D v D

Introduction

This is an application for financial remedy orders issued by Mrs D in September 2012. The Respondent is her former husband, Mr D. The final dissolution of their marriage has not yet been confirmed by Decree absolute but it is common ground that their marriage came to an end in 2012 when he moved out of the main family home into a separate cottage within the grounds. I propose to refer to the parties in this judgment as ‘husband’ (H) and ‘wife’ (W). I intend no disrespect to either in so doing.

This was a long marriage which endured for the best part of 20 years. The parties married at the beginning of January 1995 having by then lived together for some two years. It was a second marriage for H and a third marriage for W. By then, he had two children from his first marriage, a son and a daughter, who are now respectively 44 and 43 years old. H has dual citizenship. Both are now UK tax resident but non-domiciled. H is now 71 years old and, on his case, nearing the end of his productive working life with retirement beckoning. W is almost 11 years younger. She will celebrate her 60^th birthday in a few days’ time.

Three children were born during the course of the marriage. The eldest child is currently studying at university and thereafter will spend a further five years studying post-qualification. The second oldest child is in his final year at school. From September 2015, he hopes to attend university. The youngest child is a pupil at boarding school and is studying for her GCSEs. Her current plan is to read history at Oxford or Cambridge with a view to a law conversion course thereafter. Everything which I have heard and read about these children persuades me that they are bright, intellectually accomplished young people who have a shining future ahead; they are a credit to each of their parents.

W issued her petition seeking dissolution of the marriage on 19 September 2012. Decree nisi was pronounced in January 2013. The financial proceedings were transferred to the High Court to be heard by a Judge of the Family Division by order of District Judge Malik at the First Appointment in January 2013. On 12 March 2014, Parker J dealt with a Financial Dispute Resolution appointment which did not result in settlement. As part of a raft of directions made on that date, she listed the matter for a final hearing with a time estimate of 7 days. For reasons to which I shall come, W was ordered to pay H’s costs of that hearing, such order not to be enforced until the conclusion of the proceedings with which I have been dealing. Open offers were exchanged, albeit that W’s response to H’s proposal took almost 8 months to materialise. Final directions were made by me at a pre-trial review in January this year. Thus it was that on Tuesday of last week, 3 March 2015, I commenced hearing this case.

Mr Nigel Dyer QC and Miss Juliet Chapman appeared for W instructed by Withers LLP. Mr Robert Peel QC appeared for H. His instructions come from Radcliffes Le Brasseur. I should say at the outset that I am grateful to all three counsel in this case for the care which has so obviously been taken in the detailed preparation of their written and oral submissions. They have assisted me enormously in my analysis of the evidence and in the conclusions which I have reached on the basis of that evidence.

Throughout the currency of this litigation, there has been an ongoing dialogue between the parties’ respective solicitors in relation to financial disclosure. Both parties made their initial presentations in Forms E in January 2013. Since then, H has responded to three lengthy questionnaires served by W. Her current solicitors, Withers LLP, were instructed at the end of October 2014. They inherited a case where a significant quantity of documents had already been disclosed. From the foot of that disclosure, they compiled W’s third questionnaire and, in January this year, took out an application in the Royal Court in Jersey for the production of bank statements relating to various corporate entities owned by a Jersey Trust which H had set up in June 2004, some nine years into the marriage. The detailed open offer which flowed from their recent instruction by W at the end of November last year was stated to be subject to a specific caveat in relation to ‘some significant outstanding disclosure issues which need to be resolved before a full and final agreement can be concluded’ [2/D9].

On 18 February 2015, less than two weeks before the start of this hearing, the parties exchanged section 25 statements in which each set out in some detail their final positions. H complains that this was the first time he had been presented with a clear formulation of W’s case in relation to his alleged non-disclosure. Mr Peel has described it on his behalf as a straightforward ‘ambush’. Because the exchange of narrative statements was simultaneous rather than sequential, he did not have the opportunity to respond in any detail to that case. However, in the time available, he was able to obtain statements from various third parties whom W alleged were, or might be, involved in holding assets on his behalf or otherwise assisting him to obscure the true state of his finances from the gaze of the court. I gave leave for those statements to be admitted in evidence. Mr Dyer did not wish to cross-examine any of those witnesses save for one, Peter Tanfield, a long standing business associate of H’s. He, it appears, was travelling in Africa and was not responding to emails or telephone messages which might have enabled us to set up a video link in order to receive his evidence.

Thus, by the time we reached the final day of evidence, the only witnesses from whom I had heard were W, H and their accountant, Mr Adam Collins. I also had the benefit of reading the contents of three bundles of documents, including the detailed narrative statements relied upon by each of the parties. Within the bundles I had two reports prepared by the single joint expert, Mr Paul Smethurst. He had been instructed by the parties to value the business and trust assets. His figures have been accepted and incorporated into a very helpful schedule of assets which is by and large agreed as a reconciliation of the wealth available to these parties. Excluding the value of some future run-offs from a number of commercial mandates (to which I shall come) and the issue of whether or not H has now revealed the full extent of his assets, there is just over £5.5 million which falls for division in this case.

Aside from some minor issues of computation, there is broad agreement between the parties as to how the assets should be divided in terms of the value to be delivered to each at the end of this marriage. The spectre which hovers still over these proceedings is W’s suspicion (if not actual belief) that H has yet to make full and final disclosure of the means at his disposal. These suspicions are based upon a number of unexplained transactions which are underpinned to a significant extent by the opportunities which she says are available to him to disguise transactions or ‘park’ funds with his business associates. In these circumstances, much of the oral evidence and cross-examination which I heard over a number of days was devoted to H’s response to her non-disclosure case. I shall need to make detailed findings about his evidence in due course. As to where it takes the case, Mr Dyer accepts that he cannot point to the existence of any specific funds or assets but invites me to reflect any adverse findings of fact which I might make by awarding W a 75% interest in the net proceeds which will be generated from a forthcoming sale of the former matrimonial home. That additional uplift, over and above her joint legal and beneficial interest in the property, represents a sum of just under £522,000. That figure (or the formulation of the departure from equality which he was seeking on behalf of his client) did not emerge until closing submissions but it is said to represent, on the case advanced by W, a fair reflection of outcome. Whether that figure can properly be said to reflect a 50% share of what is likely to remain hidden is something to which I shall come in due course once I have reviewed the evidence. In his final submissions to me, Mr Dyer quite properly accepted that he was not in a position to quantify the extent of the so-called ‘hidden’ assets in this case. The uplift of 25% over and above what would otherwise be W’s entitlement from the sale of the family home was, in the circumstances, a fair reflection of any conclusion which the court might reach if I were to find that H had lied in his repeated denials that everything was now ‘on the table’ in terms of his financial disclosure obligations.

In order to set in some context the non-disclosure case advanced by W, I turn now to set out the background to this family’s life and the manner in which H and W operated their financial affairs during the course of the marriage.

Having been born in Eire, H spent his early years growing up in Africa. When he left school, he worked for a short time as a clerk in an accountant’s office. He discovered an aptitude for figures and was persuaded to take up articles and further study. He qualified as an accountant at the age of 24, securing the highest mark of any student in the country in his final examinations.

In 1969, some two years later, he travelled to London where he became a consultant for Price Waterhouse. He was soon doing bankruptcy work at a fairly high level and was head-hunted by a company which was to acquire an aircraft company in respect of which he had been appointed as its receiver. Whilst in that employment, he set up a company called Maple Technology Limited which was the corporate vehicle through which he undertook various consultancy contracts for his employers, especially in Eastern Europe.

The next fifteen years saw H living and working in Europe. By the end of that period, he was largely working on his own account on a number of projects, including debt recovery. Having spent three years trying to build up another business in the UK, he had to liquidate that company. It was at this point that he started to work full-time on the Maple business, having maintained many of his previous contacts from around the world.

At about the same time, in 1993, the parties met and, by the time of their cohabitation the following year, H was involved in Maple on a full time basis.

The company is incorporated in Jersey and is involved in the recovery of distressed debts on a worldwide basis (mainly in third world countries) on behalf of international banks and insurance underwriters. H’s income is derived from ‘success fees’, or commission payments, which are generated when debts are recovered (or partially recovered) pursuant to contracts which have been referred to in these proceedings as ‘mandates’. The commission rate is usually between 12.5% and 15% and each mandate is a bespoke contract tailored to the needs of a specific client, the identity of the debtor and the risk involved in pursuing recovery in whichever third world jurisdiction is involved. In terms of time scale, some mandates can take up to ten years to produce any return; others will be abandoned if the prospects of recovery are viewed as negligible or if the creditor client decides to write off the debt. In addition, from time to time, H carries out contractual obligations for clients on an ad hoc basis for which, in respect of a particular project or piece of work, he is paid on an hourly basis for his time. One of the documents which has been produced during the course of this hearing was a detailed schedule of active (or recently active) mandates currently held or operated by Maple. In relation to each of 62 such mandates, H has provided a commentary as to status. Some 42 remain active in one way or another. From this commentary and the evidence which he gave during the course of the hearing, it is possible to build up a fairly clear picture as to the nature of the debt recovery business and the geographical and political aspects which operate in each case, or category of cases, to limit the prospects of recovery. As H confirmed, his business is seen very much as ‘a remedy of last resort’ by some of the major banking and insurance institutions in the world. It is only when litigation has failed (or, at least, the conventional routes of enforcement of any judgment debts secured through local courts) that he will step in to assist in the recovery process. Often, that process is unproductive either because his clients are unwilling to ‘throw further good money after bad’ or because the debtors are insolvent and without any assets to pay. H’s modus operandi, as he explained it, was to travel to the debtor’s country (and I heard about operations in places such as North Korea, Democratic Republic of Congo (DRC), Senegal, the Ivory Coast and Uzbekistan), befriend the debtor, find out what the issues may be and thereafter to attempt to negotiate an instalment or other programme for payment of at least part of the debt. It is a business which depends upon personal connections. As H told me, it can be a lengthy and sensitive process and there is no guarantee of a successful outcome at the end of the day. Sometimes recovery of the debt may involve finding an ‘angel investor’ to shore up an ailing company through an investment of funds so that there is some cash flow from which the debts can be paid.

As well as working with a number of associates ‘on the ground’ in the different countries in which the business operates, H also works with a full-time partner called Paul Burne whom he took into the business in 2001. Mr Burne is based in Alabama in the United States and he is responsible for debt collection in North and South America. There is no formal arrangement or partnership deed in existence; rather their relationship is based upon a long-standing friendship and mutual trust. H told me that theirs is a very close working relationship and they speak by telephone on an almost daily basis. Sadly, it appears that Mr Burne’s wife is very unwell at the present time and that may or may not impact upon decisions which will need to be taken shortly in terms of the future direction of the Maple business. As matters currently stand, they share fees derived from the mandates on a 50/50 basis regardless of which of them actually works on a particular contract. Mr Burne is some 15 years younger than H and the point is made on behalf of W by Mr Dyer and Miss Chapman that his income stream is unlikely to cease on retirement from the business. Not only will he continue to have the benefit of the existing mandate run-offs, he will also earn his 50% of future commissions recovered by Mr Burne. That appears to have been the arrangement or understanding between them when Mr Burne joined the business without being required to inject any equity participation. I shall need to return to the issue of the financial consequences of H’s retirement in due course. For present purposes, I propose to deal with the business structure and its inter-relationship with the trust.

As is clear from the helpful organogram with which I was provided at the start of the hearing, Maple sits at the centre of a business structure which operates in tandem with a partnership in which H and W are equal partners. This is known as the Regency Partnership (‘Regency’ or ‘the Partnership’). It is an onshore entity whose function is to provide administrative services for Maple. Fees (usually 7.5%) are collected on debts recovered. Thus, it is the means or vehicle by which the parties are able to bring income into the United Kingdom in order to meet their general and other living expenses. In addition, it does work on an ad hoc basis for a French road building company called Mullerat.

Maple owns two separate SPVs.

The only other asset owned by Maple is a 0.68% share in a gold mining company in Zimbabwe. Whilst there was originally a dispute as to the value to be attributed to these shares, they are now agreed to be worth US$100,000.

As to the value in the Partnership, the latest accounts for Regency show it to be technically insolvent with liabilities in excess of its assets. Whilst this situation has arisen largely as a result of the removal from the balance sheet of c.£304,000 of improvements to various land and buildings at the former matrimonial home, the single joint expert nevertheless considers the Partnership to have a nil value.

The shares in Maple are owned entirely by the Manor Trust (‘the Trust’) set up by H in June 2004 as part of a tax planning strategy. A mutual friend of the parties, a tax lawyer called James Dunhill, was instrumental in advising upon and implementing the scheme about which W says she only learnt some eight weeks after its creation. This is a discretionary trust of which H and W are the only beneficiaries. It is administered from Jersey (where the Trust is based) by professional corporate trustees called Summit Trustees Limited (‘Summit’ or ‘the Trustees’). I heard about a number of individual trustees who have in the past had dealings with H and W but it seems that a lady called Lisa Brockley is the parties’ primary point of contact within the Trust.

In addition to owning Maple, the Trust is the sole owner of the following offshore entities which act as corporate ‘wrappers’ for various forms of business activity :-

The only other asset of the Trust is a small (4%) investment in a Philippines-based company called British Armour Manufacturing Limited.

Mr Smethurst, the single joint expert appointed in this case, has valued the assets held within the Trust to be worth just over £3.47 million. It is agreed that the Trust will be collapsed in a tax efficient manner and the parties will share the funds thereby released on a 50/50 basis. The mechanism for collapsing the Trust is likely to be the creation of two separate sub-Funds which will be allocated to each of H and W who will thereafter appoint their own trustees. The tax implications have yet to be worked through but it is agreed that these and any other costs will be top-sliced in advance of any division of the net funds. W raises no objection to the preservation of the corporate ‘wrappers’ which are currently owned by the Trust. These will be transferred to H as vehicles for his future business dealings or for whatever purpose he may intend for them.

Excluded from the valuation of the underlying Trust assets is the value to H of his share in the mandate run-offs which have yet to be received (or ‘work in progress’ as it is referred to in Mr Smethurst’s second report). The single joint expert quite properly took the view that, because of the uncertainty surrounding recovery, he could not factor into the underlying net asset value of Maple any uplift in relation to these sums. Nevertheless, the potential figures involved are not insubstantial. H has estimated the net fees payable to him after deducting expenses, including Mr Burne’s share, to be just under £14 million if he were to recover 100% of the ‘face value’ of the mandated debts. However, on the basis of the current status reports he has provided, he expects to recover no more than a total of £1.43 million over the next 10 years. From that notional sum has to be deducted the administrative costs of the recovery which may account for some 50% of the income. As Mr Peel points out, this nets down to c. £700,000 on which he will pay tax. At [2/D393-394], I was provided with a summary of the net profit which H has earned from Regency and Maple in the last six years. The pre-tax profits over that period show total income of £710,164 for the Partnership and £651,822 for Maple, a combined average of just over £220,000 per annum. Thus, says Mr Peel, H’s estimate of his net receipts from the mandate run-offs once an allowance has been made for tax is not far short of the annual income which the accounts show him to have been earning in the last years of the marriage.

The extent to which W should be entitled to share in these mandate run-offs is one of the issues in this case which I shall have to determine.

The former matrimonial home is a property known as The Manor Farm in Kent. It is a substantial property set in 16 acres. There is a cottage and a barn within the curtilage of the property. Since their separation some two and a half years ago, W has been occupying the main house and H has been living in the cottage. He runs his ‘office’ from the barn where he is assisted by an administrator and some part-time staff. The property was originally on the market for £3.5 million. It is now being offered for sale by two local agents at £2.75 million. The property is not subject to a mortgage although there are three business loans which will need to be repaid from the proceeds of sale. The agreed equity if a sale at this price can be achieved is £2.086 million. In principle, the parties had agreed to share these sale proceeds equally. W’s case, as it is now advanced by Mr Dyer on her behalf, is that she should receive 75% with the balance being paid to H. This outcome depends on my findings in relation to his alleged non-disclosure.

There is a second (unencumbered) property in Surrey which is currently home to H’s 86 year old stepfather. This is a small flat which has an agreed value of £95,000. It is agreed that the net value (after making allowance for notional costs of sale) is £92,150 and this asset will be transferred to H.

The parties own a second property in the South of France. This holiday home was purchased in August 2011 for €1.1 million. It has an agreed value for the purpose of these proceedings of €1.06 million, or just over £777,000. The loan secured on the property will need to be repaid to Ada Limited which will, in turn, remit the funds to the Trust. At present, the balance owing (some €1,159,455) appears to be greater than the value of the property. The advice which the parties have received is that any balance over and above the current value may be written off in some fiscally efficient manner once they have taken tax advice. They have also been advised that this loan needs to be repaid using funds external to the Trust itself. It may well be that these will come from the proceeds of sale of the English family home in due course. Any costs of transfer (as yet unascertained) will be shared equally and, in terms of the account between them, W will make a balancing payment to H of just under £400,000. How this will all work in practice remains to be seen since W wishes to retain the French property as part of her settlement. She told me that she has not yet decided where in this country she would wish to make her home once The Manor Farm has been sold. She may move to live in the French property as some form of ‘stop gap’ arrangement whilst she reflects on what she wishes to do. If her finances permit, she may decide to buy in England and keep the French property as a holiday rental investment. H does not object in principle to the transfer of the property into her sole name but he says through Mr Peel that it has consequences upon her future domestic economy in terms of the costs of maintaining two homes with a finite income stream flowing from the rental yield. Insofar as it impacts upon W’s future needs case, I shall come back to this at a later stage in my judgment.

In addition to joint funds of some £58,765, W holds assets in her own name. These consist of cash and shares. The value of these assets is absorbed entirely by a significant liability in respect of costs, funded both through a commercial litigation loan bearing an 18% rate of interest and an unpaid debt due to her solicitors. In all, she has an aggregate liability of just over £168,000 when her assets are offset against her liabilities. However, that is to ignore a value of some £265,000 which she holds in some Australian shares and dividends inherited upon the death of her mother. It is agreed that those assets will be ring-fenced for these purposes and treated as non-matrimonial in character.

H also holds in his own name cash and various publicly quoted shares. He has an outstanding tax liability and unpaid costs of just over £153,000 (including a loan of £20,000 which he borrowed from his son from his first marriage). A significant proportion of the cash held in an American dollar bank account emanates from the sale of a property in America which the parties owned for the last ten years of their marriage. That property was sold in August 2014 and the proceeds distributed between them. Whilst W received her share, some two-thirds of those funds have been expended on legal costs.

It is agreed that, if liquid funds are to be equalised, H will be required to pay to W an adjusting lump sum of just over £127,000.

Pensions in this case are minimal. Each of the parties has a small private pension fund (or funds) the combined values of which amount to less than £75,000. It is agreed that there will be no further adjustment in respect of these assets.

In terms of computation, there are two further issues which need to be resolved but neither is significant in terms of the global asset base. H seeks from W a payment which will equalise the current disparity in their respective liability for costs. As at the conclusion of this hearing, H’s costs were c. £310,000 whilst W’s were £380,000. He seeks from her a sum which represents 50% of that disparity (i.e. £35,000).

In addition, H seeks to recover from W by way of a further cash adjustment a sum of just under £20,000 in order to equalise an imbalance in their Partnership drawings account. W contends that her expenses in relation to the children should be taken into account and no adjustment is required. In total, these two items represent some £55,000 of further potential adjustment.

The final issue in terms of the figures is the appropriate sum which needs to be ring-fenced to provide the children with an Education Fund. Whilst the principle of setting aside the funds is agreed, the amount of the investment and the structure in which it is to be held are not. H contends that £320,000 is the appropriate figure; W wishes to set aside £500,000 which will cover not only second degrees / post-graduate study but also living expenses during any extended period of study which any or all of the children may undertake. Whilst Olivia’s plans are now fairly advanced in terms of the next six or seven years, the two younger children are still at school and their future is less predictable. There is a further issue over the identity of the trustees or ‘administrators’ of such a fund. Each party has put forward candidates for this role but objections have been raised from both sides to the choice of the other. By the time we reached final submissions, it looked as though the area of dispute was narrowing.

A subsidiary, but related, issue concerns the quantum and duration of the future payments which it is agreed that H will be making for the children’s support. He contends that a figure of £6,000 per annum per child is the appropriate figure which should be paid to W until the end of each child’s secondary education. W seeks £10,000 per annum per child to the end of their tertiary education.

I shall come back to these disputed issues in due course when I deal with my overall award in terms of distribution.

The figure appearing on the agreed schedule of assets (just over £5.5 million, including the reattribution of W’s ring-fenced inheritance) is, and was throughout the hearing, subject to her headline issue of alleged non-disclosure.

In his opening note, Mr Peel sought to make much of the way in which some of the specific allegations against H had only emerged vey recently in her section 25 statement. He pointed to the volumes of disclosure which H had made to date as these proceedings have taken their course over a period of more than two and a half years. He reminded me that, as an equal partner in Regency, she had enjoyed full and unrestricted access to all and any information and documents which she required. It did not appear to be in dispute that W had indeed accessed a substantial quantity of documents and emails going back several years in her attempts to understand some of the business transactions. The relationship between the parties has obviously become increasingly strained over the course of this litigation and there is quite clearly an atmosphere of restrained antipathy and mistrust between them. It cannot have helped that they have been required to live in fairly close proximity to one another during a difficult period of marital breakdown. W accuses H of having at least one affair towards the end of their marriage (which he denies). She described to me occasions since their separation when he had been over-bearing and had made threats both in relation to her personal security and in terms of his unwillingness to provide her with transparency in relation to the family finances. She accused him of restricting the information he provided to a ‘need to know’ basis. All of these factors appear to have laid the foundation in her mind for the subsequent allegations of non-disclosure. She has since trawled through what I suspect are hundreds (if not thousands) of documents in an attempt to understand the accounting procedures deployed by H in relation to the funds flowing in from the individual mandates. Where the various paper trails have ended without satisfactory explanation, she has deduced that he must have been withholding information about funds received ‘under the radar’ and ‘parked’ with friends or third parties.

Her case is that, from time to time and because of the nature of his work, opportunities arose for H to enter into side agreements with various third parties which enabled him to collect additional payments over and above those contractually provided for in the various mandates. These sums, she contends, were never passed through the books of either Maple or the Partnership and are therefore not reflected in the formal accounts of either entity. Whilst she has been unable to point to any undisclosed bank account or other solid evidence of non-disclosure, through Mr Dyer she nevertheless invites me to proceed on the basis that there is a sound evidential platform to be gleaned from extraneous evidence to support her suspicions. She says that these payments are innately untraceable and are likely to be held for H by his close associates and/or business colleagues. She says that the parts of the world in which he operates and the cash basis which underpins many of the transactions which he undertakes provide him with substantial opportunities to conceal dealings of this nature.

Throughout, H has denied these allegations. He has been interrogated robustly through a series of three written questionnaires, most recently in January this year when W’s current solicitors undertook a thorough review of the papers and his disclosure to date. He points to the fact that he has co-operated fully with Mr Smethurst, the single joint expert, and has provided whatever information has been requested of him. He points to the open access which W has had to all and any documents she has needed, including (now) a full run of the business bank accounts held by Summit in Jersey. Mr Collins, their business accountant, has made himself available to answer all and any enquiries which W might have. He is someone who is intimately involved in the Partnership business and who, with his team, is responsible for preparing the accounts each year. It was he whom the parties entrusted some years ago to fly to Jersey to review the systems put in place by the Trustees for the provision of information and figures to the parties. I was told that, as a result of his input, those systems were changed and upgraded.

W’s endeavours to date have uncovered the existence of two specific transactions which appear to contradict H’s insistence that no one has ever held funds on his behalf or made payments on his instructions. These relate to the payment on two separate occasions of his grandchildren’s school fees in 2010 and 2011. On both occasions, the fees were paid directly to the school using a route which did not involve the remittance into the jurisdiction of funds directly traceable to H. As H himself now admits, the purpose of these particular transactions was to avoid paying the tax on those remittances. He accepts that it was wrong to have handled matters in this way and admits that he is embarrassed by the exposure which the spotlight of this litigation has brought about. Nevertheless, he asks me to accept that W was fully aware of, and agreed to, the payments being made even if she may have been unaware of the manner in which the fees reached the school bursars. He points to the fact that every penny of what he has earned during the marriage has been spent for the benefit of his family in one form or another.

Prior to the FDR hearing before Parker J in March 2014, non-disclosure as a specific assertion by W does not appear to have been an issue in the case. On that occasion, there was an exchange between leading counsel (W then being represented by a different team) which involved the production of a number of documents which W had extracted from H’s office. I am told that, as a result, the negotiations effectively stalled whilst H, through Mr Peel, sought to deal with W’s questions throughout the remainder of the day. This led Parker J to order W to pay the costs of that hearing but on the basis that (a) they were not to be enforced until the conclusion of the final hearing, and (b) her time for appealing that costs order would run from that date.

On 10 April 2014, H’s solicitors wrote to W’s solicitors specifically requiring her to state whether it was her case that H was guilty of non-disclosure [1/C414]. In that event, she was asked to particularise each and every aspect of her case and to identify any documents on which she sought to rely in support. There was no response to that letter. By November 2014, W’s new team was on board and requesting copies of the Trust bank statements which, to date, the Trustees had declined to provide. (H had never resisted disclosure of these documents but the Trustees had been unwilling to provide disclosure over and beyond the formal accounts.) As I have recorded earlier in this judgment, those bank statements have now been provided, albeit in two separate tranches. The final tranche was delivered after the hearing had commenced. At no point in the trial was I taken to any of the statements which took up two large boxes. Mr Dyer confirmed, on W’s behalf, that he was not seeking to reopen any cross-examination of H on the basis of the second tranche of disclosure of those statements. That is hardly surprising given that his case in relation to the allegations of non-disclosure is that the monies diverted by H were never passed through any of the business or Trust bank accounts and are not reflected in the formal accounts which are informed by the bank statements held by Summit.

During the course of cross-examination, H was required to deal with five specific allegations evidencing non-disclosure on W’s case. These had been raised previously (if indirectly) in W’s most recent questionnaire but the detail had only emerged from her narrative written statement served on 18 February this year, less than two weeks before trial.

Before turning to examine the evidence which I heard about these allegations, I remind myself that this is W’s case and she bears the burden of establishing the non-disclosure as alleged on the ordinary civil standard. In other words, I have to be satisfied that it is more likely than not that H has failed to make full, complete and up to date disclosure in breach of his obligations both to her and to the court.

In NG v SG (Appeal: Non-Disclosure) [2011] EWHC 3270 (Fam), [2012] 1 FLR 1211, Mostyn J set out some guidance in relation to the proper approach to allegations of non-disclosure in financial remedy cases. At para [7] on page 1214, he said this :-

At para [16], his lordship said this :-

That passage was cited by McFarlane LJ in Rabia v Rabia [2014] EWHC Civ 1767 as ‘a useful description of the court’s approach’ or ‘the stepping stones which a court must traverse before it can make an inference’.

Very often allegations of non-disclosure are made in the context of cases where there is little evidence of a husband’s true wealth. In these situations, a wife will often be driven to undertake extensive investigations into the underlying complexities of past transactions. Sometimes she will be in a position to show that the level of financial provision available to her husband in recent years and/or the lifestyle he has been able to maintain are inconsistent with the case he seeks to present to the court. Sometimes, when taken together, all the loose threads put before the court are sufficient to build up a convincing picture that the husband is not telling the truth. Moor J was confronted with just such a situation when he dealt with the case of Young v Young [2013] EWHC 3637 (Fam), [2014] 2 FLR 786. At para 166 of his judgment, his lordship dealt with a catalogue of such ‘loose ends’ (including the husband’s lifestyle which contrasted with his protestations of being a ‘penniless bankrupt’) which the court relied upon to reach his conclusion that the husband in that case had failed to comply with his disclosure obligations.

Thus, looking at the picture in the round, more often than not, the evidential platform from which non-disclosure allegations are launched will be found in one or more of the following :-

Taken at face value and without more, it is difficult to see how the allegations advanced against H by W fit into any one or more of these specific categories. She accepts that she is unable to point to evidence of an undisclosed account (whether or not in H’s name) which is the repository for funds siphoned off from the mandates by way of a side agreement or undercover cash payment, nor can she point to the existence of an asset which represents the product of such funds. The volume of material placed before me and the schedule of disclosure which H has made in these proceedings militates against any suggestion that he has ignored his obligations to provide disclosure, whether pursuant to a court order or on a voluntary basis. As to lifestyle, whilst these parties are separated in terms of any continued marital relationship, they have continued to operate a joint financial base as partners in the business. As such, W has had, as she accepts, unrestricted access to such documents as she has wished to see. H is currently living in the cottage next to the main family home. The children have been coming and going between those homes. She knows when he takes them away on holidays and he has provided information about the cost of those trips. Each continues to provide financial support for the children. In this sense, she has been a first-hand observer of H’s lifestyle in the period which has elapsed since their separation and she does not seek to advance her case on the basis of lifestyle choices which are inconsistent with his declared income. His income on the face of the documents which I have seen (which is effectively their joint income from the Partnership and from the Maple mandates) does not appear to have changed significantly over the last six years, including the last two years of their separation.

Rather, this is an underlying set of facts in respect of which Mr Dyer and Miss Chapman build their case in relation to adverse inference from the dual planks of (i) opportunity; and (ii) a willingness on H’s part in his previous financial dealings to take advantage of such opportunity when it has presented itself in the past. The real question for me is whether or not the evidence supports a finding that H has, in fact, taken advantage of such opportunity to the detriment of W’s financial claims in these proceedings.

In constructing their case on behalf of W, they rely on five specific instances where this has, or might have, occurred. It is to these allegations that I now turn.

In relation to both this and the second school fees payment for the benefit of H’s grandchildren, there is no suggestion that W was unaware of the gift he was making. She accepts that she knew about the intended payments from previous family discussions, raised no objection at the time but (despite H’s earlier assertion to the contrary at [1/C115]) was unaware of the manner in which either or both payments were transacted. It was only when she failed to find any entry in their personal bank statements that she began to explore the issue of how the payments had reached the schools.

I bear in mind that the pre-payment of school fees was something which these parties had undertaken in 2006 for the benefit of their own three children. The transactions relating to the grandchildren were undertaken prior to there being any suggestion from any quarter that this marriage was in difficulties or that a separation was being discussed. On the contrary, H’s evidence (which I accept) is that he did not wish the marriage to end (Footnote: ²).

In order to understand the background to this transaction, I propose to set out the facts as succinctly as I can. One of the companies owned by the Trust is a company called Regency Associates Group Limited (‘Regency Ltd’ (Footnote: ³)). It is a BVI company which was the vehicle through which H operated his debt recovery business in the Country T. He had a partner in this enterprise, a company called MVP. Some years ago, MVP entered into a joint venture with Regency Limited. Mr Francois Bernard is the Chief Executive Officer of MVP. He is resident in an African country.

Natal Mines is an African state owned mining company. It features in more than one of W’s allegations of non-disclosure against H. He had entered into a mandate with a bank (bank D) (which was subsequently taken over by HSBC) to recover from Natal Mines a debt of just over US$1 million. Having secured the mandate, he entered into a Services Agreement with MVP for local assistance ‘on the ground’ which was likely to include obtaining a formal judgment against Natal Mines. He told me during the course of his oral evidence that this was the second time he had worked on a contract with Mr Bernard. I have in the bundles a copy of the Service Agreement which was signed in March 2008 [1/C:235]. That sets out the terms of the joint venture in relation to the recovery of the Bank’s debt. Article 5 deals with the distribution of any funds recovered and the proportion in which they were to be shared between MVP and Regency Ltd. It provides that the first US$500,000 recovered would go to Regency Ltd with any surplus over and above that sum being paid to MVP. Art 5.3 contains a specific reference to the possibility of ‘further recoveries’, being the recovery of costs and interest. In this event, any sums recovered in respect of costs expended would be paid to the party which had incurred such costs whilst interest recovered would be paid to MVP.

H’s oral evidence was that HSBC had asked him to work on the recovery of this debt soon after it took over the original lending bank (BANK D). His point of contact with HSBC appeared to regard recovery as more or less hopeless. He told me about a conversation he had with Tom Marks at HSBC who found the matter ‘dumped on his desk’ and did not want to become involved in any further outlay. He asked H merely to recover what he could at minimum cost to the Bank. Following a further conversation, the Bank told H that they would accept a payment of US$250,000 in full and final settlement of the Natal Mines debt (then US$1,009,924). There was an agreement between H and HSBC that in the event of recovering US$500,000, the Bank would receive 50% (i.e. US$250,000) and Regency Ltd would retain the balance (Footnote: ⁴). That was why the first US$500,000 referred to in Art 5 of the Service Agreement with MVP provided for top-slicing the funds in this way. MVP anticipated that it would secure additional recovery in respect of unpaid interest on the debt and that recovery would be theirs to keep.

I was told that MVP struggled to recover anything until it commenced legal proceedings against Natal Mines. As a result of those proceedings (which were expensive and funded entirely by MVP), the company was able to secure not only the balance of the debt (c. US$500,000) but all the interest due in a total sum of US$1.4 million. That litigation had been ongoing for some considerable time and H had no active involvement in the proceedings or the ultimate recovery. However, when he discovered the extent of Mr Bernard’s recovery, he went back to seek an uplift in Regency Ltd’s share of the recovery proceeds. He told me that Mr Bernard was a difficult individual with whom to negotiate and he had no legitimate expectations of any further recovery. Nevertheless, Mr Bernard appeared to be willing to consider an additional payment from the total funds recovered. Having looked at the total profit recovered by MVP once allowance had been made for the costs of recovery (for example, the heavy litigation costs), he told H that he was prepared to make an additional payment to Regency Ltd in the sum of US$87,000. That is the sum which H told me he agreed to accept.

At about the same time as this offer came through from Mr Bernard, H was due to make a payment to Emma’s school in respect of her fees. The sum due was £55,204. He had already had an earlier discussion with Mr Collins, the parties’ accountant who deals with the Partnership, about making the payments in respect of the grandchildren’s fees in a tax efficient manner. Mr Collins confirmed that such a conversation had taken place when he gave his own oral evidence. He told me that he had been aware of the plan to pay the grandchildren’s school fees in advance although he had no direct knowledge about when the payments were actually made. He had spoken to H in general terms about the tax implications and had warned him that, if funds were remitted into the jurisdiction from Jersey, they would be taxable as a remittance. However, if the funds were paid directly to the grandchildren or to third parties on their behalves, the remittances would be treated as the children’s money, rather than H’s, and taxed accordingly on a lower basis. Whilst the children would be liable for the tax as beneficiaries of the payments, there was likely to be material benefit in terms of the tax which would be saved when an assessment was eventually made by HMRC.

It was suggested to H that his answer to one of W’s questions about this transaction was deliberately misleading insofar as he had sought to shift responsibility for this transaction onto the shoulders of Mr Collins in that he had said that this payment (and the payment for Rachel’s fees) had been made in this manner on advice from the accountant [1/C:115].

H told me that he had collected from his conversation with Mr Collins the clear message that he needed to deal with the payment of the school fees via a third party so that funds were not remitted directly into his onshore bank account for these purposes. Because he was by then aware that he was due to receive some €87,500 from MVP, he asked Mr Bernard to pay the additional recovery not to Regency Limited but directly to the school in discharge of Emma’s fees. He accepts that these funds did not pass through Regency Limited’s bank account and that the receipt of these funds is not reflected in the annual accounts for that period. In order to ‘square the books’, H had caused an invoice to be issued and delivered to MVP in the sum of £55,204.06 [1/C245]. It is dated 30 April 2010 and purports to be for ‘assistance in finalising agreement between Natal Mines/Bank D’. A run of emails dated 6 to 18 May 2010 confirms completion of the transaction and payment to the school by Swift transfer. Two of those emails passing between H and Mr Bernard (6 and 14 May 2010) appear to support what H told me about the sum which ‘MVP is happy to pay’, i.e. €87,500. As to why the invoice rendered on behalf of Regency Limited pre-dates the run of emails, I do not know (and H could not explain) unless it was backdated to fall into the company’s year end (which is 30 April). H accepted that Mr Dyer was perfectly entitled to characterise the invoice as a ‘sham’ or ‘dummy’ invoice. He openly admitted that he had never expected to be standing in court answering questions about this particular transaction when he took what he believed to be a tax efficient means to divert the MVP payment to discharge his promise to his son to pay Emma’s school fees. Of course, it was a far cry from tax efficiency; it was clear tax evasion.

H accepts that it was a mistake to make the payment to the school in that it should never have been undertaken so as to avoid tax altogether (which was what happened). He told me that his partner, Mr Burne, was aware of the transaction, even if he did not know the detail. Mr Burne has confirmed in his written statement that he was au fait with the entire transaction as it related to the HSBC/Natal Mines mandate. He confirms the detail of the account which H has given me. He tells me that H was extremely fortunate to have identified as a partner in the debt recovery operation Mr Bernard and MVP since the ultimate recovery for the benefit of both parties and the Bank was only achieved after MVP had incurred significant costs on its own account without any guarantee of recovery [3/15]. Mr Burne confirms that there was no contractual entitlement to any additional recovery from MVP and he regarded the additional payment as a generous concession. He was aware of the payment to H in the sum of €87,500 but recalled agreeing that this would fall outside any entitlement he had to share in the recovery since H was largely responsible for securing the additional payment.

Certainly W knew about the payment which went to the school, even if she was unaware of the provenance of the funds which were used to discharge the fees. As I have said, when pressed by Mr Dyer as to why he had not provided the detail of the transaction before, H accepted that it was a cause of considerable embarrassment to him.

Against that background, I turn now to W’s second allegation. It predates the first in terms of the chronology of H’s participation with Mr Bernard and MVP. H’s evidence was that this particular mandate started in 2001/2002. Bank P was the lead creditor amongst a number of institutions which were owed money by Natal Mines. In the absence of securing any recovery, the Bank finally made a claim against its reinsurance policy with the underwriters who paid out a total of US$18 million. H told me that he visited Africa on a number of occasions without making any progress in terms of recovery. By that stage, it seemed that the Banks would have accepted a return of between 25% and 30% of the loans but nothing had been secured. In the course of his work on this mandate, H was able to discover that part of the Bank D debt was secured against one of the mines owned by Natal Mines. Contrary to the terms of that security, Natal Mines (the debtor) had sold to a BVI third party its mining and exploration rights in that mine thereby defeating the Banks’ security. H recounted to me during the course of his evidence some of the physical and other challenges which had confronted him as he sought to pursue the debt on behalf of the lead Bank. He had taken a view that all value in this particular mandate had been lost.

It was whilst he was attending an annual conference in Cape Town that he had been introduced to Francois Bernard. His father apparently worked for Natal Mines and he had close connections both to the local area and to the company itself. Mr Bernard is not involved in the business of debt recovery on the same scale as H; his principal business is the sale of electrical equipment throughout Africa. He also deals in the supply of mining equipment. However, as a result of that encounter, Mr Bernard told H that he would look into the situation and report back if he felt he could assist in H’s attempts at recovery on behalf of the banks. A subsequent meeting was set up between the two men and Bank P. The result was the Service Agreement which was entered into between Regency Limited and MVP on 15 June 2007 [1/C262]. This refers to discussions over a collaboration to recover a debt of US$50 million on behalf of various banks. Article 5 of that Agreement provided that, whilst Regency Limited would receive the first US$300,000 of any recovery, any further sums recovered up to US$18 million would be shared between Regency and MVP as to 60% to Regency and 40% to MVP. Anything between US$18 million and US$35 million would be shared on a 50/50 basis. Participation Fees were to be shared on the basis that MVP received 90% and the balance was to be paid to Regency Limited.

Once the Agreement had been signed and approved by the banks and underwriters, Mr Bernard put in hand an aggressive strategy to secure the banks’ security in a second mine. H told me that an Israeli company which had local interests in the area had created a situation in which hundreds of local artisanal miners had been released onto mine dumps as a result of which the assets were being looted and stolen. Mr Bernard had secured the mine dump, erected security fences around the perimeter and employed a security firm to patrol the mine daily on a 24 hour per day basis. This had involved a very substantial financial investment on his part but it was one which had persuaded the banks that he was serious about making attempts to recover their outstanding debt. Over a significant period of time, he took further steps (including legal action) which resulted in a full recovery of the debt which the banks had, by then, all but written off.

As part of her documentary evidence to support her case of non-disclosure, W has produced from company records a copy of an allocation schedule of all sums received by Maple and the Partnership in relation to the Bank P / Natal Mines mandate [1/C:279-288]. At [1/C:284] there is a reference to Participation Fees of US$15 million, 90% of which (some US$13.5 million) was contractually due to MVP under the terms of the Service Agreement. Appearing alongside that entry is a further entry : ‘To be renegotiated with MVP’.

It is W’s case that this is evidence to substantiate her allegation that there is likely to have been a further payment which was made ‘under the radar’ or ‘off the books’ and which H has not thus far disclosed in these proceedings. H told me that he had a number of discussions with a Mr Kalissi who was the individual leading the banks’ claims. There are emails amongst the documents which W has produced which refer to those discussions and the possible ‘claw back’ from the US$13.5 million Participation Fees (see, for example, [1/C313]). The banks had been keen to know whether there was any prospect of clawing something back from MVP in the light of the substantial ‘windfall’ recovery which that company had made. H agreed to speak to Mr Bernard on behalf of his client banks. Thereafter there appear to have been a number of discussions between H, Mr Bernard and Mr Kalissi who had agreed to become involved directly. Those negotiations came to a conclusion, according to H, when Mr Kalissi on behalf of the banks accepted that there was no further mileage in an ongoing dialogue. It is H’s case that there was no renegotiation and that neither he nor the banks succeeded in their attempt to claw back some further financial benefit from the sums recovered by MVP. That, he says, is the very simple and straightforward explanation for the fact that the run of emails on this subject goes no further, despite W’s attempts to find evidence of undeclared payments.

W’s third allegation is based upon an email which she found amongst the company documentation which had been sent by Mr Bernard’s assistant, Claudia Robin, on 25 November 2009 [1/C317]. It relates to a contract between Natal Mines and a company called Xanadu Limited (‘X LTD’). She says that H had not referred to this mandate in any of the financial disclosure he has made during the course of these proceedings. Since she was aware of his involvement on behalf of several banks in recovery actions against Natal Mines, she asked him whether he had signed a Service Agreement with Mr Bernard and/or MVP in relation to recovery from X LTD. She says she was particularly interested in this contract since he had mentioned it previously to her in conversation and said he hoped it might produce a sum of c. £1 million in success fees. Without, it seems, any particular anchor to this potential contract, she recalls a conversation which she had with Lisa Brockley at Summit during the course of which Miss Brockley is alleged to have said to W that she hoped ‘[W] would find all the money’. (In her written statement, Miss Brockley denies that any such conversation took place [3/11].)

W further recounts an episode which she says took place in June 2014 when she approached H in the car parking area at the former family home. She says that she asked him specifically about this contract and the status of the recovery and/or success fee. She alleges that her question provoked him and he became very angry and told her to drop her enquiries. In her written evidence, she says this of that encounter :-

W became distressed in the witness box when she was asked questions about these matters. She told me that she had contacted the local police as a result and that they had made a formal record of her telephone numbers in order that any calls would be responded to as a matter of priority. H denies that such a conversation ever took place. He says that the first time he had any knowledge about it was when he read the contents of W’s section 25 statement. It does not appear to have been raised at the time (or subsequently) in the inter-solicitor correspondence or anywhere else. If police records exist (as W suggests they do), I have not seen them.

H had been asked questions about the X LTD contract in a previous questionnaire. In his Replies dated 26 January 2015, he explained the position in this way :-

As to previous discussions between the parties about the potential X LTD mandate, H accepts that some years previously he had a conversation with W about the fact he had learned that there was a debt owed by Natal Mines in relation to industrial equipment (trucks and spare parts) but he had never been able to establish who the creditor was and there is (and never had been) any formal mandate in relation to it (Footnote: ⁶). He recalls that in relation to this contract, he told W that it would be of financial benefit to the family if he had been able to secure a formal mandate in respect of recovery. He says that she has confused or conflated two different transactions in the context of discussions about Natal Mines. When he was asked by Mr Peel for further details during the course of his oral evidence, he told me that in relation to his own enquiries about debt recovery which was the subject of his conversation with W, he had known that there was a contract between German and Australian parties. Mr Fortin, the managing director of Natal Mines, had told him there was a substantial debt outstanding but would not give him any further details which might have enabled him to ‘bid’ for the mandate. He had asked around but even Mr Bernard had been unable to assist him to identify the parties which would have been the first step towards securing a formal mandate. He reconfirmed what he had said in his written evidence: to this day he does not know the identity of the parties to the loan, and the X LTD mandate to which W has referred never existed in terms of a formal instruction to Maple or the Partnership.

As to the document which W has produced, H told me that this related to a completely different transaction concerning X LTD. Mr Bernard was the sole beneficiary of the consideration of some US$69 million reflected in the promissory notes and he had undertaken 100% of the recovery work on that contract. There is nothing in either the email or the attachment to it which is fundamentally inconsistent with H’s case. The email from Mlle Robin refers to a telephone call which she had with H on the same day and records the fact that Mr Bernard had asked her to send on the copy documents. The first is a letter from the Bank J concerning ‘Transmission de 24 traites’ pursuant to a formal agreement entered into with the Ministry of Finance on 4 May 2009. Set out in tabular form is a list of 24 promissory notes payable on future dates on 25^th of each month between April 2010 and March 2012. The total of the payments is shown as US$69,196,094 and each promissory note is for a sum of just under US$3 million (although the figure varies slightly in each case). The second document attached to the email is a copy of the first promissory note dated 25 April 2010. X LTD is the ‘tireur’ or ‘drawer’ and each payment appears to be backed by the Bank J through an account with Credit Suisse in Zurich.

H told me during the course of his oral evidence that Mr Bernard (or his company) was the beneficiary of the payments totalling some US$69 million. It was he who had performed all the recovery work in respect of this particular contract with X LTD but the payments he was due to receive under this contract were staggered over a four year period. Because he was aware of H’s previous professional dealings with Bank P, Mr Bernard was keen to know if H could negotiate a sale of the future promissory notes in order to accelerate the payments even if this might result in a discount in respect of the bottom line figure. H told me had approached Bank P but it was not interested. He sent the details on to Mr Burne, his US partner, to see if he could assist with his own contacts in the banking world. Each of them drew ‘a blank’ as no one was interested in buying the debt.

When he was cross-examined by Mr Dyer about these matters, H confirmed that he had no involvement at all in, or expectation of any benefit from, the X LTD contract which was the subject of the email which W had found on the Partnership server. His only involvement was as a potential ‘middle man’ in relation to the sale of the promissory notes. I know not whether he might have expected some sort of fee or commission from Mr Bernard had he been successful in his attempts to sell the promissory notes; his evidence was that both he and Mr Burne failed in those attempts and there were no financial benefits to either flowing from this transaction.

This fourth allegation has to be seen in the context of what I have already said earlier in this judgment about the first payment in respect of Emma’s school fees and the discussion which H had with Mr Collins and H’s evidence as to his understanding that these payments needed to be made via a third party if tax on the remittances was to be avoided.

H accepts that this payment was made through Peter Tanfield, his long-standing business associate. I was taken to a copy of a bank statement for Maple Technology Limited on which appears the payment out of a sum of £56,000 on 13 June 2011. The payment was made to Mr Tanfield and the payment reference is ‘Re Garrick Ivory Cost’ [sic] [3/3]. (This should be read as ‘Re Garrick Ivory Coast’.) An invoice supporting that payment is in the bundle at [3/61]. It is dated 31 May 2011 and appears to have been issued by Mr Tanfield to Lisa Brockley at Summit. The narrative on the face of the invoice reads as follows :-

H accepts that this was a fictitious invoice. He told me that he had a mandate with the company which is referred to in the invoice (‘Garrick’) and had made one recovery of a fairly substantial sum which had been payable over a period of time. As a result of some machinations between the French government and Garrick against the background of elections which were ongoing at the time on the Ivory Coast, there was a further agreement for the supply of equipment notwithstanding the debt which was then due to Garrick. As a result, H’s contract was cancelled. As Maple had by then only been paid a single tranche of its recovery fee, H was obliged to write off the balance of the debt. There was at that point in time a book debt in respect of a sum which was owed to Mr Tanfield for work which he had done in relation to this contract as H’s local associate ‘on the ground’. All he had done up to that point in time was to effect the initial introduction between H and K Henry. There was subsequently an agreement that no fee would be payable for that introduction. Whilst he had no direct input into drafting the invoice, H accepts that he used this ‘book entry’ in respect of Mr Tanfield’s fee to create a contra entry in a sum equivalent to the school fees he was due to pay for Rachel in order to ‘square the books’. He accepts full responsibility for this tax avoidance scheme (for that is what it was) which he says was never explained to Mr Tanfield. All Mr Tanfield knew was that H was going to send him some money which he, in turn, would pay to the school on H’s behalf. In cross-examination, he accepted that he might well have asked Mr Tanfield to send the invoice so that the accounts could be reconciled. H accepts he was wrong and repeats his acute sense of embarrassment at having acted in the manner he did. He accepts without qualification that the invoice was based upon a debt which had been waived. He has since made a clean breast of these matters with the Trustees through a self-report to Lisa Brockley.

Whilst he accepts that he has had a long business association with Mr Tanfield and a company called Mullerat, H denies that he has ever made any payments to him as a nominee and/or that Mr Tanfield is holding or has held funds on his behalf. Whilst his office administrator (Natalie) handles the paperwork for Mr Tanfield’s English bank account, he told me that she has never transferred funds between them and, indeed, has no mandate to operate Mr Tanfield’s bank account.

He told me that, whilst he agreed that the sum of £56,000 was not accounted for correctly, this – with the payment for Emma’s school fees – was the only instance where he had manipulated the accounts for his personal benefit. He rejected the suggestion made to him by Mr Dyer in cross-examination that the court could not place any reliance on the figures shown in the company accounts because of ‘under the radar’ dealings. He said that W’s exhaustive search through voluminous bank statements and accounts going back 15 or 20 years had shown exactly how he dealt with the business and that all he had earned over the course of those years had been for the benefit of his family. He had given his own children the benefit of a private education and felt very strongly about providing that benefit for his two grandchildren. It was a priority about which W was very well aware and it was unfair for her to seek to hang on the peg of his payment of the school fees an allegation that either there were undisclosed funds available to him or that his dealings with the business were thoroughly contaminated by these two transactions.

During the course of the hearing, Mr Dyer and Miss Chapman produced a new section (H) of documents which were inserted in the bundles of documents already produced by W. This consisted of some 30 pages of invoices with a summary table showing the total value of invoices addressed to Mullerat which had been issued by the Regency Partnership in the last three accounting years to date. They were produced to illustrate an apparent disparity between the amounts shown in the Partnership accounts and the apparent face value of the individual invoices which, in each year, appeared to be significantly in excess of the sums shown in the Partnership accounts.

In this context, I heard quite a lot about H’s previous dealings with Mr Tanfield. H accepts that there is a significant element of cash involved in his transactions with his business associate. He was taken by Mr Dyer to a spreadsheet which had been prepared by the staff in the Partnership’s offices. It is called ‘Reconciliation of Amounts on Euro Account’ and covers the period from May to December 2009 [1/C320]. One of the entries on that spreadsheet refers to the payment to Mr Tanfield of €25,000 at Heathrow airport. H confirmed that this was a cash sum paid in 2009 and reflected one of several such payments. These payments represented sums due to Mullerat (the French road building company for whom Mr Tanfield acted as a consultant) with whom the Partnership did a significant amount of work. They were used by Mr Tanfield to make payments to sub-contractors and others working locally (where Mr Tanfield is based) or elsewhere in Africa. Cash payments were an integral part of their business arrangements because 90% of the people with whom Mr Tanfield deals do not operate bank accounts. Whilst the level of cash transactions has decreased in recent years, it remains a necessary element of fulfilling the mandate contracts. H told me that this was the primary purpose of the HSBC Euro account with HSBC (which he refers to as ‘the Trust account’). It was why the reconciliation spreadsheets were produced on a regular and ‘running’ basis. Once a particular project or piece of work had been concluded and all receipts and expenses had been reconciled, the fee due to Regency would be transferred from the Euro Trust account and paid to the Regency account. Such payments were then reflected in the Partnership accounts as income.

In terms of H’s input on behalf of the Partnership, H was to explain during the course of his oral evidence that, during the course of Mullerat’s road-building projects, the specification will often change from that agreed in the underlying contract. Extras were continually cropping up as routes changed or engineering work had to be carried out. Before payments were authorised by Mullerat, engineers had to be called in to ‘sign off’ on these additional works. It was H’s job to find the engineers who were then referred to Mr Tanfield who was effectively ‘project managing’ locally in Africa. All the work ‘on the ground’ was carried out by Mr Tanfield and H had little input on behalf of the Partnership. Once the amount of any individual contract had crystallised, H would invoice Mullerat. From the sums received, he would pay Mr Tanfield and the people working under him. Much of the cash paid to Mr Tanfield was used by him to pay the local engineers which was why the sums were often significant. They were, in effect, part of the wages bill for the projects and contracts which were carried out locally in various parts of Africa. Within the bundles, I was provided with a complete run of spreadsheets for the three year period May 2009 to May 2012. These appear to demonstrate an accounting procedure which is entirely consistent with the explanation which H gave me.

When Mr Collins came to give his evidence, he confirmed that this was the manner in which this particular HSBC account was operated and that it was, indeed, known within the business as ‘the Trust account’. He sees the spreadsheets and regularly checks the figures on a quarterly basis against the sales and purchase ledgers. He confirmed the system by which Regency/the Partnership invoiced a significant amount of the work undertaken by Mullerat in Africa and acted more or less in the capacity of Mullerat’s agent. Monies received were held in the Euro account (which he described as the equivalent to a solicitor’s client account) on behalf of Mullerat and, from these funds, payments were made as disbursements to various third parties as Mullerat’s agent. He told me that the figures which appeared in the Partnership accounts represented Regency’s share of fee income net of sums paid out on behalf of Mullerat. The figures were checked and reconciled and Mr Collins was confident that they were accurate. He had spoken to W about the accounts and made a point of going through the figures with her on an annual basis before the accounts were signed off in order to ensure that she was happy with both the accounts and the operation of the Partnership during that year. He told me that she was well aware of how the Partnership accounting procedures worked and there was a regular dialogue between them, either in person or over the telephone.

That evidence appeared to me to deal conclusively with the apparent discrepancy shown on the schedule at the beginning of (new) section H.

When Mr Collins was asked by Mr Dyer why the Partnership and Maple operated different accounting systems, he told me that this was an entirely conventional arrangement in terms of the treatment of the figures by the two different entities and one which the Revenue consider to be perfectly acceptable. His understanding was that the presentation of the financial information in the Maple accounts was the result of H’s and W’s collective wish to see the figures in that format so that they were able to have a much clearer understanding of the information being accounted for within the Jersey companies. This had been the purpose of his visit to Jersey on their instructions in 2008. He had made a further visit to the Trustees’ offices in July 2009, and carried on with overseeing the restructuring of the administrative procedures throughout most of 2010. In this way, he was able to reassure H and W that the reports and information they were getting from the Jersey Trustees were adequate, accurate and sufficient to provide them with all the information which they wanted in terms of running the business effectively.

I found Mr Collins to be an entirely straightforward and reliable witness who was clearly on top of all the figures and administrative aspects of the Partnership accounts. In terms of his professional obligations, he clearly regards himself as bound equally to H and W and favours neither. He has had a long-standing relationship with both and I detected no bias or favour towards either. It was clear to me when W was giving her oral evidence that she appears to have trust and confidence in Mr Collins and, insofar as it is relevant to the issues which I have to decide (including the administration of the Mullerat invoices / HSBC Euro account), I take the view that I can rely on what he told me.

H’s response to this allegation is set out in his written Replies to W’s third questionnaire served in January this year [1/C124]. Mrs Jacques is a barrister who lives and works in Country A in Africa. She practises from chambers known as Boyle Chambers. In addition to her professional qualifications, H told me that she is also a chieftan of one of the local tribes and, as such, commands significant respect and influence within local and business communities.

Part of Mrs Jacques’s professional work involves the recovery of debts on behalf of her clients. She was instructed by the Country A government in relation to a number of international debts. On this occasion, she appears to have been defending the government’s position in relation to non-payment. I was told that on several occasions in the course of her professional dealings with H, she had enlisted his services to effect introductions to third parties (including lawyers) to assist in her work. H told me during the course of his oral evidence that, despite his expectation of having to work hard on this contract, he actually did very little apart from effecting two introductions to lawyers who subsequently undertook the bulk of the work for Mrs Jacques.

Having spent a number of years completing her work on behalf of the Government, it appears that Mrs Jacques was not paid all the fees which were due to her. She turned to H for further assistance in recovering this (personal) professional debt which also included sums which she was due to pay to several overseas lawyers who had worked on the government’s cases. Having agreed to help by acting more or less as a ‘letterbox’ for Mrs Jacques (Footnote: ⁷), in April 2009 he issued the Country A government with a formal invoice for her services in the sum of €6,555,307, being ‘the agreed fee’ in respect of her work between 2004 and 2009. That work was described in the invoice as ‘work undertaken by a number of lawyers and experts working on all the international debts of the country as per the attached summary’ [1/C334]. The invoice was issued through Regency Ltd (the BVI company owned by the Trust). (In fact two invoices were produced in very slightly different amounts. I accept that the second was issued to correct a typographical error which had arisen in relation to the calculation of the conversion of the debt from French Francs into Euros.) H had anticipated that Mrs Jacques might reasonably expect to recover a sum of about €5 million. No payment having been received, a further invoice was issued in June 2010. At the same time, it appears that H took advantage of a visit to London by the Prime Minister of Country A to seek his intervention in achieving a resolution and payment of the debt. When that approach failed, H introduced Mrs Jacques to a well-known London firm of solicitors, Clyde & Co, who were instructed to threaten formal proceedings for the recovery of the debt. I have seen letters from that firm sent in February and August 2011 to the Prime Minister of Country A. It seems that a dialogue between those solicitors and the Ministry of Finances was opened following the threat of legal proceedings because, in October 2011, there appears to have been a concession by the Country A government which agreed to make a payment before the end of that month.

H told me that throughout this period his personal involvement in the recovery exercise was restricted to one or two meetings with Mrs Jacques when she came to London on business. However, he did become directly involved in discussions with the Prime Minister and he told me that when it became clear that he was undertaking more work than he had anticipated, he suggested to Mrs Jacques that they should put their personal arrangement on a more formal footing. He asked her to agree a fee which he suggested should be 5% of any sums recovered. Mrs Jacques states in her written evidence that this discussion took place when she came to the UK to accompany her elderly mother who was due to undergo surgery in Southampton.

H told me (on two separate occasions during the course of his oral evidence) that when he had written to Mrs Jacques asking her to agree a formal fee structure, she had responded by sending him a text message with a single (but enlarged) question mark.

On 13 December 2011, H wrote to the Jersey Trustees and told them to expect the ‘first payment’ of about €1.8 million. He said that thereafter and over the course of the next six months between January and June 2012 there would be monthly payments of c. €686,000 [1/C344-345]. Thus, by this stage, H appeared to believe that he had secured agreement with the Country A government for a staged payment programme in respect of a total recovery of just under €6 million. The company’s fee was said to be 5.5%, at least insofar as it related to the first tranche of the settlement monies.

As the paper trail shows from the run of documents produced by W, on 21 December 2011 a sum of just over €1.8 million was paid into Regency Limited’s bank account. I have seen a copy of an email from Lisa Brockley sent to H on that day confirming receipt of the payment and asking for details of the disbursements (legal fees) which needed to be paid from this sum. In accordance with the fee which H had quoted previously, Miss Brockley advertised the fact that she was intending to transfer to the Maple account a sum of c. €100,000 representing the company’s 5.5% fee. It is at that point that the paper trail in relation to this particular transaction ends.

It is H’s case, challenged by W, that the only consideration he received from Mrs Jacques was a single sum of €60,000. He told me that, as a result of his discussions with Mrs Jacques, he was left in no doubt that she expected him to do the work as a personal favour and had been surprised to receive his request for such a significant fee (i.e. 5.5%). She had told him that she was expecting the further instalments of settlement sums to be paid to her locally in Country A in order that she could cover the cost of her expenses and other disbursements (including the significant sums she had paid out to other lawyers acting on her behalf in these transactions). H, on the other hand, thought that all the payments would be channelled through Regency Limited. After further discussion, she agreed to pay him a sum of €60,000 which she considered generous for the work he had done and which he told me he was prepared to accept on the basis that it was fair and reasonable for the work he had done.

H has provided a copy of the Services Agreement into which the company entered with Mrs Jacques on 16 December 2004 when her work for the government began [1/C140]. He has also provided evidence of payment of the sum of €1,829,388 to the company in December 2011 and its invoice to Mrs Jacques for €60,000 dated 25 January 2012 [1/C146].

I now have a statement from Mrs Jacques which is dated 27 February 2015. She has confirmed in that statement that she has not at any time held monies for H and is not holding funds for him now. She says this at paragraph 4 [3/46]:-

Mrs Jacques confirms in her statement that, after the first instalment, no further monies were paid to H. She confirms what H told me during his oral evidence that she had been ‘shocked and embarrassed’ when he sought to charge her a fee of 5%. Of the €60,000 which she did pay, she says she thought the sum was ‘much too high but [she] was prepared to let it go’. She confirms that, after the first instalment which went through the Regency books, all further payments were made locally in Country A and paid directly into her Chambers account.

As part of her challenge to these arrangements, W has queried why, in these circumstances, H and Mrs Jacques would have maintained what was obviously a cordial business relationship after this episode. H told me in his oral evidence that he remained on very friendly terms with Mrs Jacques. She had sent him some business by putting him in touch with some people who were involved in a recovery following an aircraft accident in the Country T (Footnote: ⁸); he, in turn, sent any work he had in Country A to her.

H was cross-examined about the lack of detail in the account he had provided in his replies to Q’s questionnaire. Why, asked Mr Dyer, had he not mentioned the December 2011 agreement to cap his fees at €60,000 ? Why frame his response to the question in terms which suggest that he had been ‘swindled’ by Mrs Jacques ? H told me that he had been in Australia when, as part of his ongoing discussions with Mrs Jacques, he had agreed to limit his recovery from this particular exercise to €60,000. That, he said, was the explanation for the fact that his office administrator sent an email to the Jersey Trustees on 23 December 2011 containing the following reference :-

A further email was sent by the office administrator to Mrs Jacques on 7 February 2012 asking whether there was news on the further funds which it was assumed would be coming to Regency Limited. H told me that this was a proper reflection of his administrator’s assumption because of the previous assumptions he had made about Regency (as the collection agent) receiving the totality of the settlement funds. He told me that he had informed his administrator at some point following his return from Australia that the figure coming to Regency Limited had now been capped. He could not remember when he had that conversation but said that it might well have been after the email of 7 February 2012 was sent.

It seems to me that some support for H’s case can be found in an email which he sent subsequently to Mrs Jacques on 15 August 2012. The trustees in Jersey had written to him pointing out that a further tranche of €686,000 which they had been expecting from the government of Country A was not received in the month of January 2012. They asked, ‘What is the position in terms of the collectability of this debt from the invoice raised on 23/06/10 ? No chasing appears to have been carried out, but one part payment was received during the year, in December 2011’ [1/C365]. In his own email to Mrs Jacques, H said this :-

In paragraph 58 of her section 25 statement, W suggests a further reason for her belief that H may have come to a side agreement with Mrs Jacques so as to put funds beyond her reach and divert funds away from the business books. She alleges that he made a number of business trips to the Ivory Coast during 2011. On one of those visits, she suspected that he was accompanied by a woman with whom she alleges he was having an affair. She telephoned the hotel where she knew he was staying and was apparently informed that ‘Mr and Mrs D were staying at the hotel. The implication in the statement appears quite clear : the woman in question was Mrs Jacques. H confirmed in his oral evidence that he had not had any inappropriate relationship with Mrs Jacques. When W was asked whether she was alleging that this was the identity of the woman to whom she was referring in her statement, she took a step backwards and told me that this was not so. I have to say I was somewhat puzzled by this evidence since W bases her allegation on the existence of a side ‘deal’ or arrangement between H and Mrs Jacques on the link she makes in her own mind between a heated confrontation which took place with H on his return to the former matrimonial home and the ‘renegotiation’ of the terms of his success fee with that lady. She says this :-

Even if I am wrong in my interpretation of what W intended to convey by this paragraph, it seems to me that it confirms the fact that H had communicated to W at about the time he tells me he was speaking to Mrs Jacques that he was likely to get significantly less from the work he had done for her than he had expected.

I ask myself, too, why H would have alerted his own office staff and the Jersey Trustees to his original expectations if it had been his intention to set up some fraudulent side deal with Mrs Jacques? If this was a ‘set up’ from the time when the Country A government made its offer to compromise the claim by making a payment to Mrs Jacques, it would have been far simpler to ‘square the books’ from the outset in terms of the information he provided to the Trustees and his own staff. If he and Mrs Jacques were in collusion over siphoning off significant sums for his benefit which they intended to pass ‘under the radar’ and away from sight of the Trustees and W, it seems to me that there was a much simpler way to achieve these ends without creating the paperwork trail which W has exhibited to her statement.

Mrs Jacques confirms explicitly in her own statement that there is no side agreement between her and H. She has no personal relationship with H; that much is now accepted by W. She is a member of the Bar and is clearly a respected member of her profession since she operated at a sufficiently senior level to secure instructions on a major piece of international litigation which the Country A government wished to defend. Why should she compromise that personal and professional integrity to conspire with H and participate in a fraud which shielded his assets from the reach of both W and the court ? To that question, I find myself struggling to find an answer.

In terms of my assessment of the parties as witnesses, each presented in a very different way. Both gave their evidence clearly and in a courteous and careful manner. Each thought about the questions they were being asked and formulated their responses coherently. However, W struck me as a woman who needs to have at her fingertips the precise detail of every aspect of her case. She has clearly invested a very significant amount of her time and energy in the last year and more focusing on every aspect of H’s financial disclosure. Whilst I accept that her care for the children has been a priority whilst they have been home, I have little doubt that his disclosure has been a fairly full-time job for her in recent months. Her answers to questions were meticulous in their precision. She is softly spoken but seldom hesitated in her responses to questions which were put to her. There was very clearly an undercurrent of suspicion and, in some instances, hostility towards H in much of her evidence. She regards him as a potential point of conflict in terms of her personal dealings with him and, as she told me, this is the main driver for her wish to set up the education fund for the children’s tertiary schooling.

As I have said, there was a point in her evidence at which she became visibly distressed, but she quickly regained her composure after a short break. As to her case in relation to non-disclosure, she was careful not to invade the territory of certainty in relation to her suspicions. She said this whilst she was dealing with Mr Peel’s questions in cross-examination :-

W confirmed that she had gone back in detail through records to 2008. Not only has she had access to the computer files and hard drives, she has now had access to a full run of the bank statements operated by the Jersey Trustees. She has seen all the mandates. She accepted that her ‘audit through the books’ has informed and focused many of the questions she has raised with H during the course of the proceedings and, in particular, since her new solicitors took over in October 2014. She believed that there should have been a greater volume of funds flowing through the Maple and Trust accounts. She was concerned about one particular mandate in respect of which she would have expected to see funds from a €58 million / €59 million transaction reflected in the trust bank statements. The statements relating to that particular period were due to arrive later that day and she told me she would then be in a position to verify what H had said about it. He was not cross-examined subsequently on this point by reference to the statements and nor did Mr Dyer seek to introduce any of the statements in evidence. I can only surmise that this line of enquiry was either closed down in W’s mind by what she read in the statements or that they did not assist her (or me) one way or the other.

H was equally courteous and controlled whilst he was giving his oral evidence and was quick to acknowledge the very considerable contribution which W had made to the marriage and to their family life over the years. He struck me as a witness who had done his best to cooperate with the provision of information as the case had unfolded but as one who was becoming increasingly concerned that his attempts to reassure W with significant quantities of information and documents appeared to be met with further volleys of questions. He was entirely open in his responses to Mr Dyer’s questions about the manner in which the school fees for his grandchildren had been paid. Whilst it was suggested to him that he was being evasive in his written answers, I accept as true his explanation to me that he was, indeed, thoroughly embarrassed about the steps he had taken and he was careful in his oral evidence not to implicate Mr Collins in any wrong doing in relation the advice he had received.

He is clearly not a man who enjoys the robust good health of someone twenty years his junior and I accept what he told me about his future intentions in relation to retirement. With the six figure bills which these parties are now carrying in relation to their combined legal costs of these proceedings, he cannot afford simply to ‘down tools’ and stop work altogether. I accept that he is going to need to have a serious conversation with his business partner, Mr Burne, about how they intend to work together in future. Mr Burne has significant problems of his own just at the moment, not least of which is his wife’s ill health about which I was sorry to learn.

On the whole, I found both parties to be credible and reliable witnesses, each of whom was doing his or her best to assist me to reach the conclusions which would inevitably inform this judgment. I am prepared to accept that the ongoing tensions between them over the course of the last two or more years may well have led to confrontations or flash points when H may have used intemperate language in W’s presence. I suspect these occasions may well have been the reflection of much frustration on both sides. W did not believe that she was being shown the whole picture. As she became more deeply enmeshed in the detail of his working life and practices as a result of her extensive trawl through the papers, her suspicions have only increased. H, for his part, has been confronted – in effect – with the requirement to prove a negative. As each round of the paper disclosure exercise has produced further enquiries from W’s team, he has probably felt his back to be up against a brick wall without the means of satisfying W that he had, and has (on his case), put his cards on the table. I bear in mind that H is now 71 years old and that, on any view, his working life is coming to an end. Findings of non-disclosure and the possibility of receiving a diminished share of the assets as a direct consequence are, I accept, matters of significant importance to a man whose ability to retrench over future years of income generation is more or less non-existent in terms of anything other than the existing mandate run-off. At times, he appeared genuinely wearied by the administrative burden which this case has imposed on him and I accept that this is a case where opportunities for further wealth creation in the future are likely to be limited.

Insofar as it is necessary for me to make a finding about the incident which is alleged to have occurred in the car park, I do not accept that H has ever made a genuine threat to W’s life. If and insofar as she may have interpreted what he said as such a threat, I know not but I am prepared to accept what she told me about reporting the matter to the police despite the absence of any evidence to suggest that is what she did. However, she was operating in an environment of suspicion and mistrust. H’s business interests are conducted in some uncomfortable (and even hostile) environments where the standard norms of transparent commercial operation may not always be observed, as even he admits. She was undoubtedly worried about her own future financial security and that of her children. I suspect that it was in these circumstances that she took from a conversation with Lisa Brockley the impression that there might well be some difficulty in tracing all the money. Miss Brockley is a director of Summit Trustees Limited. As such, she is not only regulated in her dealings by the Jersey Financial Services Commission in her conduct of trust business; she owes the beneficiaries a fiduciary duty to conduct those affairs honestly and transparently. She has denied making any such statement to W although it is clear that H did not inform the Trustees at the time about the transactions concerning the school fees payments.

To the extent that W sought to suggest in explicit terms that the Trustees were involved in any deliberate falsification of the accounts in collusion with H, I reject her case. I do not find that these were mere ‘puppet’ trustees dancing to a tune piped by H. Had that been the case, there would have been no need for W’s solicitors to instigate proceedings in Jersey to secure production of the bank statements since H was actively encouraging their disclosure at the relevant time. Mr Collins’s evidence was to the effect that these were entirely professional offshore Trustees who had quite properly implemented appropriate administrative changes to their accounting procedures when he had been involved in 2010, 2011 and 2012. He told me about the extent of the inter-relationship between himself (as the Partnership’s accountant) and the Trustees. Whilst Mr Collins is not involved in the production of the Maple accounts, there is a flow of information between them, including the financial spreadsheets extracted from the bank accounts and the sales and purchase ledgers.

I was taken to an email produced by W during the course of her re-examination. It is in the bundles at [1/C:139A]. It comes from Mr John Miller, one of the directors of Summit, and was sent to H on 2 October 2012. W raised concerns about references in that email to some proposed adjustments in the 2012 accounts for Maple. There is reference in the email to reductions in a loan made to ‘Natalie’, the office administrator. I was told that H had lent her a sum of c. £13,000 in relation to a deposit on a property purchase. That loan was fully documented, and H told me during the course of his oral evidence that Natalie had made various repayments against that loan by paying money to him or to third parties in respect of business or family expenses. For example, I heard about sums which she paid in Euros on behalf of H and W to a firm of removers which was transporting furniture down to their home in the South of France. H had an arrangement with Lisa Brockley at Summit that a record would be kept of these informal payments and set offs would be made against Natalie’s loan. The email from Mr Smith refers to recharging sums of just over £5,000 as expenses for repairs or administration work in the various accounts. It also makes reference to an existing loan of £150,000. This, I was told, was separate and distinct from the personal loan to Natalie and related to an inter-company loan recorded in the business accounts. I do not have the full email exchange and cannot see H’s reply but he told me during the course of his oral evidence that he did not understand these references himself and, given that they related to accounting procedures dating back two and a half years, he would need to ask Lisa Brockley if further clarification was required.

At the end of the day, I stand back and ask myself how likely it is that this husband has availed himself of the opportunity to ‘park’ funds with various third parties in an attempt to reduce the assets which are available for sharing with W in these proceedings. I accept, as I must, that the opportunity for such dealings may well exist given the basis on which he conducts operations and the degree of trust which he is inevitably bound to repose in individuals who have become his working partners in those regions over the years. I had statements from all the relevant third parties who are implicated in W’s allegations in one way or another. All reside outside the jurisdiction. The only witness whom Mr Dyer wished to cross-examine was Peter Tanfield. He could not be contacted in the course of his travels and thus the question posed by Mr Dyer on behalf of W (‘Ou-est M Tanfield ?’) went unanswered.

I have to bear in mind that the late service of W’s section 25 statement meant that H was confronted with significant last minute difficulties in rebutting the detail of her case as it was therein set out. The written evidence I have received from each of these individual witnesses has not been tested in cross-examination and the weight I can attach to what they tell me is therefore something I need to consider carefully. However, these individuals are not related to one another in any way. They make their separate appearances in the narrative of this case in the context of individual mandates and other transactions. W was asked during the course of cross-examination by Mr Peel whether it was part of her case that each of these individuals who had conspired with H were holding money on his behalf knowing that their instructions from H flowed from his desire to defeat her claims. To this question she responded by saying that their motives might not be malicious but she would be very surprised if her suspicions were not borne out.

I read Mr Burne’s statement with care, as I did all the others. It seems to me that he is an individual who has had a consistent and long-standing business and personal relationship with H over a number of years. He speaks highly of H’s integrity. To a significant extent, their relationship is built almost entirely on trust since there is no formal agreement regulating their partnership. He says that H ‘has always been absolutely open and honest with me regarding the finances of our business and I trust him completely’ [1/C16]. He is aware of the Natal Mines transactions and knows of H’s involvement with Mr Bernard. He knows about the potential X LTD transaction and that involving Mrs Jacques. But for his wife’s illness, it appears that he would have been prepared to come to court to assist me in whatever further way he could.

Mr Bernard has confirmed he is not holding monies for H or acting as his agent. Mr Tanfield has provided a similar denial of involvement in any such activities. I have already commented upon the unlikelihood, in my view, of Mrs Jacques being willing to compromise her professional position for H in the manner alleged by W.

Of course, I bear well in mind that this untested evidence comes from his friends and business associates who may well have a vested interest in continuing their commercial relationship with H in the future. Against that, I have to weigh in the balance the manner in which H and W conducted their financial arrangements during the course of their marriage to one another. All their property dealings have been entirely transparent and properties which they have purchased (including their French home) are held in their joint names. W has had unrestricted access to all their joint financial information. From her own account to me of their conversations around the kitchen supper table, H would freely share with her information about the business and future opportunities which might be exploited as firm mandates at some point further down the road. When he set up the offshore Trust in Jersey, he made her an equal beneficiary not simply as his spouse but in her own right. That structure had been put in place on W’s own evidence some eight weeks before she even became aware of its existence. She was fully involved in running the business through the Trust (at least insofar as the provision of information was concerned) as Mr Collins’s evidence demonstrated.

I have well in mind section 4 of the Civil Evidence Act 1995 which provides that, in weighing hearsay evidence and the weight to be attached to it, I must have regard to any circumstances from which any inference can reasonably be drawn as to the reliability or otherwise of the evidence. In particular, I bear in mind the practicality of calling the non-resident witnesses in view of both the imminence of the hearing and the late service of W’s detailed evidence in relation to the non-disclosure allegations, the personal knowledge which each of the witnesses has in relation to the events about which they depose in their witness statements, and the existence of any motive to conceal or misrepresent matters.

In the circumstances which I have set out in some detail in this judgment, I ask myself whether the evidence as a whole points to a conspiracy by H on the scale alleged by W involving both the Trustees and Messrs Bernard and Tanfield (neither of whom appear to be connected to one another in any other way) ? Did the institution of these proceedings by W operate on H’s mind in such a way that his entire animus towards her changed and the modus operandi, or course of dealings, he had established for the family’s financial benefit over nearly 20 years became a convenient edifice behind which to obscure the siphoning off of substantial and material sums of money in these proceedings ? Even that possibility would not begin to explain W’s case which requires me to find that he has been intent on perpetrating this fraud on her and the court for the last seven or eight years since 2007 (the year in which the US$50 million mandate to which I have referred in paragraphs 67 to 71 above). Is it likely that Lisa Brockley, as one of the Summit Trustees, would have participated in this fraudulent course of conduct (at its worst) or turned a blind eye to it (at best) ? Is Mrs Jacques also implicated in this web of deceit ?

After very careful reflection on all these matters, I have reached the conclusion that, on the balance of probabilities, W’s case in relation to non-disclosure has not been made out in circumstances which would permit me to move, without more, to an award involving an additional 25% of the equity in the former matrimonial home. Whilst I shall come on to analyse her case as it advanced from the foot of ‘needs’ in due course, I do not consider that the ‘sound evidential basis’ for drawing the conclusions which W invites me to make as explained by Mostyn J in NG v SG (Appeal: Non-Disclosure) (supra) has been established. H has on two occasions sought to achieve a tax saving on remittances to a third party or parties (ie. the schools) which he was not entitled to claim. In so doing, he utilised a mechanism which involved not simply the payment of money at his direction through a third party but the creation of document(s) which regularised the payment in the company/Partnership books. For that, he is properly the subject of censure. However I do not find that the evidence before me taken as a whole justifies the quantum leap which W asks me to take into territory which involves an assumption that, because he has been prepared to act in this manner in relation to his grandchildren’s school fees, he should necessarily be branded a ‘non-discloser’ merely because the opportunity to conceal transactions might hypothetically exist in the circumstances in which his business is transacted. Her suspicions have no doubt been fuelled to an extent by the difficult exercise she has undertaken in trying to fit together pieces of information without the benefit of the narrative explanation which H has provided during this hearing. Nevertheless, I am prepared to accept as true what he said to me that all of his efforts over the years have been for the benefit of his family. I could see very clearly the extent of the deep affection he holds for his three children from this marriage. That is something from which they benefit from each of their parents and I hope and expect that, with these proceedings behind them, the parties - as parents - will feel able to move on into a more settled regime whereby the children come and go freely as young adults between both their parents’ homes.

With that central issue now determined, the remaining issues in the case can be resolved in fairly short order.

I accept the submission made to me by Mr Dyer and Miss Chapman that, although uncertain as to timing and quantum, the mandate run-off is potentially worth a significant sum of money. H’s own estimate in the event of 100% recovery would make his share worth just under £14 million gross (net of Mr Burne’s share and expenses). He has estimated the probable ‘net recovery’ to be about £1.53 million. Whilst this figure ignores any potential interest payable, as Mr Dyer reminds me, I now know considerably more about how these mandates operate in practice and I accept that, whilst that may be correct as a statement of principle, it is unlikely in the future to result in an actual return which is significantly inflated by interest. As H explained, interest is only recoverable once the entire outstanding principal sum has been recovered and even then probably only in the event of a judgment debt after protracted and expensive litigation. Whilst I am aware that there have been three occasions in the past where full interest was recovered, this was largely down to the work undertaken by H in days when retirement was a far-off eventuality and he was travelling widely to extract maximum value from each mandate and often over protracted periods of time.

On behalf of H, Mr Peel invites me to proceed on the basis that these mandates represent a source of future income and any entitlement claimed by W to a share of this future income should be determined as a matter of principle after looking at her need or entitlement to an order in respect of periodical payments going forward. If such a need exists, it can be capitalised. He reminds me that she has already had the benefit of two and a half years of income support since the parties’ formal separation in 2012. However, in the light of my findings about H’s future retirement plans in the light of his age and health, how long is it reasonable to impose upon him an obligation to maintain his (younger) wife ?

It is accepted by both sides that the mandates have a significant element of matrimonial accrual in terms of their character as assets generated during the subsistence of the marriage. All but seventeen of the current live 42 mandates were signed during the subsistence of the marriage at a time when H and W were full partners in every sense of the word. I have been taken to the decisions in Rossi v Rossi [2006] EWHC 1482 (Fam), [2007] 1 FLR 790, H v H [2007] EWHC 459 (Fam), [2007] 2 FLR 548, S v S [2006] EWHC 2339 (Fam), [2007] 1 FLR 2120 and Jones v Jones [2011] EWHCA Civ 41 [2011] 1 FLR 1723. I have also looked at the authority of Evans v Evans [2013] EWHC 506 (Fam) where Moylan J had to consider the issue of the impact of post-separation endeavour in a situation where a husband was undoubtedly going to have to work hard in a business to prepare it for sale. In that case, his lordship made an award to W of 44% to reflect that future endeavour on his part (see para 157 of the judgment).

Mr Dyer and Miss Chapman invite me to consider these particular mandate contracts and their run-off over the next few years as akin to a barrister’s aged debt or a City banker’s bonus paid on a discretionary basis. I can see distinctions in both of those examples but I accept that, whether one characterises this particular species of asset as being essentially capital in nature or representing future income, it represents an asset – or a series of rolling income receipts – which has been generated during the subsistence of the marriage. There is only one mandate which has been the subject of a contract in 2015 and, wherever one draws the line in the sand, there is a matrimonial tailpiece which can be traced through to any future value received by H.

These matters and the law in relation to post-separation accrual were considered by me at some length in Cooper-Hohn v Hohn [2014] EWHC 4122 (Fam) in paragraphs 147 to 197. Those paragraphs were included by way of extract in the bundle of authorities which was placed before me for the purposes of counsel’s closing submissions, and I do not propose to repeat them here.

Mr Peel points to the fact that W will have no need of a share in the mandate run-off because she will be receiving more than 50% of the assets as a result of the agreement to ring-fence her inherited assets. I bear in mind, however, the absence of any significant pension provision in this case and the significant disparity in their ages. If I am minded to conclude that she has an entitlement to share, Mr Peel invites me to adopt a capitalised figure on the basis of a fixed ‘known’ rather than a Wells type of sharing arrangement which would give her a fixed percentage of the mandate recovery. In this context he points to the potential difficulties in satisfying her on each occasion that the figures attributed to her share are fair and reasonable. He points to the fact that she will wish to conduct some form of ‘audit trail’ to satisfy herself that H has been open and honest in the disclosure he has made. He says that this is the fairer and cleaner way to deal with her case on sharing because it will leave each of the parties in a position of knowing where they stand and able to plan for the future.

These are powerful incentives, I agree, given the history of this particular litigation.

I have reached the conclusion that, regardless of the way in which the proceeds from the mandate run-offs are characterised, W should be entitled to her fair share of these matrimonial assets as and when they fall in over future years. It is completely impossible to predict at this stage (a) when recovery might be made, and/or (b) what that recovery will be in terms of the figures. I accept that H may well be nearer the mark in terms of his estimates, based as they are upon a correlation with his income over the past 6 years [2/C393-394]. Nevertheless, it is simply impossible for me to predict with any certainty at this stage what sums he might recover. The evidence I heard over the course of this hearing has persuaded me that there is the potential for windfall recovery in certain situations and it would be unfair to deprive W of her share of any benefit of that element of future recovery. Similarly, in seeking to be fair to W in fixing her entitlement now at a sum certain, I might be visiting future unfairness on H should he recover less than he expects. I have come to the conclusion that, despite the financial nexus between them which such an outcome will inevitably prolong, W should receive her share of the mandate run-off expressed as a percentage of the net recovery in H’s hands.

W seeks 40% of all sums received. I now have a much better understanding of the degree of work and involvement which can sometimes be required of H in bringing these contracts to the stage where they mature and pay out. That is not always the case but it seems to me that a discount of 10% (ie. an uplift of 20% in his favour) does not properly reflect the fact that, at 71 years old, he will continue to operate in often hostile business environments to claw back the financial benefit currently locked in the mandates. I accept his evidence that he finds the work gruelling and the travel tiring. Although I accept that W will continue to make her own contributions under section 25(2)(f) in terms of her care for the children, they no longer absorb her entire focus and energy in perhaps the same way as once they did as small children. Within three years, each will be away from home at university pursuing the next stage of the beginning of their adult lives. Whilst I need no persuading that parental obligations can, and generally do, outlive any fixed or notional time line in a child’s journey through life, the fact is that W’s time will become increasingly her own to develop her French property, to travel, or to do as she chooses. In my judgment, H should be entitled to retain across the board two-thirds of any recovery he makes from the mandates and W shall be entitled to 33.33% of the net sums received whether paid in tranches or in single payments by the debtor in each case. These should be expressed as a series of separate contingent lump sum payments to W.

In terms of verifying these arrangements, W has now put forward Mr Adam Collins as someone who might assist the parties going forward. He is willing to do this and enjoys the confidence of each of H and W. In my view he would be particularly well placed to carry out this exercise given his detailed working knowledge of the business. His costs of this exercise should be shared equally by way of top-slicing these costs from the bottom line figures before W’s 33.33% entitlement is calculated. In this way, there is an incentive on both sides to keep his costs to a minimum. Before that exercise happens, a schedule will need to be drawn in order to set out the sums (if any) paid to Mr Burne and any other third parties involved in the recovery, the administrative and other costs and expenses and a notional deduction for H’s tax. It would be unfair were he to receive his share on a gross basis whereas W received hers on a net basis. I would hope that the parties will be able to agree upon a formula of words to be annexed to the order in due course. In the event of any further disputes on the ‘policing’ aspects of the payments due to W, I shall rule if necessary but I very much hope a consensus will emerge now that Mr Collins has been identified as the candidate for this particular exercise. I take the view that it would sensible to ‘spell out’ the procedure to be adopted either in the body of the order or in a separate schedule attached to it so that in future, should either party need to seek declaratory relief from the court in relation to the sums due to W, it will be evident from the order how the calculation is to be made.

Whether the sums due to W are to be paid on a biannual basis or annually, I shall leave to the parties to agree. It may be that Mr Collins will have a view on the practicalities involved in terms of his own input into this exercise. If agreement cannot be reached, I will decide but it would obviously be preferable to minimise costs where practical. Provided that costs can be contained, I should have thought that a biannual account is likely to assist both parties in terms of their future cash flow.

Thus, I return to the remaining aspects of computation which require my ruling. For these purposes, and in terms of the mechanics of extraction, the parties have helpfully prepared a document called “Points of Agreement”. That sets out in broad terms how value is to be delivered to the parties in terms of the distribution of the assets. I have already set out earlier in this judgment the agreed structure which has been put in place by the parties.

There remains an issue as to whether W should make a notional payment to H of £19,728 to equalise the greater drawings she has taken from the Partnership. W’s case, about which I heard some evidence, is that the greater burden for the children’s expenditure has fallen on her shoulders since the parties separated. She has provided a number of schedules in relation to the sums she has spent on items such as clothes and travel. H does not seek to criticise this level of expenditure on the three growing children. He, too, will have incurred expenses in relation to the children. I take the view that, whilst the circumstances surrounding the inequality of their drawings in recent months may have proved a source of aggravation in terms of managing the business cash flow, the sums involved are not so significant in the context of the overall assets that I should now seek to embark upon some sort of fact-finding exercise to ascertain the reasonableness of W’s expenditure. In the circumstances, I propose to treat their respective Partnership accounts as being notionally equalised with no liability either way.

The other issue which remains in dispute in terms of notional adjustment is the figure shown for each party’s legal costs. H seeks an adjustment of £35,000 to reflect the disparity in their costs incurred to date. W’s total costs are £380,000 whereas H’s costs are £310,000. If each is treated as paying 50% of the other’s costs bill, the effect without adjustment would be that H is subsidising W’s costs. He points to the fact that W has changed solicitors which will inevitably have increased her costs whilst H has had the lion’s share of the work in terms of dealing with multiple requests from her for disclosure. This was a technique deployed by Mostyn J in J v J [2014] EWHC 3654 where the husband’s costs exceeded the wife’s by some £182,000. Following the decisions in RH v RH [2008] EWHC 347 (Fam), [2008] 2 FLR 2142 and LS v JS (Appeal: Costs) [2012] EWHC 2690 (Fam), his lordship took the view that an adjustment was the fair way in which to share the existing costs burden between H and W. That case concerned a global costs liability of little shy of £1 million (some £920,000) where the assets at the date of trial amounted to less than £2 million, a situation which the judge was to describe as ‘an eye-watering total’ which had left him ‘lost for words when the scale of this madness was revealed to me’. The disparity between the parties in this case is not as acute and, as a proportion of the total assets available, whilst significant in terms of an overall costs spend, perhaps understandable given the trail of enquiries thrown up by W’s investigations into the operation of the business. I bear well in mind that it was only the forensic process undertaken during the course of this trial which actually threw open the windows so as to enable an informed understanding of various transactions undertaken by H in relation to the business. I am prepared to accept that W had legitimate concerns arising from some of the documents she had recovered from the business computer and that, in certain respects, H’s written explanations had not been as full or comprehensive as they might have been. Whether W’s suspicions would ever have been allayed without a full ventilation of these matters at trial, I know not.

Costs in respect of any financial remedy application lie very much in the discretion of the trial judge. He or she is in a unique position to determine that issue at the end of the day having heard all the evidence in the context of the wide discretion which he or she has pursuant to FPR 2010 r. 28.3(6). However, taking all these matters into account, I take the view that the fair way to reflect the costs position at this stage in the light of my conclusions in relation to W’s non-disclosure case is to equalise the costs as between the parties by a notional payment by W to H of £35,000 as it currently appears on the extraction schedule. I would hope that would conclude all and any outstanding issues in relation to costs but, if further matters arise, I will deal with them.

H had originally proposed to set aside a figure of £½ million for the children’s education costs. He told me that this was a ‘back of the envelope’ calculation which he had undertaken when Olivia was about to embark upon her undergraduate studies. He has now refined that calculation and offers to set aside a fund of £320,000. That sum is based upon a cost of £25,000 for 13 years or, in other words, a fund sufficient to see all three children through to the end of the first stage of their tertiary education. W seeks £500,000 to cover all the children’s ongoing educational expenses, including the costs of any post-graduate (or second) degrees which the children choose to undertake.

I agree that the more which can be settled now in terms of future family expenses, the better it is likely to be for everyone, including the children. I take the view that a fund of £500,000 is affordable in the circumstances of this case. With the increasing costs of education and the promise shown by these children in terms of their future academic careers and aspirations, that is the figure which will be earmarked for these costs. If there should prove to be a surplus at the end of the day, it will be for the parties to decide whether to leave their share of that benefit with their children or whether such a surplus is returned to them on a 50/50 basis. Each will need to consider the tax implications and I propose to say nothing more at this stage about the appropriate distribution of any surplus.

I heard from both parties in relation to their choice of trustee for the education fund. The areas of dispute appeared to have narrowed by the time we reached final submissions. Whilst I will not in this already lengthy judgment set out my particular reasons for the choice of trustee (unless either of the parties wishes me to do so), I take the view that Alice Garrade (W’s nominee) and James Dunhill (H’s choice of trustee) should be invited to act as joint trustees of the fund. The former is a relatively young woman who has known the children for most of their lives. She lives in Australia but has 15 years’ experience in the banking industry. Whilst she is a family member, W confirmed that she recognised H should be able to communicate with her as and when he needed in relation to these matters. The latter is a tax lawyer who knows the children well and in whom H has considerable confidence. I take the view they should be able to work well together over the life of the trust fund for the benefit of the children. In these days with email communication and Skype facilities readily available, I see no reason why their residence in different continents should prove any impediment to an effective working relation both as between themselves as trustees and in terms of their communication with the three children as the beneficiaries of the education fund. The parties will need to take specific advice as to the provenance of the funding of the £500,000 which will go into the education fund; that is not a matter at this stage which requires any further input from me.

Interim provision for the children has been agreed. On an ongoing basis, W seeks £10,000 per annum per child throughout their tertiary education. H offers £6,000 per annum per child. I accept that this family has enjoyed a good standard of living throughout the marriage. The children have been educated in some of the top public schools in the country. They have been fortunate enough to have spent the last few years living in a very comfortable home in Surrey with all the benefits of spending time during the summers in their French holiday home. They are all now young adults in their own right and, as such, their day to day costs are comparable – if not equivalent – to the costs of supporting three young adults. In these circumstances, I do not consider W’s request for £10,000 per annum per child to be unreasonable in the context of this case notwithstanding that she, too, will be benefitting from any future returns from the mandate run-off. Whilst I hope and expect that the children will spend a significant amount of their free time with their father in his new home, the reality is that W will be meeting significant costs in maintaining a base for them in this country and getting them to and from each new term of study or work placement as they make the transition from student to employee.

In terms of the duration of the order, in my judgment the provision of £10,000 which will be paid to W for each child on an annual basis should be reduced by 50% to £5,000 during any period whilst any of the children is studying for a first degree. I have reached this conclusion on the basis of the provision I have already made in respect of the size of the education fund and in the light of H’s prospects of winding down into full retirement in due course. That reduced sum will represent the ‘roofing allowance’ to be paid directly to W for their benefit. I have every confidence that H can be relied upon to negotiate with the children directly in relation to any additional costs they may incur during any second degree which may not be covered by student loans or earnings generated in vacation periods.

I remain hopeful that, following a pre-arranged visit by H to the former matrimonial home, a schedule reflecting an agreed division of chattels will be prepared.

In summary, and on the basis of the various decisions and rulings set out in this judgment, the assets will be divided between the parties in accordance with the broad consensus which is now reflected in the final extraction schedule handed up at the conclusion of the evidence and dated 6 March 2015.

In reaching my conclusions, I have had very much in mind the checklist of factors set out in section 25 of the Matrimonial Causes Act 1973. Principally, in relation to needs, I am satisfied that the net effect of my order will meet the needs of each of these parties as they move into the next (retirement) stage of their lives. Although W is considerably younger than H, her future income needs have to be considered in the light of the fact that he is nearing the end of his working life and there is very little in this case in terms of pension provision available to either party. Each will share to an extent in the mandate run-offs, whatever these may yield over the next few years.

It is agreed that W will retain the French property and her share of the net proceeds from The Manor Farm. That share will be 50% after adjustment has been made for the various balance sheet events which have been provided for on the extraction schedule. The French property will be transferred into her effective ownership and control once the means has been agreed for the repayment of the mortgage and the balancing adjustment to H. Both parties will be left with sufficient resources to acquire a home of their own which will not be encumbered by any debt. If W chooses to retain the French property as a vehicle for investment and income generation, that must be a matter for her. I accept that she has a number of decisions to make in relation to where she puts down roots in future and these will be decisions she will take once both parties know what The Manor Farm has achieved in terms of a gross sale price.

I heard argument from leading counsel during the course of closing submissions about the appropriateness of fully amortising W’s notional Duxbury fund on the basis of various assumptions as to her future choices in relation to the purchase of a home. Regardless of these notional assumptions, I am satisfied that each of these parties will have a fund of up to £1 million which, in my view, will enable each to acquire a comfortable home for themselves and their children in Surrey or elsewhere outside central London. The balance of the capital available to them (which in W’s case will be about £1.8 million and in H’s some £265,000 less because of the ring-fencing of her inherited wealth) will need to be invested to produce an income stream upon which (with their respective shares of the mandate run-offs) they will live in terms of their future income needs. I was taken through their respective budgetary presentations. Budgets are to some extent aspirational on whatever basis they are drawn. I am confident that each of H and W will be left with sufficient resources to meet their needs and those needs will necessarily fall to be considered by them individually in terms of the decisions each makes about their respective housing needs going forward. Whether W will be able to afford to maintain and run the French property on the basis of the rental income yield which she anticipates receiving will be a matter for her. She will need to think about these decisions carefully once she knows what cash will be available from the sale of The Manor Farm and the liquidation of the Trust. She may well decide to ‘downscale’ in terms of the English home she buys in order to retain the French property. That will be a matter for her at the end of the day. H will be in a position to acquire an unencumbered home equivalent in value to the sort of property he showed me in his ‘comparable’ property particulars. I am satisfied he will have sufficient space in his new home to accommodate the children whenever they spend time with him during holiday and other periods.

I am satisfied that the structure of my award will meet needs and is one which is fair to each of H and W in the light of all the section 25 factors and the important principle of ensuring that each leaves the marriage with a broadly equal share of the assets they have together built up over a lengthy marriage. That principle of equality will be disturbed only by the discount which I have reflected in terms of my award relating to a principled departure in terms of that asset or income stream which is represented by the mandate run-off.