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VV v VV 2022 EWFC 41 (13.5.22) Short childless marriage - cohabitation period - conduct/misconduct - needs

As I have said before, trying to squeeze an 11,431 word judgement into a useful bitesized article is like … well I’ll leave that to your imagination.

The relationship history was as follows:-

In March 2018 the parties (in their 50’s) met on Eurostar, which as far as I am aware does not operate as a dating agency.   W said cohabitation started December 2018, but H said it was December 2019 when they moved into a house in Kensington.  Not in dispute, was that the smitten husband to be, spent £125,000 on an engagement ring and the parties were engaged in March 2019. The parties were married on 25th January 2020 but it was acrimonious from the start and ended in June 2020.   In August 2020 H issued his FR application.

H’s relevant employment history was as follows:-

In September 2018 H started work for a US digital technology company which he left in September 2019.  The separation agreement provided for H to acquire 700,000 ‘units’ (shares) in the company upon it being listed.

Prior to it being listed, early in 2021 the husband 'pre-sold' (to a speculative buyer) some 438,732 units, receiving $11,531,991 gross. He did not inform the wife of this, as he was concerned that the wife might "make mischief" by telling the company's founder and attempt to thwart the pre-sales, at a time when it was not clear what the units would be worth on the stock market.  I’m sure H thought it’s never wrong to take a profit when you can !

In spring 2021, the company was listed, each unit fluctuating between $450 & $700.  Within weeks their value tumbled,  worth $22.54 at date of judgement[1].

H was not able to sell any of the units upon listing because the wife and her solicitors had been in touch with the company, without telling the husband, requesting that the company not release the units to the husband (which included his pre-sold units), pending resolution of the financial claims. The units were not therefore released on the listing day.

H was not able to fulfil his pre-sales contract, causing him financial loss.

At trial Peel J found the total available assets were valued at £11,801,754, almost all of which belonged to the husband. The husband offered a lump sum of £400,000 on a clean break basis, but as he had already advanced a similar sum to the wife for legal fees on account of that sum, his proposal was in effect nil. The wife, sought 50% of the remaining units, and the proceeds of sale of units to date ie over £6m gross, less any tax payable.

Issues

The extent of pre-marital cohabitation - W claimed that the husband's units in the US  company accrued during the cohabitation/marriage, and were therefore matrimonial in nature. Peel J, found that cohabitation did not start until December 2019, when the parties moved in together in London.

Peel J reviewed the law on cohabitation, with extracts from various (mainly Mostyn) cases.  He added ‘It seems to me that where cohabitation is in dispute, the court may need to inquire to an extent into the state of the relationship when evaluating the durability and permanence of the alleged cohabitation’.  And … ‘The essential inquiry is whether the pre-marital relationship is of such a nature as to be treated as akin to marriage. 

Prior to that, their relationship fell short of cohabitation equating to marital norms, and the fact of engagement did not by itself give rise to a sharing claim’.  Peel J backed up that latter view with extracts from Miller/McFarlane.  He also added I would add that the court should also look at the parties' respective intentions when inquiring into cohabitation.

Sharing - As the units were not acquired during cohabitation or marriage they were not marital property.

H’s conduct in ‘pre-selling’ shares without notifying W or the court.  On the evidence the judge was satisfied that H was acting prudently, and not guilty of conduct.  Peel J reviewed more Mostyn cases citing OG v AG [2020] EWFC 52, where four situations were identified:-

  • Very rarely, personal misconduct during or after the marriage
  • The add back jurisprudence where there has been wanton dissipation by a party
  • Litigation misconduct which is usually penalised in costs but can in rare cases sound in the award
  • Lack of full and frank disclosure leading to adverse inferences

W’s misconduct, in contacting the company, and preventing the release of the units on the listing day - Mr Justice Peel found that this amounted to gross and obvious conduct, which the court was entitled to take into account.  The conduct caused the husband financial losses in the tens of millions of dollars.  So what penalty did the judge visit on W as a result of her misconduct?  Firstly the judge said ‘If I am wrong in my analysis of W's sharing claim, I am satisfied that any such claim would be comfortably outweighed by her misconduct’ and later said ‘She was undoubtedly reckless in her interference with H's contractual rights. At the very least, she should have applied to the court rather than act unilaterally’ and see under ‘needs’.

W’s needs - Peel J calculated the wife's needs to amount to £750,000, and that is the sum he awarded to her. He cited Mostyn J in FF v KF [2017] EWHC 1093 at [18] ‘The main drivers in the discretionary exercise are the scale of the payer's wealth, the length of the marriage, the applicant's age and health, and the standard of living, although the latter factor cannot be allowed to dominate the exercise’.

And Peel J added his own comments ‘True, the marriage was short, but H is wealthy and has a high income whereas W, by contrast, has modest resources and a limited earning capacity.  W's conduct is also a factor. It seems to me that had H's wealth been much greater, as it would have been absent her behaviour, then her needs based award would likely have been higher than that which I propose to make.  I also bear in mind that H has already paid W £400,000 which has been spent on her legal costs’.

Costs - The judge invited written submissions in the first instance, which I doubt will be followed up.

Within W’s needs the judge included redemption of the £60,000 mortgage on her pre marital acquired flat, £273,000 indebtedness re costs, £450,000 rehabilitative maintenance (3 years at £150,000), ‘her career focus lessened during the relationship’.  Thus W was left in a position of  being adequately housed and debt free.

It is tempting to say cynically, the moral of the case is to marry someone of equal economic status, but the more lawyerly comment would be to enter into a prenuptial agreement it seems.

 

[1] Interestingly the judge valued the units at the date of giving judgement rather than trial date as their value had shifted.