Goddard-Watts v Goddard-Watts

Factual and Procedural Background

This judgment concerns the rehearing of a financial remedy application following the setting aside of a previous final order dated 1st June 2010. The prior order was set aside by Judge Moor on 8th July 2015 due to the husband's non-disclosure of his interest in two trusts. The parties, referred to as the husband and the wife, were formerly married with the marriage having been determined in 2010. The wife contends she is entitled to an equal share of the parties' current resources, including assets held in the trusts, seeking a lump sum and contingent additional sums linked to a company sale. The husband argues the wife should receive a share based on the 2010 valuation of the trusts' assets plus compensation for delayed receipt, maintaining that other assets were fairly divided in 2010.

The parties began cohabiting in 1987, married in 1996, and separated in 2009. The husband, now aged 50, worked initially for his parents' company and later acquired substantial business interests, including a majority shareholding in Group Silverline Ltd. The trusts at issue—the Hardy Trust and the Eagle Trust—were established in 2008 with trustees being the husband's brother and parents, and beneficiaries including the husband and his descendants. The husband was found by Judge Moor to be the principal beneficiary of the trusts.

The 2010 order was based on asset valuations including business interests and assets in the trusts, but the husband's disclosure was later found to be woefully inadequate, particularly regarding the trusts. The trusts held significant shares in Toolstation Ltd and cash, and had made loans and distributions to the husband and his businesses. The wife received the former matrimonial home and a lump sum under the 2010 order, but the husband’s non-disclosure led to the order being set aside and this rehearing.

Legal Issues Presented

1. What approach should the court take in rehearing a financial remedy claim after a prior final order has been set aside due to non-disclosure?
2. Whether the wife is entitled to share equally in the parties' current resources, including the trusts' assets, or only entitled to compensation based on the value of the trusts’ assets at the date of the original order.
3. Whether the shares contributed by the husband’s parents to the trusts constitute marital assets subject to division.
4. How to value the husband’s business interests and trusts’ assets, and the relevance of post-separation increases in value.
5. The extent to which the trusts’ assets are available as financial resources for the parties under the Matrimonial Causes Act 1973.

Arguments of the Parties

Wife's Arguments

• The wife should receive an equal share of the parties' current resources, including the assets held in the trusts, as the original sharing was procured by the husband's fraudulent non-disclosure.
• The sharing that took place in 2010 is no longer relevant and the award should be determined by reference to the current position.
• The wife has a continuing interest in the husband's businesses, which he has been managing and investing in using her undivided share.
• The trusts' funds have been used to assist the husband's business and to meet his living expenses, indirectly benefiting the business and justifying a share in the business's current and future value.
• Relies on authority including Sharland v Sharland, Jenkins v Livesey, Smith v Smith, Williams v Lindley, and Cowan v Cowan to support the proposition that fraud vitiates prior orders and entitles a rehearing based on current values.

Husband's Arguments

• The wife should only receive compensation based on the value of the trusts' assets as at 2010, plus an uplift to reflect delayed receipt, to remedy the effect of the husband's non-disclosure.
• The division of other disclosed assets in 2010 was fair and should remain upheld.
• The shares contributed by the husband's parents to the trusts are not marital assets and should not be shared.
• Post-separation increases in value of the husband's businesses are the product of his own endeavour and do not give rise to an entitlement for the wife beyond the 2010 division.
• Relies on authorities including Sharland v Sharland, Kingdon v Kingdon, and H v H to support the position that a rehearing need not start from scratch and that the existing order should be upheld except for discrete adjustments.

Table of Precedents Cited

Court's Reasoning and Analysis

The court commenced by acknowledging the principles established in Sharland v Sharland, emphasizing the court's flexibility in determining how to rehear a claim after setting aside a prior order for non-disclosure. The court recognized that a rehearing does not necessarily require starting from scratch and that issues can be isolated and dealt with proportionately.

Applying this, the court found that the 2010 division of assets, other than the trusts, was fair and remains so. The non-disclosure concerned a discrete element—the husband's interest in the trusts—and the defect could be remedied by adjusting the 2010 order rather than dismantling it entirely, consistent with Kingdon v Kingdon.

The court rejected the wife's submission that the division should be recalculated solely on current values, noting that increases in value post-separation largely resulted from the husband's own endeavour and did not justify further sharing beyond the original division.

The court carefully considered the valuation evidence, accepting the expert valuations as reasonable and rejecting criticisms that relied on hindsight or unavailable forecasts. The court also distinguished the shares contributed by the husband's parents as non-marital assets, applying the principle that assets from sources external to the marriage are not subject to sharing.

Regarding the trusts, the court concluded that 65% of their assets were marital resources available to the parties and that the wife was entitled to 32.5% of that value, payable as lump sums when assets were realized. The court considered the interests of other beneficiaries and found sufficient residual assets would remain in the trusts.

The court accepted that the wife should receive an uplifted sum to reflect the delayed payment and the acceleration of instalments previously payable over eight years, exercising its discretion as recognized in Jones v Jones.

Finally, the court found no entitlement for the wife to share in the husband's business post-2010, as the business's growth was the product of his post-separation efforts and the wife had already been compensated through the 2010 division and the adjustment for the trusts.

Holding and Implications

The court allowed the wife's financial remedy application in part by awarding her a lump sum representing 32.5% of the marital share of the trusts' assets, adjusted to reflect delayed payment and accelerated instalments, totaling approximately £6.42 million.

The court upheld the fairness of the 2010 division of other disclosed assets and rejected the wife's claim to an equal share of the current value of the husband's businesses, finding that post-separation increases were attributable to the husband’s efforts and not subject to sharing.

The shares contributed by the husband's parents to the trusts were excluded from marital assets and not subject to division.

This decision clarifies that in cases of non-disclosure, courts have broad discretion to tailor rehearings and may isolate discrete non-disclosed assets for adjustment rather than reopening the entire financial remedy. It underscores the importance of the source of assets in applying the sharing principle and confirms that post-separation growth attributable to one party does not automatically create entitlement for the other.

The ruling directly affects the parties by increasing the wife's award to reflect the value of the trusts' marital assets but does not establish new binding precedent beyond the application of existing principles.