S v S

Mrs S is a former wife who seeks directions as to the timing and implementation of a lump sum order made by me on 15^th December 2014. As I said in my judgment at the time, it is a bitter case and it seems to have remained so. Mrs S has been represented by Mr Southgate QC. The former husband, Mr S, has represented himself, assisted by his secretary, Mrs D, as his McKenzie Friend.

The Judgment of 15^th December 2014 sets out all the necessary background. It is essential reading although part E may be skimmed. The order was a lump sum of £5.6 million representing 22% in the wife’s favour out of a kitty of £25.3 million. That was an acknowledgement of the fact that Mr S had originally brought all the wealth into the marriage. The sum of £5.6 million has now been reduced to £5.175 million by a payment by Mr S on account. In view of the complexity of Mr S’s business infrastructure (he is in property holding and development) time was given him in my order until 15^th March 2015 for him to take professional advice and present Mrs S with proposals as to timing and implementation. The parties were then required to use their best endeavours to negotiate terms about timing; but as and from 15^th April 2015 they were respectively given liberty to apply to me for directions. The next I saw of the case was on 8^th June 2015 as a paper exercise when I set down the case for hearing today. There was a preamble which stated that Mrs S had requested, but that Mr S had declined, to provide any evidence which he might seek to rely on as to the question of timing.

On 13^th March 2015, being the last working day before the deadline, Mr S made proposals. Apart from seeking to vary the order about the date of transfer to him by Mrs S of one of the properties in her name (“the small house”) it merely proposed that the full sum would be paid within 28 days of the sale of his main business asset, P Ltd, or its assets. Since then there have been exchanges between the solicitors and latterly as between Mrs S’s solicitors and Mr S in person. These exchanges have really got nowhere, with Mrs S’s solicitors suggesting properties that could be sold and Mr S’s solicitors maintaining his stance as already mentioned.

Mr Southgate submits that Mr S is as negative and as bitter about Mrs S and about this case as he was at the time of the trial. As I said in paragraphs 55 and 56 of the Judgment at page B22 of the bundle prepared for today:

“There is no doubt from my having seen and heard [Mr S] that his attitude to the wife has been negatively influenced by his sense of affront at the extent of her financial claims. Having brought all the wealth into the marriage, he feels (as stated expressly in his Form E) that her claim should be assessed in the context of the rented Walthamstow property from which she came. He told me and clearly believes that she married him for his money. I do not, however, find that to be so. On the contrary, the contemporaneous correspondence implies that he would have been proud of her and grateful to her. I have no doubt that she was in love with him and he with her. His evidence is that he took all the decisions and that the wife ‘always lived in my houses.’ He does not consider that she contributed anything much to the marriage at all. I am satisfied [however] that she supported him fully within the house in the various ways of which she spoke in evidence; and that she complemented him as a supportive businessman’s wife and hostess within the social world of culture and the arts (music, opera and museums) of philanthropy and of fund-raising in which he moved.”

I am afraid Mr Southgate is right about Mr S’s continuing bitter attitude towards Mrs S, although that does not necessarily mean that he, Mr S, is not trying to get on with raising the required sum of money. In his letter of 28^th May 2015 he describes Mrs S as “vexatious” and as “being egged on by her lawyers.” He describes them as harassing and persecuting him. He told me that he feels the proceedings have humiliated him and have diminished his standing and self-esteem. He says he feels like a common criminal having to come to the court. He regards the costs of £1.3 million as at December 2014 as having been disgraceful, although I must point out that his unilaterally instructing accountants in breach of the rules led to there being two accountants to deal with the case adversarially and greatly inflated the costs, compared to what they could and would have been with a single accountancy expert. Mrs S’s claims are, in Mr S’s view, excessive and the order in her favour unreasonably high. He said he contemplated appealing it or simply putting himself in breach of it, although he decided against either of these courses. Appeal of course is an aggrieved party’s remedy. But having not appealed, I am sure he realises that he has to comply with the order. This, he says, he has tried to do.

On 26^th May 2015 Mr S formally instructed agents in the sale of the assets of P Ltd and he instructed them to close the deal by the end of October 2015 with completion by the end of 2015. He says he cannot sell individual parts of that asset or other assets piecemeal, because the overall reduction in value would decimate his businesses. Also such a way of proceeding would be hugely complicated. Mr Southgate is sceptical about this on behalf of Mrs S. No documents have been produced, although Mr S said that they would in any event be confidential and Mr Southgate submits that he (Mr S) can generally be seen to have taken the line of most resistance. Meanwhile, Mr Southgate emphasises that Mrs S is being prejudiced by the rising housing market and by the sense of her life being on hold.

I do not disagree with Mr S that a sale of the assets of P Ltd must be extremely complex and time-consuming and to some extent out of his direct control. I can imagine that it has absorbed him in a considerable amount of difficult work. However, standing back and taking a broad overview, the plain fact is that the Judgment and order are dated 15^th December 2014 and we are now at 7^th September 2015, with very little progress to show for it. Mr S says he did not get the Judgment until mid-January 2015, but he had first class lawyers including a Silk at the time of the hearing and they were in attendance for the Judgment in December 2014. Of course he needed time to think and to take professional advice; but thereafter following March 2015 it was incumbent up on him to move his plans along.

As it is, the sale brochure regarding the assets of P Ltd has only been prepared last week; further to which Mr S has transferred two shares of a company of his into his grandchildren’s trust since the hearing. The company concerned owns land in Cornwall. The company nominally owed Mr S the purchase price of the land which he had paid some time previously; but he is now not going to reclaim the debt from the company, nor enforce the constructive trust on which the company would prima facie have held it for him. Effectively, therefore, he has given away the land’s value of £893,000 which he could have recouped for himself by going against the company to retrieve it. He did not demur about this and said, rather angrily and defensively, “Why the hell shouldn’t I provide for my grandchildren?” I am afraid the answer to that rhetorical question, however much one may want to provide for one’s grandchildren (as to which, as a grandfather, I am not at all unsympathetic), is that when a court has made an order then one has to arrange one’s affairs so as to comply with it. Divesting himself of such a large amount of money after the date of the order did not help the cause.

All in all, taking that matter into account, together with Mr S’s expressed upset and anger about Mrs S and bearing in mind that the arrangements to sell the assets of P Ltd were not put in place formally until May 2015, I do consider that Mr S has dragged his feet in the earlier part of this year. I hope he is right in saying that there can be completion of a sale by December 2015. I do consider it would be reasonable to give Mr S more time to pay a substantial part of the £5.175 million still owing. At the same time, I am sympathetic to Mrs S’s wish to get on to the property ladder.

Looking back to the Judgment of December 2015, it provided for the sum of £2,062,000 (paragraph 79(b)) for Mrs S’s accommodation, for setting up the accommodation and for Stamp Duty Land Tax. She should not have to wait much longer for that sort of sum. It happens that, through Ms Bangay QC, Mr S made open proposals on 7^th November 2014 (D42) where he put forward that he would pay £1.3 million within six months, (which was at that time by June 2015) and a further £2 million after twelve months (i.e. by December 2015) the latter sum being by the realisation of two companies, [named], for the combined sum of £1.9 million. That would have enabled him to pay a lump sum (which was his open offer at the time of the proceedings) of £3.3 million. He has, therefore, been aware of the sort of obligation on him, although I take the point that he had been targeting a lower overall figure and so was not then contemplating selling the assets of P Ltd. I do not accept that the issue of costs has changed anything with regard to the offer which he made at that time, as he claims, because (although such costs are indeed extremely large at £1.3 million) they were clearly in that range when he made those proposals.

What I propose as being the fairest to both sides that I can achieve, is that Mr S pay £2.2 million by 9^th December 2015. This gives him a further three months to raise that sum of money. It will enable Mrs S to buy a property. The balance will be paid by 31^st March 2016, giving a further six and a half months from now for the assets of P Ltd to be sold. Upon payment of the first of these lump sums, the rental element of the maintenance arrangement presently in place will cease; that is to say, the £3000 a month that Mr S is currently paying for Mrs S to rent a home. In the event that he defaults on either payment, then the interim maintenance paid under the maintenance arrangements currently in place will be credited as and from the date of such default against the accruing judgment debt interest (8%) as and when he finally makes the payment or payments concerned.

I do not think it would be fair, there having been as yet no date in place for payment, to impose punitive judgment rate interest (8%) dressed up as maintenance as from today, nor indeed at all (unless Mr S defaults on those above payments that I propose to order). I record that Mrs S presently has around £126,000 per annum gross, being by a combination of £60,000 a year general maintenance from Mr S, £36,000 a year from him for her rent, £24,000 a year from one of his companies for the rental of “the small house” and £12,000 a year (net of mortgage) from an investment property which she owns. That is £132,000 a year gross. If one taxes the last two items, one gets down to about £126,000 a year net, a respectable income. Even when the rental stops, because she will not need it, she will have something just under £100,000 a year, which is the amount I said in my Judgment that she required.

In my view, and I have borne this strongly in mind, it is better to allow Mr S further time to pay in this way, in the hope that the due payments will be made and that the matter can be put to rest without further expensive trips back to court.