THR v WAT [2025] EWHC 1125 (Fam)

IN THE FAMILY COURT

Venue SITTING IN THE ROYAL COURTS OF JUSTICE

[2025] EWHC 1125 (Fam)

Venue Royal Courts of Justice, Strand, London

Date Monday 17 th March 2025

WC2A 2LL

Before

HIS HONOUR JUDGE HESS

(Sitting as a Deputy Judge of the High Court)

Between

THRApplicant

WATRespondent

NICHOLAS YATES KC and CHRISTIAN KENNY (instructed by Vardags) appeared for Applicant.JUSTIN WARSHAW KC and JOSHUA VINEY (instructed by Mishcon de Reya LLP) appeared for the Respondent.

This matter was heard in private. The judge gives permission for this version of the judgment to be published. In no report of, or commentary on, the proceedings or this judgment may the parties or their children or their addresses be identified. All persons, including representatives of the media and legal bloggers must ensure that the terms of this rubric are strictly observed. Failure to do so may be a contempt of court.

JUDGMENT

HIS HONOUR JUDGE HESS:

[1]This case concerns the financial remedies proceedings arising out of the divorce between THR, to whom I shall refer as “the wife”, and WAT, to whom I shall refer as “the husband”. Both parties appeared before me by counsel. Nicholas Yates KC and Christian Kenny counsel, instructed by Vardags Solicitors, appeared for the wife, and Justin Warshaw KC and Joshua Viney counsel, instructed by Mishcon de Reya Solicitors, appeared on behalf of the husband.

[2]This family has substantial wealth and the case was originally listed to last for ten days starting on 10 March 2025. For the purposes of the final hearing, I had six voluminous electronic bundles and I had read a good deal of this on my reading day on 10 March 2025 which led into the first day of the hearing proper on 11 March 2025, Tuesday of last week.

[3]In the course of the morning and the early afternoon of 11 March 2025 there were helpful discussions between the parties which led to a complete compromise of the case, or at least that is what people thought at the time, and heads of agreement of a sort were exchanged, and the case was adjourned from then until today 17 March 2025 to allow a draft order to be produced and for any drafting issues to be resolved between the parties.

[4]I was told in clear terms on 11 March 2025 that this was a Xydhias binding agreement referencing the written exchange, with a slight oral amendment to it which had taken place outside court, and both parties were happy that they were Xydhias-bound by what they had agreed, or thought they had agreed. It has been common ground before me today that what happened on 11 March 2025 was an agreement which was binding within the meaning of the Court of appeal judgment in Xydhias v Xydhias

[1999] 1 FLR 683

and my task today is to resolve the final form of the order. I shall deal with the unagreed matters item by item.

[5]The first issue relates to the significance of the wife’s ownership of a company called X Limited.

[6]In that context I have now seen the terms of the written document which led to that agreement and the headline terms of that are that the wife was to receive £36 million subject to “what she already had”. In the offer letter, which emanated from the husband’s side, the calculation of “what she already had” identified as “W resources” a figure of £2,090,107 and that figure is the bottom line figure in the ES2, which was presented to me at that time also, less the figure of £99,165 for the putative value of the wife’s interest in X Limited.

[7]There may have been an argument about this had we gone to trial, but the point being made on the wife’s side was that though in theory she had a director’s loan liability in her favour of £99,165, that was unlikely to be paid in view of the financial position of the company, so it was not an asset of real value. It seems to me that in writing the offer letter that they did, and including the figure of £2,090,107, that was a representation that, for the purposes of this settlement, the £99,165 for X Limited was not to be included, the mathematics points clearly in that direction.

[8]It seems to me that prima facie the husband should be held to that, as Mr. Yates has argued on behalf of the wife. Mr. Warshaw, on behalf of the husband, says that should be treated as a mutual mistake. I do not know whether it was a mistake on the husband’s side or not, but it seems to me that it was not a mutual mistake and therefore I do not think that gives rise for any kind of release from that obligation.

[9]It seems to me, in fixing the final terms of this order in the way that is allowed in the policy of the Xydhias decision of the Court of Appeal, that it is appropriate for me to hold the husband to that figure of £2,090,107 in the context of the X Limited argument (we will come back to the legal expenses argument in a minute) and therefore I am not to going to change the figure, and X Limited for these purposes should be deemed to be zero and not cause the wife to have her lump sum reduced by any amount by reference to that.

[10]I turn to the second issue, which relates to Mr Warshaw’s suggestion that the wife’s lump sum figure should have deducted from it the amount that the wife will now actually have to pay in legal costs rather than the notional figure in the ES2. I am going to reach the same decision on this issue. It seems to me that if a point was to be taken that as a result of a settlement there had to be some paring back of the costs-yet-to-be incurred figure for the purpose of the mathematics, that should have been highlighted in the offer letter. It was not. The figure given is £2,090,107, which assumes that the full costs payments are to be made.

[11]By the same reasoning as in relation to the X Limited asset value, it seems that is not a good point and I am going to hold the husband to the figure that was in his offer.

[12]I turn to the third issue: that of interest on the lump sums.

[13]In the exchange of offers, which are helpfully set out in the wife’s counsels’ note for today, the timings of various lump sums are set out in a way which is easy to understand (there was, in fact, a formatting error which made them less apparent than they might have been, but no point is taken on that). It is clear there was going to be a substantial sum within 28 days and then a further substantial sum in 12 months and a further substantial sum after that in 18 months, so it was obvious that there would be a delay in the wife receiving a certain portion of the money which she was going to get. Those dates are set out in the offer, which was accepted.

[14]The wife now, at the drafting stage, suggests that added into those clauses should be some interest provisions and the suggestion is that that might be a figure of 3.75 per cent from now until those are paid in 12 months’ or 18 months’ time.

[15]I have heard submissions on this. Mr. Yates says this was obviously something that was left over for me to decide. Mr. Warshaw says no, if this was going to be pursued, it should have been raised last week. Mr. Yates says he did not have time to pursue those or to raise them last week. But it is true that the parties were negotiating about this offer for all of the morning of 11 March 2025, and the start of the case was delayed a number of times to enable them to do that, and was only settled sometime in the afternoon, about 2.15 or thereabouts, on 11 March 2025.

[16]It does seem to me there was time to raise this if it was important. I have not been persuaded by Mr. Yates’s argument that these were really just such matters of drafting and detail that they can now be pursued, notwithstanding that they were not raised before or at the time the Xydhias agreement was reached. It seems to me there is a distinction between that and the child maintenance level, which was expressly raised in the course of argument that this would need to be resolved by me if the parties did not reach an agreement in the meantime, but this was not raised at all.

[17]Is it, as Mr. Yates suggests, a matter of relative detail or triviality that they can just raise it after the deal has been done? In my judgment, hearing all that has been said on it, and knowing the timescale of the negotiation development in this case, I have not been persuaded that the interest clauses should be included. If the wife’s team wanted those to be an essential part of the deal, there was plenty of time for them to raise that last week. They did not and I think they are held by not having done that. I am not going to include any interest provisions in these payments.

[18]I now turn to the fourth issue, that of security. I agree with Mr. Warshaw’s submissions on this. There is a distinction between this case and the Xydhias case itself because in that case security was already in the air and requiring a resolution at the time the agreement was being negotiated and it was just a question of deciding what the appropriate level was. In this case security was not raised as such in the 11 March 2025 negotiations.

[19]Notwithstanding that, the husband has made an offer for security and that is an offer which seems to me to be not unreasonable in the context of this case. It does not give 100% security for every penny of the lump sums that are ordered but it goes a substantial way down the road to achieving that and it seems to me to be the husband making a reasonable response to this dispute.

[20]If I were to accept what Mr. Yates has suggested, the only answer to this argument would be to impose 100% security for the entirety of the lump sum. I am not sure there is any operative policy principle to that effect. It seems to me what is offered by the husband is reasonable and though the parties have had some acrimony in what they are doing, this is not the worst case of acrimony and I have no reason to believe that the husband will not pay what he has said that he is going to pay and there is no particular evidence of him trying to wriggle out of obligations which the court has imposed on him. Indeed, in fact, in contrast he did actually pay £5 million upfront at an early stage of the case, which is perhaps quite an unusual feature of this case.

[21]I am satisfied that the security offer for the lump sum by the husband is reasonable in all of the circumstances and I am not going to commit him to anything further than that. I will accept his offer and impose that in the order.

[22]I now turn to the fifth issue, the level of child periodical payments.

[23]I was alerted on 11 March 2025 to one issue which certainly divided the parties and that was the issue of the level of child periodical payments. In dealing with this issue, I make the following observations.

[24]In broad terms, the wife has ended up with assets worth approximately £36 million, plus some more, perhaps a few million pounds more if the parties are lucky, on the liquidation of a company called Y Limited. Almost all of this will be realisable assets, including real property worth between £7 and £8 million, and the rest will be largely cash. Of that cash, the wife will be left in possession of more than half of it within the next month or so and the rest of it will come in over the next 18 months.

[25]The husband will be left with something broadly similar or on a version of the outcome of the case which was never resolved, a higher amount, although it is apparent that a higher portion of his assets (whatever they are worth) will take the form of business assets and therefore they have a level of illiquidity and a level of uncertainty in their value. The values that the parties were toying with before they resolved their differences, were calculated on the basis of multiples of future income production, largely anyway.

[26]What is left to decide is the level of child periodical payments for the husband to pay for the three children of the family. In deciding this, I will set out some of background details.

[27]The history of the marriage is as follows. The wife is aged 40, having been born in 1984. She was university educated at university and is a qualified school teacher. She currently works as a part-time teacher. The husband is also aged 40, having been born in 1985. He took a degree from university in technology management and has worked in the online financial industry in the period since.

[28]The parties met and started a relationship in 2015 and married in 2019. Their family home from 2018 onwards is where the wife and children continue to reside, and will continue to reside after the resolution of this case.

[29]The marriage produced three children. One has some special needs including those arising out of a diagnosis of autism and he has an ECHP, but this does not prevent his attending mainstream school and in many ways living a perfectly normal life.

[30]All the children attend a local primary school, in the youngest’s case the nursery of that school, and there are no current plans to change this source of primary school education: state education with no school fees.

[31]All the children live with the wife, who bears the primary burden for their care, but have good contact with the husband for approximately three nights per fortnight at present and one additional afternoon per week and additional time in the school holidays.

[32]The husband is, I note, pursuing separate Children Act 1989 proceedings with a view to increasing the time the children spend in his care from the current three nights per fortnight to something more than that. There is a final hearing in March 2025. I have not seen any detailed statements in relation to that but I have been told that the Cafcass report which will be before the court in March 2025 recommends leaving things broadly as they are. In the end the dispute is a matter for the judge or the magistrates hearing this case in March 2025 but for today’s purposes it is reasonable, I think, for me to presume and to proceed on the basis that things will not change very significantly on that day.

[33]In August 2023 the marriage broke down. The parties went their separate ways. The husband left the family home and he has lived elsewhere since then. Divorce proceedings were commenced in September 2023. I recently discovered that decree nisi was only applied for a few weeks ago and has not actually been pronounced but I have been in contact with the Divorce Centre in Stoke and have been able to procure an acceleration of the pronouncement of the decree nisi or conditional order of divorce so, all being well, that will happen this week.

[34]The order that I purport to make today cannot formally be approved until that decree nisi/conditional order of divorce is in place, and I have asked the parties to tell me as soon as they are aware that has happened so I can formally approve this order and place it on the books of the court and get it sealed.

[35]Decree absolute or final divorce order will I am sure follow after a six-week period after the decree nisi has taken place. It is not in itself a controversial matter.

[36]So, to the issue which is remaining which is of child periodical payments. It is common ground that there is a CMS assessment in place in this case and that that CMS assessed the husband’s income to be at or above the maximum level for CMS purposes, which is £156,000 per annum gross. The basic jurisdictional requirements of a CMS top-up order exist under section 8(6) of the Child Support Act 1991. The existing CMS assessment is for a total for three children of £25,064 per annum.

[37]The parties, as I have said, have drafted an order which is, apart from my insertion of one figure, wholly complete and the child periodical payments order bit of this, the top-up order bit of this reads as follows:

“In circumstances where: 1. The CMS has made a CMS calculation in respect of the children of the family and 2. The court is satisfied that the circumstances of the case make it appropriate for the respondent to make periodical payments as ordered in paragraph (e) below, in addition to the child maintenance payable in accordance with the CMS calculation, the respondent shall pay to the applicant periodical payments for the benefit of the children of the family. Payments shall be in the sum which when added to the payments, if any, made by the respondent to the CMS pursuant to the CMS calculation total X pounds per annum per child, payable monthly in advance by standing order. Payments shall start on 1 April 2025 and shall end on: 1. Each child respectively attaining the age of 18 years or ceasing their full time secondary education, whichever shall be the later; or 2. Further order. The court may prior to the expiry of the term, or subsequently, order a longer period of payment.”

[38]That structure having been agreed, it is plain that both parties agree that this is a case which is appropriate for a top-up order, and I am happy to endorse that agreement. They also agree the structure of the order. So, for example, nobody has suggested that whatever figure I insert should be changed year on year with inflation. That is not included in the draft.

[39]The rival positions for X pounds per year are as follows. The wife suggests that the figure should be £50,000 per annum per child, or a total of £150,000 per annum. The husband suggested the figure should be £20,000 per annum per child, or a total of £60,000 per annum.

[40]As in many areas of this area of work, most of the leading cases on this subject emerge from the judicial mind of Mostyn J and he has opined on this issue in a number of cases, including CB v KB

[2019] EWFC 78

, Collardeau-Fuchs v Fuchs

[2022] EWFC 135

and James v Seymour

[2023] EWHC 844

[41]It is possible to identify some changing of the judicial mind of Mostyn J over these three cases. When CB v KB was in the ascendant, his suggestion was that the court should impose a cap for the purposes of calculation of £650,000 per annum gross on the payer’s income and should simply apply the CMS formula as extended to incomes between £156,000 and £650,000 per annum gross. There is not in that decision any particular analysis leading to the conclusion that £650,000 is the correct figure and it is fairly arbitrary, but certainly for a number of years that governed thinking on these issues.

[42]His reformulated approach, in which he disapproved of his own CB v KB approach, is to be found in his judgment in James v Seymour. This case provided a much more sophisticated mathematical model for incomes between £156,000 and £650,000 per annum gross, and I note that if I were to apply a £650,000 per annum gross cap on this case, the figure for James v Seymour purposes would be £19,865 per annum per child; not very far away in fact from the husband’s position before me.

[43]But in the James v Seymour judgment Mostyn J has specifically stated that in cases where the payer’s income goes above £650,000 per annum gross, the child maintenance level should be worked out from first principles, applying Matrimonial Causes Act 1973, section 25(3). That section reads:

“As regards the exercise of the powers of the court under section 23(1)(d), (e) or (f), (2) or (4), 24 or 24A above in relation to a child of the family, the court shall in particular have regard to the following matters— (a) the financial needs of the child; (b) the income, earning capacity (if any), property and other financial resources of the child; (c) any physical or mental disability of the child; (d) the manner in which he was being and in which the parties to the marriage expected him to be educated or trained; (e) the considerations mentioned in relation to the parties to the marriage in paragraphs (a), (b), (c) and (e) of subsection (2) above.”

[44]The matters in paragraphs (a), (b), (c) and (e) of subsection (2) above are:

“(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire; (b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future; (c) the standard of living enjoyed by the family before the breakdown of the marriage --- (e) any physical or mental disability of either of the parties to the marriage.”

[45]Overseeing all of that is section 25(1) of the Matrimonial Causes Act 1973 which says that:

“It shall be the duty of the court in deciding whether to exercise its powers under … and, if so, in what manner, to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.”

[46]What do I make of the facts of this case against those legal criteria? In relation to the property and other financial resources which each of the parties to the parties marriage has, or is likely to have in the foreseeable future, I have already said that both the husband and the wife will be left with substantial capital assets of £30 million or £40 million or more, albeit that the wife’s assets will be rather more liquid than the husband’s.

[47]In terms of income and earning capacity which each of the parties to the marriage has, or is likely to have in the foreseeable future, I make the following comments. The wife currently has part-time work as a school teacher earning £17,000 per annum net. In addition to that, she will no doubt in due course receive substantial investment income on the assets which she will have as a result of this case. It is difficult to predict at this stage what that figure will be, save that it should be, depending on exactly how she invests it, a substantial sum which she can use to the welfare of herself and her children. No doubt in due course she will think about working full-time as a teacher, but at the moment the present situation seems to me to define her earning capacity reasonably accurately, given that she is a primary carer with three young children.

[48]The husband has been in the last few years a very, very high earner, running some innovative and successful businesses in the world of IT. The information that we have in the court bundle suggests that his income for tax purposes over the last five years has been as follows. In the year ending 5 April 2020, £14.7 million per annum gross. In the year ending 5 April 2021, £55.6 million per annum gross. In the year ending 5 April 2022, £76.3 million per annum gross. In the year ending 5 April 2023, £42.1 million per annum gross. In the year ending 5 April 2024, £31.1 million per annum gross.

[49]The expert evidence, which I have read a good deal of but never was resolved in the sense that cross-examination of it never took place, suggests that the figure for the year ending 5 April 2025 may well be significantly lower than the figures in recent years, but what it will be precisely is an unknown at this stage, and I think perfectly reasonably neither party suggests that I should have heard any detailed or expert evidence on that subject. Whilst I recognise that I have not heard cross-examination, and certainly not a consensus on what the experts thought about the future earnings of the husband, on either view it is probable that he will carry on being a very high earner, an earner of substantial amounts year on year, albeit the current year not as high as the last few. In my view, it would be wrong to see the husband other than a man with very high income, which might vary over time depending on business conditions and other matters, but will still place him as someone with an extremely large income for the foreseeable future.

[50]I turn to some of the other factors. The disability of the children. Although one, as I have said, has some issues with his autism, from what I have read they are not such as to make a material difference to the issue that I am now having to decide. For the avoidance of doubt, none of the children have any assets or income which are relevant for the purposes of this analysis.

[51]In my judgment, the facts of this case are going to be largely decided by the consideration of the needs of the children in the context of all of the circumstances, but also in the context of the standard of living that was enjoyed by the family before the breakdown of the marriage.

[52]It is, as is often the case in very big money cases, faintly absurd to be talking about “need”’, even more so in the context of needs for children as the levels of figures that we are talking about in this case are far higher than that word would in an ordinary usage justify. But the matter does require resolution and I must do my best to consider what would be a reasonable figure for the husband to pay to meet the costs of the children at a reasonable level in the context of the overall financial situation and the context of the standard of living which the three children enjoyed before the breakdown of the marriage and in the period also immediately after the period of the marriage, albeit that I note that at ages three, six and six respectively they perhaps do not have much appreciation of their standard of living or of how lucky they are financially and the things that they have which many other people do not have.

[53]In assessing a figure, I have looked at the various documents which have been brought to my attention, and I note, through the advocacy of Mr. Yates, that the wife puts a pitch along the following lines. She suggests that I should consider the schedule which is in the bundle which totals £112,554 per annum but I should note that there are some unidentified items in that list termed “unknown expense”’ and there is actually a figure of zero by holidays, and if I want to insert a figure for reasonable holiday expenses I can do no better than go to the husband’s schedule, which suggests a figure of £120,000 per annum. If I add £112,554 to £120,000, I get to £232,554, and Mr. Yates suggests that I should round that up to approximately £250,000 per annum because of the “unknown expense” numbers, which I note include things like dental treatment, eye appointments, riding lessons, music lessons, and various other figures which it is difficult to quantify at this stage.

[54]Having looked at that carefully and heard Mr. Warshaw’s response to that, I have to say that the budget does seem to me to have some fairly absurd inclusions within it. It has not been cross-examined on a line-by-line basis and I am not sure necessarily that much light would have been thrown on it if it had been, having been dealt with on submissions, but in my view Mr. Warshaw is on some sound ground by arguing for example that it could not really be justified to spend £25,750 per annum ongoing on children's furniture or £6,000 per annum ongoing on children’s computers or £2,000 per annum on Christmas gifts for the children, or £120,000 on holidays for the children – in this respect I bear in mind that the husband will also be taking them on some holidays as well. So that the holiday spend which is suggested by Mr. Yates would be very large indeed. I accept and note that there have been some very expensive holidays in the past, but it does not necessarily follow from that that those can be duplicated in any direct sense in relation to an assessment of future needs. There is also a large figure for cash handouts for the children for activities. I remind myself we are dealing with children of six, six and three respectively.

[55]Also I remind myself that both parties are left with substantial amounts of assets and that the wife will be left with at least £36 million worth of assets from which she could reasonably be expected to fund a very good life as well as for herself, for the children in meeting every conceivable need for them.

[56]Whilst I accept I am not bound in any formal way by the fairly arbitrary £650,000 cap favoured at one time by Mostyn J and not so favoured at a later time, I find myself closer to the proposition that a route identified by having in mind some sort of notional cap (which I do not propose to identify mathematically) may be appropriate, reminding myself that we are talking here about not sharing, but of meeting children’s needs. The needs of children must be finite whatever the payer’s income.

[57]For those reasons, I find myself closer to the lower end of the scale for this, and I have in the end decided to make a broad assessment and reach the conclusion that the correct figure to be added to the order is one of £25,000 per child per annum and I would ask that this figure should be included in my order.

[58]That completes my judgment. - - - - - - - - - - - -