Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
Sir Peter Singer
Between :
ALISA LAINE THIRY | Applicant |
- and - | |
DIDIER THIRY | Respondent |
Mr Lewis Marks QC and Mr Harry Oliver(instructed byForsters LLP) for the applicant ALISA LAINE THIRY
The respondent DIDIER THIRY neither attended nor was represented
Hearing date: 24 November and 2 December 2014
Judgment
Sir Peter Singer :
By 1pm at the end of the first morning of what had been listed as the five-day final hearing of financial remedy cross-applications between these former spouses Mr and Mrs Thiry (to whom for convenience I shall refer as the husband and wife) Mr Lewis Marks QC had completed his combined opening and concluding observations. This was achieved through a combination of circumstances: the huge documentation in the case had been culled to a single bundle in accordance with the most recent manifestation of PD 27A; the husband neither attended nor was represented; and I not only have had previous acquaintance with the case in March this year and at last month's pre-trial review but, obviously assisted by the reductio ad necessitatem of the bundle, had had an opportunity of pre-reading the proffered material.
If all that were not of itself to be remarked upon, other features render this case unique in my experience. On behalf of the wife Mr Marks, supported by Mr Harry Oliver and those who instruct them, invites me by way of principal relief to make lump sum orders against the husband personally totalling some €21.6 million. The basis on which this capital award is sought might be described as restorative justice rather than any exercise of redistributive discretion, without involving (save to the self-inflicted extent that the husband's conduct of the litigation has inflated the wife's costs bill and thus my costs award against him) any punitive element. I will also consider whether in fairness to the wife I should in addition order the husband prophylactically to fund provision for future costs in the event that the husband, here or in any other jurisdiction, embarks on a fresh round of litigation to attempt to secure an award of damages against the wife for alleged malicious damage to his reputation and his businesses which he has had every opportunity (in my judgment) to pursue within the ambit of this case, and as would have been consistent with the overriding objective in cases such as this. Indeed he has consistently threatened to do so but has proved unwilling, or it may rather be unable for want of objective merit, to strike home. Mr Marks has also invited me to consider making an assessment of the costs incurred by his client of and incidental to these applications on the indemnity basis by reference to a detailed schedule which comes in at a shade short of £500,000. That schedule has been overtaken by the contents of an email sent to me and to the husband on 25 November, explaining and making a number of adjustments (not least those wrought by the foreshortened hearing) which brings the total down to just a few pounds short of £456,000. That figure encompasses existing orders against the husband including two totalling £38,825 where he was directed to make prompt payment (which he has not), and interest in relation to the crystallised £38,825 at judgment debt rate since those payments fell due, calculated as far as 28 November.
Suffice to say at present that I propose to consider orders and to conduct a costs assessment in line with what is proposed. The form of the order necessary to reflect those elements is obviously rather fuller than that bare description would suggest, and was to an extent discussed during the course of the morning, and may need refinement in the light of the precise terms of this judgment.
In the ordinary course of events one would expect a spouse against whom such orders are sought to appear to defend them at final trial. This husband has since the commencement of the wife's applications by Form A dated 8 May 2013 known the bases and the specifics upon which her claim is formulated, and in addition has for quite some while now also known what target she aimed at in terms of quantum. (The exception to that is the prophylactic and conditional "fighting chest" to which I have referred as a separate element in paragraph 2 above.) Yet he has not taken the opportunity whether in writing or in person to make submissions in response to his wife's case. So, again somewhat unusually, I perceive my first task to be to demonstrate how the husband's conduct of this litigation from virtually its onset till now has led to the situation where I without qualm or compunction base myself in concluding these applications in his absence upon the material and the presentation to which I have been directed on behalf of the wife.
The litigation history
The family chronologies of these parties are briefly as follows. The wife is now 50 and English, and the husband 53 and a French national now living in Belgium. Each had previously been married, the wife and her former husband concluding their divorce proceedings in 2004 at which point she received some £37 million by way of divorce settlement. The husband has three adult daughters; and the wife three children of whom two are adult. In May 2006 the about-to-be spouses entered into a pre-nuptial agreement for the purposes of which the wife disclosed assets valued at £32,280,000 and the husband €10,524,000. Then on 25 May 2006 they were married. They separated seven years later in May 2013, and in that same month the wife issued divorce proceedings and instituted her financial remedies claim. Both parties were initially represented by solicitors. The wife remains represented by those she first instructed: the husband's representation came to an end when his solicitors came off the record on 20 May this year (although they had not communicated with the wife's solicitors at all since mid-March), and since then he has engaged in these proceedings (to the extent that he has) in person.
I will set out in abbreviated form aspects of the litigation history from May 2013 onwards which illustrate defective aspects of the husband's response to court orders and directions, and thus his attitude of contempt for these proceedings and indeed for his wife.
The date for exchange of Forms E was extended by agreement to 12 July 2013: only after an order with penal notice attached did the husband serve his on 16 August.
His Form E incongruously stated total capital of £42,700 but income (including benefits of various kinds) of £960,250 both for the previous year and projected forward for the next one.
By an order made on 10 September 2013 the husband was given until 1 December 2013 to specify whether or not he relied upon conduct (for he had asserted that the wife maliciously by false denunciation provoked a baseless moneylaundering investigation of his affairs by Belgian authorities, causing him financial and other reputational damage). He neither did so nor pursued his stated intention of seeking an extension of time.
On 4 December 2013 the husband initiated an application for (in effect) the transfer to his corporate structure of the 50% interest in the Hotel Odette enterprise held by the wife's corporate structure.
The husband did not reply as ordered or indeed ever at all to a schedule of deficiencies in his replies to questionnaire which schedule was served on him on 5 December 2013. This despite letters from his solicitors later that month that he had for consideration the draft of his reply; and the following month that the draft replies would be subject to review with their counsel later that month; and then in February that they hoped to be able to provide the replies 'in the course of the next week or two.'
On 12 March 2014 at what was to have been the FDR (but which could not proceed as such not least because of the absence of the husband's replies) I directed that he should reply by no later than 16:00 on 4 April 2014. A penal notice was attached in relation to that direction.
At the same hearing I debarred the husband from filing or relying upon any evidence and documents in respect of the conduct allegations governed by the 10 September 2013 order. This proved to be the last hearing at which the husband chose to be represented (by leading counsel) although he did not personally attend then nor has done so since.
On 21 May 2014 Newton J committed the husband to prison for four months for his contempt in failing to comply with the order to answer the schedule of deficiencies. The committal order has not been executed because the Tipstaff's power of arrest does not extend to Belgium.
On 16 October 2014 I conducted a PTR in the husband's absence, but with the benefit of extensive annotations upon Mr Oliver's opening summary which he had transmitted by email early that morning. Amongst other directions I ordered each party by 7 November to file a witness statement setting out all the evidence upon which [they respectively] intend to rely at the final hearing in relation to these (but no other) issues: the pre-nuptial agreement; the loan from Full Moon Invest SA ['FMI'] to Concept Factory SA ['Concept']; and Hotel Odette. The wife complied, the husband has not done so.
The same order made clear to the husband his obligation pursuant to the rules to attend the final hearing, and suspended the committal order for the whole of November giving him safe passage for the purpose of preparing for and appearing at final hearing. The order furthermore specifically recited and warned him 'that in the event either of his non-attendance … and/or his failure to file evidence [as ordered] the court may proceed … to a final determination of the applications, including making orders for the payment of money by him to the wife.'
In the course of the fortnight following that hearing the husband was sent and acknowledged receipt of the order and of the draft index to the trial bundle. On 6 November by email he confirmed that he would file his witness statement by the following day's deadline and that he then intended to approach his previous legal team with a view to instructing them.
The wife's solicitors received no communications from him after those he sent on 6 November, and none from any lawyers instructed on his behalf. There has therefore been no response to the letter sent to the husband on 7 November setting out in summary the orders which I would be invited to consider making; nor to the detailed costs schedule sent to him on 10 November; nor to a copy of the preparatory note of counsel submitted to me in advance of the hearing, and of the draft of their proposed order, both of which were sent to him on 18 November. Attempts on 12 and 13 November to serve the bundle (as opposed to simply its index) at the address in Belgium nominated by the husband had failed as no one was there to receive it.
The pre-marital agreement
Nothing, unusually, turns on this: neither party seeks to depart from its terms and each during the course of these proceedings has ratified it. It records that 'the parties each come to this marriage with independent means and neither expects to be financially dependent on the other' in the event of divorce. The purpose of the agreement is therefore expressly 'to define the property that each of them owns at the time this Agreement is executed and to agree that that property shall remain each party's separate property through the marriage and beyond. This property … will remain the sole and exclusive property of each of them.' With that in view 'this Agreement is intended to operate as a statement of intent of the parties and evidence of each party's respective assets and liabilities at the commencement of the marriage.' With that in mind they declared and agreed that the property listed in two Exhibits to the Agreement 'is and shall remain the separate property' of each of them respectively.
What the Agreement could not be construed to exclude, though, would be any necessary process of accounting to unscramble their separate property if it became mingled, or indeed to prevent either asserting against the other debts necessary to be repaid or otherwise brought into account in order to achieve an equitable separation of their financial lives. Herein lies the crux of this case, and these are propositions which the husband does not contest: indeed he asserts them.
As stated above, the wife disclosed assets valued at £32,280,000 and the husband €10,524,000. Little need be said about the composition of their funds on either side but for two matters of note. The wife at that juncture owned property in London (where she still lives) estimated to be worth £11 million, and property interests which she valued at £7 million in St Barts in the French Antilles.
A feature of the husband's list of five corporations, however, is that whereas in two of them (Stone Invest SA and Concept) he asserted simply his '100% holding,' in relation to the other three he described them as '100% held by daughter in trust.' The clear inference to be drawn from the circumstances and the context must be that it was one of his daughters (or it may be that was a typographical error for all three of them) who held the companies on trust for him as to 100%: why else include them and value them (in the not insignificant aggregate amount of €3,920,000) in this list of his separate property? And indeed that conclusion, although the waters have since become muddied, seems to be the currently accepted position of the husband.
The course of the husband's dealings with the wife's assets: loans from FMI to Concept and the resultant debt
There are two quite distinct constituents to this, with which I shall deal separately.
First, the sum of €17,586,029 which the husband himself accepts and asserts was as at 31 December 2012 the amount rolled over (inclusive of interest) under the most recent of a series of contracts evidencing loans from a company within the structure maintained for the wife, FMI, made to a company within his stable, Concept. In paragraph 2.9 of his Form E the husband confirms the loan and its amount, and indeed elsewhere states that the contract (of which he exhibits a copy) was but the last of a series dating back annually to 2007.
By letter dated 16 September 2013, signed by the husband, he confirmed to the wife in her capacity as an administrator of her companies that Concept 'intends to abide by its contractual commitments, subject to any legitimate rights of set off it may have.' Payment however has there been none. I will deal as a separate item below with the suggestion of a right to set off.
The wife does not seek to challenge or go behind the amount shown by the husband in the loan agreement dated 31 December 2013, and it forms the basis of the calculation conducted on the wife's behalf upon which I shall base this element of my lump sum award against the husband. She does however draw attention to a number of highly suspicious aspects to this arrangement. As I will explain, her case is that the husband took control of her assets on the basis that he would, literally, husband them for her benefit. She says that he did not fully if at all describe to her the manoeuvres he effected, nor the significance of documents which at his request she signed many of which were in French, a language in which she does not have full competence. The documentation which I have read supports these broad propositions, as indeed does the sneering, superior and supercilious tone of many of the communications with which the husband has bombarded the wife during the course of these proceedings (ignoring requests and refuting suggestions that in view of the tone of many of his abusive and indeed somewhat menacing messages he should communicate only with her solicitors).
Thus without cogent explanation (and there has been none) it is difficult to understand what the commercial benefit for her has been that in order to lend money to his company for an annual return of about 0.8% currently (the contractual rate is twelve-month euribor plus 0.25%) her company has been obliged to maintain rather than reduce bank borrowings at significantly higher rates of interest.
This inter-company loan is unsecured. But that, asserts the husband, should not be a worry to the wife. He explains that by reference to what he says is his own financial strength, which if it does not consist of his own money then certainly it would seem on his own account comprises assets and money within the corporate structure which he controls and to which he has unrestricted access. To explain this it is necessary to delve deeper into his Form E.
The husband's Form E.
As stated above, in August 2013 his Form E suggested that he had total capital of £42,700 but income (including benefits of various kinds) of £960,250 both for the previous year and projected forward for the next one. He accordingly disowned any value in business interests in which inferentially he denied having any beneficial ownership. The suggested rationale behind this approach is to be found at paragraph 2.11 of his Form E where the husband asserted:
'Landscape Assets SA, a Luxembourg registered company, is the ultimate holding company for the various enterprises and property assets that I have built up over the course of my business career. The issued share capital of Landscape now belongs to my three daughters… However I continue to undertake business ventures and manage the assets on behalf of Landscape and with the cooperation of my daughters there continues to be an element of flexibility in the arrangements. … ' [my emphasis]
He explains there and elsewhere that he is neither a director nor a shareholder of the holding company, but that its bearer shares have been distributed equally amongst his daughters. He annexed an organogram demonstrating the complex (although essentially pyramidal) structure of the 30 companies, variously registered in Belgium France and Luxembourg, which he suggests are owned by his daughters. They include the two, Stone Invest SA and Concept, which before the marriage he had acknowledged were 100% owned by him. He also annexed a spreadsheet entitled 'Assets Thiry Family' showing open market and forced sale estimates of the value of the entities then within the group. The information in that document is effectively his first and last word by way of detailed consolidation of the value of the enterprises, and reduced to its essentials it presents thus:
| Orderly sale | Forced | Loans | Orderly Net | Forced Net |
€ | €111,308,000 | €90,855,000 | -€46,209,381 | €65,098,619 | €44,645,619 |
£ | £89,022,186 | £72,664,235 | -£36,957,452 | £52,064,734 | £35,706,783 |
The spreadsheet is dated 1 July 2013, and as well as assets lists countervailing liabilities. Amongst these features the sum of €18,250,000 against a rubric including the notation FMI, representing the inter-company loan which is now under consideration as it then stood.
Although, as I have said, no more recent exposition or evaluation of this business structure has been proffered by the husband he has since his Form E had more, and revealing, things to say about it.
In the emailed comments with which the husband interspersed Mr Oliver's note prepared for the PTR in October, and which formed part of the materials then presented to me, in response to the assertion that the borrowing was apparently unsecured he wrote 'Global value of H's companies in August 2013 £50,550,000. Unsecured?'
Similarly, but no doubt sarcastically, in response to the suggestion by Mr Oliver in his note that this debt needs to be attached to the husband personally he wrote 'This is making perfect sense. I am of course choosing to destroy and lose £44 million of my assets to avoid the repayment of £12.5 million to my wife's company.'
Even more recently, in one of his emails dispatched on 6 November, entitled 'The official truth Alisa, not mine… not yours… the simple and terrifying reality' he sets out a series of assertions, which I quote verbatim below. (Although the denomination is not specified, it is clear that he is counting in sterling.) :
Her net wealth in August 2013 is £44,500,000
His net wealth in August 2013 is £50,550,000
Profit for her companies, organised and managed by him during the marriage, £20,075,000
Management costs and fees for his management companies during the marriage, £0
So-called loan from her company to his company, £12,546,000 plus £1,700,000 of interest
Damages and consequences of calumnious denunciation for his business today, £43,750,000!!
I observe in passing the repeated assertions the husband makes, which I find reflect the reality of the situation rather more than do any strict application of company or trust law, which is that he regards and indeed treats his daughters as holders of the bearer shares as bare trustees, the companies as his fiefdom, their assets as his property to command, and (at least in the case of the inter-company debt now under consideration) his company's liabilities as his own. He has, for instance, signing rights in respect of each of the company bank accounts. He has acknowledged that none of his daughters has contributed to the development of the wealth held within the structure. The 'element of flexibility' which he mentioned would seem to have no bounds:
He describes himself in the Form E as 'the permanent representative of [2 of the companies within the group] which govern [a number of the other companies].' (The companies so 'governed' include, Hotel Properties SA, half-owned by the wife's structure, and its 2 wholly-owned subsidiaries which respectively own the Hotel Odette and operate its business, and another entity Louise 686 SA.)
From that role as those companies' permanent representative he describes how he receives 'substantial benefits in kind, in the form of current account expenditure, residential accommodation, offices, staff, cars, travel and use of corporate credit cards to meet personal expenditure': all of which it would seem helps to bring his income to not far short of £1 million annually, albeit described as gross rather than net of tax.
On 16 September 2013 his solicitors wrote to those acting for the wife 'Didier has always intended that his daughters benefit on his demise and there has been no change in that intention. In practice Didier continues to control the companies in the same way as he always has. There has been no change in the way the companies are managed and they are still available to him, as there is an element of flexibility in the arrangements.'
In his PTR email and in response to Mr Oliver's suggestion that he 'has emptied his structure, and that to stand any chance of W recovering the money she is owed the debt will need to be attached to H personally,' he wrote 'I always said that I was considering this loan as a personal debt (integrity and morally wise) whatever would happen with the companies. So please do [sc.: attach the debt to me personally].'
The husband's assertion that her companies have as a result of his organisation and management during the marriage profited by £20,075,000
This is demonstrably nonsense, on the basis of the information available within these proceedings and in the absence of any elucidation. In order to appreciate how great a travesty it is one does need first to reappraise each party's presentation of their own financial situation in their mid-2013 Forms E. This process, through which Mr Marks took me, is necessarily impressionistic rather than precise having regard not least to fluctuating property valuations and exchange rates. As against that, however, at no stage during the course of these proceedings has the husband vouchsafed any explanation or justification for the baldly stated proposition that thanks to him she is £20 million better off.
The wife's Form E
According to that document, her assets break down as follows:
ITEM | VALUE |
London Home | £5,077,600 |
Bank Accounts | £124,792 |
Investments | £9,879,500 |
Owed by H for CC | £80,864 |
Corporate Structure | £29,400,000 |
TOTAL | £44,562,756 |
But this is subject to a number of caveats:
As already mentioned, the value of the corporate structure shown, £29.4 million, includes the outstanding inter-company loan. It also includes the wife's investment in the Hotel Odette venture. If they are not both recovered the effect is that the net assets available within the structure were worth approximately only some £11 million.
Although her London Home was taken to have increased in value by £6 million since the date of the marriage the equity had been eroded by a £12 million mortgage in part to fund building development in St Barts.
The St Barts building thus developed had in the interim been sold and a substitute purchased, which produced overall a net profit of some £12 million.
Thus her pre-marital disclosure of £32 million had been augmented by mid-2013 by some £18 million of increased value and profits from property, which in crude terms would have left her with £50 million in all, whereas the truer position at the time of her Form E was only as much (or, on another view, only as little) as about £35 million.
In marked contrast is the 5- to 6-fold evolution over the intervening seven years from the husband's starting position (including his corporate structure as it was then) of €10,500,000 to the £50,550,000 he has most recently asserted as the value of that structure.
The husband has at various stages been prolific in his assertions of his probity. Thus he has written 'my word is the best guarantee she can get… respect my word'; 'have I ever said or insinuated that I had the intention to delay or will not pay back this loan'; 'I did everything to secure and respect each commitment that I had'; and (once the repayment date of 31 December 2013 had come and gone) 'I confirmed that the debt was not contested and I have managed to have the amount available since 31 December.'
So why does Didier Thiry so steadfastly refrain from honouring his word rather than run the risk that one might conclude (as I have done) that he is an unprincipled rogue who has acted in financially predatory fashion to prey on his wife for his own profit and to her substantial detriment?
The husband's allegation that the wife has maliciously denounced him to Belgian tax authorities
The husband raised a conduct issue in his Form E. It appears that in March 2012 he was put under investigation by Belgian authorities in relation to tax/money laundering issues and, it may be, alleged embezzlement. It would seem that the focus of the investigation may be alleged cash dealings and other improprieties and irregularities to do with the management of the Hotel Odette. He complains that the effect of the investigation and restraints imposed upon the companies severely damaged his business interests. He vehemently asserts that it was the wife who made the original 'denunciation' which instigated these investigations. He stated in his Form E that she is implicated in a campaign to harm him by lending her name or support to a deliberately false report. All of this the wife just as vehemently denies.
The husband also maintains that the wife is herself under investigation by the Belgian authorities, for making the false report. It would seem that he has made a formal complaint of slander against the wife in Belgium, but she knows nothing of any such criminal investigation involving her.
Despite the fact that he has at various times said that since July last year he has known the source of the allegations the husband has never condescended to chapter and verse, sheltering behind the unsubstantiated contention that the Belgian judge investigating him (or perhaps the wife, it is not clear) has barred him from bringing evidence from that investigation into these proceedings. He has also said that his inability to show up the wife as the author of his misfortune derives from the fact that the informant (that is to say, according to him, her) has been granted anonymity by the Belgian court.
It was at the First Directions Appointment on 10 September that he for the first time informed the court that 'he cannot make a decision whether he relies upon conduct within the meaning of s.25(2)(g) of the Matrimonial Causes Act 1973 because he is awaiting the decision of an examining magistrate in Belgium (juge d'instruction Sophie Grégoire) as to whether the anonymity of those who denounced him to the Belgian authorities in 2012 should be removed.' An order was made in these terms:
'By 1st December 2013 the Respondent shall specify whether or not he is relying on conduct within the meaning of Matrimonial Causes Act 1973 s.25(2)(g) within these proceedings and if so he is to provide by 4pm on that date a full statement in support of that allegation with all supporting documentation (to include but not be limited to an answer to question 6 of the Applicant’s questionnaire) with translations, and any application for extension of time shall be made to a Judge of the Division and be supported by evidence, including as to the progress of the Belgian investigation referred to in the recital above.'
The husband did not comply with that order nor make any application for its extension. After a good deal of shilly-shallying I debarred him in March from relying upon these alleged events in these proceedings. He has continued to make frequent reference to them, suggesting it was just a matter of time (and as recently as 6 November that it is now still just a matter of time) before the wife is exposed as a malefactor and the extent of the damages suffered by him is established. Unless I am mistaken the 6 November 2014 assertion that losses suffered by his businesses amount to £43,750,000 (and a suggestion by the husband at a meeting last November that he was going to bring a claim against the wife for €27 million) are the only times that any supposed quantification has been advanced: these are bare assertions totally devoid of computational detail. None of this has any probative value.
As it happens, however, I have seen that Belgian lawyers instructed by the wife received a letter from the Belgian Public Prosecutor’s Office dated 26 December 2013 confirming that the investigation of the husband stems from a denunciation made by the Belgian Special Investigation Service of the tax authorities. Those same lawyers were given access to the court file following an application to Juge Grégoire and were able to see on it a letter from the Belgian Tax authorities dated 20 November 2013 confirming that investigations had shown that no denunciation or complaint had been made against the husband by any third party.
If accurate (and the husband has never since so far as I am aware suggested otherwise otherwise than by continuing to repeat his allegation without providing any foundation) that information would on the face of it exonerate the wife and put to rest the husband's suspicions, his allegations, and his claim to be entitled to set off. He has at all stages been informed of the outcome of the enquiries made on the wife's behalf in Belgium. He has nevertheless, as noted, persisted in raising the spectre or, as I would prefer to put it, hiding behind this smokescreen as a reason for deferring repayment of the inter-company loan. To the extent that spectres or smokescreens can be threadbare I am satisfied that these are, and moreover that the husband knows they are.
The parties
I must bear in mind that I have neither heard nor seen the husband in person. But I have read a good deal that emanates from him. In regard to his wife and since their relationship broke down he has manifested a manipulative and it might even be said sadistic side to his personality: why else subject the wife as he did in February this year to a daily countdown of emails running from 10 to 1 (the numeral comprising their sole content), rather in the same genre as a sequence of silent phone calls? He can be haughty, sarcastic, menacing and downright rude in tone (as in calling the wife and her lawyers 'insignificant pieces of shit'), but rarely redolent of clarity in his communications. And although I have heard no oral evidence from the wife I feel able to give substantial credit to what she says about their financial affairs during cohabitation, which is essentially that he ran them for them both, and hers supposedly for her benefit.
I propose to quote fairly extensively what the wife said about this in a statement she made on 7 November 2014. She explained that her previous employments were fashion and design-oriented and that 'my forte is not financial matters.' She continued:
'The respondent, however, has always had his own businesses and appeared to be (and told me and many others he was) an experienced investor and financial expert who had a great understanding of tax and corporate issues. He is also a fluent French speaker whereas my French is very limited and only conversational.
After we married the respondent suggested that he take over control of my financial affairs and set up a corporate structure in Belgium for company/tax reasons for me as he said it was his duty as my husband. He was aware that I was extremely risk averse and wished to preserve my assets as far as possible and have a cautious approach to investment. As he was my husband, and he professed and seemed to be skilled, I trusted his advice. I subsequently discovered around January 2012 that he had been investing my funds without my knowledge or agreement and I can therefore only assume this was the reason for his suggestion that my assets be moved to Belgium and held in a corporate structure there overseen by him.
To this end he appointed himself via one of his management companies, Concept, as director and/or managing director of [LFA] the key company in my structure. … To control this company, as the respondent did, is to control the whole. The respondent set it up so that as managing director he could make decisions and deal with my companies without my input or authority, if I wanted to do anything I needed to have his consent. I only discovered this after our relationship ended and I tried to discover information about my company bank account. I was not even permitted to know the balance of the account without his consent.
…
LFA is also the owner of FMI. As director and managing director (via Concept) of the former the respondent appointed KE as managing director of the latter because it is based in Luxembourg. It is clear from emails between them, however that KE carried out the respondent's instructions and cannot be seen as a separate and independent entity.
… despite the Hotel [Odette] project being a joint one between the respondent and me, he was in effect in sole control. … He directly ran the entire business having control of both the [companies which supplied its] directors.
…
As a result I had limited involvement with my corporate structure throughout our marriage. When I asked for information or documents or to meet with advisers the respondent told me it was "impossible" and that was not the way that companies are run. … I realise now that I should have been more actively involved and asked questions but I had no reason to do so at the time and even when I did the respondent would just say that I did not need to worry and could trust him to do with it appropriately as again this was his "duty" as my husband.
…
The respondent only resigned in June 2013… Since our separation I have become aware that the respondent arranged a loan from my company FMI to his company Concept. … I was always told by the respondent that these funds had been invested in my name in Luxembourg in family offices and real estate rather than loaned to one of his companies.'
In relation to the loan paperwork, the wife points out that on each renewal it was signed by the husband and KE on behalf of the two participating companies.
Hotel Odette
This is a hotel and its business in Brussels which the parties acquired in 50/50 partnership. That is to say that the wife believes she put up, in cash and by borrowing against her other corporate assets, 50% of the start-up and refurbishment costs. But she was she says from the start excluded from the business and its operations and thus from responsibility for their descent into insolvency. These were superintended by the husband. The extent of the financial ruin to which he brought the enterprise only became apparent on receipt of the report of an expert jointly-instructed in these proceedings. Since then the wife has refused to throw more good money after bad. She is prepared, and would indeed welcome, disentanglement from participation in this joint enterprise. She is prepared to transfer the shares representing her half-interest in the holding company of the hotel operation's substructure to the husband. But only if, as is submitted on her behalf would be fair, and when she receives reimbursement for the €2.6 million which she put into it together with an indemnity from the husband in respect of losses, claims, demands or other liabilities whether past or future in relation to her involvement with the hotel and any related corporate entity.
Parallel developments in Belgium and France
As the inter-company debt has not been repaid, commercial debt proceedings were commenced and the commercial creditor obtained judgment in Luxembourg on 29 April 2014 in the amount of €17,586,028. This was declared enforceable in Belgium on 25 July 2014, and was served upon Concept on 13 August 2014. Enforcement actions have been available to be taken from 15 September 2014. The judgment was also declared enforceable in France on 1 July 2014, and was served upon Concept on 31 July 2014. Enforcement actions in France have only been available to be taken since October 2014.
At the hearing before me on 12 March 2014 I was invited by leading counsel appearing for the husband to stay these financial remedy applications because of the Belgian commercial litigation by then commenced. I declined to do so. My decision was not the subject of any attempt at appeal. I am unrepentant, and see no reason why I should not follow through the logic of that decision, now that what may or may not prove to be a judgment with which compliance can be enforced has been made, by making a parallel order against the husband personally to bolster the attempt to obtain what should be restored to the wife's depleted resources. M. Thiry has in the interim since March made plain in the passages from his emails which I have quoted how what may be nominally his daughters' companies are in reality his, and how he and they bear equal responsibility for what he regards as his and their liabilities, so that his word as his bond may be relied upon.
It is obvious that a safeguard against double recovery must be built into this order to operate, as it were, in both directions. The wife must give credit against my order for sums recovered towards the commercial judgment debt. She must undertake that the commercial judgment creditor will allow credit in respect of sums recovered in these proceedings, once my costs award has been met in full. And so far as these proceedings are concerned I shall direct that recoveries from the husband shall be applied first and until it has been fully satisfied to meet my costs award (including interest on any outstanding balances until payment).
Discussion
Section 25(2) of the Matrimonial Causes Act 1973 lists the factors to which, with 'all the circumstances of the case,' the court must have regard in deciding what financial remedies to direct. Not all of them apply in every case and in many cases there is what has been described as a 'magnetic factor' which may dominate but, because of the court's duty to exercise the balancing exercise and to arrive at a fair result, cannot dictate the outcome. Cases such as Crossley v Crossley[2007] EWCA Civ 1491 and S v S [2014] EWHC 7 (Fam) offer paradigm examples. There is no reason in principle why a consideration which finds no express echo in the listed factors could not qualify as magnetic. As it happens, upon the basis of the documentary evidence upon which my conclusions are based, the closest and most apt listed factor would be conduct on behalf of the husband which it would be inequitable to disregard. But the case has not been argued on that basis. It is much more, as I said at the beginning, a question of restorative rather than redistributive discretion which guides me. I cannot think of any consideration which would preclude me from ordering the husband to make good his protestations of good faith and willingness to take personal responsibility for his actions.
Conclusion
And so I will order, both in relation to the inter-company debt in the same amount as the Belgian judgment, €17,586,028, and a further €2,600,000 to recompense the wife for the Hotel Odette débâcle (and as the price the husband must pay for the relief which he seeks, the transfer to him or as he directs of the shares which represent her interest in the enterprise) as the first components of the lump sum award.
Mr Marks provided me last week, in relation to the larger of those 2 components, with alternative calculations of interest for the period since the contractual date for repayment on 31 December 2013. If this debt had been subject to English law it might have been possible for the creditor to take steps under the Late Payment of Commercial Debts (Interest) Act 1998 and to claim 8% over the Bank of England base rate (0.5% throughout the period in question). To the amount of the debt I shall add the sum of €1.3 million which approximately represents 8% interest over the year to date. No interest addition would be appropriate in relation to the Hotel Odette component of the award.
In the light of the animus so evident in the attitude of the husband towards the wife, and the overall manner in which he has conducted himself in this case, I take seriously what I regard not only as the risk but also his threat that by seeking to engage her or her companies in attritional litigation in this country or elsewhere he will attempt to delay the day of reckoning, in effect counterclaiming in respect of damages said to flow from her alleged denunciation of him to state authorities in Belgium.
In Al-Khatib v Masry [2002] EWHC 108 (Fam), [2002] 1FLR 1053 Munby J awarded the wife and mother a war chest or fighting fund, applying the reasoning set out in these paragraphs from his judgment:
[133] There is, as it seems to me, a simpler route to Mr Mostyn's desired destination. Two of the factors which s 25 of the 1973 Act requires me to take into account are, as he points out, the welfare of the children (s 25(1)) and the wife's financial needs, obligations and responsibilities in the foreseeable future (s 25(2)(b)). Section 25 itself, says Mr Mostyn, putting his case in the alternative, accordingly justifies a coercive order of the particular form he seeks here. I agree. The wife has both a ‘need' to take, and indeed the ‘responsibility' of taking, all appropriate steps, for their own benefit as much as for hers, to recover the children from the husband who has abducted them. That exercise will, I have no doubt, expose her to heavy financial expenditure.
[134] In my judgment there should be made available to the wife, in addition to the other relief I have already mentioned, a fund, the interest and capital of which can be used by her but only for the purpose of funding future litigation, whether in this country or elsewhere, directed to her recovery of the children. Whatever is left of the fund will be returned to the husband so soon as the children are returned by him either to the wife or to the jurisdiction of this court.
I took a similar course in the case of Minwalla v Minwalla [2004] EWHC 2823 (Fam), [2005] 1 FLR 771:
[92] W, however, in the particular circumstances of this case, has another identifiable prospective need which, in my judgment, is not so remote that I should disregard it. I view it as more likely than not, such is his animosity towards W and his determination that she should not receive more than whatever he would choose for her to receive, that H will carry out his threat of pattern-bombing W with litigation brought by him and his creatures. The cost of meeting those assaults should not deplete the other aspects of her award or invade what, in my view, is her fair entitlement. She will, moreover, most likely sustain some significant irrecoverable costs in seeking to enforce the order so as to obtain its fruits. Her difficulties will flow entirely from the stance and actions adopted by H in response to her legitimate claim. She should be shielded from what I understand Thorpe LJ, when rejecting his application for permission to appeal my June maintenance pending suit order, described as H's policy of poisoning the water and burning the crops as he retreats to havens fresh. That policy of waste should ricochet to his account, if W is ever so fortunate as to obtain full performance of the obligations which this order will impose on H.
[93] I propose, in short and without separate analysis of its legal justification, to follow the course adopted by Munby J in Al-Khatib v Masry [2001] EWHC 108 (Fam), [2002] 1 FLR 1053. I allocate £500,000 to those purposes, inevitably an estimate, to be designated in this court's order as a separate and additional instalment of the lump sum, payable only once the whole of the balance of the lump sum (and costs) orders I will make have been met, and at that stage subject to variation if H then wishes to demonstrate that £500,000 has proved to be excessive by way of provision for these purposes until that point, and/or to bind himself that there will be no future occasion for her to meet such expenditure. The jurisdiction for such a variation application is founded in s 31(2)(d) of the Matrimonial Causes Act 1973, and that it may have the effect of reducing or extinguishing (as well as rescheduling) the ordered instalment is at present decided by authority such as Tilley v Tilley (1980) Fam Law 89 through to Westbury v Sampson [2001] EWCA Civ 407, [2002] 1 FLR 166. But any such application might well, as a practical prerequisite, involve H first meeting the orders (including the costs orders) which I shall make. That will, however, be a matter for the judge hearing the application.
I shall take a similar course here. The form of the order should, I suggest, follow Minwalla and the amount allocated for the purpose will be £500,000.
The award by way of lump sum or sums is therefore €17,586,028 plus €1.3 million plus €2.6 million, a total of €21,486,028; and in addition that contingent £500,000.
The husband has represented that he is well able to meet at least the largest component of my award and can, in view of his stance in relation to these proceedings as the final hearing approached, have had scant doubt about the outcome and thus time to marshal his resources should he have wished to comply with the order proposed by the wife, the terms of which have been advertised to him. I shall accordingly order payment of these amounts 10 days hence, that is to say on or before 12 December 2014.
Costs
I am satisfied that there is no reason in principle which precludes summary assessment of costs by the trial judge save in the case of modest amounts. I have read the short shrift received by Mr Mostyn QC from Wilson J as they both then were in Q v Q (Costs: Summary Assessment) [2002] 2 FLR 668 (at [27], [28] and [33]) when he ventured that submission, and prefer the approach of Mrs Justice Booth (in a case in which as it happens I appeared for the wife) vindicated in the Court Appeal in Leary v Leary [1987] 1 FLR 384 and then again in Q v Q. Furthermore, that this is a case for the indemnity basis of assessment is, in my judgment, indisputable.
The original costs schedule sent to the husband (to which he has not responded) and supplied to me is in far fuller than the summary form upon which assessments by the judge at the hearing are normally based. It has been prepared by a firm of costs draughtsmen and runs to 11 pages of detail and calculation. Since then, as I have mentioned, adjustments and corrections have been made to it, most significantly to exclude the cost of the anticipated days of the hearing which in the event proved unnecessary. The revised total is £29 short of £456,000, but so far as interest has appropriately been included it ran only until 28 November. I can detect no errors of principle or detail in the schedule, and the time spent by the individuals concerned over the period in question does not seem disproportionate having regard to the amounts at stake and their complexity. The charging rates are in my view, having regard to those considerations, reasonable. Subject to any further matters which may need to be brought to my attention when this judgement is handed down, therefore, I shall award costs against the husband in the sum of £456,000, which is intended to encompass all orders for costs hitherto made against him, whether or not as yet quantified