MacDonald J. An equal division of the matrimonial assets following a 40-year marriage, including a Wells share in favour of W.

Total assets of £26m. W (63) was a British citizen; H (61) held dual British and US citizenship, the latter giving rise to significant tax liabilities, estimated at between £1.4m and £1.7m; [30]. The FMH had an agreed value of £7m; [7]. Whilst W sought to retain the property, H contended it should be sold; [8].

H’s Colendi shareholding

H worked in the financial sector. Following the 2008 crash, he became engaged in litigation against the asset management company he had set up in 2006, as a result of which he recovered £2.5m in net proceeds. These proceeds were invested in numerous properties, the c.£100k pa rental income from which was paid into a joint account; [9]. The parties’ wealth also derived from Bitcoin: in 2012 H purchased just over 1,000 Bitcoin at a cost of £10,000, and by 2017 the value of H’s holding had risen to c.£20m; [10]. H later established a peer-to-peer Bitcoin exchange, which, following separation, was acquired by Colendi, a financial services platform; [13]. W was notified by H’s solicitors of the acquisition, and that H’s interest was now ‘approximately 4%’ of Colendi’s share capital, later valued by an SJE at £19m; [16]. Numerous issues between the parties arose out of this acquisition, including whether it was possible to transfer part of H’s shareholding to W under the current corporate structure; [22].

London City Lionesses

In 2019 the parties set up a company, ELSA, which in the same year bought women’s football club the London City Lionesses; [23]. Between 2019 and 2023 the parties invested a total of £3.3m into the club; [24]. In May 2023 H informed W that they no longer had sufficient funds to finance the club – W believed this was done to punish her; [25]. In December 2023 ELSA was sold for £6m; [26]. Part of the sale included a consultancy agreement providing for W to be paid an annual consultancy fee of £750,000 pa for four years, which W contended was merely deferred consideration for the sale of ELSA; [27]. H, on the other hand, alleged that the ELSA deal was a construct designed to defeat his sharing claim; [29].

Conduct

Both parties sought to rely on conduct arguments. W’s pleaded case under s 25(1)(g) consisted of (a) that she was suffering from symptoms of PTSD arising out of H’s behaviour; (b) H’s ‘secretive and unilateral financial actions’, in particular his failure to disclose the Colendi acquisition; (c) H’s exertion of financial control over her; and (d) H threatening to withhold funding for ELSA if W refused to agree to sell jointly owned properties to fund the team; [35]. W also sought to rely on purported wider non-disclosure by H; [36]. In this context she relied on an indemnity costs order made against H in an earlier hearing; [37]. H, on the contrary, not only rejected W’s allegations but positively alleged that it was in fact W who was guilty of the misconduct, stating that she was guilty of pursuing irrelevant disclosure, [38] and that she had failed to negotiate reasonably; [39].

Discussion

The judge noted that on several occasions W in her evidence ‘gave the impression of having exaggerated matters for forensic effect’ ([56]) though H was ‘likewise a less than impressive witness’ ([58]) and so the judge treated both parties’ evidence with caution.

In respect of the ELSA consultancy fee, the judge was satisfied that this constituted deferred consideration for the sale of the company; [67]. The judge’s reasoning included that:

• Whilst ELSA was obliged to pay W’s fixed ‘fee’, there was no obligation on W’s part to offer ELSA opportunities to carry out her duties; [71]. The payment of the ‘fee’ was not linked to any metric of performance; [72].
• The ‘fee’ was only not payable in the event of material breach, if W was guilty of financial dishonesty, or if W was convicted of a criminal offence; [72].
• For the ‘fee’ to constitute income rather than consideration would have rendered the sale financially disadvantageous to W given the higher tax rate payable by her, [73] as well as being a ‘commercially puzzling’ decision on the part of the purchasing company; [74].

In relation to H’s US tax liability, the judge was satisfied that these should be met by the parties equally, given that the liability arose from the sale of matrimonial assets, and that the parties were agreed on the principle of a broadly equal overall division; [79]. The judge additionally found that both parties had reasonable earning prospects, with no evidence before the court supporting W’s claim that she suffered from PTSD; [89]. Housing was therefore both parties’ primary capital need; [90]. The judge was satisfied that a fair distribution of assets could be achieved without the sale of the FMH; [91].

With regards to conduct, the judge concluded that W’s allegations ‘came nowhere near meeting the high threshold applicable’; [96]. Further, in respect of W’s allegations of non-disclosure and litigation misconduct, the judge was satisfied that it was appropriate to deal with those matters when assessing costs; [99]. In relation to H’s Colendi holding, the judge was obliged to consider the question of a Wells share given the disparity in size between the parties’ illiquid, risk-laden assets versus their liquid, ‘copper bottomed’ assets; [111].

Held

The judge ordered, inter alia, at[55]:

• the FMH to be transferred into W’s sole name;
• W to transfer to H the investment properties held in her name;
• H to transfer to W 30% of his future benefits from the Colendi shares, backed by a phantom share agreement; and
• the parties to share equally in the £750,000 deferred consideration for the sale of ELSA.

The overall result was an almost exactly 50:50 division of the matrimonial assets; [112]. The judge concluded his judgment by inviting submissions on costs; [114].