Young v Young - a cautionary tale

Most practitioners will be familiar with the long running case of Young v Young [2013] EWHC 3637 (Fam) and the wife’s efforts to prove that the husband was not insolvent but rather that he had hidden substantial assets in order to defeat her claims.

As summarised by Moor J (at para 3):

‘This case has been quite extraordinary even by the standards of the most bitter of matrimonial breakdowns.  It has been conducted in the full glare of the media.  Extremely serious allegations have been bandied around like confetti.  Some of these allegations can only be described as “wild”.  The case has cost the wife millions of pounds in litigation fees.  It has taken some six and a half years to come to trial.  There have been around 65 separate hearings.’

The wife’s position in summary was that the husband is worth a very great amount of money and that he was hiding assets from the court and his trustee in bankruptcy, specifically:

  • that the husband’s assets are at the very least hundreds of millions of pounds
  • that she should be awarded a lump sum of half the sum the court finds the husband to be worth
  • expert reports submitted by the wife referred to sums varying from £400 to £779 million and were criticised by Moor J
  • that the husband had previously offered, on an open basis, to settle her claim for the sum of £300 million (which the husband stated was not a ‘serious’ offer)

The husband’s case was that he is penniless and bankrupt to the tune of at least £28 million.  He therefore contended that, as there are no assets, the wife’s claims should be dismissed.

What comments did Moor J make in relation to the costs of the parties and the conduct of the case?

Moor J makes his views clear early in his judgment (at para 3) saying ‘In many respects, this is about as bad an example of how not to litigate as any I have ever encountered’ and ‘I have also decided that I have to be highly critical of the way in which the case has been conducted at various times by both parties. ‘

In relation to costs Moor J was critical of the level of costs incurred by the wife who had been represented by various solicitors and counsel during the course of proceedings and had also incurred significant costs in relation to expert evidence (see paras 4 to 9) concluding: ‘Whilst I accept that this has been exacerbated by repeated changes of solicitors, in part as a result of the litigation funding issues, and that this case has been as complex as any I have dealt with, I consider the total amount spent to be completely unacceptable.’ The wife’s costs totalled £6.4 million.

The husband was largely unrepresented during the course of the proceedings in relation to which Moor J commented (at para 10): ‘I entirely accept that, if I find that he has hidden substantial assets, it will follow that his decision to act in person was a deliberate tactical one.’

Generally as to the conduct of the case Moor J was critical of both parties. In relation to the wife’s evidence he said (at para 100):

‘I do not question in any way her honesty.  I regret to say, however, that I do not consider her evidence to be reliable.  She has become utterly convinced that her husband is a liar who has hidden vast resources.  She sees conspiracy everywhere.’

Regarding the husband Moor J said (at para 111):

‘By reciting the factual history of this case, it will immediately become apparent that the husband has some serious evidential difficulties.  I will mention only a few at this point.  Both Parker J and I have determined to the criminal standard of proof that he has been in contempt of court in failing to provide full and frank disclosure of his financial position.  Although I accept that he has remedied part of the deficiencies, there undoubtedly remain serious gaps…’

How did the court approach the issues of alleged non-discosure?

Applying Baker v Baker [1996] 1 FCR 567 Moor J summarised the correct approach as  follows: ‘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.’

Applying that test specifically in Young Moor J confirmed his two-fold approach had been to first (para 21):

‘...decide whether or not he [the husband] did deliberately tell lies.  If I find that he did, I have to ask myself why he lied.  The mere fact that someone tells a lie is not in itself evidence that the person concerned had undisclosed assets.  An individual may lie for many reasons.’

The second stage of that exercise was: (para 22):

‘It follows that, if I find that the husband has lied to me, I must assess whether or not there is an “innocent” explanation for those lies that does not support the wife’s case that he has hidden assets.  However, if I am satisfied that there is no such explanation, I can take the lies into account in my assessment of his case that he is penniless and hopelessly bankrupt. ‘

What were the court’s findings as to the husband’s alleged financial meltdown?

The judgment is extremely detailed as to the financial dealings of the husband and the respective views and evidence of the parties on those dealings. Moor J concluded that (para 153): ‘On the balance of probabilities, I find that he [the husband] realised that he had overstretched himself and decided that he had to make the best of a bad job’  and further (at para 159): ‘On the balance of probabilities, I have come to the conclusion that the husband did have other assets. ‘ Although Moor J added (at para 160) that ‘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.’

As to the wife’s submission that the court should find, on the balance of probabilities, that various individuals and corporate entities are holding assets on behalf of the husband, Moor J indicated that (para 160) firstly:

‘It is quite clear to me that I am unable to do so for two reasons, one of which is fundamental.  None of these individuals or entities has been joined to these proceedings.  Although some of the individuals concerned have given evidence, they have not had any opportunity to be formally heard on the issue. There have been no pleadings, so they would not know the case they faced.  They cannot therefore be bound by any finding and it would be wrong for me to make any finding in their absence. ‘

The second reason being:

‘…having heard the evidence over a three week period, I am quite unable to say where the husband has secreted his money, even on the balance of probabilities.'

Moor J did confirm that he was satisfied that various shares had significant value but that ‘I cannot say that the husband continues to own these shareholdings.  Indeed, the evidence points the other way.’ (para 161).

However at para 162 Moor J set out a series of assets that ‘the husband has not dealt with to my satisfaction’ finally concluding that ‘I should assume total additional assets of approximately £25 million over and above the money removed from Mr Beller of £20 million, giving a combined value of £45 million.’ (para 164).

In support of her case the wife made submissions in relation to the husband’s lifestyle since the parties’ separation and in this respect the finding by Moor J was favourable to the wife (para 166):

‘The wife has investigated his [the husband’s] living arrangements since the separation with a fine toothcomb.  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.’

Further that ‘His lifestyle is not consistent with being a penniless bankrupt’ (para 166) and concluding (at par 167) that ‘…taken together, 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.’

What amount did the court award the wife?

After a very detailed analysis indeed, Moor J set out his order (see paras 179 to 188) as follows:

  • the husband was ordered to pay a lump sum to the wife of £20 million within 28 days - the lump sum will attract interest at the High Court judgment debt rate of 8%, which amounts to £1.6 million per annum
  • the husband’s application to vary the maintenance pending suit order was dismissed and an order made for the husband to pay the arrears of maintenance within 28 days, although with no further backdating or continuation of that order

The costs of the proceedings are to be dealt with at a later date but Moor J indicated that (para 186): ‘Prima facie, I consider that the husband’s non-disclosure has been so great, that the wife is entitled to her costs on an indemnity basis of what I consider this case should have cost if it had been properly conducted.’

What reference was made to enforcement of the order?

Moor J put the position succinctly at para 182:

‘I realise 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.  I cannot see how he would have complied with an order for a lump sum of £300 million let alone £400 million.  I hope that he will take the view that he is better off paying the lower sum of £20 million so that he can then concentrate on rebuilding his life.’

What lessons can practitioners take from this case?

The facts and the assets involved in Young are exceptional, however the criticisms made of the parties have a general application, in particular:

  • excessive costs  - these will always be criticised by the courts and while the wife may in due course secure an order for her costs, Moor J made it clear that such costs order will only reflect those costs that would have been incurred had the case been ‘properly conducted’ and there is likely to be a very significant gap between the costs incurred by the wife and those that will be considered to be reasonably incurred
  • non-disclosure - the decision in Young is not the first time that the courts have been highly critical of non-disclosure and while the court’s findings didn’t go anywhere near the level of inferences the wife had hoped for, some inferences were drawn and clients should always be warned of the potential consequences of non-disclosure and the likely approach of the court
  • excessive issues – one of the reasons for the length of the proceedings and the incredible number of hearings in Young was the extent of the  allegations made by the wife – clients should always be advised to keep issues raised relevant and avoid ‘wild’ allegations

Geraldine Morris is a solicitor and head of the LexisPSL Family team

Twitter: @GeraldineMorris

 

 

 

 

 

 

 

 

 

 

 

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