Cambridge Family Law Practice

A successful businessman has successfully appealed against a divorce finance order which included the assets of a company in which he was the major shareholder.

He disputed the conclusion of Her Honour Judge Ingram that he was the true owner of assets. The husband disputed this, saying it was:

“…contrary to the weight of evidence which he had adduced [entered as evidence] earlier in the proceedings.”

The five companies in which he is the sole or majority shareholder had been made parties to the litigation between him and his estranged wife in the family courts. Sitting at the High Court in London, Mrs Justice Roberts explained that:

“The companies were joined as parties at a late stage of the litigation about a month before the final hearing which took place over the course of five days.”

However, the husband did not attend this hearing after becoming ill: he had, he reported, suffered a suspected stroke, and gone to his local hospital. He made three applications for an adjournment over the course of the hearing. But Judge Ingram refused these, on the basis of advice from a cardiologist, who believed he was, in fact, well enough to attend.

This meant, explained the appeal judge:

“…neither the husband nor the companies were represented at the…hearing. The entire hearing was conducted in their absence and there was no attendance by any legal representative instructed by the husband or on behalf of the companies. The wife was present throughout and was represented…”

The first instance Judge also criticised the husband’s behaviour, saying he had, amongst other matters, not properly cooperated with a property valuer in the run-up to the hearing.

The husband appealed, disputing the judge’s financial findings, as well as her refusal to adjourn the hearing. His appeal came before Mrs Justice Roberts.

The latter concluded that Judge Ingram had been justified in her refusal of an adjournment:

“She delivered a detailed ruling explaining why she was proceeding, including the reliance which she was placing on the husband’s previous litigation conduct. Whilst other judges might have taken a different course, Her Honour Judge Ingram was the allocated trial judge who had been dealing with the case for many months. She was well aware of previous opportunities taken by this husband to frustrate the smooth progress of the litigation. She factored in the stress which the wife would experience if there was further delay. In my judgment, whilst a finely balanced decision, she was entitled to take the course she did relying on [the cardiologist]’s most recent opinion as to the husband’s fitness to attend.”

But, believed Mrs Justice Roberts, the earlier judge had not properly assessed the ownership of assets belonging to the company. She explained that:

“…[Judge Ingram] did not attempt to pierce the corporate veil in this case. Rather, she treated the husband as the company’s nominee for the purposes of assessing …ownership.”

The husband had, believed Judge Ingram:

“…treated corporate resources as his own to deal with at his whim.”

Mrs Justice Roberts continued:

“In my judgment, on the basis of the evidence available to the court both before and after the hearing…it is difficult to see from her judgment… the basis for that finding.”

In assessing the value of the husband’s interest in the companies for the purposes of the financial settlement, the court should have been:

“…focussed upon […] the value of the individual shareholding in each company and not the value of its underlying assets devoid of consideration of inter-company loans and other corporate liabilities including, ultimately, any costs associated with extracting that value in accordance with the husband’s ownership of the shares.”

In other words, the husband was not the direct owner of the company assets included in the judge’s calculations, but simply a shareholder in the companies. Consequently, Mrs Justice Roberts concluded that the calculations used to draw up the financial settlement had been erroneous.

Tricia Ashton, one of the partners here at Cambridge Family Law Practice notes: “The key substantive issue arising in this appeal relates to corporate ownership and the proper approach to be taken to business interests on divorce. However, it would seem clear that the husband’s litigation conduct throughout the proceedings made the entire process – including what should have been its ‘natural’ conclusion (in this instance final hearing) – more difficult, and probably more expensive, for everyone involved – including himself.”

Read the full judgement here.