Recorder Nicholas Allen KC. Judgment following four-day final hearing, in which the parties agreed that it was a sharing case and that the net capital assets should be divided equally. The dispute centred around issues of computation, including tax issues and add-back vs Wells sharing.

W was aged 45 and H was aged 47. The parties cohabited from 2003 and married in 2006. During the marriage, they moved abroad, largely due to H’s employment, and lived between country A and country B. In 2019, H moved to country C (where he was a national) and then in January 2020 he moved to Country D. Meanwhile, W returned to the FMH in England. The parties separated in 2022, making it a 19-year marriage.

The parties have twins aged 12 who both attend fee paying schools. The parties reached a consent order at a DRA in April 2024, providing for the children to spend 8 nights out of 14 with W and 6 with H during term time and school holidays to be shared equally. However, one of the children had not spent time with H since July 2024 when she broke her leg.

The parties had spent c.£944,000 in legal fees by the time of the final hearing. These were in addition to the c.£335,000 the parties had spent on the Children Act proceedings.

The parties agreed that both the parties’ paid and unpaid costs should be top sliced from the schedule. Because of W’s greater legal fees, an equal division results in H effectively contributing £150,000 to W’s legal fees.

The parties agree that there should be an equal division of the capital and that such a division would meet both of their capital and income needs. The entirety of the disagreement related to what the assets should be taken as and therefore who is required to pay a balancing sum.

By the end of the third day, the outstanding issues were:

• the quantum of the lump sum to be paid by H to W to equalise the net assets and the time for payment;
• whether W should share in anything received by H for the loan made by him to Mr NS on a Wells basis or whether the sum should be added back and factored into the lump sum; and
• any costs applications.

Initially, W sought H’s removal as trustee of four trusts settled by H in the children’s names in 2018. Recorder Allen KC referred W to FPR 9.11(1) and the case of DR v GR (Financial Remedy: Variation of Overseas Trust) [2013] 2 FLR 1534. No direction for any child affected to be joined to the proceedings (as required by FPR 9.11(1)) had been made and therefore this application was not pursued.

This was not a case in which conduct was a relevant consideration, albeit H had behaved poorly in sending abusive, offensive and misogynistic messages to W. Recorder Allen KC considered the guidance of Peel J in N v J [2024] EWFC 184 and concluded that, as (a) there was no identifiable negative financial impact on the parties as a result of H’s conduct and (b) this was not one of the ‘vanishingly rare’ cases that Peel J referred to, H’s conduct would not be reflected in the award.

W contended that the net assets were £14,738,186, where H contended for a figure of £13,329,432.

The major difference was that H applied a c.£723,000 discount to his Citibank private equity/real estate portfolio, on the basis that he would need to liquidate some or all of the holding to purchase a property and that such investments were normally sold at a discount. Recorder Allen KC found that H could fund a property by realising other investments and therefore he did not apply the 30% discount sought by H.

The second issue related to a loan made by H to Mr NS in January 2019 of c.£394,000. W sought for this to be added back and therefore factored into the lump sum. H stated that W should share anything received back by him on a Wells basis. Having reviewed the relevant case law, Recorder Allen KC concluded that it was right to treat the making of Wells orders with a degree of caution as they are ‘self-evidently antithetical to a clean break’. W had alleged that Mr NS was in some way deliberately withholding the money to help H in the divorce but later accepted in cross-examination that there was no evidence of this. On the balance of probabilities, considering a financial summary of Mr NS provided by H, the fact that the loan was made four years prior to the end of the parties’ marriage and only £50,000 had been repaid to date, Recorder Allen KC found that Mr NS did not have the funds to repay H now and might not do so in the future. Therefore, this was not a financial resource that H either has or was likely to have in the foreseeable future. The only fair outcome was that the debt was subject to Wells sharing if it was ever repaid.

The third issue related to a difference in valuation of Company Y of c.£180,000. Recorder Allen KC acknowledged that it was impossible for him to know what the accurate position was but adopted the H’s figures on the basis that the only accountancy evidence before the court, from H’s accountant, provided that figure.

The fourth issue related to tax and essentially, H’s tax residency. Recorder Allen KC gave significant consideration to the relevant case law (including White v White [2000] 2 FLR 981, K v L (Ancillary Relief: Inherited Wealth) [2010] 2 FLR 1467 and X v X (Financial Remedies: Share Value Discount: Date for Computation of Assets) [2017] 2 FLR 840) and concludes that the principle drawn from those authorities is that latent tax will be deducted in the computation exercise unless it is ‘unreal’ to do so. Recorder Allen KC considered that English tax residency is a complex issue and some form of SJE opinion as to H’s tax status would have been required for him to base his decision on. On balance, he decided it would be inappropriate to deduct the tax for a number of reasons, including: H became resident in country B for tax purposes with effect from spring 2015, he had maintained offshore tax status since that time, and he had not submitted any tax returns or paid tax in any jurisdiction since 2015. In addition, H’s messages to W and the fact that he had not taken any formal tax advice were ‘telling’. Further, the impact on H if that conclusion was wrong would be relatively minor.

Other minor issues between the parties included the income tax payable on W’s savings and H’s Twickenham debenture.

The judge concluded the assets amounted to £14,199,256 and therefore a lump sum of £510,000 was payable by the H. This was to be paid within 28 days of the sealed order.