S v T

CourtRoyal Court
JudgeJ. A. Clyde-Smith,Jurats Grime,Ramsden
Judgment Date15 January 2019
Neutral Citation[2019] JRC 3
Date15 January 2019

[2019] JRC 3




J. A. Clyde-Smith, Esq., Commissioner, and Jurats Grime and Ramsden


Advocate C. R. G. Davies for the Petitioner.

Advocate B. J. Corbett for the Respondent.


Miller v Miller; McFarlane v McFarlane [2006] UKHL 24.

S -v- T (Matrimonial) [2018] JRC 093.

Rossi v Rossi [2006] EWHC 1482 FAM.

Matrimonial Causes Act 1973.

White v White [2001] 1 AC 596.

Hart v Hart [2017] EWCA Civ 1306.

Sharp v Sharp [2017] EWCA Civ 408.

V v V (prenuptial agreement) [2012] 1 FLR 1315.

Charman v Charman [2007] 1 FLR 1246.

Work v Gray [2017] EWCA Civ 270.

N v N (Financial Provision: Sale of Company) [2001] 2 FLR 69.

Norris [2002] EWHC 2996 (Fam).

Vaughan [2007] EWCA Civ 1085.

Rapp v Sarre [2016] EWCA Civ 93

Matrimonial — judgment on the respondent's claim for ancillary relief




History of the marriage



Procedural history



Financial Resources



The BDO supplemental report



Schedules of assets



Open positions



Legal principles to be applied



Section 25 criteria



Special contribution






Cross check for fairness



Financial misconduct



Loss of £63,507.64p



Loss of £591,000



Loss of £250,000



Ski apartment






This is the Court's judgment on the respondent's claim for ancillary relief. The assets of the petitioner are substantial, and accordingly, of the three distributive principles, namely need (generously interpreted), compensation and sharing (as identified in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24), the Court is concerned with the sharing principle, on the basis that it is probable that sharing, whether equally or not, would cater automatically for the parties' needs. The issue of compensation does not arise.


Particular features of the case are the very significant investments the petitioner has made in businesses that are currently loss-making, which restricts the liquidity available to meet any order the Court may wish to make, and whether equality of division should be departed from because of the petitioner's special contribution.


The task of the Court is first to assess the financial resources of the parties and secondly, to distribute it. Before doing that, we give a potted history of the marriage and of the proceedings.

History of the marriage

The parties, who were in their thirties, were married in England in 1995 and they have one, now adult, son A, who was born in 1996. At the time of the marriage, the respondent was a captain in the Army and the petitioner (who holds a number of financial qualifications) worked in corporate finance and financial services. She came to the marriage owning a property, Property A, with a mortgage of £90,000 and with debts of some £10,000. The property was put into their joint names and was subsequently sold in 1998 for £192,000. Their next home in England, Property B, was then acquired, again in joint names. The respondent came to the marriage with no debt, and with some £30,000 in PEPs, ISAs and cash.


In or around 1996, the petitioner started her own company, Company A to work on her idea that technology could be used to solve the problems that financial businesses have with payrolls. In 2000, she launched the first international internet payroll application service provider, which she tells us was the first of its kind in the world. The respondent, who had risen to the rank of major, then left the Army to work in the petitioner's business in an administrative role.


The business had financial difficulties in 2002/3, at which point the respondent left to qualify as a barrister and in 2004 was employed by Siemens. He re-joined the business of the petitioner in 2006, again in an administrative role. It was re-structured and began to grow again to the point that it needed equity funding to support that growth.


In or around 2008, the petitioner secured equity funding from Company U in the US. B, a software engineer, who had joined her business in or around 2002 as her chief technical officer, told us that at the time of the equity funding from Company U, the growth of the business was exponential and by 2009, Company A was delivering expert solutions to clients in more than 160 countries employing some 200 people. The petitioner informed us that she became recognised world-wide as a very successful entrepreneur, winning a number of awards.


In 2010, the relationship with Company U deteriorated and following a failed management buy-out she and B were placed on gardening leave, subject to wide restraint in trade provisions and the respondent was made redundant.


The petitioner had an idea for a new payroll platform and she moved to Jersey (with the family) and B (who was to take a minority interest) to develop it in response to the Island's drive to attract digital technology. The parties acquired Property C, through a company Company L which was owned jointly, as the family home for £1.8 million with a mortgage from Barclays Bank of £1.7 million, which the petitioner was able to occupy with her family as a “J Category” essential employee.


A new company was formed, Company B and equity funding secured from the Company V. Because of the restrictions to which they were potentially subject, the petitioner and B arranged for the respondent to be the shareholder in Company B, along with Company V and another minority investor. The terms upon which the respondent holds those shares is one of the issues in this case, albeit a minor one. The respondent was again employed in an administrative capacity.


The relationship with Company V did not go well, and by early 2011, Company B was in urgent need of further funding; indeed, a point was reached when it was unable to meet the salaries of its staff. Company V were unwilling to provide that funding, but the petitioner then met C, a Jersey-based businessman and investor, who was prepared, as he put it in evidence, to invest in the petitioner.


A new company, Company T was formed, owned as to 60% by the petitioner and 40% by a company owned by C, together with a new subsidiary, Company H and, by an agreement dated 9 th November, 2011, Company B sold its intellectual property to Company H in return for a capped share of any profit derived from that intellectual property. The respondent was employed by Company T as its company secretary. B ceased to be involved at this point. Company B changed its name to Company D, with the respondent remaining as the sole director.


As the respondent put it in his affidavit of 19 th July, 2017, the petitioner escaped from the “live” problems of Company D, leaving him to deal with numerous “bitter disputes with disgruntled former members of staff, creditors and [Company V].” Those issues resulted in over 25 court and tribunal appearances in Jersey and the United Kingdom.


In May, 2014, Intuit Inc. the US owners of Quickbooks approached the petitioner, and made an offer to acquire Company T. The marriage between the petitioner and the respondent was clearly under strain at that stage, in that there was a short period of separation that summer, but they reconciled and what was clearly a complex transaction was completed on 19 th December, 2014.


The purchase consideration of £44 million included a figure of £2 million which was to be paid to Company D to enable all of its creditors to be paid off, so as to ensure that there could be no challenge to the intellectual property that Company H had acquired from it. That transaction has given rise to an allegation by the petitioner of financial misconduct on the part of the respondent, which we will need to determine.


The net consideration received by the petitioner on completion was £22,885,915, of which £14 million was paid to her in cash, and the rest in Intuit shares, the sale of which was restricted – one half until December 2015 and the remainder until January 2016. Because the petitioner is in dispute with Smith & Williamson, her accountants at the time, she says she is unable to disclose precisely how much the shares she received in Intuit were ultimately sold for. According to the respondent, they were trading at $93 at the time of completion and she received her shares at $88.04. He says they were sold above $100, and accordingly some $4 million in uplift was received by her, bringing the total consideration she received from the sale to some £27 million.


The petitioner utilised the cash proceeds of the sale to pay off the mortgages on Property C and Property B (£2.24 million), the mortgage on Property C then being in default, and according to the respondent, she then spent some £900,000 refurbishing Property C. She gave the respondent a cheque for £250,000, she says by way of gift, as between wife and husband and he says, as a thank-you for the work he had done on the sale to Intuit. She also purchased him a Patek watch.


The petitioner was retained by Intuit as an employee until 6 th January, 2017, at a salary of £10,957. per month including bonuses, under covenants effectively not to engage in payroll work. Apart from being required by Intuit to deal with the unpleasant task of the redundancies which followed the sale, she told us in evidence that she was effectively paid to “sit on the beach” and she set about creating structures to fund a number of projects which we will detail shortly. The respondent was also retained by Intuit as a consultant for a period of six months for the sum of £7,500 gross per calendar month.


There was a short period of separation over...

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