Culligan v Culligan (No3) (Terms of Order) [2025] EWFC 186

[2025] EWFC 186Case No 1652-1920-1218-0539
IN THE FAMILY COURT
Venue SITTING AT THE ROYAL COURTS OF JUSTICE, Royal Courts of Justice, Strand, London, WC2A 2LLDate 03/07/2025
Before
MR JUSTICE MACDONALD
Between
Diane Liza Rosemin-CulliganApplicantAnthony David CulliganRespondent
Ms Marina Faggionato (instructed by Withers) for ApplicantMr Alexander Thorpe KC and Mr Edward Benion-Pedley (instructed by Judge Sykes Frixou) for RespondentHearing Hearing Date: 12 June 2025
Approved JudgmentThis judgment was handed down remotely at 4.30am on 3 July 2025 by circulation to the parties or their representatives by e-mail.MR JUSTICE MACDONALDThis judgment was delivered in private. The judge has given leave for this version of the judgment to be published.
[1]On 14 January 2025, I handed down judgment in financial remedy proceedings arising from the dissolution of the marriage between the applicant, Diane Liza Rosemin-Culligan (hereafter ‘the wife’) and the respondent, Anthony David Culligan (hereafter ‘the husband’) (see Rosemin-Culligan v Culligan (Wells Sharing) [2025] EWFC 1). On 13 February 2025, I handed down my decision as to costs and anonymity (see Rosemin-Culligan v Culligan (Re Costs and Anonymity) [2025] EWFC 26). As at today’s date, nearly 5 months later, the parties are still unable to agree the terms of a draft order arising from my judgment and now invite the court to determine a number of issues of contention between them.[2]The wife continues to be represented by Ms Marina Faggionato of counsel and the husband is represented by Mr Alexander Thorpe of King’s Counsel. At this hearing, Mr Thorpe is joined by junior Chancery counsel, Mr Edward Benion-Pedley.[3]In determining the issues between the parties, I have had the benefit of a small bundle containing relevant documents. Those documents include a draft order, marked up with the parties differing proposals with respect to the relevant provisions, and a draft Deed of Covenant, also referred to as a ‘Phantom Share Agreement’, and again marked up with the parties’ differing proposals. That document is designed to implement the order made by the court for so called ‘Wells sharing’ in respect of the husband’s shares in a company called Colendi. I have also had sight of the parties’ detailed Position Statements.

BACKGROUND

[4]The background to the decision of the court is comprehensively set out in my judgment of 14 January 2025. That judgment should be read with this one. The reasons for the court making the order that it did are, likewise, set out in comprehensive terms therein. The following matters are of particular relevance having regard to the disagreements that have arisen between the parties with respect to the provision of a draft final order for approval by the court.

Terms of Deed of Covenant

[5]The primary issue between the parties relates to the terms of the Deed of Covenant or ‘Phantom Share Agreement’ (hereafter referred to as the ‘Deed of Covenant’ for clarity) A ‘phantom share agreement’ is a colloquial term for a Deed of Covenant relating to shares and is used in financial remedy proceedings to reinforce contingent lump sum obligations without changing the legal or beneficial ownership of the shares in question. in respect of the husband’s shares in Colendi.[6]As noted in the judgment of 14 January 2025, in January 2022 Colendi expressed an interest in acquiring the husband’s company, SETL Limited. On 30 September 2022, a company called Colendi SETL Nominees was incorporated, which would ultimately come to hold the husband’s shares in Colendi on trust for the husband. The husband was appointed a director of Colendi SETL Nominees on 12 January 2023. The deal with Colendi was finalised by way of a share swap on 28 January 2023. Colendi acquired the entire share capital of SETL Limited in return for SETL shareholders receiving 8% of Colendi’s share capital in the form of 28,0555,134 Class B shares. The husband received 12,933,924 Class B shares amounting to some 3.6% of Colendi’s share capital. The trust agreement between the husband, Colendi SETL Nominees and Colendi was completed on 2 February 2023. The provisions of the trust agreement make clear that the covenant by Colendi SETL Nominees, as trustee, to transfer shares at the request of the husband, as beneficiary, is subject to the Articles of Association and the Shareholders Agreement for Colendi. The terms of the trust further make clear that Colendi SETL Nominees, as trustee, is not obliged to follow the husband’s directions as beneficiary where they are contrary to or in breach of the Articles of Association and the Shareholders Agreement for Colendi, and that the husband, as beneficiary, agrees not to instruct Colendi SETL Nominees to transfer the shares unless permitted or required to do so by those instruments.[7]At the final hearing, the court had the benefit of an expert report dated 30 October 2023, and an addendum expert report dated 9 October 2024, from Mr Rodwell on the value of the husband’s shareholding in Colendi. In his updated report, Mr Rodwell valued the husband’s shares at £19M. The court accepted that valuation for the reasons set out in the judgment. As I further noted in the judgment in that context, the need to consider ‘Wells sharing’ in this case arose not from an inability to value an asset, but rather from the size of the illiquid or risk laden asset relative to the “copper bottomed” matrimonial assets in the case, the Colendi shares comprising, on Mr Rodwell’s valuation, £19M of the total matrimonial assets of some £27M. In their respective open offers ahead of the final hearing, both parties accepted that they would have to remain connected with respect to the Colendi shares.[8]Within the foregoing circumstances, the court concluded that a contingent lump sum (being a lump sum referable to realisation of the husband’s Colendi shares) was the only reliable means of reflecting the wife’s share of the matrimonial assets comprised of the Colendi shares in so far as it was necessary to do so to achieve fairness, but that the portion of her award that was comprised of a contingent lump sum should be kept as small as possible having regard to the disadvantages of ‘Wells sharing’ in the context of the court’s duty to consider a clean break. In dealing with the disadvantages of ‘Wells sharing’ in this case, I noted as follows with respect to those disadvantages for both the wife and the husband:
“[108] The contingent lump sum dependent on the Colendi holding would have a number of the disadvantages for the wife associated with ‘Wells sharing’. It would prevent a clean break at this point in time for the purposes of s.25A of the 1973 Act (requiring that which a clean break seeks to avoid, namely two people who have fallen out having to continue to co-operate closely in respect of financial matters), would leave the wife dependent on an illiquid asset to which a risk attaches and in which it is difficult to deal, would place the wife in a position in which it is difficult to provide her with any solid protection with respect to a contingent lump sum comprising a not insignificant element of her award and would leave the wife with a lack of certainty with respect to when the Colendi shares could be realised and potential future costs consequent thereon (in circumstances where the husband’s co-operation in these proceedings with the provision of information has been less than fulsome and has led to punitive costs orders being made). Further, whilst it has been possible to value the Colendi shares in this case, that valuation is a snapshot and the future value of the asset is also the subject of significant uncertainty. [109] Against this, and as I have noted, in circumstances where it is also onerous for the party in whose name the illiquid or risky asset is held to be left with all or a greater share of that asset, the fairness of that outcome must also be considered. On the evidence before the court, I am satisfied that the wife was not consulted by the husband before he dealt in the way that he did with the substantial matrimonial asset that was SETL Limited, rendering that matrimonial asset illiquid and subject to increased risk. However, the Colendi shares comprise an asset that was built up within the marriage from other matrimonial assets, in the first instance Bitcoin and thereafter SETL Limited. Whilst there was a dispute as to the extent it was necessary for the deal with Colendi to be structured in the way that it was in circumstances where, contrary to the husband’s justification for a nominee holding, multiple small shareholders are listed on the Colendi register and other companies which have invested by way of shares owned directly, the wife did not appear to contend that the husband had structured the deal with Colendi in a deliberate attempt to defeat the wife’s claim. Indeed, as I have noted, in cross-examination, the wife was keen to emphasise that she had not used the word “dishonest” to frame her contention with respect to the husband’s approach. Finally, and as I have already observed, I am satisfied that fairness demands that the husband have sufficient liquid funds after he has cleared the liabilities for which he is responsible to rehouse himself.”
[9]Accordingly, the court determined at paragraph 55(vii) of the judgment to make the following order in respect of ‘Wells sharing’ of the Colendi shares (emphasis added):
“The husband will transfer to the wife 30% net of the future benefits that he derives in any form from the Colendi shares, to be expressed in the form of undertakings, contingent lump sums and backed up by a Phantom Share Agreement.”
[10]In the circumstances set out above, the dispute between the parties centres on the definition of “Colendi Shares” to be used in the order and the terms of the Deed of Covenant. The essential question of definition is whether pursuant to paragraph 8 of the draft order, the court having determined that the appropriate quantum of ‘Wells sharing’ in respect of the Colendi shares was 30% of that asset, the terms of the Deed of Covenant should apply to the totality of the husband’s holding of 12,933,924 Class B shares or a “ring fenced” 30% of the husband’s holding of comprising 3,880,177 Class B shares. Expressed in terms of outcome, should the wife receive 30% of the future benefits that the husband derives from all of the 12,933,924 Colendi shares, or the future benefits referable to 3,880,177 Colendi shares. This was referred to during the course of the hearing as the “scope issue”.[11]As to the scope issue, the wife submits that she has proposed the standard provision of for a Deed of Covenant in these circumstances, providing for a payment calculated by reference to a proportion of any and all proceeds arising in relation to the shares. The wife further submits that the husband’s insistence that the wife should have 30% of the net future benefits from a specified 3,880,177 shares gives rise to a risk that the husband’s will deal differentially in respect of the two groups of shares (for example, directing that the wife’s shares were swapped or diluted), meaning the husband is no longer bound together with the wife equally in respect of both the risk and the reward as contemplated by the principle of ‘Wells sharing’. As such, the wife submits that the terms of the Deed of Covenant proposed by the husband contradicts the court’s judgment that the husband will “transfer to the wife 30% net of the future benefits that he derives in any form from the Colendi shares” (emphasis added). The wife further contends that the arrangement proposed by the husband would result in a trust arrangement, giving rise to Relevant Property Regime taxes, which would include periodic/10 year charges and exit charges on the value of capital distributions. With respect to the issue of maintaining fidelity to the clean break principle relied on by the husband as described below, the wife submits that by making an order for ‘Wells sharing’ the court recognised, and addressed, the fact that a clean break is not possible in this case having regard to the proportion of the matrimonial assets that comprise risk laden illiquid assets. Finally, on behalf of the wife, Ms. Faggionato points to the fact that in his draft order submitted with his closing submissions, the husband sought an order on this issue in the terms now advanced by the wife.[12]The husband submits that in implementing ‘Wells sharing’ the court should, in so far as possible, maintain fidelity to the clean break principle. Within this context, the husband concedes that in making his proposal for ringfencing a specified 30% of the Colendi shares he wants the ability, within the confines of the agreement, to deal differentially with the remaining 70% of the shares as he sees fit (for example, by charging the shares, swapping the shares or selling them). The husband submits that this accords with fairness and the principle of a clean break, is justified on strong practical grounds and avoids any situation where the parties are bound together for any longer than necessary. The wife would be able, the husband submits, to administer the ringfenced shares by giving him instructions under Clause 8.2 of his proposed wording for the Deed of Covenant, which instructions he would be obliged to comply with. In this way, the wife could take independent decisions regarding the ringfenced 30%, for example, instructing the retention of those shares even if the husband decided to dispose of the other 70%. The husband further asserts that the arrangement will not mean there will be a differential in value to the respective groups of shares, nor will it undermine the wife’s interest in circumstances where the ‘ring fence’ is defined in the very broadest of terms and where not permissible as a matter of corporate law to treat shares unequally. With respect to the wife’s concerns regarding the creation of a trust, which would create adverse tax consequences, the husband submits that the wording he proposes for the Deed of Covenant will prevent a trust arising both by its expressed intentions and the use of wording that is inconsistent with relationship between trustee and beneficiary, although Mr Benion-Pedley conceded during submissions that the wording itself does not guarantee that outcome.[13]In addition to the scope issue, the wife further contends that to properly implement the decision of the court, that the husband should transfer to the wife 30% net of the future benefits that he derives ‘in any form’ from the Colendi shares and that she must be entitled to payment in respect of any non-cash benefits accruing to her 30% share of those shares, irrespective of whether cash benefits have been realised. This was referred to as the “cash equivalent issue” during the hearing and brings into issue the wording of paragraphs 9 and 49 of the draft order.[14]Within the foregoing context, it is important to note that whilst the subject of, and the need for, a Deed of Covenant, or ‘phantom share agreement’, was canvassed during the final hearing, and the court was satisfied that its order for a contingent lump sum would need to be supported by such an instrument, the court did not receive submissions as to the terms of a Deed of Covenant. In the circumstances, this hearing is the first time such detailed arguments have been made. On reflection, it might have been better for the court to have insisted on such detailed submissions at the final hearing, albeit that would have involved the parties incurring the costs of the legal advice and drafting to ensure the terms of such an agreement were available, at least in outline, ahead of the parties knowing whether the court was going to endorse such a course of action. In this context however, the court mustensure that its determination as to implementation maintains fidelity to the substantive decision made at the final hearing. It would not be appropriate for the court to determine the issues that remain between the parties in such a way as to change the effect of the judgment.

Terms of Final Order

[15]As noted, the parties are also in dispute regarding a number of other terms of the draft order.

(i) Chattels

[16]Beginning at perhaps the opposite end of the spectrum, when compared with the complexity of the disagreement in respect of the terms of the Deed of Covenant, the parties have been unable to agree the terms of the draft order relating to a car. In the context of the value of the car in question being £30,000, as compared to the total matrimonial assets of some £27M, the court did not specifically deal with this issue in dividing up the chattels, valued at £108,625 on the basis that the parties’ wine collection would be divided equally by value, the chattels by agreement or arbitration and that the parties would otherwise retain their own assets. In such circumstances, the wife retained the car valued at £30,000.[17]By way of competing versions of paragraph 26 of the draft order, the husband now seeks an order that the wife pay him £15,000 and thereafter retain the family car. The wife proposes that the draft order provide that any cars owned by the parties shall be sold by 1 November 2025 and the proceeds divided equally. (ii). Tax[18]The parties disagree on a number of the provisions of the draft order that flow from the court’s decision regarding the treatment of the various tax liabilities in this case. Accordingly, it is important to recall the manner in which the court dealt with tax at the final hearing.With respect to those tax issues, the court had the benefit at the final hearing of a report from Mr Matthew Pannell, the single joint tax expert.[19]As recorded in the judgment, the husband’s US citizenship gives rise to potentially significant tax liabilities in the context of his not having filed US tax returns. The question of who should be responsible for such liabilities featured heavily at the final hearing. The liabilities arise primarily from(a) the husband’s sale of Bitcoin as detailed in the judgment,(b) a potential capital gains tax liability upon the sale of the former matrimonial home and any transfer of the other UK properties and(c) a potential capital gains tax liability upon the transfer of the husband’s shares in Colendi. A number of consequences flowed from these positions: i) With respect to the tax falling due on the sale of the Bitcoin, the husband qualifies for the IRS Streamlined Foreign Offshore Compliance Procedure, under which only three years of late tax returns are required if the IRS accepts an application under that scheme. However, whilst he is able to apply under this procedure and has done so, it is not guaranteed that the husband’s application will be granted, leaving him liable to six years of late tax if it is not. ii) With respect to the US tax due on any UK property transfers between the parties, provided the parties remain married on the last day of the tax year, an election can be made under the US Tax Code IRC Section 6013(g), which will result in transfers of UK property from the husband to the wife during the period of the election not giving rise to a US tax charge on those transfers. iii) If an election were made under US Tax Code IRC Section 6013(g) prior to Decree Absolute, the wife would be treated as a US resident, and her income would become reportable to, and taxable in, the US for the period in which the election is in effect. In addition, the wife would become responsible for the entire joint US tax liability on a joint and several basis.[20]In the foregoing circumstances, the court reached the following conclusions with respect to the question of tax:
“[79] The US tax liability arose from the sale of matrimonial assets, primarily Bitcoin, and the proceeds were invested during the marriage in further matrimonial assets, primarily SETL Limited, ELSA and the renovation of the former matrimonial home. Given this position, and the parties’ acceptance that this is a case in which there should be a broadly equal division, I am satisfied that the US tax liabilities accruing during the marriage should be treated in the same way. In the circumstances I have described, there is no basis in my judgment for concluding that the position in respect of the US tax liabilities already incurred should be anything other than an equal division of that liability. Mr Pannell’s evidence that, with respect to the tax falling due now the husband qualifies for the IRS Streamlined Foreign Offshore Compliance Procedure under which only three years of late tax returns are required provided he files by 15 December 2024, was not the subject of dispute. Following the hearing, the husband provided documents from Blick Rothenberg that confirm his estimated US tax liability on the basis that the expedited procedure is used. [80] With respect to potential US tax liability incurred as a result of the transfer of matrimonial assets consequent upon the distributive exercise in these proceedings, I have reached the same conclusion. [81] The assets on which a potential liability to pay US tax arises are all matrimonial in nature. There is no principled basis in those circumstances for placing any US tax liability accruing on the transfer of such assets solely at the feet of the husband because he is a dual US and UK national, any more than there is for placing UK CGT solely at the feet of the wife because she has only British Citizenship. The evidence of Mr Pannell that contingent US tax liability will arise on a sale or transfer of any UK property, including the former matrimonial home, was not challenged by either party. Likewise, Mr Pannell’s evidence that, in the foregoing context, provided the parties remained married on the last day of the tax year, an election being made by them under the US Tax Code IRC Section 6013(g), which would have the result that transfers of UK property from the husband to the wife during the period of the election would not give rise to a US income tax charge, was also not the subject of challenge (albeit the wife deprecated an approach that results in her income becoming reportable to, and taxable in, the US for the period in which the election is in effect and responsible for the entire joint US tax liability on a joint and several basis).”
And:
“[92] As I have set out, the obligations in this case include substantial US tax liabilities, in addition to tax liabilities in this jurisdiction, a small amount of credit card debt and some outstanding legal fees. I am satisfied that, to achieve fairness in this case, the husband will need to have left over a sum for securing housing after having settled his share of the liabilities. [93] For the reasons I have already given, I am satisfied that it is appropriate for the US tax liabilities to be shared equally between the parties. It will plainly be advantageous for the US tax position to be regularised as soon as possible and in a manner that mitigates, as far as is permitted, the tax arising in that context. In the circumstances, it was more than disappointing that a mere 48 hours before the purported deadline for taking advantage of the IRS Streamlined Procedure, the parties were still in apparent dispute about which of them should provide the funds in the interim to enable that filing to take place. In the face of an increasing number of inappropriate emails to the court, containing fresh evidence for which no application to adduce had been made following the case being closed, I ultimately declined to deal with that dispute on paper. For the reasons I have given, I am satisfied that the US tax liability incurred as the result of the sale of matrimonial assets during the course of the marriage for the purpose of investing in other matrimonial assets falls to be shared equally between the parties. [94] Again for the reasons already given, I am likewise satisfied that the US tax falling due on the transfer of assets as between the husband and the wife consequent upon the final order made by this court should be shared equally in the circumstances of this case. In circumstances where transfers of property incurring potential US tax liability will be necessitated by any order this court makes to ensure a fair distribution of the matrimonial assets (including a significant liability upon the transfer of the former matrimonial home), it would again be sensible to mitigate, as far as is permitted, the tax arising in that context. [95] On the expert tax evidence before the court, an election pursuant to under the US Tax Code IRC Section 6013(g) would have the result that transfers of UK property from the husband to the wife during the period of the election would not give rise to a US tax liability. Whilst I accept that such an election exposes the wife to joint and several liability for the US tax, that liability will be paid pursuant to the final order this court makes. Whilst I further accept that an election would result in the wife being treated as a US resident with respect to her income, any election will be for a finite period, after which husband will resume sole liability for US taxes in circumstances where the wife is not a US national. In these circumstances, I am satisfied it would be reasonable for the parties to make an election under the US Tax Code IRC Section 6013(g). The wife resists this course on grounds that the husband is using the fact of his US citizenship for forensic advantage. In circumstances where I have rejected that argument, and given the nature and extent of the tax liability arising on the transfer of the family home as a result of implementation of the final order this court makes to effect a fair division of those assets, I am satisfied that if the wife is not prepared to mitigate the tax liability by making an election then she must bear the additional tax burden that results from taking that position in the manner described above.”
[21]Having regard to those matters, the court made two substantive orders in relation to the question of tax at paragraphs 55(x) and 55(iii) respectively: i) The parties shall share equally the US tax liability now falling due but shall otherwise be responsible for their own UK tax liabilities. ii) In the event that the wife is not willing to make an election under US Tax Code IRC Section 6013(g) in order to mitigate the US tax on the transfer of the family home she shall pay the US tax on that transfer on the basis that the husband must also apply his available foreign tax credit in that scenario. The wife’s obligation (if she chooses not to make the election) to pay the husband's US tax on disposal of his interest in the family home should be capped at [£97,876].”[22]Within this context, the following competing positions are advanced by the parties with respect to the provisions of the draft order. In considering the competing submissions, it is important to keep the various heads of tax liability properly separate.[23]Dealing first with the US tax falling due on the sale of the Bitcoin and the use of the IRS Streamlined Foreign Offshore Compliance Procedure, the wife contends that pursuant to paragraph 47 of the draft order she has begun to pay the lump sum order made by the court in favour of the husband in the sum of £750,000. The wife has paid to the husband £1M on 18 December 2024 and £400,000 on 29 January 2025, those payments expressed to be “to assist with liabilities”. Within this context, the wife says she owes a balance on the lump sum ordered of £27,716, which should be paid by 1 July 2025. That figure is arrived at by the wife adding the lump sum figure of £750,000 to the figure of £677,716, which she asserts is 50% of the US tax due on the disposal of the Bitcoin, and subtracting the sums of £1.4M already paid by her from the resulting total sum of £1,427,716. The wife points out that, by reason of the husband’s delay in dealing with the US tax liability, there was and is no evidence of quantum before the court regarding the US tax falling due on the sale of the Bitcoin.[24]The husband contends that expressing the terms of the lump sum order in the way the wife seeks to do, results in a cap being placed on the wife’s obligation to the husband with respect to the US tax falling due on the sale of the Bitcoin. The husband contends that the sum owed by her in respect of the US tax liability will be higher if the husband is not accepted for the IRS Streamlined Foreign Offshore Compliance Procedure. In such circumstances, he submits that wife’s 50% liability for US tax may yet exceed £677,716. In those circumstances, at paragraph 51 of the draft order, the husband seeks a provision requiring the wife to pay a contingent lump sum order equivalent to 50% of the respondent’s US Tax liability accrued for the period prior to 1 January 2025 that will arise if the husband is not accepted for the IRS Streamlined Foreign Offshore Compliance Procedure (excluding the sum of £17,214 that had been accounted for by the court and giving credit for the £1M paid to the husband on 19 December 2024 and £400,000 paid to him on 29 January 2025).[25]Dealing next with the US tax due on any UK property transfers between the parties and the election by the wife under the US Tax Code IRC Section 6013(g), at paragraph 44 of the draft order, the husband seeks a joint undertaking that if the wife makes an election with respect to US tax, the parties agree to take all steps necessary to effect the transfer of the beneficial interest in 30% of the Colendi shares from the husband’s name to that of the wife and for the Deed of Trust to fall away at that point. Mr Thorpe submits this offers the wife an opportunity, but no obligation.[26]The wife submits that the US tax election was considered by the court in the context of mitigating the tax due on transfer of the family home only and that the wife having the beneficial interest in the shares is not what the judgment provides for. The wife further contends that the husband appears to be proposing that she should have the beneficial interest in the shares, subject to the Nominee (controlled by the husband and his associate), which is not a party to these proceedings, having the legal ownership of the shares. The wife submits that this means that if, for example, the Nominee failed to pay the wife, she would not be able to enforce this against the husband. The wife contends she should be able to enforce against the husband if he fails to comply with the judgment.[27]With respect to the competing positions in respect to paragraph 44 of the draft order, I remind myself that, as noted in the judgment, on 23 August 2021 Colendi registered its Articles of Association and finalised its Shareholders’ Agreement on 13 October 2021. The founder of Colendi, and the Class A shareholder, is Bülent Tekman. Paragraph 10.2 of the Articles of Association for Colendi provide that no share in the company may be transferred unless the transfer is made in accordance with the Articles of Association. Paragraph 9.1.1 of the Shareholders Agreement provides that a transfer of shares in Colendi may only be made in accordance with the Shareholders Agreement. The effect of these documents is that shares in Colendi may only be transferred with the permission of Mr Tekman or where the pre-emption process from which Mr. Tekman benefits under the Shareholders Agreement has been completed. In cross-examination, the husband confirmed that he has not asked Mr Tekman if he would consent to legal ownership of the husband’s shares being transferred to the wife, only whether she could become a shareholder under the current nominee arrangements detailed below. Through Mr Thorpe, the husband now informs the court that the husband “is in the process of pressing Mr Tekman regarding the legal and beneficial interest” and that Mr Tekman “has been provided with a legal document”. There is no evidence to that effect before the court.[28]The wife seeks a term at paragraph 50 of the draft order to the effect that “In the event the applicant does not make the US Tax Election, she shall pay to the respondent a lump sum of £97,876 by 4pm on 31 December 2025.”[29]This reflects the fact that the court assessed wife’s liability at £97,876 assuming for that purpose, as set out at [83] in the judgment, that the wife did not agree to an election being made under the US Tax Code IRC Section 6013(g) and based on figures for the US tax due which were provided by Blick Rothenberg in advance of the expedited process. The wife submits that the court capped the liability at the figure calculated and that there was no suggestion in the judgment that if the streamlined procedure fails and thereby more tax would be payable, that it should be divided equally between the parties. The wife contends that the husband did not provide the court with any evidence on that basis, there were no figures provided to the court and the figures in the judgment should stand. During his oral submissions, Mr Thorpe conceded that the court had capped the figure at £97,876, but emphasised it had not done so in respect of the US tax falling due on the sale of the Bitcoin and the use of the IRS Streamlined Foreign Offshore Compliance Procedure.[30]The husband agrees, subject to seeking an extended time to 30 June 2026 for default sale to avoid any sales during the relevant period, the term proposed by the wife at paragraph 60 of the draft order. Paragraph 60 of the draft order sets out that in the event that the wife makes the US Tax Election, and in the event that any real estate is sold during the year in which she has made that election as a result of the terms of this order, the husband will fully indemnify the wife in respect of any US tax charges arising to her in respect of those sales and the husband will pay any sums due to the applicant under this indemnity from his share of the sale proceeds, prior to the distribution of the remaining sale proceeds to him. (iii). Transfer of Equity[31]As set out in the substantive judgment at paragraph 112, the court determined that the husband should retain the parties portfolio of eight properties. That decision requires the husband to procure the release of wife from the mortgage liabilities and to indemnify her in respect of four of those properties. At paragraph 53 of the draft order, the husband seeks a further year, to 30 June 2026, to accomplish this before there is a default order for sale. The wife contends this should be done by 29 August 2025. The same competing dates are proposed by the parties in relation to the wife’s obligation to procure the release of the husband from the mortgage on the family home at paragraph 54, the order that the husband transfer his legal estate and beneficial interest in the family home at paragraph 55, the order that the wife transfer to the husband her legal estate and beneficial interest in the portfolio of properties at paragraph 56 and the default order sale provision at paragraph 57, which the husband otherwise agrees.[32]The husband submits that his proposed period is reasonable and proportionate in circumstances where it is he who is pressed by creditors, where his difficulties stem from the wife failing to keep up payments on the family home, where the wife’s exposure is minimal in circumstances where the properties are valued at more than double the outstanding mortgage balances, the wife is not in need of a mortgage and the husband will indemnify the wife in respect of any loss. The wife submits that there plainly need to be orders for sale if the husband does not procure the wife’s release, not least as the bank require the wife to be released from those mortgages in order for her to take on the mortgage on the family home. In this context, the wife submits that there is no proper justification for the husband taking 18 months, since the date of my handing down the substantive judgment, to procure the wife’s release from the mortgages.

RELEVANT LAW

[33]One of the issues raised by the court at the outset of the hearing was the nature of the court’s jurisdiction to determine certain of the issues between the parties.[34]With respect to the disagreements between the parties regarding the terms of the draft order, the position is straightforward. The court is the final arbiter of the content of its own orders. The court will ensure that the order accurately and fully reflects the decision of the court before it approves the same. Pursuant to FPR 2010 r.29.11(2)(a), where the court orders a party to draw up the order it may direct that the order drawn up by a party must be checked by the court before it is sealed. Whilst, as a matter of practice therefore, the court will often invite the parties to submit a draft of the order as a starting point, it is the court that has the final say as to its terms.[35]In this case however, the disagreement between the parties as to the terms required to implement the order of the court extends to the Deed of Covenant, designed to implement the order for ‘Wells sharing’. In that regard, the position is less clear cut. With respect to the Deed of Covenant, the court can indicate its view as to the terms that best implement the court’s intention, having regard to the judgment. Ordinarily, it is likely that the parties will act on the court’s indication. The court cannot, however, force a party to enter into a contractual agreement on particular terms. The court can indicate its view on the issue between the parties and, where the parties dispute the meaning and import of the court’s judgment, provide clarification. However should the parties fail to accept the indication of the court, then the court will have to consider what alternatives orders within its power it can make to give effect to the judgment.

DISCUSSION

[36]Having considered carefully the written and oral submissions in this case, I am satisfied of the following: i) The court having determined that the appropriate quantum of ‘Wells sharing’ in respect of the Colendi shares was 30% of that asset, the definition of the ‘Colendi Shares’ should be the totality of the husband’s holding of 12,933,924 Class B shares, with the result that the terms of the Deed of Covenant should apply to the totality of the husband’s holding. ii) To properly implement the decision of the court that the husband will transfer to the wife 30% net of the future benefits that he derives in any form from the Colendi shares, she must be entitled to payment in respect of any non-cash benefits accruing to her 30% share irrespective of whether cash benefits have been realised. iii) With respect to the implementation of transfer by the husband to the wife 30% net of the future benefits that he derives in any form from the Colendi shares, the husband shall pay to the applicant lump sums equal to 30% of the Value from Colendi in so far as that value is received in cash, net of any taxes and costs, payable within 21 business days of any receipt by him of Value from Colendi. In circumstances where the respondent receives Value from Colendi in a form (or forms) other than cash, the respondent shall pay the applicant lump sums equal to 30% of that Value from Colendi in accordance with his obligations in the Colendi Deed of Covenant. iv) Any cars owned by the parties should be sold by 1 November 2025 and the proceeds divided equally. v) The term dealing with the lump sum payment from the wife to the husband should provide that the wife pays to the husband a lump sum of £750,000. vi) In the circumstances where the court has determined, with respect to the parties sharing “the US tax liability” falling due on the sale of the Bitcoin, the order will need to make clear that wife will be required to pay 50% US Tax liability if the husband is not accepted for the IRS Streamlined Foreign Offshore Compliance Procedure, excluding the sum of £17,214 that has been accounted for by the court and giving credit for the £1M paid to the husband on 19 December 2024 and £400,000 paid to him on 29 January 2025 vii) I decline to insist on a joint undertaking that if the wife makes an election with respect to US tax, the parties agree to take all steps necessary to effect the transfer of the beneficial interest in 30% of the Colendi shares from the husband’s name to that of the wife. viii) In the event the applicant does not make the US Tax Election, she shall pay to the respondent a lump sum of £97,876 by 4pm on 31 December 2025, being the sum due per the capped sum in the order. ix) The long stop date for the husband to procure the release of wife from the mortgage liabilities and to indemnify her in respect of four of the properties (paragraph 53), the wife’s obligation to procure the release of the husband from the mortgage on the family home (paragraph 54), the transfer by the husband of his legal estate and beneficial interest in the family home (paragraph 55), the wife’s that portfolio of properties (paragraph 56) and for the default order sale provision (paragraph 57) will be 30 December 2025. My reasons for so deciding are as follows.[37]As I have set out above, the starting point when dealing with the disputes between the parties regarding the drafting of the order that articulates court’s decision is that it must maintain fidelity to the terms of judgment. The court is not to engage in an appellate process and disputes as to drafting are not, and must not be allowed to become, an excuse for the parties to reargue their case. Within this context, the court must be particularly cautious when considering proposals that were not advanced at the final hearing and in respect of which the court has heard no evidence. As Mostyn J observed in AR v ML [2019] EWFC 56 at [22]:
“The idea that there could be a re-run of the case at the suit of a disappointed litigant on the basis of evidence, yet to be obtained, but which could have been obtained, is appalling.”

Deed of Covenant and Associated Terms of the Order

[38]In the foregoing context, the judgment of the court was clear regarding the scope of the assets to which the order for ‘Wells sharing’ related, providing that (emphasis added):
“The husband will transfer to the wife 30% net of the future benefits that he derives in any form from the Colendi shares, to be expressed in the form of undertakings, contingent lump sums and backed up by a Phantom Share Agreement.”
[39]In the circumstances, the husband’s proposal to ring-fence 30% of the Colendi shares does not reflect what the court decided. Namely, that the husband will transfer to the wife 30% net of the future benefits that he derives in any form from the Colendi shares, not the future benefits from a ring-fenced sub-set of those shares. There are also further difficulties that militate against what the husband now proposes.[40]The decision of the court as to the fair distribution of the matrimonial assets was based on the expert valuation of the husband’s Colendi holding accepted by the court. That valuation was of the husband’s shares taken as a whole. At no point was the expert asked to consider the impact on that valuation of ring fencing the shares in an effort to permit the parties to deal differently with “their” shares. Notwithstanding Mr Bennion-Pedley’s helpful submissions, the court has received no evidence at all regarding the consequences for the parties of the husband’s proposal that 30% of the shares in the legal ownership of Colendi SETL Nominees and the beneficial ownership of the husband being ‘ring fenced’ for the wife, the extent to which that proposal is consistent with the intention of the court that husband will transfer to the wife 30% net of the future benefits that he derives in any form from the Colendi shares and the impact of the proposal on the overall fair distribution of the matrimonial assets.[41]The difficulty created by the court having received no evidence as to the effect of the husband’s proposals with respect to the appropriate definition in the Deed of Covenant of the ‘Colendi shares’, as opposed to that merely asserted by the husband, becomes even more acute in circumstances where that proposal is also, on its face, potentially antithetic to the aim of ‘Wells sharing’. The aim of Well’s sharing is to share between the parties, to the extent that is fair, the illiquid and risk laden assets. In this case, the purpose of ‘Wells sharing’ it is to share the risks of the illiquid Colendi shares that are in the legal ownership of Colendi SETL Nominees and the beneficial ownership of the husband to the extent required to ensure fairness between the parties. However, by reason of the difficulties set out in the foregoing paragraph, the court has no way of testing the extent to which the risk will remain shared between the parties in the way the court intended were 30% of the shares in the legal ownership of Colendi SETL Nominees and the beneficial ownership of the husband to be ‘ring-fenced’ in the manner the husband now proposes.[42]By way of example, the husband asserts that his proposal will not result in a differential in value to the respective groups of shares, even were he to deal with “his” shares differently, and nor will it undermine the wife’s interest in circumstances where the ‘ring fence’ is defined in the broadest of terms and where it is not permissible as a matter of corporate law to treat shares unequally. However, the court does not have any evidence against which to evaluate the validity of that assertion and, again, to determine the extent to which that proposal is consistent with the intention of the court that husband will transfer to the wife 30% net of the future benefits that he derives in any form from the Colendi shares. By way of a further example, the husband submits that the wording he proposes for the Deed of Covenant will prevent a trust arising, both by the expressed intentions in the Deed and by the use in the Deed of wording that is inconsistent with relationship between trustee and beneficiary. Once again however, and in addition to Mr Benion-Pedley properly conceding that the wording itself does not guarantee that outcome, the court has not had the opportunity to receive any evidence on this issue in order to determine the same.[43]Overall, the husband’s proposal seeks to achieve in an artificial and incomplete fashion that which the court was satisfied could not be properly achieved, namely the transfer to the wife of the legal and beneficial interest in a portion of the Colendi shares. In circumstances where the draft order prepared by the husband for closing proceeded on the basis of a contingent lump sum equivalent to 50% of his net receipt from the sale of his 12,933,924 Class B shares, the position now advanced by the husband represents a late change postdating the conclusion of the expert and lay evidence. In these circumstances, in addition the husband’s proposal to ring-fence 30% of the Colendi shares not reflecting what the court decided, to accede to the husband’s belated proposal would be to take a leap in the forensic dark as to the actual impact on the distribution the court intended of the legally complex and late proposal the husband now advances.[44]Finally, whilst the submission of the husband that in implementing ‘Wells sharing’ the court should in so far as possible maintain fidelity to the clean break principle is an attractive one, efforts in this regard cannot be at the expense of fairness. The endorsement by the courts of the concept of ‘Wells sharing’ recognises that in some cases it will not be possible to achieve a clean break, whilst also achieving fairness. In this case, by utilising ‘Wells sharing’ to award the wife a contingent lump sum that is “as small as possible”, the court has already sought to maintain fidelity to the clean break principle in so far as possible within the limitations imposed by the facts of the case.[45]The judgment of the court of 14 January 2025 is clear. The husband will transfer to the wife 30% net of the future benefits that he derives in any form from the Colendi shares, to be expressed in the form of undertakings, contingent lump sums and backed up by a Phantom Share Agreement. The position adopted by the husband at this hearing, in relation to the definition of the Colendi shares in the Deed of Covenant and the draft order, is really an attempt to re-visit the arguments regarding the contingent lump sum after the close of evidence and submissions. I am satisfied that the definition of the Colendi shares proposed by the wife is the definition that gives proper effect to the judgment of the court as handed down:
“The "Colendi Shares" means the 12,933,924 shares in Colendi which are (as at the date of this order) legally owned by Colendi SETL Nominees Limited and beneficially owned by the respondent. For completeness this shall extend to any shares/assets (to include debt instruments) into which the Colendi Shares are converted, consolidated, sub-divided, redesignated and/or which derive from the Colendi Shares and/or which replace the Colendi Shares.”
[46]The second issue in relation to the Deed is again determined by the clear terms of the judgment. The court was satisfied that the husband would transfer to the wife 30% net of the future benefits that he derives “in any form” from the Colendi shares. In the circumstances, I am satisfied that the definition proposed by the wife for “Value from Colendi” at paragraph 9 of the draft order, is to be preferred as the definition that gives proper effect to the judgment of the court:
“9. "Value from Colendi" shall mean any receipt of direct or indirect entitlement to cash (or other benefit, in whatever form) by of the respondent (and/or any third party on his behalf) whether legally or beneficially contingently or otherwise from or in connection with or which otherwise arises by way of or is referable to: a. any realisation, transfer, disposal or other arrangement in respect of the Colendi Shares (whether by way of sale or any other transaction for cash consideration including any transfer, disposal, listing(s), return of capital, buyback or otherwise); and/or b. any dividend, distribution, entitlement, payment or other amount or benefit whether made now or subsequently, directly or indirectly in respect of any of the Colendi Shares.”
[47]Within this context, the parties also disagree as to the terms of the order that gives effect to the implementation of transfer by the husband to the wife 30% net of the future benefits that he derives in any form from the Colendi shares. Having regard to the conclusions set out above. Paragraph 49 of the draft order will need to read as follows:
“49. The respondent shall pay to the applicant lump sums equal to 30% of the Value from Colendi in so far as that value is received in cash, net of any taxes and costs, payable within 21 business days of any receipt by him of Value from Colendi. In circumstances where the respondent receives Value from Colendi in a form (or forms) other than cash, the respondent shall pay the applicant lump sums equal to 30% of that Value from Colendi in accordance with his obligations in the Colendi Deed of Covenant.”

Other Disputed Terms of the Order

[48]The disagreement regarding the cars is an issue that can rightly be described as almost de minimis. I am satisfied that given the passage of time since the court was last provided with an estimated value of the car in issue, the appropriate formulation for the order is that any cars owned by the parties shall be sold by 1 November 2025 and the proceeds divided equally.[49]With respect to the issues concerning the implementation of the court’s decision as to the treatment of tax, the starting point must once again be the judgment.

(x) , I decided that:

“The parties shall share equally the US tax liability now falling due but shall otherwise be responsible for their own UK tax liabilities.”
[50]Contrary to the manner in which the US tax on the FMH was dealt with, the decision at paragraph 55(x) of my judgment contains no cap, in circumstances where the sum owed by the wife in respect of the US tax liability will be higher if the husband is not accepted for the IRS Streamlined Foreign Offshore Compliance Procedure. Whilst the figure provided to the court with respect to this liability was £677,716, that figure represented that which would fall payable if the application to the scheme is successful, as provided by Blick Rothenburg. In such circumstances, the wife’s 50% liability for US tax may yet exceed £677,716. As related to the US tax falling due on the sale of the Bitcoin, the court clearly stated that the parties would share “the US tax liability”. Accordingly, the maths adopted by the wife in her proposal for the articulation of the lump sum order of £750K is not appropriate. The proper terms of that order are that “The applicant shall pay to the respondent a lump sum of £750,000 by 1 January 2025.”[51]Further, in the circumstances where the court has determined, with respect to the parties sharing “the US tax liability” falling due on the sale of the Bitcoin, the order will need to make clear that wife will be required to pay 50% US Tax liability if the husband is not accepted for the IRS Streamlined Foreign Offshore Compliance Procedure, excluding the sum of £17,214 that has been accounted for by the court and giving credit for the £1M paid to the husband on 19 December 2024 and £400,000 paid to him on 29 January 2025.[52]Dealing next with US tax due on any UK property transfers between the parties, the conclusion of the court was again made clear in the judgment at paragraph 55(iii):
“In the event that the wife is not willing to make an election under US Tax Code IRC Section 6013(g) in order to mitigate the US tax on the transfer of the family home she shall pay the US tax on that transfer on the basis that the husband must also apply his available foreign tax credit in that scenario. The wife’s obligation (if she chooses not to make the election) to pay the husband's US tax on disposal of his interest in the family home should be capped at [£97,876].”
[53]Within this context, it is difficult to understand the justification for the husband seeking an undertaking, apparently linked to the election under US Tax Code IRC Section 6013(g), as to transfer of beneficial ownership of the Colendi shares. The issue of the election under IRC Section 6013(g) US tax election was considered by the court in the context of mitigating the tax due on transfer of the family home only. The linking of that issue to the wife having the beneficial interest in the shares is not what the judgment provides for. Further, beyond the husband’s assertion through counsel, there is no evidence that the difficulties that militated against the transfer to the wife of the beneficial interest in a portion of the Colendi shares (namely, that shares in Colendi may only be transferred with the permission of Mr Tekman or where the pre-emption process from which Mr Tekman benefits under the Shareholders Agreement has been completed) have been resolved. Further and in any event, the husband’s proposal would appear to result in the wife having the beneficial interest in the shares, subject to the Nominee controlled by the husband and his associate (having the legal ownership of the shares). In all these circumstances, I do not consider the undertaking sought by the husband to be appropriate.[54]Finally, as regards the dispute concerning the appropriate dates for insertion in the provisions dealing with the transfer of equity, I am satisfied that it is appropriate to allow the husband a longer period to deal with these transactions. It is the husband who has had primarily to bear the burden of illiquidity. Further, it was the wife who permitted the mortgage on the former matrimonial home to fall into default, creating potential difficulties for both parties if and when they are required to re-enter the mortgage market. On the face of it, the wife’s exposure is minimal in circumstances where the value of the properties in question exceed, by a significant amount, the outstanding mortgage balances. The wife is not at present in need of a mortgage and the husband will indemnify the wife in respect of any loss.[55]In these circumstances, I am satisfied that it is appropriate to permit the husband a longer period in which to get his affairs in order. Within this context, I am satisfied that the long stop date for the husband to procure the release of wife from the mortgage liabilities and to indemnify her in respect of four of the properties (paragraph 53), the wife’s obligation to procure the release of the husband from the mortgage on the family home (paragraph 54), the transfer by the husband of his legal estate and beneficial interest in the family home (paragraph 55), the wife’s that portfolio of properties (paragraph 56) and for the default order sale provision (paragraph 57) will be 30 December 2025.

CONCLUSION

[56]For the reasons set out above, my conclusion with respect to the disputed matters between the parties with respect to the terms of the Deed of Covenant and the terms of the draft order are as follows: i) The court having determined that the appropriate quantum of ‘Wells sharing’ in respect of the Colendi shares was 30% of that asset, the definition of the ‘Colendi Shares’ should be the totality of the husband’s holding of 12,933,924 Class B shares, with the result that the terms of the Deed of Covenant should apply to the totality of the husband’s holding. ii) To properly implement the decision of the court that the husband will transfer to the wife 30% net of the future benefits that he derives in any form from the Colendi shares, she must be entitled to payment in respect of any non-cash benefits accruing to her 30% share irrespective of whether cash benefits have been realised. iii) With respect to the implementation of transfer by the husband to the wife 30% net of the future benefits that he derives in any form from the Colendi shares, the husband will The respondent shall pay to the applicant lump sums equal to 30% of the Value from Colendi in so far as that value is received in cash, net of any taxes and costs, payable within 21 business days of any receipt by him of Value from Colendi. In circumstances where the respondent receives Value from Colendi in a form (or forms) other than cash, the respondent shall pay the applicant lump sums equal to 30% of that Value from Colendi in accordance with his obligations in the Colendi Deed of Covenant. iv) Any cars owned by the parties should be sold by 1 November 2025 and the proceeds divided equally. v) The term dealing with the lump sum payment from the wife to the husband should provide that the wife pays to the husband a lump sum of £750,000. vi) In the circumstances where the court has determined, with respect to the parties sharing “the US tax liability” falling due on the sale of the Bitcoin, the order will need to make clear that wife will be required to pay 50% US Tax liability if the husband is not accepted for the IRS Streamlined Foreign Offshore Compliance Procedure, excluding the sum of £17,214 that has been accounted for by the court and giving credit for the £1M paid to the husband on 19 December 2024 and £400,000 paid to him on 29 January 2025 vii) I decline to insist on a joint undertaking that if the wife makes an election with respect to US tax, the parties agree to take all steps necessary to effect the transfer of the beneficial interest in 30% of the Colendi shares from the husband’s name to that of the wife. viii) In the event the applicant does not make the US Tax Election, she shall pay to the respondent a lump sum of £97,876 by 4pm on 31 December 2025, being the sum due per the capped sum in the order. ix) The long stop date for the husband to procure the release of wife from the mortgage liabilities and to indemnify her in respect of four of the properties (paragraph 53), the wife’s obligation to procure the release of the husband from the mortgage on the family home (paragraph 54), the transfer by the husband of his legal estate and beneficial interest in the family home (paragraph 55), the wife’s that portfolio of properties (paragraph 56) and for the default order sale provision (paragraph 57) will be 30 December 2025.[57]Referring to his speech to the FLBA on 16 October 2021, in his President’s Memorandum: Drafting Orders dated 10 November 2021, the President of the Family Division observed as follows with respect to the drafting of orders, including those in financial remedy cases:
“The task of drafting an order has become a prolonged process. Partly because of remote working, the process of negotiating the order extends for days, with input from instructing solicitors and lay parties. These drafts are embellished to a Byzantine degree.”
[58]As I noted at the outset, nearly 5 months after the handing down of judgment, the parties remain unable to agree the terms of a draft order arising from my judgment. FPR 2010 r.29.11(3)(a) provides that where an order is to be drawn up by a party that party must file it now later than 7 days after the court ordered or gave permission for the order to be drawn. Paragraph [33] of the 2022 FRC Efficiency Statement makes clear that this should be regarded as a maximum. The President’s Memorandum: Drafting Orders further reinforces the point:
“Where one or both parties has legal representation at a particular hearing, the order must be agreed, drafted and lodged before the parties leave the court building or, on remote hearings, on the day of the hearing, unless this is wholly impracticable, in which event the order must be agreed, drafted and lodged within two working days of the hearing.”
[59]Notwithstanding this position, the parties have expended significant further costs in debating the terms of the Deed of Covenant and of the draft order. In circumstances where, as demonstrated above, with respect to most of the points of contention the answer was plain from the terms of judgment, they may wish to reflect whether that money was well spent.[60]It is the expectation of the court that the parties will now submit an agreed draft order for the court’s approval within seven days of the date of this judgment. In default of the submission of an agreed draft order within seven days of the date of this judgment, the court will draft the terms of the order and a sealed copy will be sent to the parties.