Michelle Young v Scot Young

Young v Young [2013] EWHC 3637 (Fam)

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SUMMARY:

Divorce matter before Mr Justice Philip Moor in the High Court at the Royal Courts of Justice for final hearing –  the Financial Remedies.

Hearing dates: 28th October to 15 November 2013, 18th November 2013 and 22nd November 2013

Date of Judgment: 22nd November 2013 (Sealed 2nd December 2013)

Result of hearing: Lump sum to the Wife of £20 millions (payable on or before 20th December 2013) + interest in default until full payment, maintenance arrears arising from Order of Black J dated 22nd April 2010 for £1,511,945.85 (payable on or before 20th December 2013) + interest in default until full payment, and order for costs in the sum of £5 million (payable on or before 6th December 2013)

Dismissed application: Scot Young’s application dated 24th October 2013 to vary the maintenance order dated 22nd April 2010 and to remit the arrears was dismissed.

Representation for the Wife: Mr Rex Howling QC and Miss Suki Johal (instructed by Vardags)

Representation for the Husband: Ms Kelly Edwards (solicitor from Sears Tooth & Co) on the first and last day of the trial, only; Acted as litigant in person for all other days of the trial.

“There is, however, no restriction against reporting what now follows.” (2013 Judgment of Mr Justice Moor)


 

FACTS (the disclosure process) AS FOUND BY MR JUSTICE MOOR:

“This case has been quite extraordinary even by the standards of the most bitter of matrimonial breakdowns.”

“It has taken some six and a half years to come to trial.”

“There have been around 65 separate hearings.”

“At an earlier stage, I committed the Husband to prison for six months for contempt of court.”

“In many respects, this is about as bad an example of how not to litigate as any I have ever encountered.”

“I recognize that this case has been as complicated a Financial Remedies case as has been dealt with before these courts. I accept that it has not been helped by the fact that the Husband has been found to be in contempt of court for failing to provide full and frank disclosure. The Wife has had to engage in considerable self-help, which has increased her costs dramatically.”

“I do not criticize these (the Wife’s) costs as I accept that this was a case of huge complexity, in which FTI (team of Forensic Accountants from FTI Consulting) had to consider 127,721 documents from electronic media as well as a further 39,359 pages of hard copy documents.”

“This has been one of the most complicated Financial Remedy cases ever seen in these courts.  It has been conducted under the glare of Media attention.”

“There is no doubt that the parties started with virtually nothing. They lived with the Wife’s parents initially. The Husband asserts that he had some savings that he invested in their first marital home but he did not own his own property when they met. I therefore proceed on the basis that any assets that I find the Husband now has were generated during the relationships.”

“First, it is rightly not alleged that conduct is relevant in this case, other than the allegations that the Husband has been hiding his assets. Second, the contributions of both parties to the marriage have been equal.

“There is not doubt that their standard of living increased exponentially….a very great deal of money was spent.”

Wife’s case: Husband worth “many hundreds of millions of pounds” or even that he is worth “a few billion at least”.

Husband’s case: “he is insolvent with a deficiency of Pound 28 million.” …” Contents that since no assets, Wife’s claim to be dismissed. “He says he hopes to get back into business once the dust has settled on this case whereupon he will repay his debts and support the Wife and children once again.”

“I remind myself that the burden of proof is on he or she who seeks to assert a positive case as to disputed facts, although it is for the respondent to the application to provide to the applicant and the court all the relevant information. This has been described as the duty to provide full and frank disclosure.”

Law: J v J [1995] P215, Sachs J said: –

“…it is as well to state expressly something which underlies the procedure by which husbands are required in such proceedings to disclose their means to the court. Whether that disclosure is by affidavit of facts, by affidavit of documents or by evidence on oath (not least when that evidence is led by those representing the husband), the obligation of the husband is to be full, frank and clear in that disclosure.  Any shortcoming of the husband from the requisite standard can and normally should be visited at least by the court drawing inferences against the husband on matters the subject of the shortcomings – insofar as such inferences can be properly drawn.”

In Baker v Baker [1995] 2 FLR 829, Butler – Sloss LJ said “that the principle had been accepted for over forty years where a spouse was found to have lied and to have been guilty of material non-disclosure of relevant financial information.  It continues to apply.  It has been said that it is up to the respondent to open the cupboard door and show that the cupboard is bare.  If he does not do so, the court can draw the inference that the cupboard is NOT bare.  As explained in Baker, this is not an improper reversal of the burden of proof. It remains for the applicant to prove her case. A failure by the respondent to discharge the duty of providing full and frank disclosure can, however, lead the court to draw inferences that are appropriate.

“A monumental battle ensued thereafter to attempt to secure full and frank disclosure from the Husband. The Wife’s legal advisers drafted detailed and lengthy questionnaires with the help of forensic accountants. The court made orders for the Husband to answer these questionnaires and produce all relevant documents. At times, he did not reply at all. At others, he provided replies which the court subsequently found to be inadequate.”

12th March 2009:  Mrs Justice Hogg directed the tipstaff to seize his passport.  Court has held it for “some four and half years”.

18th May 2009: Wife’s first committal to prison application for Husband

29th June 2009:  Mr Justice Parker  found the Husband to be in contempt of court and committed him to prison for 6 months suspended for 92 days on terms that he provide the answers in full by 7th September 2009.  “He did not do so. He was in hospital for 13 days from 28th August to 10th September 2009. He subsequently instructed Payne Hicks Beach solicitors and replies were served on 11th November 2009 together with 50 to 51 lever arch files of documents.”

17th to 18th December 2009:  Mrs Justice Black heard the application for maintenance pending suit. She described the Husband’s Form E as being “so uninformative as to be nearly useless.”  Although she said it was inappropriate to make findings of fact without oral evidence. Benefactions from friends averaging out at Pound 400,000 pa.  Conclusion: Pound 27,500 per month plus rent and school fees to cover both the Wife’s general maintenance and her need to fund the litigation.   Reflected the support the Husband had historically been providing to the Wife and children.

“The Husband has made no payments under this order whatsoever.”

“The Arrears are currently just short of £1.3 million excluding the rent and school fees.”

9th April 2010: Husband made bankrupt on a petition presented by HMRC. Total of 20 creditors claiming to be owned Pound 27,772,128 excluding interest and costs. HMRC said it was owed Pound 1,607,321.

9th April 2011: an interim order was made to suspend the Husband’s automatic discharge from bankruptcy.  He remains an un-discharged bankrupt.

1st June 2012: Wife applied to annul the bankruptcy.

October 2012: Wife applied to adjourn the final hearing which was listed for November 2012.  Agreed by Mr Justice Moor “as the case was simply not ready for trial and the time estimate of 10 days was inadequate”. Further order made for the Husband to answer questionnaire by 10th December 2012. “There is no doubt that he did not do so although he did subsequently purport to provide answers on 14th January 2013.”

15th January 2013: Fresh application for Husband’s committal to prison.

16th January 2013: Judgment delivered “I found to the criminal standard of proof that the Husband remained in contempt of court. I sentenced him to six months in prison. Although I made him well aware of his right to apply to me to purge his contempt, he made no such application. I do, of course, recognize the difficulties inherent in answering a detailed questionnaire whilst in prison. He was released in mid March 2013 after he had served half his sentence.”

2nd October 2013:  Mr Justice Moor “adjourned the application generally on the basis that the Wife could restore it if she obtained a significant lump sum at this hearing.”

“I have, of course, found that the Husband is in contempt of court in not providing complete or even adequate answers to the Wife’s Questionnaires. In this respect, he is to be criticized substantially. Indeed, he has paid the penalty by being committed to prison for a long period.”

“It is, of course, right that the Husband has been found to be in contempt of court to the criminal standard of proof…the Wife is entitled to be very aggrieved about that. I do accept that it has put her to considerable additional expense in costs. I will have to consider this contempt when I decide where the truth now lies…court expects and requires its order to be obeyed..”

28th November 2013:  3 days of reading, 12 days of oral evidence and 1 day so submissions; 22 witnesses (many called pursuant to Witness Summonses); Husband gave evidence over 3 days (litigant in person: “conducted himself with considerable skill and great dignity”)

“Added to her capital requirements, she would need around Pound 20 million to maintain the sort of standard of living enjoyed during the marriage for the rest of her life.  I make it clear, however, that if I find the Husband is worth more than Pound 40 million, the Wife would be entitled to half of the enhanced figure pursuant to her entitlement to share in his resources, even if that exceeds her needs generously assessed.”

“Husband has some serious evidential difficulties.”…“Although I accept that he has remedied part of the deficiencies, there undoubtedly remain serious gaps ..” …”he accepts that he placed assets in the name of nominees and offshore entities throughout his business career.  All this means that I have been forced to the conclusion that I need to see if there is corroboration for what he says before I accept his evidence as to his financial position.”

Consideration must be given to the documents prepared by the Husband for Coutts in 2002 and for the Bank of Scotland in 2006. Husband’s case in relation to these Schedules is that he was “bigging” himself up.  In relation to the Bank of Scotland Schedule, his case, in reality, is that he was lying to the Bank as to what he owned. “I cannot accept at face value the figures or assets included in the Coutts and Bank of Scotland Schedules. The Husband is not reliable. Just as he has lied to me, he lied to Coutts and Bank of Scotland….”

“On the balance of probability, I have concluded that there was no offer of £27 million.”

 A mockery offer to the Wife by the Husband: 

25 August 2009: meeting between the parties. Attendance Note introduced. “The meeting records the Husband making an offer to the Wife of £300 million, of which £100 million was to be paid to the Wife with £100 million to each of the two children. The Wife rejected the proposal.”   Husband denied making such an offer and stated “he was in a manic state at the time…and he was admitted to hospital on 28th August 2009”.  Husband referred to Brewsters Millions movie, in which a character had to “win” an inheritance of £300 million by giving away £30 million.  Husband played with the Wife when referring to such a movie. “Finally, he referred to the offer as a “hypothetical” offer and asked if the Wife would accept. She said “no”. He responded “I’m penniless and you turned down £300 million”.

“...this was not a serious offer capable of acceptance.  I remind myself that the Husband was admitted to hospital some three days later. The references in the Attendance Note make it tolerably clear that the Husband was not serious.”

“He was pleading very serious debts. Even if he did have assets, they were all hidden in the names of nominees or offshore companies, giving rise to huge enforcement issues.”

“The Husband has no answer to many of these points. He relies on his ill-health for lack of a clear memory as to what happened.  He says that he does not have much of the relevant documentation, saying it is either held by third parties or has disappeared. The central question as to how he lost all his money remains unanswered.”

“It is clear, however, that the Husband retained valuable assets in March 2006. It would have been amazing if he had not…will have to do my best, drawing such inferences as are appropriate to the evidence in the case overall.”

“So what was the truth behind the March 2006 meltdown? In some respects, I have found this the most difficult aspect of the case.”

“I reject the Husband’s case that the share certificates held by Mr Beller did not exist. …I find, on the balance of probabilities, that the Husband removed O2 shares valued at £ 6.2 million and a further block of shares held in Jersey worth £13.67 millon in 2006.” Worth today £ 22 million.

“On the balance of probabilities, I have come to the conclusion that the Husband did have other assets…”

“It is, completely impossible to produce any sort of schedule of the Husband’s assets in 2006 due to the significant number of lies told by the Husband to so many people over such a long period.”  Not known to the court if others may be involved in hiding assets for the Husband, open to the Wife to proceed and bring these individuals to the court.

“…I am satisfied that his shares in EPOSS, Condor, MIG, Essendex, Qiosks, Xenos and PUCA had significant value. MIG was, as Mr Davie said, “The Jewel in the Crown”. Most of these were transferred to Mr JP Williams in satisfaction of an alleged debt that is itself shrouded in mystery. Mr Williams undoubtedly did very well out of MIG but I cannot say that the Husband continues to own these shareholdings. Indeed, the evidence points the other way.”

“…the Wife has undoubtedly raised significant points about a whole series of other matters that the Husband has not dealt with to my satisfaction. …. I am concerned…”

“I am satisfied that he made at least £42 million net from the various transactions that Mr Steadman identified. I do not believe these were the only transactions that made a profit. Indeed, I have identified a number of shareholdings with significant value in excess of their acquisition cost held at the time of the alleged financial collapse. I do, however, accept that he had significant expenditure to deduct from his “profits”.

“The Wife has investigated his living arrangements since the separation….I have come to the conclusion that what she has discovered supports the conclusion that he is not a penniless man of straw with huge debts. The evidence also strongly suggests that he is still involved in business.  It would be surprising if he was not.”

“…all these loose ends and threads build up a convincing picture that the Husband has indeed failed to give full and frank disclosure and that he is hiding the truth.”

“…it is impossible to see how the Husband’s list of creditors as exhibited to his Form E in the sum of £27,854,109 is correct.”

“There has also been considerable evidence given about significant cash repayments made to Legal & Equitable, a company controlled by Mr Lawrence. It was alleged that the Husband repaid Mr Lawrence between £3 and £4 million in cash. The Husband did not deny making significant cash repayments…..the Legal & Equitable company balance sheet does not include any significant debt owned by the Husband.  On the balance of probabilities, I find that the Husband does not owe any money to Legal & Equitable.”

“Apart from Berezovskya, all these investors (in Project Moscow) were close associates of the Husband. Many of them lent him significant sums of money since…”

“There is another debt in the Schedule of Elizabeth Sears in the sum of Dollar 2,000,000. This is also completely shrouded in mystery. I am not satisfied that it exists any more.”

“….I find that the only true debts are those to HMRC, said in the Schedule to be for £944,344 but subsequently claimed by HMRC at £1,607,321 plus interest and penalties and the debt to the Bank of Scotland in the sum of £3,355,340….The Husband’s total debts are therefore £ 5 million, although there will additionally be the costs incurred by his trustees in bankruptcy.”

“I have found that the Husband removed assets from Mr Beller in March 2006 worth around £20 million at the time. I have also found that he had other undisclosed assets at that date worth around £25 million.  It follows that I find that he had assets of around £45 million in total at March 2006.  This broadly equates to the money found to have been made by Mr Steadman plus additional uplift on the other ventures but less his expenditure over the years.”

“I have no idea what has happened since then….He may have earned more from other undisclosed ventures.  There may have been capital growth on what he had although he may also incurred losses….Doing the best I can, I find that he still has £45 million hidden from this court. As against that, I must deduct £5 million for his debts, making a net total of £40 million.”


WIFE’S AWARD:

“The Wife is entitled to half, namely a lump sum of £20 million…”

“I realize that the Wife will have difficulties in enforcing my order. I only have two things to say. First, this debt will exist for all time. The Husband will never be free of it. It is very much in his interests to discharge it so he can move on. Second, I have rejected all the more fanciful allegations made against him. ….”

“Although there is a presumption of no order as to costs in the Family Division I can make an order if I consider it appropriate to do so as a result of the conduct of a party in relation to the proceedings. In deciding whether or not to do so, I can take into account, amongst other things, any failure to comply with orders of the court; any open offer to settle the proceedings; whether it was reasonable for a party to raise, pursue or contest a particular allegation; the manner in which a party has pursued or responded to the application or a particular allegation or issue and the financial effect on the parties of any costs order.”

“The Husband has not complied with court orders. He has, as I have found, not made any reasonable offer to settle the proceedings. He has been found to have misled the court as to his finances to a very significant extent….”

Wife also awarded legal costs.

 MESSAGE TO THE PUBLIC FROM THE LATE SCOT YOUNG IN “LADIES OF LONDON” Click here.