contingent lump sum, Mr Southgate submitted that the judge could not be criticised for this because it had been common ground below that this was the means by which the value of the Colendi shares would be shared. No other steps had been taken which would have been required if this was to be effected by a transfer of title.

Mr Southgate submitted that the judge had been entitled to reject the husband’s case that, as Mr Southgate phrased it, the wife should be “penalised” for her conduct, in respect of what the judge had decided was deferred consideration for the sale of ELSA, by awarding the husband a sum of £750,000. This was “not a tortious claim where once an alleged breach, causation and loss are established, an award of damages must follow”. Whether and how to take the wife’s conduct into account was within the judge’s discretion and his decision could not be said to be wrong. Further, the judge had taken this conduct into account when making a costs order against the wife.

The general legal framework is well known so I propose to focus on Wells sharing as it is conventionally described.

I would, however, start by observing that it is not challenged that, when the court is determining its award, it must take into account the nature and quality of the respective assets that each spouse will retain. In Martin v Martin, my judgment (with which Simon and Coulson LJJ agreed) dealt with a submission, at [80], which had challenged the “concept of assets having variable degrees of risk” by contending that “cash in a bank and shares in a private company have the same level of risk and that the only question for the court is the reliability of the valuation of the latter”. In dealing with this submission, I referred to a number of authorities including Versteegh in which Lewison LJ had said, at [185]:

“… the difference in quality between a value attributed to a private company on the basis of opinion evidence and a sum in hard cash is obvious.”

This “difference in quality” meant that, at [94], this “is a relevant factor when the court is determining how to distribute the assets between the parties to achieve a fair outcome”.

As a result, I rejected the submission challenging the concept of risk and concluded, at [85]:

“that … assets have different levels of risk; and (b) … as a matter of principle, the court must take this into account when applying the sharing principle.”

Adding, at [93]:

“… the broad choices are (i) 'fix' a value; (ii) order the asset to be sold; and (iii) divide the asset in specie: at paras [34] and [195]. However, to repeat, even when the court is able to fix a value this does not mean that that value has the same weight as the value of other assets such as, say, the matrimonial home. The court has to assess the weight which can be placed on the value even when using a fixed value for the purposes of determining what award to make. This applies both to the amount and to the structure of the award, issues which are interconnected, so that the overall allocation of the parties' assets by application of the sharing principle also effects a fair balance of risk and illiquidity between the parties. Again, I emphasise, this is not to mandate a particular structure but to draw attention to the need to address this issue when the court is deciding how to exercise its discretionary powers so as to achieve an outcome that is fair to both parties. I would also add that the assessment of the weight which can be placed on a valuation is not a mathematical exercise but a broad evaluative exercise to be undertaken by the judge.” (emphasis added)

In terms of the weight that can be placed on valuations of private companies, there are a number of factors which can be relevant to this, such as those referred to by Peel J in HO v TL [2023] EWFC 215, [2024] 2 FLR 175, at [23].

I would also point out that the way in which risk and illiquidity is reflected in the manner in which the assets are shared between the parties can also vary. It can include Wells sharing or, by way of example, it can also include giving one spouse more than 50% of the matrimonial assets. As Bodey J said in Chai v Peng [2017] EWHC 792 (Fam), [2018] 1 FLR 248 at [140]:

“It is a familiar approach to depart from equality of outcome where one party … is to receive cash, while the other party … is to retain the illiquid business assets…”.

Wells v Wells was decided before White v White [2000] UKHL 54, [2001] 1 AC 596 but it remains relevant and has, perhaps, become more relevant with the advent of the sharing principle in Miller;McFarlane [2006] UKHL24, [2006] 2 AC 618. It is a decision which has been referred to and applied in many cases since then.

Another relevant factor, as noted by the judge, is that s.25A of the 1973 Act requires the court to consider whether there should be a clean financial break between the parties. The “clean break” principle has been an established part of the legal landscape since Minton v Minton [1979] A.C. 593, Lord Scarman at 608 F/G. It was then incorporated into the 1973 Act by the amendments made by the Matrimonial and Family Proceedings Act 1984. This is an important objective but, as the judge said, the overarching objective is to achieve a “fair outcome”: White v White, Lord Nicholls at 604 H and Miller;McFarlane, Lord Nicholls at [9]. Accordingly, a clean break must be part of a fair outcome and not effected as part of an order when it would not achieve a fair outcome.

Two examples of this are P v P [2010] 1 FLR 1126 and BJ v MJ (Financial Remedy: Overseas Trusts) [2011] EWHC 2078 (Fam), [2012] 1 FLR 667 (“BJ v MJ”). The facts of the former are relevant in that it involved shares in a private company in which the parties had invested during the course of the marriage. The parties owned 41% of the company (treated as owned equally between them) and another couple (Mr and Mrs P) owned just over 50%. Mr P was the CEO of the company and was described, at [6], as “the driving force of the company”. Neither of the parties were involved in the day to day running of the business. The issue was whether those shares should be divided equally between the parties or transferred to the husband. At first instance, the District Judge had based his decision to transfer the shares to the husband, at [60], on the “imperative of effecting a clean break”. I allowed an appeal because, at [60], this was “an important principle but a clean break cannot be imposed at the expense of fairness”. There were considerable uncertainties about the value of the shares and, at [62], there was “a good prospect of the shares … realising substantially more than the value ascribed to them by the district judge or the valuers”. The fair outcome was that each party should retain 50% of the shares.

In BJ v MJ (Financial Remedy: Overseas Trusts) [2011] EWHC 2078 (Fam), [2012] 1 FLR 667 Mostyn J made a similar observation, at [85]:

“Sometimes in order to achieve fairness the court has to reach for Wells sharing, or contingent lump sums (as in Charman), or deferred interests by way of a charge. These are commonplace. The court has to strive to make the break as clean as is reasonably possible, but I emphasise the qualification. Fairness is not to be sacrificed on the altar of finality.”

I would further observe that the extent to which sharing an asset in specie is inconsistent with a clean break will also depend on the facts of the case, in particular the nature of the asset or investment and how it can be shared. If, say, the husband is simply one investor of many and has no other connection with the illiquid and risk laden asset, sharing that investment would not appear inconsistent with effecting a clean break between the parties. On the other hand, if the husband is the sole shareholder in a private trading company in which he works, it would clearly be contrary to the clean break to give the wife shares in that company as well as creating the problems frequently identified with including such a provision in an award.

The judge’s approach was clearly significantly based on his analysis of, what he considered to be, the “view of the Court of Appeal” in Versteegh. It is, therefore, necessary to consider the passages relied on by the judge in some detail. In that case, counsel for the wife had submitted, at [144]:

“that whilst Wells purports to recognise that a situation may arise where a business cannot be valued and, therefore, the right course is the transfer of an interest in the business to the wife, it is an option only rarely, if ever, adopted due to the wholly unsatisfactory outcome which is the result. The views expressed by the Court of Appeal in Wells he submits should be regarded as being in the context of a 'a one off case' in which, in any event, the court did not even adopt its own suggested alternative outcome.”

This submission was dealt with by King LJ in a passage relied on by the judge:

“[151] I fully accept that the making of a Wells order is something that should be approached with caution by the court and against the backdrop of a full consideration by the court of its duty to consider whether it would be appropriate (per s 25A of the MCA 1973), to make an order which would achieve a clean break between the parties. I do not accept however that Wells was a wholly singular case and should be regarded as such by the courts: see for example GW v RW (Financial Provision: Departure from Equality) [2003] EWHC 611 (Fam), [2003] 2 FLR 108 and WM v HM (Financial Remedies: Sharing Principle: Special Contribution) [20l7] EWFC 25, [2018] 1 FLR 313.”

Lewison LJ touched on the issue of Wells sharing when dealing more generally with issues concerning the valuation of shares in private companies. He said, as quoted by the judge (emphasis added):

“[195] There may be cases in which a judge is left with no alternative but to fix a value. In other cases, instead of fixing a value, a judge may order the asset to be sold, so that the market will fix its real value. In yet other cases, an asset may be divided in specie: this is known in the jargon as 'Wells sharing': see Wells v Wells [2002] EWC A Civ 476, [2002] 2 FLR 97. Where the judge comes to the conclusion that he can make no more than a wild guess at the value of an asset, and it is common ground that the asset in question should not be sold, Wells sharing may be the only option left. As Mr Mostyn QC put it in GW v RW (Financial Provision: Departure from Equality) [2003] EWHC 611 (Fam), [2003] 2 FLR 108, at para [64]:

'That this was the only viable route became plain during the evidence. Both W's accountant and H agreed that it was impossible to attribute anything other than a wild guess to the value of H's options. H would extend this uncertainty to the rest of his deferred assets. It therefore follows that a Wells sharing is the only way of achieving fairness. Indeed, it would seem to me that this should become standard fare where a case has a significant element of deferred or risk-laden assets. For why should one party receive most of the plums leaving the other with most of the duff?'

[196] Mostyn J returned to the theme in WM v HM (Financial Remedies: Sharing Principle: Special Contribution) [2017] EWFC 25, [20l8] 1 FLR 313, in which he said at para [24]:

'Generally speaking, a Wells sharing arrangement (see Wells v Wells [2002] EWCA Civ 476, [2002] 2 FLR 97) should be a matter of last resort, as it is antithetical to the clean break. It is strongly counterintuitive, in circumstances where one is dissolving the marital bond and severing as many financial ties as possible, that one should be thinking about inserting the wife as a shareholder into the husband's company ... However, Wells sharing is not so objectionable if it only applies to a minority element of the claimant's award.'”

Lewison LJ then went on to say:

“[197] In our case there were two other factors which might be said to justify a Wells sharing arrangement. First there was the impact of the PMA which, if enforced in its full rigour in accordance with the wife's understanding, would have precluded the application of the sharing principle. Secondly, although the judge quantified the wife's 'needs' at £22m, she in fact came away with £51m in 'copper-bottomed' assets, thus giving her capital in excess of her needs of just under £30m before taking the shareholding into account.

[198] On the other hand, there is considerable force in the wife's argument that a minority shareholding in a company which is in practice run by the husband (even if he is not a shareholder) is a very unsatisfactory outcome. Not only do commercial relations persist (even if they may not, strictly, be legal obligations), but the very nature of the underlying business structure is such that there is no clear exit route. A minority shareholding is unlikely to be a saleable asset and participation in the fruits of the development sites may not be achievable for decades ...”

It can be seen that the expressions adopted by the judge of “last resort” and “minority element” came not from the judgments in the Court of Appeal but from the passage quoted by Lewison LJ from the judgment of Mostyn J in WM v HM. I would note that an appeal from that decision was allowed, in part, including because Mostyn J had “failed to consider whether his proposed award 'achieved … a fair division of both the copper-bottomed assets and the illiquid and risk laden assets'”, Martin, at [138]. I would also note that Lewison LJ merely quoted these passages without comment. What was said in WM v HM clearly did not form part of the ratio in Versteegh and, indeed, any analysis would have had to address the difference between what was said in the two quoted passages, namely “standard fare” and “last resort”.

In my view, there is no principle that Wells sharing is only to be included as part of an award as “a last resort” nor, indeed, that it should only comprise a minority element. I would agree with Mr Southgate’s submission that the former is not a helpful expression. I would add that there is, equally, no principle that it should be “standard fare” having regard to the well-recognised disadvantages of Wells sharing and to the potential for it to be inconsistent with a clean break. I would repeat King LJ’s observation in Versteegh, at [151], that “the making of a Wells order is something that should be approached with caution” and with “full consideration by the court of its duty to consider whether it would be appropriate” to effect a clean break so that, as phrased by Mr Southgate, the parties are not left joined together financially in any material way if that can be fairly achieved. Much will, of course, depend on the facts of the particular case.

Before leaving this issue, I would just address what Lewison LJ said at the beginning of [195], as quoted above. It might appear that these were being advanced as alternatives. The same comment could be made about what I said in Martin, at [93], which I repeat:

“As referred to by both King LJ and Lewison LJ, the broad choices are (i) 'fix' a value; (ii) order the asset to be sold; and (iii) divide the asset in specie: at paras [34] and [195].”

I was not, and I would suggest that Lewison LJ was not, suggesting that these were alternatives. Clearly, for example, the court could adopt (i) and (iii) in the same case. When this was raised during the course of the hearing, Mr Southgate agreed that they were not alternatives and confirmed that, in practice, they were not being taken as such.

The heart of the appeal, as described by Coulson LJ during the hearing, is whether the judge’s award effected a fair balance of risk and illiquidity in the division of the assets between the parties, as it was phrased in Martin. I have concluded, for the reasons set out below, that it did not.

First, I appreciate that the judge said that the “guiding principle … remains fairness” but I consider that he was led into error when he concluded that the Court of Appeal had decided, effectively as a matter of principle, that “Wells sharing will be a last resort and should only comprise a minority element” (emphasis added). In my view, as referred to above there is no such principle in either respect. The judge’s view that he should only include Wells sharing as a last resort and that it should only comprise a minority element clearly significantly influenced, if not underpinned, the manner in which he exercised his discretion when determining the distribution of the assets between the parties. This can be seen, for example, from his comment, first at paragraph 106, that he was “satisfied that … the portion of [the wife’s] award that is comprised of a contingent lump sum should be kept as small as possible” and then, at paragraph 110, that the wife’s share of Colendi “should be kept to the minimum amount required to ensure …fairness” (emphasis added). The result was, regrettably, a flawed approach to the exercise of his discretion.

I have also concluded that the reasons the judge gave for the unequal division of the Colendi shares are not sustainable such that, in any event, his division of the assets between the parties did not effect a fair balance of risk and illiquidity.

The judge rightly observed, at paragraph 104, that “considerations of fairness operate both ways”. He then set out, in paragraph 108, “the disadvantages for the wife” of a contingent lump sum. These included that the lump sum was “dependant on an illiquid asset to which risk attaches and in which it is difficult to deal”; that it would leave the wife “with a lack of certainty with respect to when the Colendi shares could be realised”; and that the “valuation is a snapshot and the future value of the asset is also subject of significant uncertainty” (emphasis added). I have highlighted these elements, which formed a significant part of the judge’s analysis, because they applied equally to the husband.

The judge recognised this, at least to some extent, because he noted, at paragraph 109, that it “is also onerous for the party in whose name the illiquid or risky asset is held to be left with all or a greater share of that asset”. This meant that he had to consider “the fairness of that outcome”.

The factors which the judge then identified, at paragraph 109, as being relevant to that question were the following:

(i)

“I am satisfied that the wife was not consulted by the husband before he dealt in the way that he did with the substantial matrimonial asset that was SETL Limited, rendering that matrimonial asset illiquid and subject to increased risk.”;

(ii)

the Colendi shares were “an asset that was built up within the marriage from other matrimonial assets”; and

(iii)

“fairness demands that the husband have sufficient liquid funds after he has cleared [his] liabilities … to rehouse himself”.

I also repeat in full what the judge said in paragraph 110:

“In my judgment, the combined effect of the matters set out above is that there must be some sharing of the illiquid Colendi asset, although the wife’s share should be kept to the minimum amount required to ensure fidelity to the principle of fairness. In addition to the difficulties inherent in ‘Wells sharing’ summarised above, I am satisfied that it is fair for the husband to bear the larger share of the consequences of having, without consulting the wife, converted his shareholding in SETL Limited, representing close to half the matrimonial assets, into an illiquid minority interest in a multinational corporation.” (emphasis added)

I deal first with the judge’s reliance on the husband not consulting the wife before the sale of SETL and on his analysis of the effect of this sale on liquidity and risk. These were clearly elements which the judge regarded as particularly significant as he referred to them in both paragraphs 109 and 110.

First, assuming the husband should have told the wife that this sale was impending, the first question, as observed by Arnold LJ during the hearing, was to consider the counterfactual of what would have happened if she had been consulted. In response, Mr Southgate suggested that it was not possible to determine whether the outcome would have been different. I disagree. As explained further below, the husband’s evidence was that, but for the sale to Colendi, SETL’s future was significantly at risk. This does not appear to have been substantively disputed although Mr Southgate pointed to a document (Heads of Terms between SETL and Colendi) said to be from December 2021, and which the husband had only disclosed in November 2024, in which SETL was given a valuation of £41.5 million. This, however, does not show that there would have been any reason or justification for preventing the sale to Colendi, indeed it supports the opposite conclusion.

I would add that, based on the total number of Colendi shares received by the SETL shareholders, the husband only owned 46% of SETL so that it was not his decision alone to sell SETL. There might have been interesting questions as to their rights in this situation if the wife had sought to prevent the sale of the husband’s shares and, as a result, jeopardised the whole transaction.

Secondly, and significantly, the husband’s case, which, as referred to above, does not appear to have been effectively controverted by the wife, was that, but for this transaction, SETL was at risk of going into administration. His evidence, as recorded in the judgment, was that, between April 2019 and September 2022, he had “invested £2.7 million in SETL”; that “Efforts to raise outside capital were not successful”; and that “by the end of 2022, SETL Limited was running out of money”. This, at least, appeared to be supported by the evidence in the expert report which, I repeat, recorded that “FY2020 to FY2022, [SETL] made significant operating losses each year, and has made further losses in the first six months of FY2023” and that its “Net Asset Value (“NAV”) has also decreased significantly each year from approximately £3.5 million as at 31 December 2019 to approximately negative £0.4 million as at 31 December 2022. This is despite the business raising capital by issuing equity of approximately £2.7 million over the three year period”. As a result of its financial situation, since 2019 the husband and the other directors “forwent their salaries”. In addition, Colendi was having “to support SETL with cash injections on an almost monthly basis”.

It is, therefore, clear to me that, even if the wife had been informed of the proposed sale, it would have taken place in any event. Accordingly, the absence of consultation was not relevant for the purposes of determining how the Colendi shares should be distributed.

Further, and in any event, the judge had rejected the wife’s case that the husband’s “failure to disclose the pending acquisition [of SETL] by Colendi” was conduct which it would be inequitable to disregard. In other words, the judge decided that it would not be inequitable to disregard this factor but he then took it into account when determining the composition of the assets allocated to the wife. In the circumstances of this case, the latter approach was inconsistent with the former conclusion.

I next consider the judge’s conclusions as to the effect of the sale, namely that it rendered a matrimonial asset, “representing close to half the matrimonial assets”, “illiquid and subject to increased risk”. In my view, neither the evidence nor the judgment supports these conclusions.

I appreciate that the husband’s shares in SETL were not separately valued but there is nothing to suggest that, prior to their sale to Colendi, their market value might have been anything “close to half the matrimonial assets”. The value referred to by the judge was based solely on the value the expert gave to Colendi not SETL, based on what Colendi had been able to raise and of which SETL only formed 8% in terms of the shares received by the SETL shareholders. The husband’s evidence, supported by the evidence in the expert’s report, as referred to above, was that, absent the sale to Colendi, the future of SETL was doubtful. Again, I do not consider that the Heads of Terms relied on by Mr Southgate undermine that evidence. The evidence strongly supports the conclusion that the sale to Colendi, as the husband contended, created significant value or, at least, considerably increased the prospect of achieving significant value based on the expert’s valuation of Colendi. To put it another way, there is no evidence that would support the conclusion that this was a financially disadvantageous transaction.

I also do not consider that the effect of the sale to Colendi was to render a matrimonial asset illiquid. There is, again, no evidence to suggest that the husband’s shareholding in SETL was other than an illiquid asset. The effect of the sale was to swap one illiquid asset for another. Mr Southgate suggested in the course of his submissions that the husband’s shareholding in SETL was less illiquid than his shareholding in Colendi because the former represented close to 50% and the latter just under 4% of the total number of shares and because of the manner in which the SETL shares were held (through a trust). Whilst this might be right in some circumstances, there is no evidence to suggest that the SETL shares were, in fact, any more realisable than Colendi shares nor that the imposition of a trust makes the latter less liquid. I cannot see how, as Mr Southgate appeared to suggest, giving the wife shares in SETL would have put her in a better position. Indeed, as referred to above, the evidence would suggest that the prospect of realising value has been substantially enhanced rather than diminished by the share swap.

Equally, the evidence does not support the conclusion that the Colendi shares are “subject to increased risk” (emphasis added) when compared with the SETL shares. Again, if anything, the evidence would suggest the opposite.

Although the judge referred to “the combined effect of the matters set out above”, in paragraph 110, these elements were clearly critical to the judge’s decision as to how the assets should be divided. The balance of the matters to which he referred cannot, on their own, sustain his decision and this was, rightly, not suggested by Mr Southgate. The result is that the reasons given by the judge for the manner in which he divided the liquid and illiquid/risk assets between the parties are not sustainable and it is necessary for that exercise to be undertaken again. The overriding objective points firmly against the matter being remitted. These proceedings commenced as long ago as 2022 and, in my view, this court is able fairly to determine that issue.

There would, clearly, be advantages if the court were able to effect a clean break. However, nobody has suggested that that is fairly achievable in this case. The sole issue, therefore, is the extent to which each party’s share of the matrimonial assets should comprise an element reflecting the value in the Colendi shares. Should it be 50% or some other percentage?

In my view, the factors supporting an equal division significantly outweigh the factors which might support an unequal division in the wife’s favour.

The Colendi shares are a matrimonial asset to which the sharing principle fully applies. As the judge said, they are clearly “an illiquid asset to which risk attaches”. The expert valuation provided for the purposes of the proceedings might be a “reliable valuation” in the context of valuations of shares in private companies but, as the judge said, this is no more than a “snapshot” and, more importantly, their “future value … is the subject of significant uncertainty” (emphasis added). As is also, the date when they might be realised. Their net value, based on the expert’s valuation, comprises approximately 50% of the parties’ total wealth. The valuation of all the other assets is based on firm, realisable, figures. Also, I do not consider it fair to confine the husband’s liquid assets to those required to meet his housing needs, especially at a level so far removed from the former matrimonial home. In my view, their overall financial needs are broadly equivalent based on the judge’s findings as to their earning capacity, taking into account that neither were in fact earning an income at the date of the hearing. All these factors point strongly in favour of an equal division.

The factors against have been highlighted by Mr Southgate. Some of these, such as some of the factors referred to by the judge in paragraph 108, apply equally to the husband as they do to the wife (as referred to above). He can point to the fact that the wife will be dependent on the husband for the provision of information and on his compliance with the Deed of Covenant. Their position will be asymmetric in that sense as well as because the husband is involved in SETL and, through SETL, in Colendi. However, as pointed out by Arnold LJ during the course of the hearing, as the husband holds only 3.6% of Colendi’s shares, his ability to engage in manipulation contrary to the wife’s interests would seem more limited making those shares less risky for her. Further, it was not the fact that they were held on trust that caused problems but that they were held pursuant to the Colendi share agreement. In any event, absent the wife making the relevant US tax election, which she made clear she would not, the tax which would be incurred on a transfer meant that this was not a realistic option.

I do not consider that the clean break principle has much relevance either way. This is because there will not be a clean break in any event and the difference between 30% of the Colendi shares, as ordered by the judge, and 50% has no material impact on this issue.

In conclusion, having carefully considered all the matters advanced by Mr Southgate, I can see no justification for dividing the Colendi shares (or their value) other than equally between the parties. Any other distribution would not, in my view, effect a fair balance of risk and illiquidity. No other means of effecting this has been proposed other than that suggested by Mr Thorpe and the judge clearly decided that the wife did not need to retain the former matrimonial home. Accordingly, the judge’s order will be varied so that the value to be received by the wife from the Colendi shares is increased to 50% (paragraph 47 of the order) and the Deed of Covenant will need to be amended accordingly. In addition, there will be an order for the sale of the former matrimonial home with the husband receiving 40.4% of the net proceeds of sale (as referred to in paragraph 47 above). In my view, contrary to Mr Thorpe’s submission, and to seek to reduce the potential for arguments over the sale price, this percentage should apply whatever price is in fact achieved. For the avoidance of doubt, this is not to affect the equal division of the value received from the Colendi shares.

Finally, I would add that none of the other matters relied on by the husband in his grounds of appeal have any material relevance to the outcome as set out above. I would just add that the judge’s decision not to award the husband an additional sum, to reflect his findings as to the manner in which the sale of ELSA was effected, was within his discretion and has not been undermined by Mr Thorpe’s submissions.

I agree.

I also agree.