Michael v Michael (No 3)

This judgment should be read alongside my judgments dated 6^th December 2023 (dealing with a number of interim applications), 12^th August 2024 (Footnote: ¹) (dealing with a number of substantial preliminary issues) and 13^th January 2025 (dealing with enforcement and Receivership issues). For avoidance of doubt, nothing has happened in the later parts of the proceedings to cause me to change or revise any of the findings and conclusions I reached in my earlier judgments.

This case concerns the financial remedies proceedings arising out of the divorce between Ms Stalo Michael (to whom I shall refer as “the wife”) and Mr Mario Michael (to whom I shall refer as “the husband”).

The case proceeded to a final hearing in two parts. The first involved 12 days in July and August 2024, after which I handed down the judgment dated 12^th August 2024, and it has resumed over 5 days on 13^th, 14^th, 16^th, 19^th and 21^st May 2025 and this judgment mostly relates to the disputes articulated in this part of the final hearing.

The representation before me in this part of the final hearing has been as follows:-

This case has unfortunately turned into a horrendously expensive legal battle for this family, with nearly £5,000,000 in family money spent on lawyers by the husband and wife combined. As in the 2024 part of the final hearing, both parties in the 2025 part of the final hearing have had the benefit of top level legal representation; but the cost of this has been very substantial. The total costs incurred by the wife and the husband in these proceedings (to which have to be added, on an overall assessment, other very significant third party costs) are as follows:-

I still have access to the voluminous bundles used in the 2024 part of the final hearing; but a fresh selection of bundles has been prepared for the 2025 part of the final hearing and I have mainly focused on these for the purposes of this judgment. For the 2025 part of the final hearing, the court was presented with three electronic bundles with a total of about 4,500 pages. The bundles are a Core bundle (with page references to Cp.X), an Experts’ bundle (with page references Ep.X) and a Miscellaneous bundle (with page references Mp.X). Some other documents were presented during the hearing, in particular a late statement from the husband (not in the other bundles) running to 773 pages (with page references Sp.X).

The bundles include:-

The following people gave live oral evidence in the May 2025 part of the final hearing (in order of appearance):-

At the outset of the 2025 part of the final hearing, the husband made an adjournment application on the basis that certain comments included in Mr Pocock’s case summary had taken the husband by surprise. I refused the application (and delivered an ex tempore judgment to that effect on 13^th May 2025 explaining why in my view the factors contained in the overriding objective in FPR 2010 Rule 1 clearly pointed towards the case proceeding). I indicated that I would nonetheless permit the husband to file a further statement to make the extra points he wanted to make, which he did (dated 16^th May 2025). I offered Mr Pocock the opportunity to cross-examine the husband on this statement (which arrived after the completion of the husband’s oral evidence), but he indicated he was content to deal with the matter in submissions.

I have also had the benefit of full and excellent submissions from both teams of Counsel in their respective opening notes and their closing, partly oral and partly written, submissions. I have received written submissions from both sides after my sending out an initial version of my judgment on 23^rd May 2025. This version incorporates all my responses to these submissions.

The history of the marriage is as follows:-

The financial remedies proceedings chronology is as follows:-

The open positions of the parties at the time of the 2024 hearing were far apart. The wife (in her offer letter of 19^th July 2024, justified on the basis of a substantial sharing claim) essentially sought the transfer of the family home plus a lump sum of £12,500,000 on a clean break basis. The husband (in his offer letter of 20^th May 2024, justified on the basis that he had no beneficial interest in either MBL or the ‘trust’ assets) essentially sought the sale of the family home with an equal division of the net proceeds and a clean break, with the wife to pay him 50% of the proceeds from the properties held in Astute and no lump sum at all payable by him.

I want to mention in passing at this stage that, cognisant of the possible consequences for the family of my reaching the findings and conclusions which I eventually did, at the close of the evidence in the Summer 2024 hearing, I said this to all the parties and their legal representatives:-

“Before we move to submissions, and in the presence of all the advocates for all the parties, I want to say something. I do not invite or expect any response, but I express the hope that some reflection will follow over the next few days. Now that I have heard all the evidence, and although I have not heard all the submissions I have a fair idea from the written presentations what is to be said, it does appear to me that (whilst I have not made up my mind about anything) there are findings which I could properly make which, while following legal principles and justice, could have unwelcome consequences for all concerned. On the usual application of legal principles to such findings, it seems probable that the findings would find their way into the public domain with the potential to engage outside bodies such as the HMRC, the Trustee-in-Bankruptcy and the Police in ways which could amount to the possibility of an unwelcome scene of self-destruction for this family. If I conclude and hand down a written judgment, which could be (though I make no promises) as early as next Tuesday, then it may be difficult for this family to be sure that these consequences will not flow. I have not been told, and cannot be told, where the negotiations reached at the pFDR or otherwise, but whilst time is running out, it is not too late for a compromise to be reached which releases a fair amount of resources from those with control over them to those without and so avoid the potential self-destruction for this family”.

Plainly, I have not been and cannot be told whether or not this led to any further without prejudice negotiations, which I hoped it might, but it had no effect whatsoever on the open positions of any party and (the husband maintaining his position that he would not be paying any lump sum at all to the wife referable to the MBL or the ‘trust’ assets) I had to proceed to produce my written judgment. The decision on publication has yet to be made, a decision having been made to defer publication until the completion of the whole case, but I expressed a provisional view on this in my judgment of 12^th August 2024 as follows:-

“I am minded to publish this judgment on TNA / BAILII, but would like to hear the views of the parties on the principle of publication and on the principle of anonymisation. My present provisional thinking is that the principles which appear in cases such as Lykiardopulo v Lykiardopulo [2010] EWCA Civ 1315 probably point to publication without anonymisation in view of the findings I have made about conduct, but I am prepared to hear further submissions on this by email if necessary”.

Subsequent to the 2024 hearing, I made orders on 16^th September 2024 and 25^th October 2024, in which I made the declarations and costs orders referred to above as well as timetabling through to the May 2025 hearing, and I made certain orders which were intended to prevent any dissipation of assets in the meantime.

In the meantime, the husband failed to comply with both my MPS/LSPO orders and my costs orders and acted in a way which caused me to believe that he had absolutely no intention of complying with them in any meaningful way. An application followed for the appointment of Receivers over some of the husband’s assets to secure the performance of the orders made thus far. I granted this application, initially on 13^th January 2025 (with some later amendments), and so Ms Hannah Davie and Ms Ami Sweeney of Grant Thornton UK LLP are now acting as Receivers, attempting to extract value from the husband’s assets to enforce the existing orders. I shall discuss further below the progress of this exercise.

I note also that the husband has in the meantime sought assistance from the Court of Appeal to stay and in due course overturn by way of appeal both the substance of my judgment of 12^th August 2024 and the subsequent enforcement orders. At the time of writing this judgment, the Court of Appeal has made no decisions, either to stay the enforcement of my existing orders or on the permission to appeal applications. Anything that I do is obviously subject to a subsequent decision of the Court of Appeal; but it has been common ground in the current hearing that, unless and until the Court of Appeal intervenes, I should proceed with this judgment on the basis that they will not interfere with my earlier decisions.

I completed the evidence and submissions at the end of the fourth day of the May 2025 hearing and have taken the fifth day (and a little further time) to write this judgment.

In dealing with the claim I must, of course, consider the factors set out in Matrimonial Causes Act 1973, sections 25 and 25A, together with any relevant case law.

Matrimonial Causes Act 1973, section 25, reads as follows:-

Matrimonial Causes Act 1973, section 25A, reads as follows:-

The parties have two children, A and B, but they are adults and, accordingly, they are not my first consideration. On this issue, I have nothing to add to paragraph 21 of my judgment of 12^th August 2024.

In the circumstances of this case, where income and capital are fairly entwined, with income largely being derived from capital rather than separate employment, I propose to consider together, in one computational exercise, the “property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future” and “the income, earning capacity…which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire”.

Within this overall heading lie some agreed items but also the major computational issues in dispute in this part of the case. Where I make no particular comment below, and just include a figure in the asset schedule, it is because the item is not controversial.

It is agreed that the family home (which is in the joint names of the partiers) is worth £6,000,000 and is subject to a Handelsbanken mortgage with an outstanding balance of £3,500,000 plus mortgage arrears of £142,954 (which have accrued because, notwithstanding my MPS order that the husband should pay the mortgage interest, he arranged with the bank to take a mortgage holiday). It is common ground that from this headline figure will need to be deducted sale costs at 3% (£180,000) and the costs of a significant repair to the swimming pool roof (£200,000, although it may be that the property will have to be sold before the repair work is completed). More controversial is the husband’s contention that a charge executed on 24^th October 2024 in favour of his solicitors, Hill Dickinson, should be deducted to secure their outstanding costs bill (currently £461,454) against his share of the equity. Mr Pocock told me that the wife may yet bring an application to set aside this charge (which would then involve further proceedings in which Hill Dickinson were themselves a party); but this application has not yet been made and may not be and, in the meantime, my view is that I should observe and respect in my asset schedule the existence and effect of this charge in favour of Hill Dickinson. Accordingly, my asset schedule will record the net equity in the family home as being £6,000,000 less £3,500,000 less £142,954, less £180,000 less £200,000 less £461,454 = £1,515,592.

The wife owns twoother real properties in her sole name (a third, 72 La Rose Lane, having been sold to pay legal costs):-

The wife owns 56% of the shares in a company called Kairos Property Solutions Limited (I shall refer to the company as ‘Kairos’). The other two shareholders (who are both family members) hold 22% each. Kairos owns two real properties (70, Lancaster Road, Northolt, Middlesex and Malvern House, Woodford Green, Essex), which are both let out and are subject to significant mortgages. The properties were valued by Mr Hari Hirani who provided two SJE reports dated 27^th July 2023. An SJE report on Kairos has been produced by Mr Gavin Pearson dated 18^th July 2024 and some further questions were answered by him on 2^nd August 2024. The wife has been prepared to accept and adopt Mr Pearson’s conclusions, treating this as a quasi-partnership for valuation purposes, and assuming a sale to a third party. Accordingly, I shall include in my table the net value of the wife’s shares at £737,360 and will also include a debt owed by the wife to Kairos in the category of a shareholder loan account of £89,093.

I note also that the wife has an income from Kairos of £21,552 per annum net, though plainly this would not survive a sale or winding up of Kairos. The wife also derives an income from letting 97b, Falkland Road; but there is no profit once the costs are taken into account.

The husband held the legal title of two other real properties, 31, Townsend Avenue, London N14 and 33, The Avenue, London EN6 (the latter has been sold during proceedings); but in each case it is asserted by the husband that he holds or held the property on trust for somebody else and the wife has not in the end challenged this, so it is agreed that the correct figure in the schedule is zero. The husband does not receive any rental income from them.

The parties have been able to agree figures for bank accounts held in their respective sole names, premium bonds and credit card debts, as recorded in the schedule below.

Both parties have significant debts arising from their legal costs, which are recorded in the schedule below and the wife also has a substantial outstanding litigation loan.

In relation to STMA Developments Limited it is common ground that the wife and the husband each own 50% of the shares in the company, but it is now common ground that there is no longer any value in this company, the husband having removed such money as there was in the company bank accounts. It is therefore recorded as having zero value and the wife is content to transfer her shares in it to the husband, subject to an indemnity in relation to tax or other costs arising (which are not anticipated to amount to anything of significance).

The husband has an interest in MSI Investments LLP. The argument here is de minimis and it is common ground that I should simply split the small difference between the two figures in the ES2 and identify its value as £202,003.

The controversial items, on which I need now to make findings, are the following:-

In assessing the values of the shareholdings I remind myself of the fragility of share valuations of private companies, in particular the apposite words of Moylan J (as he then was) in H v H [2008] EWHC 935:-

“The experts agree that the exercise they are engaged in is an art and not a science.

As Lord Nicholls said in Miller v Miller; McFarlane v McFarlane [2006] 2 AC 618 [26]:‘valuations are often a matter of opinion on which experts differ. A thorough

investigation into these differences can be extremely expensive and of doubtful

utility’. I understand, of course, that the application of the sharing principle can be

said to raise powerful forces in support of detailed accounting. Why, a party might

ask, should my ‘share’ be fixed by reference other than to the real values of the

assets? However, this is to misinterpret the exercise in which the court is engaged.

The court is engaged in a broad analysis in the application of its jurisdiction under

the Matrimonial Causes Act, not a detailed accounting exercise. As Lord Nicholls

said, detailed accounting is expensive, often of doubtful utility and, certainly in

respect of business valuations, will often result in divergent opinions each of which

may be based on sound reasoning. The purpose of valuations, when required, is to

assist the court in testing the fairness of the proposed outcome. It is not to ensure

mathematical/accounting accuracy, which is invariably no more than a chimera.

Further, to seek to construct the whole edifice of an award on a business valuation

which is no more than a broad, or even very broad, guide is to risk creating an

edifice which is unsound and hence likely to be unfair. In my experience, valuations

of shares in private companies are among the most fragile valuations which can be

obtained”.

With one eye firmly set on these caveats expressed by Moylan J, I shall first turn to the issues relating to MBL.

MBL is a property development and letting business in which the husband owns 34.375% of the shares. The other shares are held as to 34.375% by his brother Mr Michael (AKA ‘Agy’) Michael and as to 31.25% by his brother Mr Stavros Michael.

I refer the reader of this judgment to paragraphs 45 and 87 to 99 of my judgment of 12^th August 2024 for a full analysis of the history and operation of this company. My conclusions were that the husband continued to own his shares on behalf of himself, ran the company himself without much (if any) assistance or input or interference from his brothers, that he had a free hand to move money out of MBL if and when he wanted to do so, and that he paid his brothers (and other family members) money from MBL if it suited him to do so without reference to any contribution they had made to the business and often in cash. As I noted in my earlier judgment, the husband’s siblings have done very well out of the husband’s generosity in relation to MBL. Stavros Michael told me in July 2024 and again in May 2025 that, although he is a director of MBL, he lives in Cyprus and does little or nothing in the MBL business. In his words in July 2024: “I don’t do anything in the business. Nor does Agy. Nor do my sisters. I left it to Mario unless I was asked”. His evidence in May 2025 confirmed that he still does nothing in the business. Michael (AKA ‘Agy’) Michael told me in July 2024: “For MBL. I don’t do nothing. Mario does the work for my benefit.” He also confirmed that, at that stage, he had never been a director of MBL because of “an issue in the past”.

I note that on 24^th October 2024, the day before the hearing before me on 25^th October 2024, the husband resigned as a director of MBL and was replaced by his brother Michael (AKA ‘Agy’) Michael. Although presented to me as a decision of Stavros and Michael, justified by reference to the fact that these divorce proceedings were causing the husband to become distracted from the affairs of MBL, I find it very difficult to see this move as other than a tactical manouevre to attempt to distance the husband from the affairs of MBL and thus perhaps impede enforcement efforts – though it perhaps makes not much difference in fact in view of the later appointment of the Receivers. In view of the conclusions I have reached about this family, and hearing the oral evidence in May 2025, I am unable to accept that this move was orchestrated by anybody other than the husband himself. I think it overwhelmingly likely that, even though he is no longer a director as such, the husband still makes all meaningful decisions over the running of MBL and this, of course, includes the decisions made on the quantum and methodology of dividend payments.

The value of MBL has in its ownership a large number (I have added it up to 38) pieces of real property, much of it in London, most of which is residential let property. Whilst the company itself was incorporated in 2001, it acquired some properties which had been owned and run by a previously existing partnership (Michael Brothers Partnership) so that the business as a total entity seems to have begun its life in the late 1980s, but has continued to operate and expand ever since.

The real properties were valued by Mr Hirani as at 31^st March 2024 in his report of 15^th May 2024. The challenges to Mr Hirani’s evidence did not significantly affect the values of MBL owned real properties and so it can be said uncontroversially that the total value of the real properties within MBL is, for my purposes, £24,411,001. In his analysis in his report of 10^th February 2025, Mr Pearson has appropriately used this figure in place of the accounting book value of the same real property. Following from this adjustment Mr Pearson has analysed all of the other matters affecting the company value, obviously including borrowing and other indebtedness (which are set out in his Appendix 6 at Ep.1331) and concluded that MBL as a whole has a market value of £15,091,258. On this basis a 34.375% share (without any more adjustments) would be worth £5,187,620. He further suggests that if a ‘minority discount’ is to be applied to this figure then the correct percentage is 35%; but he raises the possibility (for the court to answer) that the business may represent a quasi-partnership, in which case there would not be any minority discount. Amongst the deductions reflected in his valuation figure is writing off of the sum of £3,982,000 owed to MBL by Paul Simon Developments Limited, but said (by the husband in information provided to Mr Pearson) to be unlikely to be recoverable (see Ep.1298). The appropriateness of this writing off has been challenged on behalf of the wife and oral questions put to Mr Pearson on this subject. I need, therefore, to address two issues – the minority discount issue and the write off issue.

Dealing first with the write off issue, I record that some documents were put to Mr Pearson in cross-examination. First, two emails dated 28^th April 2025 (Mp.204) and 1^st May 2025 (Mp.233) recording some views from Mr Bharat Varsani, the Head of Finance at Paul Simon Developments Limited, which suggested that the projected balances “will be cleared on completion and re-finance of the particular project” which “we anticipate to be 10 to 12 weeks from now” (i.e. in July 2025). Secondly, a document created by Paul Simon Developments Limited (Cp.1269) calculating the amounts due (with interest) at £7,035,566. Mr Pearson said in response to these documents: “I genuinely hadn’t seen these before. If cash is to be repaid then it should be added onto the valuation. Yes…If it is a recoverable debt then it should be added”. In this instance Mr Pearson did not consider that this information should be excluded on the basis that it emerged after 31^st March 2024 (the notional valuation date) and I agree with him. Mr Pocock’s case in closing is that this figure should be added to the overall value of MBL to turn it from £15,091,620 to £22,127,186 and that, commensurately, a 34.375% share would be turned from £5,187,620 to £7,606,220. Mr Wagstaffe has accepted in his closing submissions that something should be added to reflect the late emergence of the documents put to Mr Pearson, but not the whole figure of £7,035,566. On a balance of probabilities, I have favoured Mr Pocock’s argument here. The information coming from Paul Simon Developments Limited is that the amount owing will be paid and I regard this as a more reliable indicator of the reality than the information put forward by the husband. Accordingly, I accept Mr Pocock’s argument that, subject to the matters below, it is appropriate to value the husband’s MBL shareholding at £7,606,220.

Should a minority discount be applied to this figure? In assessing this I have noted (and I accept) Mr Pearson’s view that, if it is to be applied at all, it should be applied at 35%. But Mr Pocock’s argument is that it should not apply at all because the arrangement of MBL is, in effect, a quasi-partnership. In this context I remind myself of the words of Mostyn J in Clarke v Clarke [2022] EWHC 2698 (Fam), which was an appeal judgment from a Circuit Judge who had applied a minority discount somewhere between zero and the SJE’s suggested figure. Mostyn J said:-

“I turn to the 20% discount that was applied in the valuation of the respondent’s interest in both companies…The judge explained that the accountant had applied this discount to take account of the unquoted status of the company, the lack of  marketability of the shares and the lack of overall control due to his percentage of the total  shareholding...The judge was clearly uncomfortable with the 20% discount, and rightly so. He said: ‘In his oral evidence Mr Clarke stated that he had been trading with his partner, Mr  Shadforth, for many years and he would imagine that they would always take decisions  jointly.  There was an element as I discussed with Mr Lewis in what he described, he, Mr  Clarke, described, as a quasi-partnership’ …Of course, it is perfectly true that were the respondent to seek to sell his 50% shareholdings in 2R Investments Limited and PCP Cladding Ltd he would struggle to do so, and if he were able to find a buyer would have to sell at considerably less than the par value of £939,033...So in that sense the 20% discount is logical. But it is also completely unreal because, in my judgment, on the evidence it was not possible for the judge to find that there were any likely circumstances in which the respondent would  sell his shares other than in conjunction with his fellow 50% shareholder. It is my opinion that the judge should have looked into the future, and asked himself whether it was more likely than not that a discount would be suffered. The answer to that question would, on the balance of probability, be no. If the judge was satisfied that the business was run as if it were a partnership, and if the judge was satisfied on the balance of probability that no discount would be suffered on any disposal in the future, then the judge should not have made a middle choice. It seems to me that the question is a binary one. Either the discount applies or it doesn’t. There is no room for a third way.”

In my view it is difficult to distinguish the facts of Clarke from the present case in this context and it is difficult to reach any different conclusion in the present case to the one reached by Mostyn J in Clarke. MBL was, as I have concluded, run by the husband as a quasi-partnership, in fact rather more than that in this case where the husband effectively ran it on his own without much reference to his ‘partners’. If the husband needs to raise money by realising the value of his MBL shares then it is highly unlikely that this would involve a sale other than in conjunction with his brothers. Anything different is, in my view, in the category of “completely unreal”. I am not persuaded by Mr Wagstaffe’s suggestion that the brothers would simply refuse to co-operate. In reality they would be likely to co-operate if the husband asked them to do so (whatever their strict legal rights may be) – that is the way the Michael family works as I have previously described. I do not therefore propose to make any minority discount in the figure in my schedule.

Where I agree with Mr Wagstaffe is that the appropriate figure to place in my schedule must have potential Capitasl Gains Tax (CGT) deducted from it. Applying Mr Pearson’s methodology to the higher valuation figure, I have calculated that the potential CGT liability would be £7,606,220 less £4,796,498 (Ep.1303) = £2,809,722 x 24% = £674,333.

The figure which I will place in my asset schedule for the value of the husband’s MBL shares is therefore £7,606,220 less £674,333 = £6,931,887.

Mr Wagstaffe has gone on to make some points about the partially non-matrimonial nature of this asset, which may be relevant to the quantification of any sharing claim, and I shall return to this issue in the distributional part of this judgment below.

A further aspect of the MBL part of the dispute relates to a dividend paid in July 2023 (in the course of the proceedings, when the dispute about MBL was already at large) in the sum of £3,531,088, of which only £36,823 was received by the husband (instead of his 34.375% share of £1,213,811). Apart from the £36,823 paid to the husband, the entirety of the sum was paid to Stavros Michael. Because he lived in Cyprus he did not have to pay any UK income tax on this figure. Although I have not seen any formal documentation to this effect, it is suggested that there was a formal waiver of dividend entitlements in favour of Stavros, who then formally ‘loaned’ rather than ‘gifted’ portions of this dividend money to his brother Michael and his sisters in proportion to what was being then contended as the true beneficial interests in the MBL shares, so that they also received a portion of the dividends without paying any UK income tax, although they are all based in the United Kingdom. Mr Wagstaffe told me that this is a lawful tax-saving device (he cited WT Ramsey Ltd v Inland Revenue Commissioners [1982] AC 300 and Furniss v Dawson [1984] AC 474 in support of his proposition) and nobody has argued otherwise before me. Whatever the lawfulness of this arrangement, in the context of my findings on 12^th August 2024 about the real ownership of the MBL shares, there is a strongly persuasive argument for saying that the husband’s ‘waived’ amount should be added back to his assets on the basis that this is likely to be being held to his demand by one or other of his siblings. Why was he waiving substantial dividend entitlements and, not long afterwards, telling me that he could not afford to pay MPS and LSPO obligations? Related to this, in my view, is the late emergence of a sequence of ‘loans’ from his siblings at the eleventh hour (28^th April 2025) in the total sum of £530,000 (see Cp.1156 & Cp.1278 et seq). In the context of the modus operandi of the Michael family, as previously described, I have been persuaded on a balance of probabilities by Mr Pocock to find that these ‘loans’ are really no more than the recycling of the dividend money held for the husband. I am therefore minded to include on my asset schedule a figure of £1,213,811 (the dividend he should have received) less £36,823 (the dividend he did receive) less £530,000 (what has already been recycled back to him) = £646,988. Mr Wagstaffe has argued that if I am minded to write back in the dividend figure of £1,213,811 (which I am) then I should deduct dividend tax from this figure. The response to this from the wife’s team is to say: “The entire purpose of sending the dividends to Stavros and then ‘loaning’ them to H (as was his presentation) was to avoid tax. Where a party in fact has structured receipt so as to avoid tax it is inappropriate to include a notional figure for tax that will not in fact be paid: see e.g. BJ v MJ [2011] EWHC 2708 (Fam) at §69”. I agree with this response.

This business does generate a significant income and has had available monies for good dividends, but, of course, if it is to be sold to meet matrimonial or tax liabilities then it will not be available to provide income and I am not thinking there is any significant purpose in analysing its income-producing abilities. I do conclude, however, that the income available from this source was sufficient to enable to meet the MPS and LSPO obligations I placed on him and I reject his suggestion that I should unpick these interim orders in my final order. I am satisfied that my interim MPS and LSPO orders were fair and justified.

Again with one eye firmly set on the caveats expressed by Moylan J above, I now turn to the issues surrounding Hartsfield Investments UK Limited, to which I shall refer in this judgment as Hartsfield UK. This is a company of which (on my findings of 12^th August 2024) the husband is the 100% beneficial owner. It has no operations itself but it has a large number of subsidiaries, some owned as to 100% and some owned as less than that, and some of which do have successful and valuable operations. Most of the activity in these subsidiaries is in the nature of real property developing and letting; but there are some exceptions to this. The table below is reproduced from Mr Pearson’s report of 10^th February 2025 (Ep.1275).

It took Mr Pearson a great deal of time to value these companies (and I make no criticism of him personally for that; I am absolutely satisfied that he is a highly professional, careful and hard-working valuer). Partly this was because he was awaiting clarification on the underlying real property values from Mr Hirani to feed into his calculations (depending on how the individual properties are counted there are more than 150 real properties to be valued within the overall company valuation, many of which gave rise to individual challenges and queries, and, again, I make no criticism of Mr Hirani for his highly professional and skilled valuation work) and partly because they are complicated companies, but also this was partly because the husband was slow in providing information when it was requested. One particular feature which Mr Pearson found unusually complex was the reconciliation of the intercompany debt balances. Money often moved around the group with apparently little planning or formality but, to a valuer, the nailing down of a reliable picture at a particular snapshot date was obviously important.

The overall valuation of Hartsfield, broken down into its constituent parts, appears at Appendix 4 to Mr Pearson’s report of 10^th February 2025 (Ep.1328). He has placed a market value of the Hartsfield UK shares at £24,870,951. Omitting the subsidiaries where there is no value, these figures are broken down in Appendix 4 (Ep.1328) as follows:-

This presentation has been challenged in a number of different ways in the course of the May 2025 hearing.

I shall deal first with the wife’s challenges to Mr Pearson’s presentation. The essence of Mr Pocock’s position for the wife is summarised by the table below, which shows a near doubling of the original bottom line figure from £24,870,951 to £47,350,707, as follows:-

It can be seen that the following figures have been amended from Mr Pearson’s presentation to Mr Pocock’s presentation:-

I shall therefore start with Mr Pocock’s case in relation to the development at West Green Road, London N15 and I have the following comments on this:-

I shall next deal with Mr Pocock’s case in relation to the development at 30-36Clarendon Road, London N8 and I have the following comments on this:-

I shall next deal with Mr Pocock’s case in relation to the development at 45-63 Lawrence Road, London N15 and I have the following comments on this:-

The amount entered under the heading of ‘irrecoverable amounts due to members’ has been amended from minus £328,970 to zero. I have not been persuaded that there is any basis for this adjustment.

Nor have I been persuaded that there is any proper basis for adjusting Mr Pearson’s original findings on Verve Clothing Company Limited.

Like MBL, Hartsfield does generate a significant income but, of course, it is interlinked with capital projects and anyway if it is to be sold to meet matrimonial or tax liabilities then it will not be available to provide income and I am not thinking there is any significant purpose in analysing its income-producing abilities.

Accordingly, I propose to revise Mr Pearson’s valuation of Hartsfield UK by finding for the following table (subject to the further arguments below made by Mr Wagstaffe):-

Mr Pocock has invited me to find that the £200,000 recently lent to the husband by Mr Philip Philippou should be disregarded as a loan on the basis that it is ‘skimming’, i.e. that there is a secret agreement between the husband and Mr Philippou to let the Waverley Road property to him at a knockdown price in return for him holding money for the husband. There are certainly a number of circumstances which cause a degree of suspicion, but I have not been persuaded that I could find on a balance of probabilities that the loan is not genuine and I propose to leave it in my schedule of assets.

Mr Wagstaffe has urged me to make a number of further deductions from this figure.

First, Mr Wagstaffe takes issue with Mr Pearson’s decision not to make any ‘minority discount’ deductions for the constituent parts of Hartsfield UK of which he owns less than 100%. In essence, these are the following items which are, for all practical purposes, owned 50% by the husband and 50% by his long-term business partner Mr Simon Oliver. Mr Wagstaffe suggests (with a degree of support from Mr Pearson) that the court might decide to make a discount of 20% of these items.

I have described above the law on quasi-partnerships; but there seems to me to be a material difference between the relationship between the husband and his siblings in MBL and the relationship between the husband and Mr Simon Oliver in the other companies. I find myself persuaded by Mr Wagstaffe’s words, in his closing note, as follows:-

“It is a particular feature of this case that H does not have overall control over the assets of the principal asset in the case, namely Hartsfield’s subsidiaries. The fact that H has only a 50% share in these (other than Property Empire) gives rise to the question of whether a minority discount should be applied. Whilst in common usage, the description “minority interest” is in fact something of a misnomer. The concept, as Mr Pearson explains, is that “where a party holds less than 100% of the issued share capital of a company it is necessary to consider whether a discount should be applied to the pro-rated value in order to reach the market value…Plainly, a clause in the Articles of Agreement cannot bind a third party, and there is no reason why it would even bind Mr Oliver unless a sale of Hartsfield’s shares in the subsidiary companies was mandatory under the Articles of Agreement – and there is no suggestion that one would be in present circumstances. Otherwise, if Mr Oliver was in principle willing to buy H’s shares, but H wanted a price Mr Oliver did not want to pay, he would just walk away…There are three reasons why a discount is appropriate: (a) Mr Pearson is, as noted above, simply wrong about the effect of the Articles of Association. (b) H and Mr Oliver have worked in partnership with each other for over 40 years (Footnote: ⁴). In the case of a third-party sale any purchaser of H’s (indirect) 50% interest would be taking a very substantial risk of deadlock. It is highly likely that a purchaser would not be willing to pay full value for a company they cannot control. (c) In cases such as this where the principal participants have been in business together for over 40 years…it would not be unusual to regard it as a quasi-partnership, with the effect that a minority discount would be inappropriate, but in liquidity terms the court would not expect the company to be realisable in the foreseeable future absent specific evidence of an intention to sell. In this case, receivers have been appointed over H’s shares in Hartsfield already, and W’s case is that receivership should be extended. The concept of quasi-partnership by definition has not application where one of the shareholders (or their receiver) is by definition trying to liquidise their share. This is quite apart from the point that from somewhere H needs to find money to pay a tax bill that will increase sharply with late payment”

I therefore propose to make a further deduction of 20% of the value of the 50% owned assets. This (as per the table above) produces a deduction of £3,790,096.

Secondly, Mr Wagstaffe suggests that I should make a further deduction of 3% for costs of sale. Had I not been minded to make a minded to make a minority discount deduction I may have been more inclined to do this, but since the minority discount deduction involves contemplating a real possibility that Mr Oliver will purchase some of the husband’s assets at a discount, I take the view that the costs of sale are likely to be relatively small and there may be a degree of double counting. Therefore I shall exercise my discretion to make no further deduction representing costs of sale.

Thirdly, Mr Wagstaffe has suggested that I should deduct the costs that the Receivers are charging for trying to enforce my earlier orders and/or make a deduction of the value of some of the assets on the basis that the Receivers may extract what they wish in a way which is less advantageous to the husband than if he were extracting money himself. I decline to do this, for the following reasons. The main reason that the court has had to accede to the expensive request for the appointment of Receivers is that the husband has made it entirely clear that he intends not to comply with and to resist all enforcement of my orders and to do his very best to minimise any receipt of monies by the wife. He has repeatedly said that it has always been his policy not to sell any real property and that he does not propose to change this now. I am afraid that this attitude does not sit well alongside his obligations to his wife after a long marriage – if he has to sell real property assets to pay her what she is due then that will have to be, whether or not it fits with his general policies. He has also shown himself very willing to manoeuvre his asset position to obstruct enforcement if that is an option. As such, the presence and cost of the Receivers is entirely of the husband’s own making and, if I was to allow a deduction for the consequences of this, this might, in effect, cause the wife to have to pay one half of them and that would not be fair. His best policy would have been, and would still be, to offer the Receivers full and willing co-operation and work with them to ensure the wife receives what is validly due to her. The Receivers’ recent report (Cp.1535) and recent application suggest that the husband has not yet taken this message on board.

Fourthly, Mr Wagstaffe has raised the possibility of CGT on the shares in Hartsfield UK. Since I have now placed a value of the husband’s interests at £34,279,379 less £3,790,096 =£30,489,283, it can now be seen that there is unlikely to be any significant CGT on a disposal of the Hartsfield UK shares since they are worth almost exactly what they were assessed as being worth in November 2020 – see above.

I now turn to the issue of the potential liability to tax arising from the findings of ‘sham’ which I made in my judgment of 12^th August 2024.

At some point prior to the Summer 2024 hearing, the husband was advised (in particular by a letter dated 7^th May 2024 from his accountant, Mr Yogan Patel of MHA accountants) that if I found the trust arrangement to be a ‘sham’ (which I later did – see above) then there was likely to be a tax issue arising from a transaction which took place on 24^th November 2020.

The background was that, until 2020, the assets of the ‘trust’ were its 100% shareholding in AB Holdings Limited which in turn owned 100% of Hartsfield Investments Limited (Cyprus). Both these companies were Cypriot companies and Hartsfield Investments Limited then owned numerous subsidiary companies in the UK. On 23^rd November 2020 a new company was incorporated in the UK, namely Hartsfield Investments UK Limited, which was also 100% owned by AB Holdings Limited. On 24^th November 2020 the subsidiary companies owned by Hartsfield Investments Limited (Cyprus) were all transferred to Hartsfield Investments UK Limited. On the same day, 24^th November 2020, the shares of Hartfield Investments UK Limited were transferred by AB Holdings Limited to the ‘trust’ for a nominal consideration of £1. The legal consequence of my declaring that the ‘trust’ was a sham was that the assets of the ‘trust’ were at all times beneficially owned by the husband. As such, the transfer of the shares of Hartsfield Investments UK Limited to the ‘trust’, i.e. to the husband, might be treated by the HMRC in the United Kingdom as an income distribution of the entire open market value of the assets of Hartsfield Investments UK Limited, then said to have been worth £30,212,015. Further, the income tax liability would have been due on 31^st January 2022. Interest would be due on late payment. In addition, absent unprompted disclosure, penalties might be imposed of up to 100% of the liability at the discretion of HMRC. The liability might be a substantial amount.

Because the wife’s team thought this unlikely, and did not accept the objectivity of Mr Yogan Patel, Mr Sladen of K3 Tax Advisory Limited was instructed, on a SJE basis, to give a view on the matters arising from the letter of Mr Yogan Patel.

He produced an initial report on 12^th July 2024, and some responses to questions dated 25^th July 2024, and a final report dated 24^th March 2025 (Ep.1424).

Mr Sladen notes the opinion of MHA that, as at 24^th November 2020 (at the moment of the share transfer) the assets of Hartsfield were worth £30,212,015.

His evidence was to the effect that, given my sham finding, the share transfer of 24^th November 2020 would be likely to give rise to a UK tax liability in the name of the husband. His report (and his subsequent oral evidence) suggests that this tax liability could end up somewhere within a very wide range of outcomes. He emphasised that the way HMRC deal with these things depends on the discretion of the appointed case-worker/investigator and it is impossible to predict who that might be or how sympathetic such a person might be to the dilemma which has arisen. The possibilities ranged from the share transfer being treated as a capital distribution or as employment income or as the purchase of shares with the consideration left unpaid. Mr Sladen could not be sure where the facts of this case would end up, but felt that all outcomes were possible and that the HMRC were used to a situation such as this where a court decision imposed a transaction that nobody was anticipating at the time it was made such that the documentation did not necessarily determine the real effect of the transaction. The width of outcomes was made yet larger by the discretion likely to be exercised by the HMRC case-worker/investigator in relation to interest and penalties. A decision would be made as to the degree of turpitude in the original non-disclosure or late disclosure, the extent to which the disclosure was considered prompted or unprompted and the degree of co-operation with the HMRC in the course of the investigation. The range of possible outcomes was very wide – very broadly, a best case scenario of a liability of about £6,000,000 and a worst case scenario of about £30,000,000.

The husband’s evidence before me (which I regarded as perfectly sensible) was that he would seek advice after this hearing (the need for which he still hoped might be obviated by a successful appeal of my decisions) from his own accountants and follow any advice proffered by his own accountant as to how, when and in what manner to approach the HMRC so as to minimise the damage arising from this tax liability.

The uncertainty of this situation creates a very real difficulty for the court. If I make a finding that this tax liability will, on a balance of probabilities, be at a particular level and fix my order accordingly then the order could come to look very unfair in one direction or another if the actual level proves to be significantly wide of the mark, whether higher or lower than the figure identified by me. I raised with both legal teams the possibility of a formulaic answer, for example a reverse contingent lump sum order dependent upon the actual tax arising. For different reasons, neither legal team were very keen on this; but, having reflected further on this myself, I have concluded that such a way forward provides the only fair way forward here. My asset schedule, and the terms of my final order, will reflect these thoughts.

Mr Pocock has put forward some add-back claims. I have carefully read paragraphs 47 to 56 of Mr Pocock’s closing note and have reached the conclusion that these are, in reality, costs arguments rather than add-back arguments. I will deal with costs in due course, but I do not propose to include any ‘add-backs’ in my asset schedule on the bases suggested.

Thus, having reached the above conclusions, and utilising the figures referred to above, I find the the asset schedule in this case to be as follows:-

Joint

Wife

Husband

In my judgment of 12^th August 2024 I said:-

“I want to say at this stage, however, that it is unlikely that needs issues will be to the fore in any analysis. This seems to me to be very likely a case where the sharing principle will dominate”.

On my findings there are assets here worth £1,515,592 less £585,241 plus £38,977,508 = £39,907,859. Even if the potential tax liability falls at the top end of the scale, i.e. £30,000,000, then there should still be enough to meet both parties’ needs, albeit at a much reduced level from the very high standard of living they enjoyed during the marriage. If the tax liability is at the bottom end of the scale then this is all the more the case.

In my judgment of 12^th August 2024 I said:-

“All of the assets have built up over the course of a long marriage and it seems to me unlikely that any of them will be non-matrimonial property. The guiding principle at the distribution stage is likely to be the sentiment expressed by Mostyn J in JL v SL [2015] EWHC 360: ‘Matrimonial property is the property which the parties have built up by their joint (but inevitably different) efforts during the span of their partnership. It should be divided equally. This principle is reflected in statutory systems in other jurisdictions. It resonates with moral and philosophical values. It promotes equality and banishes discrimination.’”

In the period since I said this, the husband has developed a case (with, I accept, a degree of force) to the effect that a significant portion of the assets in MBL (perhaps in the region of 40%) were acquired prior to the parties’ cohabiting in the year 2000, have never been mingled and should be treated as non-matrimonial property. I accept that this would justify a departure from equality in the husband’s favour to some extent and that this should be, and is, factored into my decisions below which will inform my order. The full extent of this feature is ameliorated by the fact that some of the wife’s assets were also held before the marriage.

Mr Wagstaffe, again with a degree of force, has drawn my attention to the fact that if a lump sum order is to be calculated as a fixed sum then the court should factor in the fact that the wife’s assets will be copper-bottomed liquid assets (i.e. cash) whilst the husband’s assets will be illiquid risk-laden assets (i.e. shares not necessarily easily saleable) and that some adjustment from equality is appropriate in these circumstances. This factor may also affect the timing of payments – where they are dependent on the sale of real property they may take some time to achieve. As Peel J said in HO v TL [2023] EWFC 215 it it is appropriate for the court “to step back when conducting the s25 exercise and, in the exercise of its discretion, to allocate the resources in such a way as to reflect illiquidity and risk. Conventionally, that would be to allocate to the party retaining the business a greater share of the overall assets to provide a fair balance. As Bodey J said in Chai v Peng and Others [2017] EWHC 792 (Fam) at para 140: “It is a familiar approach to depart from equality of outcome where one party (usually the wife) is to receive cash, while the other party (usually the husband) is to retain the illiquid business assets with all the risks (and possible advantages) involved”. In making the decision I set out below, I have factored these matters into my thinking.

I have also heard different submissions from Counsel on who should be responsible for meeting the tax obligation arising from my sham trust finding (in matrimonial terms; it will be the husband’s obligation as far as HMRC are concerned). Mr Wagstaffe has wholly blamed the wife for this; but in my view this is unfair. The husband created the difficulty and, without doing what she has done, the wife would not have been able to claim a fair share of the family’s assets – certainly the husband would never have offered her one. Mr Pocock says that the blame wholly falls on the husband – he created the structure which has caused the problem and his conduct made it inevitable that the wife had to seek findings of ‘sham’. My view is somewhere between these two positions. The husband, in setting up the structure and by his conduct in defending it, must be regarded as the principal cause of the problem. On the other hand, in assessing the wife’s claims I cannot ignore the existence of the problem, further that she was happy to accept the benefits of the structure when she was still married, without much questioning of the husband’s methodologies. In reaching a solution here I bear all these thoughts in mind and, in making an order, create a fair balance between the competing positions.

There was an 11^th hour exchange of new open offers on 12^th May 2025, the day before the second part of the final hearing commenced, which represent a further and extreme polarisation of the parties’ positions.

The wife now sought an order which provided (broadly):-

The husband now sought an order which provided (broadly):-

I am afraid that neither of these offers commend themselves to me. Both would represent wholly unfair outcomes in different directions. I must therefore determine what is, in my view, a fair outcome for both parties, piecing together all the findings and comments I have set out above.

I propose to make an order as follows:-

This is my decision. I regard my act of sending this (amended) judgment out by email as the handing down of the judgment and the 21-day appeal period will begin from this date, i.e. 11^th June 2025.

I invite Counsel to draft an order which follows from these conclusions.

As discussed during the hearing we will need to convene again to deal with residual matters and I have fixed a one day hearing for this purpose in the Central Family Court before me for an attended hearing on 1^st July 2025. I hope on that day to deal with the residual costs issues from the July/August 2024 hearing, the costs orders arising from this hearing and this judgment, judgment publication issues and any issues arising from this judgment for the continuance (or otherwise) of the Receivership order.

In the hope that it may assist discussions and narrow the issues required for determination on 1^st July 2025, I express the following provisional views (subject to further submissions):-

I believe that the other third parties who may have an interest in appearing on 1^st July 2025 have been alerted to this date. I request the legal teams to make absolutely sure this has happened.