Obviously, when you are involved in a financial remedies case on divorce you must have an idea of what you are trying to get out of the case and devise a strategy accordingly. Part of that strategy will of course normally involve putting forward settlement proposals. However, that is not to say that you must stick to the position set out in those proposals, no matter what. As we will see, case W v W, such an uncompromising strategy can lead to disaster.
The case W v W was actually dealt with by the Family Court at Manchester in September 2018, although I only came across the published judgment in January. It contains a useful lesson in the dangers of adhering to an uncompromising strategy.
The case concerned a wife’s application for financial relief consequent upon the parties’ divorce.
The parties’ relationship began in 1992, and they were married in 1997. There are two children of the marriage. At the time of the hearing of the wife’s application the older child had finished his education, and the younger child was about to go to university.
The parties separated in 2016 when the wife left the matrimonial home, a farmhouse that had belonged to the husband’s father. She then commenced divorce proceedings and issued her financial remedies application.
The primary asset of the marriage was the husband’s plant hire business, which he started shortly after the parties’ relationship began. Hearing the case, His Honour Judge Booth valued the business at just over £7 million, out of a total asset base of some £9.5 million.
The wife sought an equal division of the assets. The husband proposed that he should have two-thirds, on the basis of his greater contribution, including the property that he had inherited from his father, and having regard to the fact that the wife would receive ‘copper-bottomed’ assets, whereas he would continue to carry the risk inherent in any trading business.
After hearing the case W v W, Judge Booth concluded that the assets should be divided as to 45% to the wife and 55% to the husband, which he considered properly reflected the matters raised by the husband. That would leave the wife an entitlement to £4.3 million, and the husband £5.2 million.
The next question raised by Judge Booth was: Can the husband afford to pay? He answered thus:
“I am giving him, as he requested, the opportunity to continue the business. At the Pre-Trial Review I invited the husband to consider how he might raise funds by borrowing and/or by selling assets or part of the business. I was surprised that I needed to make that suggestion. I was invited to infer from the very limited information that the husband elected to put before me that he could raise funds but did not want to disclose how much in case that opened the door to a larger award to the wife than I might otherwise have been contemplating. That has not been my approach. I have assessed what I regard as the wife’s entitlement. It is for the husband to organise his affairs to make it happen. To that end I will give him time.”
Accordingly, he ordered that all properties in the parties’ joint names should be transferred to the husband, other than a house occupied by the wife’s mother. The husband should continue to provide support for the wife until he paid her, three months hence, the sum of £2.3 million. The balance of the wife’s entitlement would be paid to her as to £1 million in 15 months’ time, and a further £1 million in 27 months’ time.
A bold strategy that failed
Following the circulation of a draft judgment, the husband “raised the spectre of a liquidation of the business”, as he suggested that the funds he was required to pay to the wife may be beyond the business’s ability to raise or sustain. To this Judge Booth responded:
“[The husband] knew [the wife] was asking for 50% of everything based on a valuation of the businesses substantially higher than that contended for by him. He presented his case as if there was no possibility of me providing that she should receive more than he was prepared to offer. That was a bold strategy that failed. He must bear the consequences of the decisions he made in the way he ran his case. I am not prepared to fundamentally alter my judgment so as to reduce the amount the wife might eventually receive. I have resolved the case on the basis of the evidence put before me. The husband is a man of considerable ability with access to good professional and commercial advice. He should apply his skill to raising the money.”
Ouch. We are not told whether the sums (at least, save for the last one) have been paid, and if so the effect of those payments upon the business. Still, as I said, a salutary lesson in the dangers of adhering to an uncompromising strategy.
You can read the full judgment of the case W v W here.
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