A v B

This judgement addresses the application for financial remedies made by the wife dated 19 November 2020 (B 12-24). The respondent to the application is the husband. I shall henceforth refer to the parties as the Wife (A) and the Husband (B) respectively and in doing so I mean no disrespect to either of them.

The Wife has been represented by Annie Ward of counsel and the Husband has been represented by Jane Campbell of counsel. I am most grateful to each of them for their helpful position statements and for their skilful conduct of the final hearing commencing on 30 October and concluding with submissions on 31 October 2023.

For the purposes of the final hearing I have been provided with a trial bundle in two lever arch files and extending to 730 pages. I have also been provided with a supplemental bundle in a further three lever arch files exceeding 2000 pages very little of which was referred to in the course of the final hearing. Where necessary, I will refer to the documents in the trial bundle by reference to the pagination marked within it. I will denote any reference to documents in the supplemental bundle by using the prefix S B. I will not, of course, refer to all the documents in the bundle, but that should not be taken to signify that I have not read all the relevant documents.

Both parties have incurred vast legal costs in these proceedings which are out of all proportion to the available assets and the complexity of the issues. The consequence of this is that both parties’ ability to meet their future needs is likely to be severely compromised. This is a truly regrettable situation. The Wife’s costs in these proceedings are I am told in the region of £145,000 and the Husband has spent in the region of £209,000. I allude to costs “in the region of” because neither party has served a costs schedule in form H since June 2023, and it is clear that they have both incurred significant costs in the intervening four months. I do not understand why the solicitors on each side have failed to provide the Court with an updated form H as is their obligation to the Court.

The legal framework within which these applications fall to be determined requires no elucidation. It is, however, pertinent to remind myself that the burden of proof falls upon the party seeking to establish a particular fact or issue. The standard of proof is, of course, the ordinary civil standard of proof namely the balance of probabilities.

The Wife has pursued a career in academia holding positions at universities at City 1, Country X and subsequently at City 2. The Wife then secured a position in a university in City 3 where she is now an academic. In order to pursue her career and maximise her income the family were involved firstly, in a move from City 1 to City 2 and then in a move from Country X to the UK.

The Husband is an engineer formerly employed by a company in Country X and latterly working as an independent contractor through his own company, a company registered in Country X. More recently he has established an English registered company which is in its infancy and has no or no significant value that requires to be considered in these proceedings.

The parties have one child, C aged 14 years. Regrettably, the parties could not agree appropriate child arrangements for C and they became in embroiled in contested Children Act proceedings. Those proceedings concluded with an order made in December 2021 which, essentially, provides for the parties to share care of C who now spends alternate weeks in the care of the parties. C attends a school in City 3 which is fee paying and the responsibility for paying school fees is just one of the issues which I need to address in this judgement.

Each of the parties lives in rented accommodation in City 3 having failed to agree on the purchase of a family home following their relocation to City 3 and subsequently failing to reach an agreement as regards their finances that would have enabled either of them to purchase a new home for themselves in advance of the final hearing in these financial remedy proceedings.

Regrettably, the progress of the financial remedy proceedings has been fraught with delays involving at least five hearings including a first appointment, and FDR hearing and a number of aborted hearings cancelled at a late stage by the Court administration. Notably, both parties relied upon and prepared fully for a final hearing listed in June 2023 which was vacated by the Court administration at the last minute by reason of the usual fiction of judicial unavailability.

The Wife seeks orders for a lump sum payment to her of £555,286. She seeks an order that C’s school fees be paid equally. She accepts that thereafter there should be a clean break in life and death. Subject to the Husband’s compliance with certain conditions (see below) she offers a small pension share in the Husband’s favour.

The Husband proposes that he retain his interest in two properties in Country Y and proposes that he should pay a lump sum to the Wife of 52% of the balance standing to the credit of bank account 1 together with a lump sum equating to 50% of the balance standing to the credit of bank account 2. He seeks a pension share equating to 55.43% of the Wife’s pension fund in Country X. He proposes that the Wife alone should be responsible for C’s school fees. Subject to those matters he proposes a clean break as to capital and income in life and in death.

These offers were set out in open proposal is dated 6 December 2022 (W) and 7 December 2022 (H) exchanged between their respective solicitors. I am not aware of any attempt to narrow their differences since then. At least, no revised open proposals have been made by either party over the past 10 month period which is surprising, not to say regrettable, no doubt with severe costs consequences for each of the parties.

The first task of the Court when addressing financial remedies applications is to identify the assets available for distribution between the parties. At the start of the second day of the final hearing I was presented with an agreed ES2 and I draw on this document in setting out a summary of the parties’ remaining assets.

These are my observations on this asset schedule. The Husband is co-owner with his brother of a property in Country Y inherited from his father in about 2012. The property was inherited by him during the course of the parties’ marriage and it has been used, to a limited extent, by the parties since then. The value set about above represents half the total net value of the property. The Husband has said in evidence that he is unable to realise the capital in the property because his brother does not wish to sell it. The Husband tells me that the property is not let because his brother does not wish to let the property but wishes to preserve it for use by the family. The Husband, therefore, derives no income from this property.

The bank balances represent what is left of joint funds deriving, in large part, from the sale proceeds of the family home in Country X. Each party has unilaterally drawn on these funds with the Husband having removed £312,000 from the joint funds shortly after the parties separated.

The Husband’s business-the corporation in Country X-has liquid funds of £207,600 and that is its value asserted by the Wife. The Husband’s case is that for him to access these funds he will have to pay tax and he says the company needs to retain £30,000 as working capital. He advances a net value attributable to his company of £117,000.

Each party has some chattels including various items of jewellery and artworks in the Wife’s case and a car in the Husband’s case. These assets are of relatively low value and I propose excluding them from my computation of the distributable assets.

As regards liabilities the Husband’s liabilities are negligible, save that I remain unclear what he owes, if anything, to his solicitors in these proceedings. The Wife’s liabilities are said to be £31,570. Some £17,500 relate to a costs order against her in proceedings pertaining to a dispute with her former solicitors about their fees. It is unclear why this remains unpaid. Her liabilities are also said to include £25,000 representing the disputed unpaid fees of her former solicitors. Whether she has or will have any liability for some or all of those fees is unknown until that litigation is concluded. The balance of her liabilities represents a credit card debt.

The Wife has a number of pension funds deriving from her employment in Country Z, Country X and the UK and these are as follows:

The Husband’s pension resources are contained in a single fund as follows:

There are a few matters upon which the parties are agreed. Firstly, the Husband agrees that the Wife’s Country Z pension fund should be excluded from the computation of the marital assets. I believe this concession has been made on the basis that this pension fund accrued before the parties’ relationship or marriage occurred.

Secondly, it is now agreed that the Court should make final orders effecting a clean break between the parties in life and death. In particular, the Husband no longer pursues a claim for spousal periodical payments.

Thirdly, it is now agreed that the Husband should retain or retain his interest in the two properties in Country Y although it would appear that at some point in these proceedings the Wife sought the transfer of one of the properties into her name.

It is agreed that this is, essentially, a needs case.

In Miss Ward has helpfully summarised the issues that the court has to determine. They are:

whether the properties in Country Y are to be regarded as matrimonial assets;

what value should be ascribed to the Husband’s company;

should there be an add-back in relation to what is said to be a depletion or non-disclosure of capital by the Husband;

what assessment should be made of the Husband’s earning capacity.

The Wife asserts that substantial sums should be added back to the assets available for distribution and she founds her application on a number of bases set out in her statement dated 5 February 2023 (426-436) as follows:

she says the Husband unreasonably rejected a proposal or offer she made to him in September and October 2020;

she says the Husband withdrew £312,000 from the parties’ joint assets, a large part of which (£244,000) having been spent on legal fees by him;

the Husband embarked on excessive and she says unjustifiable business expenses amounting to £195,000; and

she says the Husband “violated assurances” that he would maintain his revenue, by which I think she means income, so that he had to rely on capital rather than income to meet his needs.

It is trite to observe the objective of the Court is to determine a fair distribution of the available assets between the parties. S. 25(2) sets out a range of considerations which require to be analysed by the Court-as to which see my analysis below. As part of that analysis I will consider the issue of conduct and the relevant jurisprudence on the issue of “add-back”.

Pursuant to s.25(1) I must give first consideration to the welfare of any minor child of the parties.

I have read the Wife’s Form E dated 20 January 2021 (C 77-121), her replies to a questionnaire raised on behalf of the Husband (C 157-164); her replies to a schedule of deficiencies (C 183-191); her replies to a further questionnaire dated 9 January 2023(C 221-234; her “add-back” statement dated 5 February 2023 (425-439) and her section 25 statement dated 25 April 2023 (483-531). In the several documents and in her oral evidence she adopts a decidedly one-sided account in her favour, strenuously advancing her own view on the appropriate outcome and downgrading the Husband’s contribution. She goes so far as to attribute to him malign intentions or motives. One of many of the examples of her stance is her rejection of the suggestion that the Husband’s business is a corporate vehicle through which he invoices for his services and derives his income. She rejected the suggestion that it was simply an income distribution vehicle although she failed to explain why this was not an appropriate characterisation of the Husband’s business.

She asserted that the Husband was irresponsible in rejecting a proposal she put forward in September and October 2020, which was, of course, before these financial remedy proceedings were commenced. She says that had he done so, the parties would not have needed to incur the costs they have incurred in these proceedings. She says her proposals were reasonable in the round. The Wife goes on in her statement to present detailed, if not readily comprehensible, analysis of the financial consequences. She attributes the reduction in the Husband’s income, derived from his business, to a refusal on his part to maximise his income. She admits of no other possible explanation for that situation such as the parties’ relocation from City 1 to City 2 and the subsequent relocation from Country X to the UK. She berates the Husband for the substantial legal costs incurred both in these financial remedy proceedings but also in the Children Act proceedings accusing him of adopting a casual attitude to the proliferation of legal costs and of failing to carry out any due diligence in relation to his spiralling legal costs.

In oral evidence she said that she thought she was entitled to an equal share of the matrimonial assets but, I suspect, only on the basis that the Court acceded to her “add-back” argument. She asserted that she had contributed 104,000 in Country X’s currency toward the deposit paid by the parties on their first home totalling 114,000 in Country X’s currency, suggesting that that ought, in the interests of fairness, be taken into account now, even though that contribution was made in or about 2004.

She rejected the suggestion that in the round the Husband had made an equal contribution to the welfare of the family. She asserted that her contribution was greater than that of the Husband. She also rejected the suggestion that the Husband’s business experienced a setback as a consequence of the move from City 1 to City 2 or that the move from Country X to the UK created a further setback for his business. She conceded that the Husband agreed to the two relocations to facilitate the advancement of her career which also enabled her to achieve an increased income.

She, I felt rather grudgingly, accepted that the Covid pandemic and the associated travel restrictions would have had a short-term negative impact on the Husband’s business. She rejected the suggestion that it could have had a longer term impact notwithstanding that governmental travel restrictions were significantly greater in Country X than they were in the UK.

In relation to the value of the Husband’s company the Wife told me that she didn’t accept the base value of the company which equated, on the Husband’s figures, to the funds in that company’s bank account. She did not explain the basis upon which she believed the company to be more valuable than that bank account balance suggested. She conceded, however, that from the gross value allowance had to be made for tax, at whatever the applicable rate might be, charged in respect of transferring the funds of the Husband’s company to the Husband.

In respect of the Husband’s assertion that he required £30,000 working capital to remain in the accounts of his company she said that she would accept the need for £5000 working capital but she did not elaborate on how she calculated that figure or upon the basis of her rejection of the Husband’s figure. She explained that she did not agree the value of the Husband’s company because she did not regard it as a simple income distribution vehicle. She suggested that the accounts of the company were prepared on a different basis, but she did not explain why or how that company should be characterised as anything other than an income distribution vehicle. In relation to expenses incurred by the Husband’s company she said she didn’t accept the expenditure on outside contractors because she did not understand why contractors’ travel wasn’t constrained by Covid restrictions in the same manner as the Husband’s ability to travel was restricted.

In relation to the parties’ discussions in September and October 2020 she did not recall the Husband making it clear to her that fully detailed financial disclosure was a necessary prerequisite to any agreement between them. In relation to the first element of her “add-back” argument the Wife’s objection was to the use by the Husband of joint assets to defray his legal costs.

The Wife had difficulty in accepting that a payment made by the Husband’s company to company D was a legitimate cost or expense of the company although she conceded that she was simply speculating that it was not.

The Wife refused to accept that the trading history of the company showed that outside contractors had been employed by the company and paid for by the company before the parties had any discussions about separating. Her response was that she wanted more information about those transactions. Rather than accepting that outside contractors were paid for by the Husband’s company before the issue of separation was raised she responded that some payments had been reversed, although she did not take me to any examples of that having occurred. She accepted that when the Husband ceased to be a resident in Country X it was necessary for him to employ, as a director of the company an individual who was a resident of Country X. She agreed that that individual was Mr E, but she challenged the amount of his remuneration in the sum of 100,000 in Country X’s currency. She also challenged and sought explanations for a range of expenses incurred by the Husband’s company including one item of expense amounting to 800 in Country X’s currency. She challenged an increase in the company’s accountant’s invoice for preparing accounts on the basis that the payment appeared to her to be excessively high. In essence, she explained that if she was unclear about any particular transaction she had sought answers to questions and disclosure. It appeared to me that the Wife sought to characterise any transaction which she did not herself understand, despite extensive disclosure, as being false, illegitimate and a sham. In like manner, she challenged an expense because the manner in which a payment was recorded in a bank statement differed from the description given to other payments and she rejected the explanation proffered by the Husband.

The Wife alleged that the Husband was overpaying tax in an effort to down value the company. She was taken to the documents printed from the tax authority Portal. One group of entries showed a liability in Country X’s currency of £83,175 which was then paid. She said there were other tax payments shown in the company accounts and she did not know whether those payments related to tax liabilities out with the scope of the Portal documents that she had seen.

As regards her housing need, the Wife did not accept that her housing need was equal to that of the Husband. She did not think the Husband needed to be in a position to buy a house because she did not believe that he would remain living in the UK notwithstanding that the Court had made a shared care order in respect of C. She accepted that her housing proposals for the Husband included rented properties in contrast to the properties she advanced as suitable to meet her own needs. She accepted that some of her housing proposals for the Husband were outside the bounds of City 3 whereas her proposals for herself were all within the City. She said this divergence was appropriate because the Husband was able to drive whereas she was not. That meant that she required to live within City 3 close to C’s School and her place of employment. She did not think that C would care whether the Husband was able to buy a house or that the Husband living outside the city centre would add significantly to the length of C’s school day. It appeared to me to be her case that C would be wholly insensitive to the disparity between what she asserted to be her housing need compared with her proposals for the Husband’s future housing.

As regards her mortgage capacity the Wife relied upon an assessment contained in a report dated 28^th of January 2022 (E 611-620) to the effect that she could borrow £150,000. She acknowledged that this was an assessment prepared on the basis that she would be wholly responsible for C’s school fees of more than £3160 per month. I am unclear why the Wife sought a mortgage capacity assessment on this basis when it is her case that C’s school fees should be shared equally.

The Husband gave evidence. I have read his several documents and he confirmed the accuracy of his Form E dated 4 February 2021 (122-156); his replies to the Wife’s questionnaire (165-182); his replies to the Wife’s schedule of deficiencies (192-220; his replies to the Wife’s further schedule of deficiencies (272-424); his response to the Wife’s “add-back” statement (440-482) and his section 25 statement (532-591).

He told me that he now proposed to pay a lump sum of £225,000 to the Wife, a figure which was slightly higher than his earlier offer to pay a lump sum equating to 52% of the balance in his bank account. He told me that he intended to remain living in the UK and that he intended to apply for the necessary visa permitting him to do so imminently. His obligation to apply for a new visa would arise on the granting of a decree absolute in the divorce proceedings and it was necessary for him to remain living in the UK in order to fulfil his care obligations in respect of C.

In relation to the properties in Country Y he told me that he accepted that the property vested in his sole name was a matrimonial asset but he disputed that the other property which he co-owned with his brother was a matrimonial asset. It was his ambition that in due course C would inherit his interest in the properties in Country Y. He accepted that his initial value of those properties (SB 197-8) was very much lower than the valuation of the single joint expert (610). He could not explain the difference in those valuations other than by suggesting that it may have something to do exchange rates. He denied seeking to misrepresent the value of the properties in Country Y to the Wife or the Court.

He accepted that it might, in principle, be possible to derive an income of about £120 per month by letting those two properties in Country Y but he explained that his co-owner, his brother did not want to sell or let the property they owned together. He told me that the other property was not in a fit state to let in its current condition. He had considered making arrangements to let the property vested in his sole name, but he concluded, eventually, that for a variety of reasons it was not practical and he abandoned that plan.

He accepted that the Wife had worked part-time after C was born for, he thought, a period of about three months, rather less than the two years suggested by the Wife. He explained that when the family lived in City 1 they lived just a short journey from his place of work. When the family moved to City 2 he became involved in much greater travel. He accepted that there was a period in 2016 when he was unemployed having left his previous employer and he accepted that during that period the Wife was the only breadwinner. He told me that the subsequent move to live in the UK occurred shortly after he had established his own business and that the move was motivated by the Wife’s opportunity to enhance her career and earning potential which he supported at the expense of his own business opportunities. The move to live in the UK was prejudicial to his ability to fully exploit his business because the Husband was no longer operating close his network of contacts in Country X. In addition, he encountered other difficulties in establishing himself and his business in the UK including for example the difficulties he had in obtaining a national insurance number.

He told me that initially he joined the Wife in looking to find a property for the two of them to buy in City 3. In the event he says they jointly decided to defer their search for a suitable home to buy.

He was asked about discussions between himself and the Wife in September and October 2020 following their decision to separate. He accepted that the Wife had made a proposal to him but he said he had not at that point seen a schedule of the assets the Wife had available to her, although he had asked her to produce one. He was also faced with the Wife’s insistence on excluding her pension resources from the distribution of assets between them. He told me that in order to progress their discussions he had produced a schedule of his assets, but the wife had not. He also told me that such discussions as the parties had in September and October 2020 were very brief and/or cursory.

He accepted that a part of his motivation for removing capital from the parties’ joint account was to frustrate the Wife’s intention to use marital assets to purchase a home for herself before an overall agreement was reached between them as to the distribution of their assets. At that time he wanted both of them to be able to buy homes for themselves in the City 3 area. Whilst he accepted that a consequence of the parties’ being unable to agree a division of their assets in September and October 2020 was that each of them had incurred very substantial legal costs and indeed causing them to pay over the years approximately £183,000 in rent he rejected the suggestion that these expenses i.e. legal costs and the cost of each of them renting a property where a consequence of his unreasonable refusal to accept the Wife’s terms.

He accepted that he sought a shared care arrangement in respect of C. He said there were many issues raised in the Children Act proceedings such that he felt that he needed legal representation. He had not expected his costs in those proceedings to be as high as £112,000 (which is the sum he thought he had paid in respect of those proceedings).

It was put to the Husband that he had sought to misrepresent the value of his company, but he rejected that assertion as unfounded. He accepted that the net profits of the business in the accounts for the year ended 30 June 2023 were about half of what it had been for the year ended 30 June 2021. He explained that the 2021 accounts included income from projects in Country W which contracts had been secured by him before Covid emerged. Those contracts and hence the income from those contracts had now ended. Since then there had been reduced opportunities for him to secure new contracts because, among other things, his business networks were in Country X and not in the UK. He rejected the suggestion that the profits had reduced to half what they were in 2021 because he was only working half as hard. He did not suggest that the shared care arrangements in respect of C, was itself a factor limiting the time available to him to work and exploit his earning potential. He told me he wanted to earn more, but being away from what had been his main centre of operations in Country X was a disadvantage to him. He made the point that the UK is not an equivalent centre for his industry.

He explained that his company made a range of payments to subcontractors in respect of desktop projects carried out on behalf of his company. Those subcontractors were able to undertake this work notwithstanding the travel restrictions imposed by the government of Country X because they were “desktop” projects which did not require the subcontractors to travel to sites. One subcontractor, Mr F was in paid employment but he was nevertheless able to undertake projects on behalf of the Husband’s company as an independent contractor. He explained that a payment to Mr F’s son was an arrangement made at Mr F’s request to mitigate his liability for tax in Country X. He told me that all the payments made to a number of individuals by his company all represented legitimate business transactions.

He was asked about an entry in his company accounts for the year ended 30 June 2020 relating to directors’ fees of 100,000 in Country X’s currency paid to Mr E. That entry was before the parties began discussing their separation. He told me that in fact that sum had not yet been paid to Mr E, notwithstanding the entries in the company accounts. He accepted that the accounts for this reason understated the profit of the company by 100,000 in Country X’s currency which was reflected in the balance sheet of the company. He explained that at some point in time Mr E had to be paid this sum. He rejected the assertion on behalf of the Wife that this was a sham transaction and a dishonest attempt by the Husband to down value the company.

The Wife challenged a number of payments made by the Husband’s company to a number of individuals on the basis that they were payments to friends of the Husband and were therefore sham transactions or a device to put funds out of the way. The Husband explained that the payments identified in the Wife’s statements as being payments to friends were in fact payments to long established contacts in the industry for work undertaken by those individuals on behalf of his company as subcontractors. He explained that there was nothing unusual, still less suspicious, about his being on friendly terms with individuals who carried out work on behalf of his company.

The Husband was asked about a payment of 125,000 in Country X’s currency on 28 September 2020. He explained that that payment was in effect an up front payment for the work his company had assigned to that individual. He told me that the transfer of funds was effected by telephone rather than international funds transfer. He said this explained the different annotation marked against this transaction when compared with the annotations in the bank statements relating to other transactions. He told me there was a financial limit on international funds transfer transactions in Country X so that it was necessary for a different mechanism to be employed to make that payment. He told it me it was an entirely genuine transaction and that whilst he had sought further details from his bank to illustrate the recipient of that payment he had not yet received that information from the bank.

As regards the allegation that he was depleting the value of the company by overpaying taxes in Country X, the Husband explained that the tax authorities in Country X used a Portal which issued accounts during the year of what taxes were due. He told me that he caused his company to pay the tax liabilities in accordance with the Portal assessment. At the end of each financial year the tax authorities in Country X produced a balancing account on the Portal illustrating whether further tax was due to be paid or whether tax had been overpaid. He accepted that there was likely to be a refund due to his company for the last accounting period but he thought it was likely to be a relatively small sum. As I understand the Husband’s evidence tax is levied by the tax authorities in Country X on profits achieved in the preceding tax year and this appears to me to explain why tax was levied at a sum significantly in excess of the income earned for the year ending 30 June 2023.

These are my findings on the principal issues. Both parties, I am satisfied, have a reasonable ambition to purchase suitable alternative accommodation to meet their needs and of course those of C who is in their shared care. This reflects the position the parties were in prior to their relocation to live in the UK. In my assessment each of the parties is likely to need to spend between £450,000 and £500,000 in the purchase of a home for themselves. I do not think the property particulars advanced by the Wife as being suitable for the Husband properly or reasonably represent his housing need in so far as those proposed properties are rental properties. It would not be reasonable to expect the Husband to be restricted to rental properties and it would not be in C’s interests for C to see any significant disparity in the quality and location of housing as between C’s parents.

Each of the parties has a mortgage capacity. Unfortunately, I do not regard the evidence as to their mortgage capacity to be reliable. In the Wife’s case her evidence is based upon the assumption that she is solely responsible for C’s school fees. Secondly, it is based on an out of date income figure: her earnings as I understand it, have increased significantly since this assessment was undertaken in January 2022. On any view it is very out of date and it would appear that some elements of the Wife’s other expenditure are unrealistic. I am equally sceptical about the Husband’s assessment of the Wife’s mortgage capacity of £475,000 (701-702). On balance, I suspect the truth of the position lies somewhere in the middle of these figures and I find it likely that the Wife could afford to borrow approximately £300,000 taking account of her age and relatively limited remaining working life, but taking account of her increased earnings and a more realistic view of her regular monthly expenditure.

As regards the Husband’s mortgage capacity I have read his evidence (703) suggesting he could borrow £182,000. That analysis is based on proposed gross income of £42,370 per annum but I think it more than likely that the Husband will be able to increase his income above that level but probably not to the same level as it had been in 2019/2020. I find the Covid effect on his industry will diminish over time and he will have a greater opportunity to increase his earned income. I find that they Husband is likely to be able to borrow in the region of £250,000 to finance his purchase of suitable alternative accommodation.

I am entirely satisfied that the Wife is fully exploiting her earning potential producing a net income for her of £130,000 per annum, equating to a net income of £10,833 per calendar month. She may have opportunities for further advancement in her career as she says in her written statements. There is no clear evidence that she will have the opportunity for advancement or that she will achieve a greater income in the future. I do not factor into my assessment any prospect for advancement or of her achieving a higher income in future.

As regards the Husband’s earning capacity I am satisfied and I find that it has reduced dramatically since the parties relocated to the UK. I am satisfied that the reasons for this include the parties’ relocation, the distancing of the Husband from his industry contacts based mainly in Country X. I take into account that the UK is not an international centre for operations in the field in which the Husband has worked in the past. I accept the Husband’s evidence in this regard. I find it more than likely that the Husband will suffer some diminution in his earning capacity by reason of his childcare responsibilities. Neither his assumption of a more equal responsibility for C’s care nor the diminution in his earning capacity by reason of the impact of Covid and the parties’ relocation to the UK deserve of criticism of the Husband. I reject the submission that the Husband has wilfully brought about a diminution of his earnings.

I accept the Husband’s evidence that he is committed to exploiting his earning potential and I accept as realistic the submission on his behalf that he can recover his business. It is difficult to conjecture or find as a fact the level of the income the Husband will achieve in future. But taking all the evidence into account, including historical income, the diminishing adverse effects of the Covid pandemic I find that he is likely to be able to earn not less than £80,000 per annum net equating to a monthly income of £6600 or thereabouts.

As regards the implications of the parties’ discussions in September and October 2020 I am satisfied that it was reasonable for the Husband not to accept the Wife’s proposals as they were then formulated. Firstly, I find that unlike the Husband, the Wife had produced no schedule of her resources meaning that the Husband had no sound basis for evaluating the value of the assets available for distribution between the parties and no means of forming any view as to the fairness of the Wife’s proposal. Secondly, such discussions as the parties had were brief and cursory. They did not embark on detailed discussions to determine what was fair. Thirdly, and I accept the Husband’s evidence in this regard, the Wife was explicit in her desire to exclude from the assets available for distribution between them, the value of her pension funds. Even by December 2022, the Wife was apparently prepared only to make very limited provision by pension sharing order. I conclude that the Wife’s proposals in September and October 2020 would not have achieved a fair outcome as between the parties with the Husband retaining approximately £930,000 worth of assets and the Wife retaining assets to a value of something in excess of £1.3 million. It was therefore reasonable for the Husband to reject or at least not to accept the Wife’s proposals made at that time.

I find, and it follows from the above, that the Husband cannot be held responsible for the parties’ subsequent expenditure on costs and rent in the intervening period. The costs and other consequences cannot properly be said to flow from the Husband’s decision not to accept that proposal, still less can it be said that at that time the Husband was unreasonable in his conduct in rejecting the Wife’s proposal in September and October 2020.

Both parties have fully engaged in these disproportionate and disproportionately expensive proceedings and I reject the submission and the Wife’s evidence that the costs reflect the inadequacy of the Husband’s disclosure or the opacity of that disclosure. What is clear from the Wife’s written and oral evidence is that she has pursued and sought to investigate each and every element of the Husband’s disclosure to the “nth” degree. I take into account that the Wife raised 52 questions arising out of the Husband’s Form E. The Husband raised just 22 questions arising from the Wife’s Form E. I note in passing that the Wife pursued an unsuccessful application for an expert valuation of the Husband’s company and she made, and then withdrew, an application for further disclosure of a further 23 separate ranges of documents.

Having reviewed all the evidence in these proceedings I am not satisfied that the Husband’s pursuit of these proceedings to have been inherently unreasonable. I do not find that the Husband has dissipated matrimonial assets or the income of his company dishonestly or with a view to putting funds out of reach of the Court or with a view to deceiving the Wife. I do not regard the Husband as having adopted an unreasonable or unrealistic position in the Children Act proceedings and in any event it does not appear to me to be open to this Court to revisit the issue of the costs of those proceedings. I regard it as unfair of the Wife to accuse the Husband of being wanton in respect of his expenditure on legal costs nor is it reasonable for her to accuse him of failing to carry out due diligence.

In determining the outcome of these applications the Court must, of course, have regard to all the circumstances of the case, but the court must give first consideration to the welfare of the parties’ child C. In my assessment his welfare requires that each of C’s parents has the ability to purchase suitable alternative accommodation for themselves and for the child. Absent some very good reason, there should not be any or any significant disparity between the quality of the housing each of the parents can afford C. Similarly, C’s welfare requires that each of C’s parents is left with sufficient financial resources to meet his educational and other needs.

I must take into account the income, earning capacity, property and other financial resources of each of the parties. I have found that the Wife is fully exploiting her earning capacity and that the Husband will be able to achieve an increase in his earning capacity to the extent of approximately £80,000 per annum net. I have found that there are no hidden financial resources available to either the Wife or the Husband so that the financial resources falling to be taken into account by this Court are as summarised in paragraph 14 above.

I have found that the parties have broadly equal financial needs as regards the purchase of suitable alternative accommodation for themselves and C. There is no significant difference between them as regards their obligations and responsibilities either for themselves or C.

I am in some difficulty identifying the parties standard of living before the breakdown of their marriage. What is clear is that whilst they lived in Country X they owned property of significant value and, certainly so far as the Wife is concerned, she was able to purchase valuable jewellery and artworks which is suggestive of a reasonably good standard of living but not an exceptionally high or an extravagant standard of living. A salient feature of the parties’ standard of living was that they have until relocating to live in the UK had the benefit of owning their own home or homes.

I have already recounted the ages of each of the parties and in round numbers their relationship endured for some 14 years which I characterise as a medium term marriage.

Neither of the parties asserts that they have any physical or mental disability which requires to be considered by the Court in determining a fair outcome.

I have to consider the contributions of each of the parties to the welfare of the family both historically and looking to the future. I have read the parties’ evidence on the issue of their respective contributions. It is notable that the Wife claims to have made a significantly greater contribution to the welfare of the family than the Husband. I reject that assertion. What is clear that throughout the parties’ relationship the Wife has enjoyed a stable and flourishing career in academia. Throughout the early years of the parties’ marriage the Husband appears to have been in stable employment and subsequently to have pursued a successful business from which the family have derived significant financial benefit. The Wife’s pursuit of her successful academic career has been fully supported by the Husband to the detriment of his own ability to maximise his earning potential. The position now is that both parties are equally responsible for C’s care and welfare, notwithstanding that the Wife has been principally responsible for paying C’s school fees (see below). Overall, my assessment is that each of the parties has made a broadly equal contribution to the welfare of the family albeit in different ways achieving different balances during the course of their relationship. I do not consider that such differential as there may have been requires to be reflected in the distribution of the assets between them.

I must consider the conduct of each of the parties if that conduct is such that it would be inequitable to disregard it. I shall deal with the Wife’s case that there should be substantial add backs under this heading. In OG v AG [2020] EWFC Mostyn, J. identified four situations where conduct may be relevant and he identified four scenarios as follows:

gross and obvious personal conduct

where one party has wantonly and recklessly dissipated assets which would otherwise have formed part of the distributable matrimonial property giving rise to the add-back jurisdiction;

litigation misconduct falling to be severely penalised in costs, if proven; and

drawing adverse inferences as to the existence of assets drawing on conduct in failing to provide full and frank disclosure enabling the Court to draw adverse inferences.

In this case the Wife does not argue that the first of Mostyn, J.’s scenarios is engaged. From what I am told by Ms Ward there are allegations of litigation misconduct (the third of Mostyn, J.’s scenarios) which should fall to be penalised in costs orders, but I have yet to hear submissions from the parties as to costs and I pass over this issue until I have heard from the parties on the issue of costs.

As regards the fourth of Mostyn, J’s scenarios I have made findings on a balance of probabilities that the Wife’s suspicions about a number of transactions effected by the Husband through his company do not evidence or support a finding that there are assets available to the Husband which he has failed to disclose or in respect of which his disclosure is inadequate and which should therefore be reflected in the scope of the distributable assets .

That leaves the second scenario posited by Mostyn, J. where one party, allegedly the Husband in this case, is found to have wantonly or recklessly dissipated assets. Mostyn, J. in describing the “add-back” jurisprudence observed that it will only be in a clear and obvious and therefore rare case that this principle is applied. Turning now to the evidence in this case, the Wife asserts her add back case on four grounds (see above). I have read and carefully considered her “add-back” statement dated 5 February 2023 (425-436). I have found that it was in all the circumstances reasonable for the Husband to have rejected the Wife’s proposed distribution of the assets in September and October 2020 for a number of reasons which I do not need to repeat. It may well be, with the benefit of hindsight, the parties could have reached an agreement earlier than has proven to be the case, but the Wife’s attempt to reconstruct what the position might have been had they reached an agreement has been unhelpful and does not persuaded me that the Husband was unreasonable to reject her proposal, which so far as I can understand was never committed to writing.

It does not appear to be disputed by the Husband that he transferred substantial sums from the parties’ joint accounts to his own accounts. Although the Wife alleged that the Husband promised to preserve or protect those funds I have seen no evidence of such promise and the Husband denies that he entered into any commitment to protect and preserve those funds and not to spend them on meeting his needs during a period of time when his income was insufficient to meet those needs. I note that the Husband’s solicitors put the Wife’s then solicitors on notice that by reason of the reduction in his income he was compelled to have recourse to capital to meet his income needs. This appears from Vardags’ letter to Newton Kearns dated 16 February 2021 (p. 458). Had there been any commitment by the Husband to protect and preserve the funds he had withdrawn from the parties’ joint accounts I would have expected at least some sort of protest if not an application to freeze those funds. The Wife’s solicitors themselves seem to acknowledge the Husband’s need to draw on capital to meet his income needs in their letter dated 10 February 2021 (p. 481). The Wife alleges that the Husband “violated assurances” that he would maintain his income. As to this I have seen no evidence that the Husband in fact made any such assurances and no evidence that he intentionally breached any such assurances. Whilst it is true that the Husband’s income has taken a nose dive since the parties’ relocation to live in the UK he specifically rejected the suggestion that this arose because of any decision by him to reduce his effort to generate an income and he affirmed his intention to exploit his earning potential as best he could. I am unable to find that the reduction in the Husband’s income derives from any strategy devised by him to advance his position in these financial remedy proceedings at the expense of the Wife or with the intention to cause her detriment. It is noteworthy that he does not now at least pursue an application for spousal periodical payments.

The Husband is criticised for spending substantial sums on legal costs in these and the Children Act proceedings. In respect of the latter it should be noted that the Children Act application was made by the Wife who pursued it, as she was entitled to do, to a final hearing. She also pursued an unsuccessful appeal. I find that it was not unreasonable for the Husband to be represented in those or indeed these proceedings. Miss Ward says in her note that the Husband should have spent less and discharged his legal costs from his income. That is not a strong or good argument when it is clear that the Husband’s income was insufficient to meet the costs in the Children Act proceedings or indeed in these proceedings. She invites me to consider and involve the approach taken by HHJ Hess in YC v ZC [2022] EWFC 137. I have considered the case report carefully. HHJ Hess identified a number of general conclusions as to how the situation should be addressed by the Court. He identified a number of authorities or at least examples of cases where the Court had added back to the asset schedule a proportion of disproportionately extravagant costs incurred by one party. In this case the Husband appears to have spent about £209,000 on legal costs compared with the Wife’s expenditure of about £145,000. Whilst recognising that there is a difference between their legal costs the differential comes nowhere near the differential between the parties in YC v ZC, where the Wife had spent £463,000 and the Husband only £159,000. In this case I do not consider the costs incurred by the Husband to be “grossly disproportionate”. I need also to take into account the case he had to meet in responding to requests for voluminous further disclosure, to respond to extensive questionnaires and to meet a number of applications made by the Wife. I conclude that there is no merit in the argument that a proportion of his legal costs should be added back into the schedule of matrimonial assets.

In any event, I would not characterise the Husband’s expenditure on legal costs as wanton or reckless. It was and, in these proceedings, is reasonable for him to be represented in responding to applications (and in the Children Act proceedings an appeal) initiated by the Wife.

In respect of the transactions of the Husband’s company challenged by the Wife I have already found that the Wife has failed to establish that these transactions were sham transactions entered into by the Husband with the purpose or intent of defeating the Wife’s financial remedy claims. She has therefore failed to surmount the first element identified by Peel, J. in T v K.

In respect of the alleged overpayment of tax to the authorities of Country X I am not satisfied to the requisite standard of proof that there has in fact been an overpayment of tax made by the Husband’s company in order to deflate its value. I accept the Husband’s evidence as to the operation of the Portal which assesses the company’s liability to tax on the income generated in the preceding trading or tax year. running from 1 July-30 June in each year. The Husband’s explanation for the disparity between the company’s income and the consequent tax liability has the ring of truth about it as does his concession that there may be a small, as yet unknown, refund to the Husband’s company of overpaid tax. I reject the submission that the Husband or his company has habitually overpaid tax or that there is any underlying malign intent or plan to defeat the Wife’s financial remedy claims by making inflated payments of tax.

In respect of the payment by the Wife to the Husband of £5999 at his request at the time of or shortly after the parties’ separation I do not understand why this should be added back at all. It was a voluntary payment by the Wife to Husband. In no sense could this be transaction be characterised as a wanton or reckless depletion by the Husband of the matrimonial property.

It follows that I reject each element of the Wife’s “add-back” claim. The distributable assets are those identified in the summary set out earlier in this judgement, subject to the observations I have already made in that regard.

My Order is as follows:

the Husband shall pay a lump sum to the Wife of £275,000;

A pension sharing Order in respect of the Wife’s pension fund in Country X of 55.43% in favour of the Husband;

Each party to retain the chattels in their possession;

Clean break in life and in death;

The school fees of C (including extras) shall be paid by the parties in equal shares.

I assess that the capital remaining available to each of the parties will enable each of them to purchase suitable alternative accommodation sufficient to meet their needs when account is taken of their mortgage raising capacity (properly assessed). For example the Wife will be able to raise a mortgage considerably in excess of the figure she advances and I have taken the view that she could afford to raise a mortgage of not less than £300,000 which with the lump sum will more than meet the likely cost of suitable accommodation for her and of course for C.

I have taken the view that the Husband could probably raise a mortgage of £250,000 taking account of what income he is likely to be able to generate in the immediate or at least foreseeable future. He will have some £156,000 remaining available to him in his bank account after paying the lump sum and he can have recourse to the balance remaining in his company accounts. Even if he is taken as needing to retain £30,000 working capital, he will have a further £87,000 available to him from this source. He would I calculate have a housing fund of c. £493,000.

The Husband’s housing fund could if he chose to go down this route be further enhanced if he were to sell the smaller of the two properties in Country Y. My Order outlined above does not specifically address the properties in Country Y, but for the avoidance of doubt they should remain on the Husband’s side of the account free of any claim by the Wife.

In line with the parties’ agreement, the Order provides for all claims each of them might have against the other for any form of financial provision should be dismissed including any claims against the estate of the other.

I have directed that C’s school fees should be discharged by the parties equally, with credit being given to the Wife for the sums she has paid “up front”. Any extras should in so far as possible be agreed between the parties in advance and those extras should also be paid in equal shares. This aspect of my Order reflects the fact that both parties share the care of their child in accordance with the Order made in December 2021.

For the avoidance of doubt the parties’ chattels should remain in the possession of the party in whose possession they now are, save that the parties can agree otherwise if there are any personal possessions belonging to them that remain in the possession of the other party.

I have made provision for a pension sharing Order in respect of the Wife’s pension fund in Country X in line with the recommendation of the joint expert Mr Segal at para. 3.1 of his report (p. 600). This pension share will effectively produce equality of CETV values, but not necessarily equality of pensions in retirement. It is inevitable that the Wife’s pension resources will increase in value as a consequence of her continued employment by the university in City 3 and continued membership of the USS scheme. The Husband’s position is not so assured or favourable as any increase in his pension provisions will depend on his ability to make further pension provision from his earned income. But, as I understand it, the parties agree that the objective of a pension sharing Order in this case should be focussed upon equalising the CETV values of their pensions rather than equalising pension incomes in retirement. I recognise that I have no jurisdiction to make a PSO in respect of the pension in Country X and that in Order to give effect to my Order the parties will need to obtain a mirror Order in Country X. I hope that they can at least cooperate in this process.

Standing back for a moment I need to satisfy myself that the overall effect of my Order achieves a fair result for each of the parties. Addressing the capital division first, I calculate that the Wife will have capital assets to a total value of £373,500 or thereabouts made up of the lumps sum and her remaining capital. The Husband will have capital assets of the remaining balance of his accounts (after payment of the lump sum) amounting to £156,000, the value of the two properties in Country Y namely £97,640, The net value of the Husband’s company namely £117,000 making a total of £370,640. That is I am satisfied as close to equality as can be achieved. The pension sharing Order is calculated on the basis that it will produce equality of fund values.

I am satisfied that the Order I am making will meet the needs of both parties both in terms of meeting their need for suitable housing and leaving them with sufficient income to meet their needs.