Court confirms settlement providing £10.3 million for wife
Sir Hugh Bennett, sitting in the Family Division, has dismissed a wife’s application to reopen financial remedy proceedings in a “big money” case in which heads of agreement and a consent order were approved by the court but the order was not yet sealed.
In S v S  EWHC 991 (Fam), the wife alleged non-disclosure by the husband and sought an order from the resumption of a hearing which concluded in July 2012. The husband, the founder and owner of the majority of the issued share capital in a valuable company (“X Co”), cross-applied under the show cause procedure for sealing of the order, arguing that he was not guilty of non disclosure and/or that the non-disclosure was not material.
The parties had married in 1993 and separated in 2010. They had three children. At the final hearing in July 2012, there was agreement that the matrimonial assets should be shared equally. The real issue was whether, and if so how, the husband’s shareholding in X Co should be shared.
In the event, the parties reached settlement during the course of the final hearing. The settlement terms were approved by the court, although the order was never sealed. The wife was to receive £10.355m of cash and properties and the husband retaining £5.64m. The husband also agreed to pay the wife, in the event of receipt of any cash proceeds following a disposal of his shares in X Co, 30% of the balance of the proceeds remaining after payment of costs of sale and CGT, £4m into a trust for one of the children and a payment of £1.7m to the wife. Various other terms were agreed as to transfer of properties and bank accounts, periodical payments for the children and the setting up of a trust for one of the children.
The wife subsequently discovered, however, that detailed planning for an initial public offering (“IPO”) ie a stock market floatation had been ongoing behind the scenes within the company. Media reports in July and August 2012 valued the company at between $750m and $1bn. She consequently applied back to court. Although by that point the draft order had been approved, it was not sealed.
The husband maintained that he had given full and frank disclosure and/or that his non-disclosure was not material. Furthermore, he dismissed the valuations of $750m-$1bn as “pure conjecture”.
In giving judgment, Sir Hugh Bennett dismissed the husband’s first argument, finding that planning for an IPO in early 2013 was in full swing from January 2012 to August 2012 and that the husband had been dishonest and had attempted to keep the true facts from the wife and the court. His Lordship also found it to be inconceivable that the circumstances as now disclosed would not have been relevant to the wife’s decision to compromise the litigation, and (more importantly) to the court’s approval of the heads of agreement and draft order. If the facts had been known, the court would have had little option but to adjourn the proceedings pending the possible IPO. However, in light of subsequent events (particularly that no IPO had in fact taken place), it was clear that in fact the order the court would have made if proper disclosure had taken place would not have been substantially different from the heads of agreement. Accordingly, and notwithstanding that the husband had been guilty of non-disclosure, in all the circumstances the non-disclosure was not material. His Lordship therefore dismissed the wife’s application and ordered that the draft order be sealed forthwith.
For the judgment and a fuller summary by Stephen Jarmain of 1 Garden Court, from which this news item is derived, please click here.
SOURCE: Family Law Week