THIS is the full judgment in the McCartney/Mills divorce case:
Mr Justice Bennett:
1. This final hearing concerns the application by Ms Heather Mills/Lady McCartney ("the wife") for financial provision against Sir Paul McCartney ("the husband").
2. The hearing took place over six days between 11 and 18 February 2008. The wife represented herself assisted, with my permission, by three Mckenzie Friends, namely her sister, Fiona Mills, Mr David Rosen, a solicitor-advocate, and Mr Michael Shilub, an American attorney. The husband was represented by Mr Nicholas Mostyn QC and Mr Timothy Bishop, instructed by Payne Hicks Beach.
3. The battle lines are set out in the open offer made by each party prior to the start of the final hearing. In her letter of 31 January 2008 the wife computes her reasonable needs for herself and Beatrice at £3,250,000 p.a. which amounts on a Duxbury capitalised basis to £99,480,000. She seeks a property adjustment order in respect of a property in Beverley Hills called "Heather House" and of a property in New York State, 11 Pintail. She seeks between £8m and £12.5m for a home in London, £3m to purchase a property in New York, £500,000 to £750,000 to purchase an office in Brighton, a transfer to her of a mortgage in favour of the husband over her sister's (Fiona) Hove property, transfer of property order re a Southampton property owned by the husband in which Sonya Mills lives, and relief in respect of chattels. Further, the wife asks the court "to place a significant monetary value on compensation for loss of earnings, contribution and conduct". She would retain her own properties at Pean's Wood in Robertsbridge, Sussex and at Angel's Rest in Hove. Overall her claim amounts to about £125m. She also seeks an order for costs.
4. By letter of 6 February 2008 Messrs Payne Hicks Beach set out the husband's position. Overall the wife should exit the proceedings with total assets of £15m (after a deduction for conduct) made up as follows. Sonya Mills' home and the mortgage on Fiona's home should be transferred to the wife at a combined value of £683,000; Angel's Rest (which has now been valued at £2m); the net value of Pean's Wood; the value of funds that either the wife has or should have; and a balancing lump sum provided certain art is returned to the husband. Further, the husband would meet the reasonable cost of security for the wife and for their child, Beatrice, for 2 years not exceeding £150,000 p.a. For Beatrice, the husband would pay periodical payments at £35,000 p.a. and for a nanny not to exceed £25,000 p.a. Both these figures would be index-linked. The periodical payments would continue until Beatrice is 17 years old or completes secondary education, whichever is the later. Further, he will discharge the school fees, uniform and reasonable extras, and health insurance premiums. Proposals were made as to chattels. There would be no order as to costs.
5.Both parties made it clear that each wants a clean break both under the Matrimonial Causes Act 1973 (as amended) and under the Inheritance (Provision for Family and Defendants) Act 1975.
6.The barest outline of the background would be that the wife and the husband met in the spring of 1999, became engaged on 22 July 2001, married on 11 June 2002, separated on 29 April 2006 and ever since have been engaged in protracted matrimonial litigation. They have one child, Beatrice born on 28 October 2003 who is therefore now 4 years old.
7.No decree nisi has yet been pronounced, for the following reasons. On 17 July 2006 the husband filed a petition for divorce on the grounds of the wife's unreasonable behaviour. On 13 October 2006 the wife filed an Answer denying the husband's allegation of unreasonable behaviour and cross-praying for divorce on the grounds of the husband's unreasonable behaviour. On 28 February 2007 the suit, the ancillary relief proceedings and an application by the wife for maintenance pending suit came before me. I shall return to this hearing later in the judgment. Suffice it to say for the moment that at my prompting the parties agreed to stay their divorce proceedings and on or after 1 May 2008, by which time would have been separated for 2 years, to one party presenting a fresh petition for divorce based on the 2 years separation and to the other consenting to a divorce. So, at a hearing arranged for 12 May I hope to be able to pronounce a decree nisi of divorce.
8.The husband's case on financial provision for the wife is summarised at paragraph 9 of the opening note of Mr Mostyn QC as follows:
"We submit that fundamentally this is a straightforward case. Because of H's enormous pre-marital wealth and because of the brief duration of this marriage W's claim should be determined by reference to the principle of need alone. This is not a case where the principle of sharing of the "marital acquest" is engaged at all. Nor is it a case where the principle of compensation will arise. W's needs fall to be fairly assessed, not predominantly by reference to the standard of living during the marriage. W's award should be reduced to reflect her post-separation misconduct. That misconduct is based on three distinct episodes as explained in our Conduct Note."
9.The wife's case cannot be so succinctly summarised. By the time of the parties' first meeting in May of 1999 the wife says that she was wealthy and independent with, as she told me in evidence, properties and cash totalling between £2m and £3m. She earned her living as a TV presenter, a model and public speaker. She began to cohabit with the husband from March 2000 which led seamlessly into marriage and thus the relationship lasted 6 years. This is denied by the husband. The wife says that the husband's attitude towards her career was one of constriction such that the opportunities for the development of her career fell away during their relationship. He dictated what she could or could not do. She thus seeks compensation for the loss of her career opportunity in that during their cohabitation and subsequent marriage she forewent a lucrative and successful career. She seeks an award commensurate with being the wife of, and the mother of the child of, an icon. She places great weight on the contributions she says she has made to counselling the husband's children by his former marriage and to the husband's professional career. She asserts that his assets are worth in excess of £800m and that she is entitled to share in the "marital acquest". Finally, she asserts that throughout their marriage and after their separation the husband behaved in such a way that it would be inequitable to disregard and that his conduct should be reflected in the award.
10.During the course of this judgment I shall have to determine certain matters of fact.
11.The major factual issues as to the history of their relationship that I must determine are these. First, at the time the parties met, was the wife a wealthy and independent person? This is linked to the third issue. Second, did the parties cohabit from March 2000 or from the date of the marriage? The relevance of this issue is to the length of their relationship and to the further issue of "marital acquest". Third, did the husband constrict the wife's career after cohabitation (whether at March 2000 or June 2002)? This is relevant to the issue of "compensation" for an allegedly lost or restricted career of the wife.
12.I shall also have to determine issues of fact concerning the husband's and the wife's assets, the wife's proposed income needs, the wife's expenditure between October 2006 and December 2007, and the wife's earning capacity.
13.Many of the issues of fact involve a head on conflict between the evidence of the wife and the husband, in which I shall also have to examine the relevant and important documents. It is therefore appropriate that I should briefly say something at this stage about the evidence of each of the parties.
14.The wife is a strong willed and determined personality. She has shown great fortitude in the face of, and overcoming, her disability. I refer to the loss of her left leg below the knee. As I shall show she is a kindly person and is devoted to her charitable causes. She has conducted her own case before me with a steely, yet courteous, determination.
15.The husband's evidence was, in my judgment, balanced. He expressed himself moderately though at times with justifiable irritation, if not anger. He was consistent, accurate and honest.
16.But I regret to have to say I cannot say the same about the wife's evidence. Having watched and listened to her give evidence, having studied the documents, and having given in her favour every allowance for the enormous strain she must have been under (and in conducting her own case) I am driven to the conclusion that much of her evidence, both written and oral, was not just inconsistent and inaccurate but also less than candid. Overall she was a less than impressive witness.
17.The husband's background needs little exposition. He is, and has been for many years, a world famous musician, composer and singer. He is an icon to millions of people. He married Linda, who had a daughter from her first marriage, whom the husband subsequently adopted. He and Linda had 3 children, Mary, Stella and James. In 1998 Linda died of cancer. I have no doubt that he was deeply upset by her death. He is now 65 years old.
18.The wife, who is now 40 years old, spent much of her childhood in Northumberland. She seems to have had a rather troubled childhood. When she was 14 years old she had to move to live with her mother in London. She left her mother's home aged 15. She took a number of jobs.
19.When she was 17 years old she started modelling. After a modelling competition she got a job presenting a TV series. More modelling jobs followed. When she was 20 years old (1988) she went to live and work in Paris.
20.In 1989 she married. The union was childless. She and her former husband ultimately divorced. She learned to ski and became an instructor. She learned to ski in Slovenia.
21.During the crisis that affected the old Yugoslavia the wife became appalled by the fighting and the terrible injuries suffered particularly by the civilian population. She became heavily involved in charitable works joining convoys of trucks taking food and clothing to Croatia. She became very conscious of the terrible injuries inflicted by landmines. She saw a number of people who had lost limbs, particularly legs.
22.In 1993 her trips to Croatia diminished as her modelling career in the UK began to prosper. At paragraph 26 of her affidavit of 30 January 2008 she says:
"In early 1993 my trips to Croatia became less and less frequent, as my modelling career in the UK began to take off. I got work modelling all over the world including in the Bahamas, Malaysia, America and the Middle East. I won lucrative contracts with Marks and Spencers, River Island and Slix, the swimwear company .... I believe I was earning at that time in the region of £200,000 per annum. I do not have my tax returns although I did request the same from the Inland Revenue who informed me by letter that they are not available...."
23.On 8 August 1993 she was on a zebra crossing in London and was unfortunately hit by a police motorcyclist. Her left foot was severed above the ankle. She suffered head injuries, cracked ribs, a punctured long and multiple fractures of the pelvis. Her left leg was amputated 6 inches below the knee. In October 1993 she underwent another operation which shortened her leg still further but still below the knee.
24.The wife says that, following media enquiries, she gave interviews and earned about £180,000 in 10 days. She wrote a book "Out on a limb", the proceeds of which were donated to transport artificial limbs to Croatia. She says that thereafter she did much public speaking and her earnings were in the range of £300,000 per annum.
25.She became involved in fundraising for a number of charities - see in particular her description at paragraph 32 of her affidavit. She continued to do an enormous amount of charitable work in particular being involved in transporting artificial limbs to Croatia. She was by now, she says, an established public speaker.
26.At paragraph 45-47 of her affidavit she says:
"After my accident in 1993, I raised money through public speaking in aid of charities. I became one of the top 10 female speakers in Europe. Between 1993 and 1999 when I met Paul my income spiralled for example in 1997 I had a modelling contract for £750,000; I wrote, with a ghost writer, a best selling autobiography called Out on a Limb and in the year prior to marrying Paul I earned 1,000,000 for 14 days work. In order to support myself and to help with my charity work, I did a lot of television presenting, for example, Good Morning with Anne & Nick, Keanu Reeves interview, BBC TVAM, Chill Out With Heather series (where I interviewed a number of well known people), The Holiday programme, Wish You Were Here, Travelogue, First Say (after Panorama show), radio hosting, The General hospital, Richard and Judy, etc etc the list is endless. I also continued modelling. I would contribute a lot of my earnings to charity....
Before I met Paul in 1999, examples of my work included:
a.That's Esther Show with Esther Ranzten - I was a co-presenter, making and presenting reports. I did approximately 25 programmes focusing on the struggles of amputees, and the quality of services available to them, as well as other issues such as chip pan fires, police sirens, male nannies, safe children's playgrounds, waste pickers in Cambodia;
b.Panorama - I worked as a senior producer making programmes called 'First Say' concerning issues such as Clinton's impeachment, European working time directive and Prince Charles 50th birthday; This was the flagship's commission for the digital channel 'Choice' on the BBC. My role involved producing, researching scripting, directing and presenting.
c.Travel programmes - I was a presenter on Summer Holiday, Wish You Were Here and Travelog;
d.The General - I was a presenter on this programme based in Southampton General Hospital which was broadcast live five days a week;
e.Pebblemill - Chill Out with Heather series and Croatian documentary
As mentioned previously, before I met Paul, I was speaking all over Europe and was considered one of the top ten female public speakers in Europe. I would speak on the same bill with eminent individuals such as Mark McCormack, Neil Armstrong and others. I commanded a fee ranging from £10,000 to £25,000 for a one hour speech ...."
27.She thus asserted at paragraph 48:
"The assets I held at the time that I met Paul included the following:
a.A penthouse flat in Piccadilly worth approximately £500,000;
b.A property on Cross Street in Brighton, worth £250,000.
c.I rented a 5 bedroom barn in Hampshire, at a cost of £750.00 per month. I had maintained a London apartment and a country property since 1992. An example of this is attached....
d.I also owned a Green Mercedes, a Saab, and then a Rover as, I was sponsored by Saab and Rover. I also had my own driver, Trevor, and a free Saab limousine ....
e.I often lent money to friends, as I could afford to do so. An example of such loans is shown in my Form E.
I was wealthy and financially independent in my own right prior to our marriage."
28.I have to say I cannot accept the wife's case that she was wealthy and independent by the time she met the husband in the middle of 1999. Her problem stems from the lack of any documentary evidence to support her case as to the level of her earnings. I do not doubt her commitment to charitable causes. She is passionate about them, particularly those that involve working for, and with, amputees. The DVDs shown to me in court amply bear that out. I do not doubt that she modelled successfully and was a public speaker. But the investigation in this case of her assets and earnings as at 1999 when the parties met do not bear out her case.
29.The penthouse flat in Denman Street was not worth £500,000 in 1999. She sold it on 20 March 2001 for £385,000 after the London property market had risen substantially since 1999. She did not in 1999 own the property in Cross Street in Brighton. That was not bought until March 2000 when she gave up her property near King's Somborne in Hampshire.
30.During her cross-examination she asserted for the first time that in addition to property assets she had £2m-£3m in the bank. No mention of such assets was made in her affidavit. There is no documentary evidence to support that assertion. During the hearing she was asked repeatedly to produce bank statements, which she said she thought she had in Brighton, to verify this claim. No bank statements were ever produced.
31.The first tax return that the wife has been able to produce is for the year ending 5 April 1999. The Revenue has not been able to supply any prior tax return. However her tax returns for the years ending 5 April 1999 and thereafter to 2006 are in the papers. Her gross turnover and net profit declared for "acting, modelling and public speaking" for the tax years 1999 to 2002 are, respectively (to the nearest £500) £62,000 and £11,500; £42,000 and £6000; £112,000 and £58,000; and £78,000 and £49,500. Thus her tax returns for 1999 and 2000 do not support the wife's case of very significant earnings as set out in her affidavit.
32.The wife's riposte is that much of her earnings, which are not included in the tax returns, were sent direct to charities of her nomination. In her evidence she told me that as much as 80% or 90% of her earnings went direct to charities. However, the wife had to accept in her cross-examination that there was no documentary evidence, for example letters from the relevant charities, that her fees were sent direct to charities. In her Answers to a Questionnaire of 6 February 2007 the wife, having been asked to set out in a schedule the income earned by her and sent direct to charities for the years 1997 and 2000 inclusive, replied that she did not have the records requested to enable her to complete a schedule. Furthermore, her assertion that she gave away to charity 80% to 90% of her earned income is inconsistent with having £2m-£3m in the bank in 1999.
33.The wife accepted that had she had £2m to £3m in the bank in 1999 she is most likely to have put such a sum into an account earning interest. But the tax returns do not disclose any bank interest earned or only very small sums which are not consistent with holding £2m-£3m in a bank or banks. Moreover her tax returns disclose no charitable giving at all.
34.In March 2000 the wife bought a property in Cross Street in Brighton for about £250,000, using £200,000 paid to her as compensation for the injuries arising out of her accident in 1993. There was no need therefore for her to touch the £2m-£3m in her bank account if such existed. However in May 2001 the wife purchased in her own name 7, Western Esplanade in Hove i.e. Angel's Rest for £750,000. On 18 May 2001 MPL Household, the husband's company, and the wife entered into a formal legal charge whereby it lent the wife £800,000, interest free, secured on Angel's Rest in order for the wife to be able to buy it. The wife agreed to repay the loan at £1000 per month from 1 July 2001 for a period of 25 years. The excess of £50,000 was to be used to improve the property. In September 2001 the husband advanced the wife another £150,000 to carry out refurbishments. The inevitable question was asked of the wife - why the need for such a loan and advances if she had £2m-£3m in the bank? Even allowing for some depletion in the bank balances over an 18 month period from mid 1999 to early 2001, if she was as wealthy as she made out there would have been no need for this loan or for a loan of such magnitude.
35.By May 2002 the loan was "discharged". She paid the monthly £1000, and sold Cross Street and according to the husband paid off about £348,000 of the loan from a combination of the net proceeds of sale of Cross Street and monies from a modelling contract.
36.I find that the wife's case as to her wealth in 1999 to be wholly exaggerated. The assertion that she was a wealthy person in 1999 is, of course, the first step in her overall case that her career, which in 1999 she says was one producing rich financial rewards, was thereafter blighted by the husband during their relationship. It is therefore connected to the issue of "compensation".
37.The next matter to be decided is whether the wife and the husband began cohabitating in March 2000 or, as the husband asserts, their committed relationship began upon marriage. It is common ground they met in May 1999 at the Pride of Britain Awards. He accepts he was immediately attracted to her. He later telephoned her and they began meeting. He made a donation to her charity of £150,000 in July. It is at that point the wife says they began dating. There is no dispute about that.
38.In August the husband took the wife to New York and showed her his holiday house at 11, Pintail, on Long Island which he had purchased in December 1998. The wife says that after that thereafter things started to get serious and they saw more and more of each other. By September 1999 they were spending 5 nights a week together, at hotels and thereafter at the husband's property called "The Forecastle" but usually referred to as "Lizzie", in Rye, which is a 3 bedroom cottage. In November 1999 the wife met the husband's children by Linda. Later he introduced her to his adopted daughter, who was Linda's daughter from her first marriage.
39.In January 2000 he took her on holiday to the Turks and Caicos Islands. On their return they continued to spend up to 5 nights a week at Lizzie.
40.In early March 2000 the wife gave up her property in Hampshire and moved to a property in Cross Street, Brighton to be nearer the husband. "This was around the time that Paul and I decided to move in together" (paragraph 20 of her affidavit of 7 February 2007 in relation to the parties' pre-marital relationship). It is said that the husband suggested trying to live together. From that point on the husband and she were only apart if one of them was abroad. They lived by then mostly in "Lizzie", a property of the husband in Rye or in the husband's property at 7, Cavendish Avenue in London.
41.The Christmas of 2000 was spent at Lizzie. In January 2001 they went for a whole month to India and whilst in Jaipur the husband "secretly" bought a sapphire and diamond engagement ring for the wife.
42.During 2000 and 2001 the husband was making his album "Driving Rain" and much of the recording was done in Los Angeles. The husband's travel agent, Mike Whalley found a property to rent at 9536 Heather Road in Beverley Hills.
43.In March 2001 the husband purchased that property and transferred it into Mr Whalley's name "temporarily for tax purposes, but that it would soon be transferred to me" (paragraph 32). It was never transferred into her name.
44.In February 2001 the wife sold her flat in Denman Street and in May 2001 purchased Angel's Rest. Cross Street was sold. But the wife says that she and the husband continued to live in Lizzie and visited Angel's Rest "only on occasion (sic)" (paragraph 33).
45.On 22 July 2001 the parties became engaged. The wife was given the ring that the husband had bought in India. In November 2001 the husband gave her a joint Coutts credit card.
46.On 14 June 2002 they were married. Their living arrangements remained the same. But in 2002 they began building "The Cabin" - a Norwegian style log cabin near the lake on the husband's estate of about 1500 acres at Peasmarsh in East Sussex.
47.The husband's evidence is contained in his affidavit of 25 January 2007. His case, broadly, is that they dated during 1999, 2000, 2001, became engaged in July 2001 and married in June 2002, whereupon the nature of their relationship changed.
48.The husband says that the wife did not give up her Hampshire property to live with him, because in March 2000, she bought Cross Street in Brighton. Furthermore having purchased Angel's Rest in May 2001 she decorated, furnished and insured it. He asserts that Angel's Rest was the wife's primary home.
49.After their engagement their relationship did "become more formal and settled, but the living arrangements did not change very significantly". They did not live as husband and wife.
50.I have to say that the wife's evidence that in some way she was the husband's "psychologist", even allowing for hyperbole, is typical of her make-belief. I reject her evidence that she, vis-à-vis the husband, was anything more than a kind and loving person who was deeply in love with him, helped him through his grieving and like any new wife tried to integrate into their relationship the children of his former marriage. I wholly reject her account that she rekindled the husband's professional flame and gave him back his confidence.
51.In any event, in my judgment, what Lord Nicholls of Birkenhead said at paras 66 and 67 of Miller v Miller >fr 1,8<2006>fr 3,8< UKHL 24, >fr 1,8<2006>fr 3,8< 2 AC 618 is highly pertinent to this aspect of the case. He said:
A point of a similar nature concerns the approach to be adopted when evaluating the contributions each party made to the welfare of the family. Apparently, in this post-White era there is a growing tendency for parties and their advisers to enter into the minute detail of the parties' married life, with a view to lauding their own contribution and denigrating that of the other party. In the words of Thorpe LJ, the excesses formerly seen in the litigation concerning the claimant's reasonable requirements have now been "transposed into disputed, and often futile, evaluations of the contributions of both of the parties": Lambert v Lambert >fr 1,8<2003>fr 3,8< Fam 103, 117, para 27.
On this I echo the powerful observations of Coleridge J in G v G (Financial Provision: Equal Division) >fr 1,8<2002>fr 3,8< 2 FLR 1143, 1154-1155, paras 33-34. Parties should not seek to promote a case of "special contribution" unless the contribution is so marked that to disregard it would be inequitable. A good reason for departing from equality is not to be found in the minutiae of married life."
In her final submissions the wife described her contribution as "exceptional". I reject her case. I am afraid I have to say her case on this issue is devoid of reality. The husband's evidence is far more persuasive.
Assets of the husband
I have already set out the husband's background. He is now 65 years old. He is, musically speaking, extraordinarily talented. He composes, sings, and plays musical instruments. He is and has been for many years famous throughout the world.
He and Linda based themselves in Peasmarsh in East Sussex. They lived at Blossom Wood Farm house on the estate of 1500 acres. I have seen pictures of it. It is a very modest property. The husband is now based there or at Cavendish Avenue.
During his marriage to Linda the husband's wealth was accumulated. By the time he met the wife in 1999 he was fabulously wealthy by even the standards of the very rich. He had accumulated valuable paintings and artwork, and properties in England and the USA. His business enterprises were extensive.
In the mid 1960s the husband purchased 7 Cavendish Avenue in London NW8. In 1984 he bought 41 West 54th Street in New York. In December 1998 he purchased the Pintail property on Long Island. He also by 1999 owned properties in Rye, Somerset, Icklesham, Essex and Merseyside. He also owned extensive Scottish estates. He owned other properties in New York and elsewhere in the USA.
After the wife and the husband separated, the husband instructed Ernst and Young LLP to value his business assets at two dates, namely at the date of marriage and at the date of separation. Mr Alan Wallis, a director of Ernst and Young prepared a report of 14 September 2006. This report was exhibited to the husband's Form E of 27 September 2006. The husband's business assets comprise the share capital of MPL Communications Ltd, the share capital of MPL Communications Inc together with their subsidiaries, the equity share capital of MacSolo Ltd, shares in Apple Corps Ltd and other related companies, and certain income streams received by the husband directly. Having conducted an exhaustive enquiry Mr Wallis valued the husband's business interests as at 11 June 2002 and 28 April 2006 at £242,900,000 and £240,900,000 respectively. At paragraph 1.26 of his report he said that between 2002 and 2006 the overall value of his total business assets had increased by £1.9m and, had the dollar not weakened between the valuation dates the overall value of the assets would have increased by £24.5m.
I now turn to the husband's Form E which lists his assets, liabilities and income.
His real property holdings were put at £33,979,000 according to professional valuations. He held £15,159,000 in bank accounts in the UK and USA. His investments were valued at £34,319,000. He was owed a total of £3,687,000. He held £6000 in cash. Paintings which he had painted, works of art, musical instruments, jewellery, furniture, house contents, motor vehicles and horses were valued professionally at £32,269,000.
He disclosed tax liabilities of £9,615,000. He put in as the value of his business interests Mr Wallis' valuation of £240,920,000. His pension assets were valued at £36,288,000. Accordingly he disclosed total net assets of £387,012,000. He disclosed his total net income for the next 12 months at £5,357,000.
At paragraph 4:3 he said, inter alia:
"I made an unmatched and enormous contribution of the great wealth which I brought into this marriage. The very great majority of my assets were owned by me prior to my marriage. The only properties purchased by either of us during the marriage were Thames Reach and Pandora's Barn (albeit for completeness, I made other purchases of parts of property from my late wife's estate). The Cabin was also built during this time. The vast majority of my wealth has been acquired over the last 45 years. Moreover, I did not merge my assets with Heather's upon our marriage nor did I convey them into joint names. I kept them separate throughout.
During the marriage I was the financial provider. I managed to generate a substantial profit from touring, although the great majority of those concerts was the music created during my time with The Beatles and with Wings. More recent income from touring, promotional fees and the like, earned during the marriage, is for the most part directly referable to the music I wrote over the previous 45 years. I have also created new work during the marriage which though critically acclaimed, has not been profitable.
I am advised that the court will be interested in the wealth which has been generated during the marriage. To that end I have asked my advisors to prepare a schedule (appended at File A, tab 4) which gives the balances as at June 2002 (our marriage) equivalent to the balances provided within this Form E. I believe the 2002 figures to be accurate although I have not extended an already long Form E with supporting documentation. This, of course, can be made available.
It will be seen that there has been an overall increase in my wealth of £39.6 million. The reasons for this increase are: (a) the money made by my tours and to a lesser extent other projects; and (b) passive growth in the value of my properties, investments and business interests by operation of market forces.
This latter factor accounts for a good part of the increase (say £12 million). It is in no way referable to my endeavours. For instance, in relation to the MPL Group I do not have a day to day executive role in the management of the business; that is left to a professional staff. Of course, I am consulted in key decisions. The Ernst & Young Report makes clear that the revenue of these businesses is largely comprised of collecting copyright income. Indeed, the passive growth in relation to my business would have been greater but for the weakening dollar. This factor has also affected the value of my US properties and investments.
Thus it is my case that the wealth built up during our marriage is approximately £39.6 million. This was the result of market growth in the value of the pre-marital assets, and from tours, where I was mainly performing works created prior to my marriage. As it happens, this analysis is in line with a letter written by me to Heather shortly before our marriage which reflected our belief as to what would be fair were the marriage to fail. A copy of the letter is appended in File VII, tab 4.3"
Further, he asserted (and there is no dispute) that he made substantial capital payments to the wife over and above an annual allowance of £360,000 per annum. He lent her monies in respect of his purchase and renovation of Angel's Rest. In 2002 and 2003 he gave her cash totalling £500,000. He lent Fiona Mills £421,000 to buy a property and purchased a house for Sonya Mills for £193,000. In 2005 he purchased jewellery for the wife worth £264,000.
He estimated his total expenditure for 2005 at £4,266,173 which is made up of property maintenance and running expenses of £1,786,864, household expenditure of £271,068, travel expenditure of £284,373, gifts and allowances of £787,884, legal and professional fees of £654,052, donations of £92,463, and personal expenditure of £389,469.
On 19 October 2006 the wife's forensic accountants, Lee and Allen, made their preliminary report concerning the husband's business assets. Their report requested the production of further information so that they could check, comment on, differ from, or agree with Ernst and Young's valuations. They further requested a valuation of the husband's business assets as at March 2000, that being the date at which the wife asserted that she and the husband had begun to cohabit.
On 2 November 2007 the Senior District Judge disallowed a substantial number of the requests made by Lee and Allen.
Ernst and Young's response to the requests for information came in a further report of 31 January 2007.
On 22 December 2006 Mishcon de Reya (the wife's former solicitors) put forward the wife's open offer that she would accept £50m. In his open offer of 25 January 2007 the husband offered to pay the wife a lump sum of £16.5m which, together with the wife's assets, would mean her exiting the marriage with about £20m worth of assets.
At a hearing on 28 February 2007 Mr Pointer QC, her counsel, sought to persuade me to permit further investigations into the husband's business assets, his personal expenditure, and to obtain further valuations of certain properties. He also submitted that a valuation of the husband's business assets as at March 2000 should be carried out, which Mr Mostyn opposed.
In giving judgment I said:
"Rule 2.6(1) (d) of the Ancillary Relief Rules require the first appointment to be conducted with the object of defining the issues and saving costs. This is so for a number of sensible reasons, including in big money cases. There has been in some cases a marked tendency for the costs to run out of control. The assets in this case are enormous and probably at the very top end of big money cases to come before the Family Division. The wife, in the context of the size of the assets, is asking for a sum which represents approximately 12.5% of them. In my judgment she appears to have had no difficulty in formulating her claim on the basis of the discovery and reports given so far. This, most emphatically, is not a case where the wife can legitimately say, "I cannot formulate my case or make an open offer because the husband has not given sufficient discovery and information". Mr Pointer told me that the husband told the wife in the course of the marriage that he was worth £800 million. I am in no position to judge the accuracy of whether the husband did or did not say that to the wife. But I have seen no evidence to suggest that the husband may be worth more than (very roughly) £400 million, nor that Ernst and Young's assessment of the value of his assets is not very broadly correct. Mr Pointer beguilingly put it to me that all Lee and Allen were doing - and indeed all that the wife was doing - was seeking a meeting between Lee and Allen and Ernst and Young to see if Ernst and Young were in the right area of £389 million; could there not just be a meeting between the accountants?
The problem to my mind with that approach is that accountants operate on the instructions of their clients, perfectly properly. One party's accountant may make demands which are quite unreasonable, and the other may refuse demands which are quite reasonable. I suspect that any further investigation would lead to confusion, not clarity, and I have no reason to suppose that the broad picture of the husband's vast - I repeat vast - wealth is substantially inaccurate.
The husband can satisfy the award the wife is seeking without any difficulty at all. Mr Mostyn says it is wholly a needs case. Again I cannot now, for obvious reasons, make a finding about that. But there is some truth in what he says. The wife's needs are likely to be the dominating issue at the final hearing. The amount of the assets in this case are so vast that the husband will be able to pay the lump sum awarded to the wife without there having to be a detailed inquiry into the extend of his assets.
I must have regard to proportionality. I am mindful of what Coleridge J said at paragraph 128 of J v V >fr 1,8<2004>fr 3,8< 1 FLR 1042. In my judgment nothing is going to be gained by permitting any further investigation that Mr Pointer asserted should be done subject to paragraphs 23 to 25 below. As to the properties, what possible difference would it make even if it is demonstrated that the properties the wife wants valued are shown to be by further valuation, say, 20% more valuable than what the husband's valuers have opined?
Mr Pointer very properly sent late yesterday evening to my clerk, with copies to the other counsel, an e-mail that he had omitted to make an important point in relation to the valuation of Peasmarsh. As I understand it, he is saying that it is not a valuation of the whole. What has been done is to parcel up the estate into small lots and value them separately. Accordingly, the wife believes that the estate may have a much greater value were it to be sold as a whole. That may be so; it may not be so. But I am afraid, with all due respect to Mr Pointer's point, it does not affect my judgment.
However, I am of the view that the wife is entitled to investigate the asset position as at March 2000. I cannot just dismiss out of hand the wife's sworn evidence by way of affidavit. It seems that the parties met in mid-June 1999. The wife's case is that they were dating from about July 1999 and a sexual relationship rapidly developed. She says that in early March 2000 she gave up her Hampshire property and moved to a property in Sussex to be nearer the husband. They then, according to her, decided to move in together and the relationship developed seamlessly into marriage. That is, broadly speaking, her case.
The husband's case is very different. I have read with care his affidavit. He controverts many of the wife's essential allegations.
I am in no position at the moment to judge which is right. Mr Mostyn asks: "What is the relevance anyway in the context of a short marriage?" I am not prepared at this stage to say it has no relevance. At the end of the final hearing it may turn out to have no impact on the case at all. But, on the other hand, it might significantly affect the amount of the matrimonial acquest. If it does not, or if the exercise of valuing the husband's assets as at March 2000 turns out to have been unnecessary, then, as Mr Pointer put it in paragraph 16 of his skeleton argument, it will be open to the court to say that the husband has been put to unnecessary expense and that the wife should reimburse him. I agree that the wife at this stage is not to be debarred from pursuing her enquiries in respect of what I broadly call March 2000. I will hear counsel in a moment on the form of the order that is necessary to put that decision on the point of principle into practice."
Accordingly I ordered that Ernst and Young and Lee and Allen were to produce an agreed report of the value of the husband's business assets as at 1 March 2000, by 14 June 2007, or if agreement could not be reached, a joint report setting out the extent of their agreement or disagreement.
The parties must have accepted my rulings because neither, in particular the wife, sought to appeal them.
Mr Wallis and Mr Timothy Allen duly completed their joint report. Mr Wallis valued the husband's business interests as at 1 March 2000 at £251,705,000, Mr Allen at £232,077,000, the difference being £19,628,000. Although the value of the husband's business assets as at March 2000 is no longer strictly relevant - given my finding of fact at paragraph 64 above - I shall nevertheless decide this particular issue for the sake of completeness.
Both accountants were called to give evidence but only in relation to the valuations of the husband's business interests as at 1 March 2000. Mr Wallis gave evidence first. Mr Allen then gave evidence and was cross-examined by Mr Mostyn.
The reason for the difference between the accountants is explained in their joint report and in their evidence by their difference over multiples. Paragraph 2:2 of the joint report says:
"Mr Wallis has valued the majority of the Petitioner's business assets at 1 March 2000 by the application of a multiple to a five year average of the earnings from the relevant income stream. Different measures of earnings have been used in the valuations, two examples being "Net Publisher's Share" (as defined in Mr Wallis' second report) and royalty income. While Mr Allen agrees the overall valuation methodology used by Mr Wallis, he is unable to agree certain of the multiples used by Mr Wallis in his valuation at 1 March 2000. This is the only area of disagreement between Mr Wallis and Mr Allen. Mr Allen's position in relation to the multiples is explained further in section 3 below."
Paragraphs 3.14 and 3.15 state:
"Lack of evidence. In Mr Allen's opinion, in order to support the use of higher multiples at the earliest valuation date there is a requirement to demonstrate a significant change in sentiment in relation to music industry related assets over the period to 2002/2006. The later valuations in 2002 and 2006 both use, with one exception, identical multiples. In Mr Allen's opinion, the relevant change in sentiment is not evidenced by the transaction multiples referred to by Mr Wallis in the second report (which, as noted above, all took place after the valuation date). In Mr Allen's opinion, as Mr Wallis has not produced evidence of a consistent downward trend in multiples in the 2000 to 2002/2006 period, the use of higher multiples in the 2000 valuation is not justified.
Conclusion. In Mr Allen's opinion, unless and until further evidence is produced to support the use of higher multiples in the 2000 valuation (when compared with those used in the 2002/2006 valuations), the multiples used in the 2002 valuation should be adopted when valuing the Petitioner's business assets."
Having listened to both accountants giving evidence I unhesitatingly accept that of Mr Wallis. I am grateful to Mr Allen for his assistance but on this issue Mr Wallis is in a different league of expertise to Mr Allen. Mr Wallis told me he has 25 years experience in musical and media work. In stark contrast Mr Allen, a forensic accountant mainly concerned with claims for damages and with share valuations, candidly admitted that he had never valued a catalogue.
Mr Allen criticised Mr Wallis' lack of research. Mr Wallis had valued on known market transactions after March 2000 and not before in determining his multiples.
Mr Wallis in my judgment convincingly answered those points. When he researched the sale of catalogues he looked at transactions around 2002 to 2006. It was clear to him that in March 2000 (the very top of the stock market boom) market sentiment was much stronger. Major music companies shares e.g. EMI, Universal and Sony were trading at 60% higher then than in 2002. The prospects for a digital boom were thought to be good. But by 2002 and 2006 the sale of CDs were declining, piracy was a real problem, and the rosy prospect of a digital boom had not materialised. He took the same multiples for 2002 and 2006 because the market had recovered somewhat to its 2002 level. He did research for 1999 but could find no relevant market transactions in the public domain.
Mr Allen, too, could find no relevant market transactions for 1999. Mr Mostyn took Mr Allen through parts of Mr Wallis' report of September 2006. Mr Allen accepted that he himself had produced nothing to gainsay Mr Wallis' analysis in his (not the joint) report of 14 June 2007. He agreed there had been a change in market sentiment after March 2000. He had done no research into the market situation as at March 2000. Finally, he accepted Mr Wallis' "multiples applied to the business assets at 1 March 2000" as set out in paragraph 3.43, 3.44 and following of Mr Wallis' report of 14 June 2007.
During the wife's cross-examination of the husband, she pressed him about the value of his paintings and his collection of paintings and artwork. He accepted that he owned paintings by Picasso, Renoir and other well known painters. He told me he wanted to keep all of his collection as it was very largely acquired before he met the wife.
The wife sought to put to the husband in cross-examination a valuation of the husband's art collection dated 6 February 2008 which she had obtained. Mr Mostyn objected, and in my judgment, rightly. No prior permission had been given for the wife to have her own valuation and in any event the valuation was far too late. Nevertheless the wife, no doubt using that report as a basis, sought to suggest to the husband that the total value of the husband's collection of art, including his own paintings, was £70m as opposed to some £25m. The husband disagreed.
Furthermore, the wife asserted in her cross-examination of the husband that some 30 paintings done by the husband, which are hanging in Angel's Rest, were given to her by the husband. The husband strongly disagreed. The husband told me that when the wife bought Angel's Rest she had nothing to hang on the walls and so he lent her 30 of his own paintings. He told me they were his, that he may leave them in trust for Beatrice and his other children, and that he wants them back save for the flower photographs and the Isle of Man stamp design, both given to the wife by the husband. The husband, I find, was generous towards the wife but his generosity did not extend to giving her 30 valuable paintings (of his own creation). I accept the husband's evidence. In my judgment he is entitled to have them back.
The total value of the husband's assets will of course fluctuate. In particular the value of his business assets will fluctuate according to market sentiment. Although I am told the husband will continue to tour in the future, it is likely that as he gets older he will tour less and less and the income stream from this source will diminish albeit his future earnings will be substantial.
It is unnecessary in the instant case to arrive at a precise figure for the total wealth of the husband, given its enormous size. As he has always accepted, he can pay any sum which the court considers appropriate as for financial provision for the wife. Nevertheless I find that the husband's total wealth amounts to approximately £400m. I reject the wife's case that he is worth £800m. There is absolutely no evidence at all to support that figure or any figure anywhere near it.
In my judgment, before I come to determine the nature and extent of the wife's assets, it is important to note that their source is very largely as a result of the husband's generosity towards her. Let me explain.
In her Form E of 28 September 2006 the wife sets out all her assets and liabilities. She had two properties, Pandora's Barn (net equity of £533,500) and Angel's Rest (net equity put at £1,067,000), bank balances at £1,198,679, monies owed to her of £22,400 and cash of £4,902. She had pension assets of £30,965. Her liabilities were said to be £4,842 on credit cards. Her net assets were thus put at £2,852,604.
As to Angel's Rest, the wife obtained a loan from the husband, as I have set out, in order to buy it. She later discharged part of the loan by the sale of Cross Street, and her monthly payments. MPL (at the husband's instigation) waived the balance of roughly 50% of the total loan.
As to Pandora's Barn, it is first necessary to look at the purchase on 17 May 2004 by the wife of a property at Thames Reach for £450,000.
That (office) property was purchased using funds from the NatWest savings account of the wife into which had been fed the husband's gifts to the wife of £250,000 in December 2002 and again in December 2003.
In about May 2006 the wife sold that property to the husband for £560,000 and purchased Pandora's Barn for £550,000.
On 2 November 2005 the wife e-mailed Mr Paul Winn, MPL's finance director, in respect of the property at Thames Reach that "the amount outstanding on the mortgage is £480,000" and "please pay it in the following account and I will deal with the closure of it". The account was a NatWest bank account in the name of the wife. On 5 November the wife e-mailed Mr Winn that "there are 4 loans with different companies on the property totalling £480,000 ...". Mr Winn pressed for full details on each loan. In February 2006 the wife again e-mailed Mr Winn about the loans and on 28 February instructed him to pay £450,000 into her account "so that I can settle this situation". On 1 March Mr Winn told the wife in an e-mail that he would not pay any sum "without proof that the loans exist or some protection secured on the property at Thames Reach".
In her Replies to Questionnaire dated 6 February 2007, in response to a question to annotate the wife's bank accounts showing discharge of the 4 loans and indicating the recipient of each payment, it was said "the wife did not have any loans".
The wife in her cross-examination accepted that Thames Reach was bought mortgage free and never had a mortgage on it. But she said that at the time of the e-mails referred to above she believed that there were loans secured on the property.
Mr Mostyn put to her that that was a fraudulent attempt to extract money from the husband.
In my judgment it is unnecessary to go so far as to characterise what the wife attempted as fraudulent. However, it is not an episode that does her any credit whatsoever. Either she knew or must have known that there were no loans on Thames Reach, yet she tried to suggest that there were and thereby obtain monies by underhand means.
Her attempts when cross-examined to suggest that she may have got in a muddle and confused this property with others, to my mind, had a hollow ring. In the light of the husband's generosity towards her, as I have set out, I find the wife's behaviour distinctly distasteful. In any event, as Mr Mostyn rightly submitted, it damages her overall credibility.
Between the filing of her Form E and the final hearing in February 2008 the wife's assets changed and increased. The wife received a total allowance of £180,000 in March 2007. On 1 March 2007 the husband agreed to pay to the wife £2.5m as an interim lump sum. In June 2007 the husband paid £3m towards the cost of the purchase of the wife's home at Pean's Wood near Robertsbridge.
The preamble to the order of 1 March 2007 made it clear that the sum for £2.5m was "on account of the wife's claims" and was made "without prejudice to each party's contentions as to the reasonable level of the wife's expenditure pending trial of her claims for ancillary relief." It was further agreed that upon payment of the £2.5m (in fact paid by 1 April 2007) the husband would cease paying the wife the allowance of £360,000 p.a. and any other expenses. The husband was to continue to pay Beatrice's school fees. There was thus no order on the wife's claim for maintenance pending suit.
As to the purchase of Pean's Wood, on 14 June 2007 Mishcon de Reya wrote to Payne Hicks Beach that the wife had found a suitable property near Vinehall Preparatory School, to which Beatrice was to return. The wife's solicitors wrote:
"The property is suitable for the following reasons:
a) It is 10 minutes from Vinehall school;
b) It is in a village in which our client has a friend, which makes the prospect of our client moving to this area significantly more attractive to her, for obvious reasons;
c) It is 5 minutes from a railway station, providing easy access to London;
d) It is contained within 14 acres and can provide vital privacy and security for Beatrice. Unless one is lucky enough to live on a private estate running to hundred of acres, such as your client, this kind of privacy can be extremely difficult to achieve;
e) It is available almost immediately. Our client estimates she would be able to move in prior to the start of the Autumn term, having done some work to it over the Summer; and
f) Finally, and most importantly, this is a house which our client feels confident she could make into a warm and comfortable home for Beatrice."
The agents' property particulars state that it is a property built in the early 20th century standing in 14 acres. It is a 7 bedroom property with a playroom, gymnasium, laundry and self contained staff cottage.
On 15 June 2007 the husband's solicitors replied as follows:
"We can also confirm that our client is willing to make the sum of up to £3 million immediately available for the purchase of Pean's Wood, (to be paid directly to the solicitors instructed by your client in relation to the purchase) if that is your client's chosen property.
As to this, we would make the following points:
i)Our client appreciates your client's willingness to move to the area.
ii)The payment is a further payment on account of your client's ultimate financial award. There is no question of it being 'in addition' to any overall financial settlement.
iii)Our client is willing to make such an advance for any reasonable property within range of Vinehall, but it goes without saying that such an advance would only be made in relation to a property that met those criteria.
iv)In making a payment of this size our client is prioritising the benefits of agreement for Beatrice. He is not to be taken as accepting that a property on the scale of Pean's Wood with its associated outgoings, is necessary or desirable. He produced examples of properties that are available for under £2 million which are more in line with the sort of places that Beatrice is used to. Your client should not be surprised that it will be argued in the financial proceedings that a property of the scale of Pean's Wood will constitute your client's main home. Whilst of course your client cannot be compelled to sell her Brighton property, it will be treated as her capital resource and not form part of her housing requirements or income needs in terms of its running costs; further the running costs of "Pean's Wood" in so far (by way of example) as its extensive grounds, equestrian facilities and out buildings are concerned will similarly not be accepted as forming part of your client's needs going forward.
v)With that in mind, the sum he will provide covers most but not all of the costs of purchase and associated expenses of this particular property. If your client wishes to purchase a property in this bracket, she has the wherewithal to make up the balance."
52.Accordingly the husband made £3m available to the wife who purchased Pean's Wood.
53.On 20 December 2007 Coleridge J ordered the wife to provide by 10 January 2008 documentation and information necessary for an analysis to be made of the change in her bank balances and the use to which she had put her interim lump sum.
54.The husband's legal advisers have subjected that documentation and information to rigorous scrutiny, which scrutiny, I am satisfied, is accurate. In her Form E the wife disclosed £1,198,682 in bank accounts. Her receipts from October 2006 to December 2007 were £4,735,581, which included £2,500,000 interim lump sum, £180,000 allowance for March 2007, and the sale of Pandora's Barn at £620,000 and deposit interest of £56,318. It is also included US dollar receipts (which have been converted into sterling), i.e. her fees from "Dancing with the Stars" of £109,322, Warner Bros expenses £14,330 and deposit interest of £47,366. Her receipts do not include the £3m made available by the husband for the purchase of Pean's Wood.
55.Her expenditure from October 2006 to December 2007 totalled £3,715,683 made up as to £2,996,159 personal expenditure, £682,425 business expenditure, and £37,099 cash expenditure. Within the figure for personal expenditure is the payment of her legal fees of £1.003m as annotated by her on her bank statements and by the information she provided.
56.Taking into account an estimated exchange rate adjustment the wife's bank balances as at December 2007 should have stood at £968,880. In fact they stood at £913,596, an unexplained difference of £55,284.
57.Thus, it can be seen that the wife's actual assets are now Pean's Wood £3,675,000 (the wife has spent £675,000 on refurbishment; the vendor's mortgage of £250,000 has been deducted), Angel's Rest £2m (professionally valued in January 2008), bank balances of £913,596, £683,000 represented by the agreed transfer to be made to the wife by the husband of Sonya Mills' house and the mortgage on Fiona Mills' house, and the wife's pension assets of £30,965. The total is £7,302,561.
58.On 11 October 2007 the wife's solicitors estimated that her ancillary relief costs to that date totalled £822,741 of which she had paid £565,000. On 11 October 2007 the wife's solicitors stated that in relation to the divorce suit her total bill was £327,406, of which she had paid £220,947. Thus upon that information it could be said that the wife is indebted to her former solicitors in the sum of £364,200.
59.However in her January 2008 affidavit she deposed that her former solicitors had overcharged her by £250,000. She has disputed the final invoice of £117,548 which is being reviewed by a costs draughtsman.
60.It is, I am afraid, unclear, whether the wife owes Mishcon de Reya or they owe her as a result of overcharging.
61.Mr Mostyn submits that a figure of £1,666,059 should be added back into the wife's assets as representing reckless expenditure during the ancillary relief proceedings. For the principle of adding back he relies upon what I said at paragraph 77 of my judgment in Norris v Norris >fr 1,8<2003>fr 3,8< 1 FLR 1142:
"The overspend, i.e. the expenditure over income of £350,000 in a little over 2 years, at a time when he was about to and then did enter into protracted litigation with the wife, can only be classified as reckless, and particularly as a time later on when the dot.com and the stock market collapsed. A modest overspend in the context of a rich man would be understandable and could not be classified as reckless. But in the circumstances of this case, as I have set them out, in my judgment, the scale and extent of the overspend was reckless. I do not think it appropriate to add back the entire overspend, but I do not consider it unfair to add back into the husband's assets the figure of £250,000. In my judgement, there is no answer that the husband can sensibly give to the question, 'Why should the wife be disadvantaged in the split of the assets by the husband's reckless expenditure?' A spouse can, of course, spend his or her money as he or she chooses, but it is only fair to add back into that spouse's assets the amount by which he or she recklessly depletes the assets and thus potentially disadvantages the other spouse within ancillary relief proceedings."
62.What I said in Norris should now be read in the light of what Wilson LJ said at paragraph 14 of his judgment in Vaughan v Vaughan >fr 1,8<2007>fr 3,8< EWCA Civ 1085, a case which involved dissipation:
"Such was a rare legal error on the part of the district judge. Miss Ward tells us that it was curious that he should refer to an absence of legal principles in that she and counsel for the husband had referred him to a recent example of such re-attribution, namely Norris v Norris >fr 1,8<2003>fr 3,8< 1 FLR 1142. Although such a decision was at first instance, it is the last in a line of authority which stretches back to the decision of this court in Martin v Martin >fr 1,8<1976>fr 3,8< Fam 335 that, in the words of Cairns LJ at 342H,
"a spouse cannot be allowed to fritter away the assets by extravagant living or reckless expenditure and then to claim as great a share of what was left as he would have been entitled to if he had behaved reasonably"
The only obvious caveats are that a notional re-attribution has to be conducted very cautiously, by reference only to clear evidence of dissipation (in which there is a wanton element) and that the figure does not extend to treatment of the sums re-attributed to a spouse as cash which he can deploy in meeting his needs, for example in the purchase of accommodation....."
63.Mr Mostyn submitted that a reasonable rate of expenditure by the wife in the 15 months period October 2006 to December 2007 would be at an annual rate of £470,000 plus £150,000 for security. i.e. a total annual rate of £620,000 which corresponds to £775,000 for the actual 15 month period.
64.The wife's total expenditure in the 15 month period was £3,715,683. If legal and forensic accountancy fees of £1,003,313 and £675,000 of property refurbishment are stripped out then the wife has spent in the 15 months period £2,037,376 on herself. Then if £775,000 is deducted from that, it is submitted that the wife has overspent by £1,262,376 in that period.
65.It is further submitted that of the wife's divorce costs £250,000 should be added back on the basis that it was quite unnecessary expenditure and, if not added back, would in effect mean that the husband was paying part of the wife's costs.
66.As to that particular submission, I reject it. It is unjustifiable for me to start to determine who did or did not behave "reasonably" at any time during the divorce suit. The fact is that the wife enjoyed the services of a top ranking London firm, as did the husband. In my judgment this item does not fall within the heading of reckless expenditure.
67.It is also submitted that the costs of Mr Wallis (£133,683) and of Mr Allen (estimated at £20,000) in carrying out the work necessary to value the husband's business assets as at March 2000 should be added back into the wife's assets as they have been shown to be "futile" expenditure. This, to my mind, is a matter of costs to be determined after this judgment has been handed down. I therefore at this stage decline to add back into the wife's assets any of these figures.
68.That then leaves me to determine whether to add back into the wife's assets £1,262,376, or a lesser figure, or no figure at all.
69.In my judgment the wife's attitude in her Form E, her open offers, her oral and written evidence, and her submissions is that she is entitled for the indefinite future, if not for the whole of her life, to live at the same "rate" as the husband and to be kept in the style to which she perceives she was accustomed during the marriage. Although she strongly denied it her case boils down to the syndrome of "me, too" or "if he has it, I want it too". I shall say more about this when I consider what are the wife's needs.
70.It must have been absolutely plain to the wife after separation that it was wholly unrealistic to expect to go on living at the rate at which she perceived she was living.
71.The wife points to the husband's vast wealth including a very diverse portfolio of valuable properties, and to his expenditure in 2005, set out in the husband's Form E. I shall return to that when I consider needs. But none of this, in my judgment, in the circumstances of this case can found a reasonable expectation that the lifestyle the wife perceived she enjoyed during the marriage could or should continue after its breakdown in April 2006.
72.It is appropriate that at this stage in the judgment I should assess the parties' standard of living during the marriage.
73.The words of Baroness Hale of Richmond in Miller v Miller >fr 1,8<2006>fr 3,8< UKHL 24, >fr 1,8<2006>fr 3,8< 2 AC 618, at paragraph 158 are very appropriate:
"Even without the former statutory objective, the court has to take some account of the standard of living enjoyed during the marriage - see section 25(2) (c). The provision should enable a gentle transition from that standard to the standard that she could expect as a self-sufficient woman."
The House of Lords' decision in that case was handed down on 24 May 2006.
74.For 10 months of the near 4 year marriage the husband was touring. This entailed first class international travel, first class hotels, and internal private flights. The husband and wife went on expensive and sometimes exotic holidays. They lived well. They often flew by private jet and /or helicopter. They always flew first class if flying with a commercial airline. The wife had an allowance of £360,000 p.a. The husband paid all the major bills. But that said, their lifestyle in their homes, particularly in England, was comparatively simple. The Cabin was a very modest property. They largely stayed in and did not eat out. They enjoyed riding and yoga. There was no round the clock security. The security in Sussex was provided by the farm workers. There was no live-in staff. The parties did not spend their time on yachts or, in the memorable phrase of the celebrated economist, Prof. J.K.Galbraith, on "conspicuous consumption". They spent time in New York and at 11, Pintail, a modest holiday home. They never visited the Scottish properties.
75.I am satisfied that the wife has expected, and unreasonably, that such a lifestyle would not only continue but was her entitlement. She did not moderate her spending after separation. I entirely accept that when a marriage breaks down, the maelstrom of a broken relationship may well envelop both spouses and make it very difficult for them to re-order their lives, particularly financial. But I have no doubt that in the wife's mindset, there was an element that she was going to spend (in the 15 month period) in order thereby to hope to prove that a budget in excess of £3m p.a. put forward in her Form E in September 2006 was justifiable.
76.The figure of £1,221,672 is broken down as follows:
>fr 1,8<Note - the rate in excess of £150,000 p.a. which the husband asserts is reasonable>fr 3,8<
London property rental 56,141
>fr 1,8<Note - this was separately provided by the husband>fr 3,8<
Cash gifts 15,000
All business expenses682,425
77.The "business" expenses generated, so far as I can see, no income other than the £110,000 fee for Dancing with the Stars. Within the business expenses is £427,590 paid as salaries and fees to various people including Fiona Mills and the wife's personal trainer.
78.The personal expenditure included £349,862 allegedly paid on security. No invoices were ever produced, despite repeated request of the wife during the final hearing and despite promises by her to bring them. The wife explained in her cross-examination that she was paying for her security in cash "so Paul can't find out who they are". However she said that she would allow me to see the invoices. She told me that she was afraid that if the husband saw the invoices he would leak details of the security arrangements for her and Beatrice. Nevertheless she told me she would produce the invoices to me. She never did. Thus, although she has annotated her bank statements identifying the items which she says are payments for security, not one single invoice or receipt has been produced to verify those payments.
79.The wife is very concerned about security. In December 2006 the police were concerned about death threats against her. Furthermore, it is apparent from DVDs shown to me by the wife that she loathes the paparazzi and engaged security men to try to protect her from them. I accept that the wife has spent sums on security but I am not satisfied that she has in fact spent nearly £350,000 in security in the 15 months period. I consider her reason for her unwillingness for the husband to see any invoices is a smokescreen to seek to try and explain away her failure to produce them. I reject completely the suggestion that the husband would in some way jeopardise the security of the wife and Beatrice.
80.I also detect symptoms of other, unreasonable expenditure to some extent in chartering planes which include helicopters.
81.I decline to add back the full figure put forward by Mr Mostyn. As I have said, financial adjustment consequent on the breakdown of a marriage is difficult even traumatic. Doing the best I can, I consider that I should add back into the wife's assets a figure of £500,000 to represent completely unreasonable expenditure over the 15 month period.
82.Thus the wife's total assets are £7,802,561.
Wife's Capital Needs
83.The wife's aspiration, as per her open offer, is to own, in addition to Pean's Wood and Angel's Reach, the properties at "Heather House" in Los Angeles, 11 Pintail on Long Island, and to be given funds between £8m and £12.5m to purchase a home in London, about £3m to purchase a New York City property, and funds of between £500,000 to £750,000 to purchase an office in London or Brighton.
84.Her case is that there should not be such a disparity between her lifestyle and that of the husband such as could or might impact upon Beatrice. She seeks to contrast her, reasonable she would say, demands with the large and diverse property holdings of the husband. She is deeply involved in charitable work and needs an office from which to conduct her charitable, as well as business, activities.
85.In my judgment, her case overlooks the fact that all of the husband's properties were acquired before their marriage, in some cases long before, with the exception of "Heather House". If the wife was being truthful in her evidence to the Senior District Judge in June 2007 (which I assume she was) - see paragraph 192 below - she will not be working in Los Angeles (or indeed the USA) and thus has no need of a home there. So far as an office is concerned, there is plenty of room for one in the spacious property at Pean's Wood. I see no justification whatever for homes on Long Island or in New York City.
86.The wife and Beatrice are well housed at Pean's Wood; indeed the husband would say over housed compared to his home, Blossom Wood, on his Peasmarsh estate, or the Cabin (which was demolished because no planning permission had been obtained). But Mr Mostyn made clear that Pean's Wood is not to be taken as an excessive purchase. I am satisfied that the wife chose that house freely and in the knowledge that that was to be her and, when Beatrice was with her, Beatrice's home for the foreseeable future. The wife now says she feels a prisoner there, as she put it, in the middle of nowhere. I find that inconsistent with her having already spent on it £675,000 and wanting another £400,000 to put in a swimming-pool.
87.The wife wishes to have funds to acquire a London property, indeed a substantial London property of in excess of £8m. Mr Mostyn submitted that whether the wife was entitled to a "second property" was a "matter for debate". However, if contrary to his submission, she should, nevertheless he submitted that any London property should be conservative and manageable, that any such property will be "particularly susceptible to the argument that it may be folded into the wife's income fund in years to come, per Flick, as being beyond the wife's strict need", and that such an acquisition carries with it an implication as to her earning capacity i.e. that it will be used to further her career opportunities.
88.In my judgment, it is important for the wife that she is assisted to recover and thereafter develop her earning capacity. I doubt that that will happen solely from Pean's Wood. It is much more likely to happen if the wife has a property in London. But, in my judgment, it is reasonable for that to be in the nature of a spacious flat with a minimum of 3 bedrooms. I have seen agents' particulars of properties put forward by the husband for properties of £2m or less. The wife did not like them because they are not on a par with Cavendish. I agree they are not. But a flat costing £2.5m inclusive of stamp duty and legal fees and furnishing seems to me to be reasonable. If, of course, the wife wishes to purchase something more expensive then she can sell Angel's Rest which would raise another £2m. Alternatively, Pean's Wood and/or Angel's Rest would provide sufficient security to raise further monies to buy a more expensive London property.
89.Thus I conclude she needs £2.5m to buy a London property. If the wife's aspiration is limited to a London property costing £2.5m in my judgment she should be able to keep Angel's Rest and not, as Mr Mostyn, submitted, have it treated as part of her "Duxbury" fund. Such a submission gives every suggestion that the husband wishes to be mean-minded, which, having seen the husband in the witness-box, I do not believe him to be. I am satisfied that Angel's Rest does mean much to the wife and she and Beatrice can enjoy time there together as they have in the past.
Disability of the wife
90.As I have said, in 1993 the wife suffered severe injuries to her left leg and other injuries. I am satisfied that periodically the wife may need to undergo revision amputations. But there is no evidence before me to support that such revisions will involve amputating her left leg above her knee. Her injuries have not affected her modelling or public speaking. She is able to ride, ski, and dance. In 2007 she entered in the USA "Dancing with the Stars" (the equivalent of "Strictly Come Dancing") and earned 200,000 before being eliminated. Her disability will not affect her capacity to care for Beatrice or her earning capacity in the future.
Wife's Earning Capacity
91.The wife's case is that her earning capacity is now zero. The wife, as I have said, blames the husband for his attitude towards her working during the marriage. That I have found to be a false case. As to her earning capacity in the future the wife seeks to explain her position in paragraph 70 of her January 2008 affidavit. Her career has been ruined, she says, by bad publicity. She has received no offers of work in the UK and worked only once in the USA in 2007 (Dancing with the Stars). She is unable to accept offers of work in the USA due to her commitments to Beatrice. She says that she does not believe that she will be able to revive her career at any time in the foreseeable future.
92.In her evidence the wife told me she had looked for other work since April 2006. She has tried to do speeches but had been vilified and she cannot get work.
93.I accept that since April 2006 the wife has had a bad press. She is entitled to feel that she has been ridiculed even vilified. To some extent she is her own worst enemy. She has an explosive and volatile character. She cannot have done herself any good in the eyes of potential purchasers of her services as a TV presenter, public speaker and a model, by her outbursts in her TV interviews in October and November 2007. Nevertheless the fact is that at present she is at a disadvantage.
94.The wife would say she is at a severe disadvantage. I think she overplays her hand. First, she was able to secure in the spring of 2007 a valuable contract, Dancing with the Stars, from which she received £110,000 for 2 months work. Second, in June 2007 she gave the following evidence to the Senior District Judge when being cross examined by Mr Peter Jackson QC for the husband.
"Q: Let me take it then that you are not going to be thinking of moving to Slovenia with Beatrice? A: I am not thinking of moving anywhere and there are 20 statements live on TV shows to promote Dancing with the Stars - - -
Q: It will help us - - - A: - - saying I will never move abroad, I will never live abroad, because I want to keep my daughter near her father. I am renowned for saying that, and to suggest anything else is just speculation on what Paul or the press have put together. Live, I have been asked it a million times and I have said I will never move abroad. I want Beatrice to be near her father - - - -
Q: So we can ignore any thought that you might want to take Beatrice to Los Angeles or any other part of the United States or anywhere - - - A: 100%. 100%. I have turned down huge amounts of work. This Dancing with the Stars was a one-off short thing that Judge Waller knew everything about in the last case and is not a tour, is not anything. It had cleared my name- - -"
95.Her evidence there that she had turned down huge amounts of work is quite inconsistent with her assertion that her earning capacity is zero.
96.Third, during the hearing before me the wife was asked and agreed to produce a schedule of all offers of work from the US since separation. She produced no schedule or list.
97.However, she did produce some documents which however did not lead me really anywhere. She produced her contract in relation to Dancing with the Stars. She donated £50,000 of her receipts to VIVA. She produced a document from 44 Blue Productions of the William Morris Agency re possible project opportunities. She also produced a letter of 2 November 2006 from Ed Hardy of Nervous Tattoo of an unsigned contract to model for a period of 10 months at a monthly fee of US 10,000. The evidence is unclear whether she ever in fact contracted and worked for Ed Hardy.
98.I have no doubt that, despite the very adverse publicity in the last 2 years or a little under, the wife does have an earning capacity. She has earned her living since the age of 17. I have found that her association with the husband advanced, not stultified, her career. If in the future she is circumspect about engaging with the media and/or adopts an emollient and less confrontational attitude to it, I think that the negative interest shown towards her will indeed subside. She has the ability and experience in TV production and film making, other than as a role as a presenter. She can in time continue as a model. It may be that interest in her as a public speaker has very much waned and is unlikely to be revived. Her opportunity to market a book about herself is probably at an end other than as a "kiss and tell all" book, which she told me she has no wish to do and in any event might well place her in breach of the confidentiality of these proceedings and of those concerning Beatrice. She is currently undertaking a part-time course at UCL in nutrition.
99.She will take a little time to recover to a full earning capacity. Mr Mostyn has suggested a year. I consider that to be optimistic. Two years is more likely.
100.Mr Mostyn has suggested that I should take a figure of £110,000 p.a. gross which is not far off the mid point between her gross and net earnings of the tax year ended 5 April 2006. But that, of course, was when she was still in a relationship with the husband and thus earned at a time when she was benefiting from being his wife.
101.I think the right figure is £75,000 p.a. gross to be taken into account two years from now.