VV v VV: The folly of love
|Image: Public Domain, via Piqsels|
"I can't imagine a future without you."
So said the husband in the memorably-named VV v VV, in a Valentine's Day card to the wife.
I suspect he now spends his days desperately trying to imagine a future he could have had but for her.
It is a tragic tale of the folly of love: fifty-something divorcee falls for glamorous creative free spirit, and wants to make a life with her (to slightly twist the words of Mr Justice Peel, hearing the case). He buys her an expensive engagement ring, and soon they are married.
Sadly, his dreams quickly turn to dust, as is so often the way, leaving him broken (possibly), wiser (probably), and poorer (definitely).
Mr Justice Peel's judgment begins ominously: "The parties were married for no more than about 5 months, and have no children. They are both in their fifties. Such cases should be easy to resolve. Not so here; the parties have litigated bitterly, at enormous cost [over £600,000 each] and in minute forensic detail for over a year and a half."
He goes on to explain that the case involved five principal issues: the extent of pre-marital cohabitation; linked to this, the extent to which the sharing principle applied to the husband's assets; whether the husband was guilty of misconduct; whether the wife was guilty of misconduct; and the wife's needs.
Before I look at those, a little background:
1. The husband, a US citizen, worked in the software industry on the West Coast of America, where he lived.
2. The wife, of Scandinavian origin, is a classically trained musician and composer of considerable repute, and lived in London.
3. The parties met on a Eurostar train in March 2018 (not quite the cachet of the Orient Express, but still...).
4. According to the wife, the parties started cohabiting in November 2018. According to the husband, they began cohabiting in December 2019.
5. Whatever, in March 2019 the parties were engaged, the husband having asked the wife's father for permission to marry her (does this sort of thing really still happen?). The husband, clearly smitten, splashed out £125,000 for an engagement ring for the wife.
6. In December 2019, the parties moved into a property in Kensington, London.
7. On 25 January 2020, they married in London. The marriage, said Mr Justice Peel, became fraught almost immediately, although he was satisfied that it did not finally end until June 2020.
8. Divorce proceedings were begun, and in August 2020 the husband issued a financial remedies application.
Now to the meat of the case, which concerns the husband's business interests. I will try to keep this as simple as possible, and I apologise in advance if my use of technical business/stock market-related terms leaves something to be desired.
In September 2018 the husband began employment with 'AB Company', a West Coast start-up specialising in the use and application of digital technology. He was awarded the right to acquire a substantial number of units in the company (I understand that in this context a 'unit' is a unit of ownership in the company - quite how these differ from shares in the company, I do not know).
The husband's role in the company, like his marriage, did not last long. He left the company in September 2019. Under the separation agreement he was entitled to acquire 700,000 units in the company, upon the company being listed on the stock market. The listing date had not by then been set.
Early in 2021 the husband 'pre-sold' (i.e. prior to listing) some 438,732 units, for which he received $11,531,991 gross. He did not inform the wife of this, as he was concerned that the wife might "make mischief" by telling the company's founder and attempting to thwart the pre-sales, at a time when it was not clear what the units would be worth on the stock market.
The listing of AB Company took place in late Spring 2021. We are told that: "Immediately upon the listing, the price of the units fluctuated between $450 and $700 which, in theory, would have valued H's 700,000 units (ignoring the pre-sales) at $315m-$490m. Within a matter of weeks, it had plummeted and now stands at $22.54."
The husband informed Mr Justice Peel that he would have sold 25% of his original holding, i.e. 175,000, at once, from which he would have realised, at a price of $450, $78.75m gross.
In fact he was not able to sell any of the units upon listing because the wife and her solicitors had been in touch with the company, without telling the husband, requesting that the company not release the units to the husband, pending resolution of the financial claims. The units were not therefore released on the listing day.
The husband and the company eventually reached a compromise in the late summer of 2021. As a consequence of the non-release of units, the husband was unable to fulfil his IOU obligations in respect of pre-sales of 438,732 units, as a result of which he suffered a loss of $4.9m. But that, of course, was only part of the loss suffered by the husband as a result of the wife's actions. Whereas his 25% holding had been worth some $78m, on today's price, they would be worth $2.8m, a loss of about $76m.
Before I return to those five principal issues I should explain briefly what the assets were when the matter went before Mr Justice Peel, and what the parties were proposing.
Mr Justice Peel found that the total available assets came to £11,801,754, almost all of which belonged to the husband. The husband offered a lump sum of £400,000 on a clean break basis, but as he had already advanced a similar sum to the wife for legal fees on account of that sum, his proposal was in effect nil. The wife, on the other hand, sought 50% of the remaining units, and the proceeds of sale of units to date - that is, over £6m gross, less any tax payable.
So to the five principal issues, which I think I can deal with in short order:
1. The extent of pre-marital cohabitation - The wife's interest in this was that she claimed that the husband's units in AB Company accrued during the cohabitation/marriage, and were therefore matrimonial in nature. Mr Justice Peel, however, took the view that cohabitation did not start until December 2019, when the parties moved in together in London. Prior to that, their relationship fell short of cohabitation equating to marital norms, and the fact of engagement did not by itself give rise to a sharing claim.
2. Sharing - Accordingly, the units, or proceeds of units, were not marital assets and the wife was not entitled to share in them. The entirety of the husband's assets were non-marital.
3. The husband's misconduct, in pre-selling the units, and failing to disclose this to the wife, or the court - The husband was guilty of litigation misconduct in failing to disclose this, but Mr Justice Peel was satisfied that in pre-selling units, the husband was acting, as he saw it, prudently.
4. The wife's misconduct, in contacting the company, and preventing the release of the units on the listing day - Mr Justice Peel found that this amounted to gross and obvious conduct, which the court was entitled to take into account. The conduct caused the husband financial losses in the tens of millions of dollars. One might then ask: what penalty did the wife suffer as a result of her misconduct? The only answer that I can find from the judgment is Peel J's comment: "If I am wrong in my analysis of W's sharing claim, I am satisfied that any such claim would be comfortably outweighed by her misconduct".
5. The wife's needs - Mr Justice Peel calculated the wife's needs to amount to £750,000, and that is the sum he awarded to her.
Ubi amor, ibi dolor.
Since I wrote the above, a costs judgment has been published, here. The husband sought costs against the wife in the sum of £450,000. Peel J ordered the wife to pay £100,000, as "a consequence of her litigation conduct."