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Trinidad and Tobago High Court |
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REPUBLIC OF TRINIDAD AND TOBAGO
IN THE HIGH COURT OF JUSTICE
H.C.A. M 114 of 2003
BETWEEN
MARILYN BELGROVE
PETITIONER
AND
KEITH BELGROVE
RESPONDENT
BEFORE THE HONOURABLE MADAM JUSTICE JUDITH JONES
Appearances
Ms. Suite for Petitioner
Ms. Prowell for Respondent
JUDGMENT
By an application dated the 3rd July 2003 the Petitioner, Marilyn Belgrove, (“the Wife”) applies to the Court for:
Periodical and lump sum payments for her support and for the child of the family born on the 24th November 1989;
A transfer of the matrimonial home situate at 1274 West Bank Road Palmiste, San Fernando into her sole name and for any other property adjustment as the court deems fit including in relation to the Respondent’s interest in the Belgrove Group of Companies.
There are, in addition, cross applications for the custody of the minor child of the family and an application by the Respondent, Keith Belgrove, (“the Husband”) for the maintenance of the said child. None of these applications were pursued. By the time the applications came before this Court the child was 16 years old and, according to the evidence, living with the Husband. The Wife, however, seeks an order for maintenance for the said child on the basis of her daily access to him on an afternoon after school and the occasional overnight access.
It is not in dispute that the parties lived together prior to the marriage, the Wife says that it was from the end of 1977, the Husband, 1979. They got married in April 1981. In 1993 the Husband filed a petition for divorce. That petition was dismissed by consent in the said year. In 1996 the parties separated for six months. In December 2002 the Respondent moved out of the matrimonial home. Cohabitation between the parties has not resumed. The petition in this suit was filed on the 31st January 2003.
There are two children of the family, a girl born on the 1st January 1979 and the boy, the subject of the custody applications, born on the 24th November 1989. The Husband has two children from a previous marriage who lived with the parties until 1987.
The matrimonial home situate at 1274 West Bank Palmiste was constructed in or around the year 1987. It is vested in both names and has been valued at $950,000.00. It is the subject of two mortgages for which the Husband pays the sum of $8,028.00 a month. The matrimonial home is at present occupied by the Wife.
The burning issue between the parties is whether the Wife has acquired an interest in the shares of the Husband in the Belgroves Group of Companies (“the Company”). To that end the questions of the shareholding of the Husband in the Company; the value of these shares and the contribution of the Wife to the development of the Company were raised as issues of fact for the Court’s determination.
It is not in dispute that the Husband is the Managing Director of the Company, a family based company in the funeral service industry.
According to the annual returns of the Company submitted by the Husband there are 244, 021 issued shares of which the Husband holds 160,076, some 65.5% of the issued share capital. According to the Husband 12% of those shares are held by him on trust for his brother. Of the 53.3% held solely by him he states that 20% was given to him by his father in June 1978; 20% was left to him by his father by a will made in 1978 and probated in March 1988 and 13.5 % was purchased by him in 1998 from other shareholders. I accept the evidence of the Husband as to the shareholding in the Company and find that the Husband holds 65.5 % of the shares in the Company of which 12% is held by him on trust for his brother.
Much of the cross-examination of the Husband centred on the control of the Company with the Wife seeking to establish that the Husband exercised total control. The evidence of the Husband is that none of the other shareholders are directors of the Company. The other director is the Company’s financial assistant who, according to the Husband, operates on a consultancy basis with the Company. The Husband is one of the two signatories on the bank accounts. The other signatory is the accountant, an employee of the Company. According to the Husband the day-to-day control of the Company is within his purview as managing director.
In my opinion, despite the evidence of the Husband that steps are now being made to have more participation in the running of the Company by the other members of the family, the Husband, as managing director and as the majority shareholder, is in the de facto control of the Company. That said it is clear that this is not a one man company but one in which the other shareholders, members of the Husband’s family, are becoming increasingly interested in the day to day management.
With respect to the value of the shares, two opinions were placed before the Court as to the share value.
By an order made by consent on the 12th October 2004 it was agreed that the Company be valued by the firm of Price Waterhouse Coopers Limited. and that the costs of the said exercise be borne by the Husband in the first instance and thereafter to be set off against the Wife’s eventual entitlement for ancilliary relief. By a valuation dated the 27th January 2005, Price Waterhouse Coopers estimated the fair market value of the Company to be $3,000,000.00 TT or $12.29 a share.
The Wife disputes the value and, by way of an affidavit from Victor Herde, (“Herde”) places before the Court a value of $6,000,000.00 for the Company as of the 31st March 2005.
There is no question but that both accountants are equally qualified to give such opinions.
According to Herde, in order to come to his conclusions, he conducted a review of the valuation of Price Waterhouse Coopers.
The difference in the opinions of the two experts, in the main, arises from their assessment of the appropriate Price Earnings Ratio to be used in the valuation. It is accepted by both experts that the Price Earnings Ratio is the most appropriate method of valuation in businesses of this type and the Net Asset Value is only to be used to check its reasonableness. From the affidavit of Herde, although Herde questions of the value of the Company’s real property used to arrive at the Net Asset Value, there seems to be no dispute as to the use of the figure of $600.000.00 used by Price Waterhouse Coopers as representing the Company’s annual maintainable earnings.
Price Waterhouse Coopers assesses the Price Earnings Ratio of the Company to be 5. According to the evidence of Brian Hackett, the accountant who prepared the report, this assessment was based on analysis of similar companies in the same industry. According to the witness, given the peculiar characteristics of the Company there are no similar companies operating within Trinidad and Tobago and accordingly two internationally listed companies in the same industry were used as bench marks and then discounted to take into consideration the fact that since the Company was a small company, unquoted on the Stock exchange, the shares would not be as easy to sell.
Herde was not cross-examined, from his affidavits however it is clear that he used an average of the Price Earning Ratio of all the public companies listed on the local stock market to arrive at an average Price Earnings Ratio of 15. He states that he then discounted this to arrive at a Price Earnings Ratio of 10.
It is clear from the evidence that an assessment of the value of a company is not an exact science. At the end of the day this Court is in the unenviable position of determining which of the expert opinions is more acceptable. In my opinion and given the narrow issue of dispute it would seem to me to be a situation in which the Court has to determine which method of arriving at the Price Earnings Ratio is more reasonable. The fact that this is not an exact science or that there are no companies of a similar nature in Trinidad and Tobago makes the assessment even more difficult. Neither can this Court resolve the situation by itself coming to a conclusion independent of the experts as to what is the correct Price Earnings Ratio. I have to determine which expert opinion I accept.
In my view a consideration of the Net Asset Value approach does not assist since it is accepted by both experts that this is merely a tool used to test the reasonableness of the value found by using the Price Earnings Ratio approach. In any event, Herde’s objections to the conclusions of Price Waterhouse Coopers arrived at by the use of the Net Asset Value approach is based on what he concludes to be the undervalue of land held by the Company. Unfortunately, despite the fact that the valuation reports used by Price Waterhouse Coopers are dated October 1999 and July 2003, I have no other evidence as to the value of the land.
In all the circumstances of the case and given the evidence placed before me and bearing in mind that the firm of Price Waterhouse Coopers was the firm appointed by the Court with the consent of the parties to conduct the valuation, I accept the valuation given Price Waterhouse Coopers. It seems to me that a comparison of public companies in other industries traded on the local stock market is not a comparison of like with like. Further I have evidence before me as to the reason used by Price Waterhouse Coopers for the discounting of the Price Earnings Ratio arrived at by a comparison of like with like. I have no such explanation from Herde. Finally, in the absence of any evidence, I am unable to accept the value placed on the land by Herde in order to test the reasonableness of his conclusion as to the Price Earnings Ratio.
In the circumstances I find that the value of the Company is $3,000,000.00 of which the Husband is beneficially entitled to 53.3%. I find therefore that the Husband’s shares in the Company are valued at $1,600,000.00. Of those shares, shares now valued at $1,200,000.00, were acquired by him during the period of cohabitation by way of inheritance or gift. According to the Husband his other shares, valued at $400,000.00, were purchased by him in the year 1998.
With respect to the Wife’s contribution to the Company it is not in dispute that the Wife’s employment with the Company began in 1978. Neither is it in dispute that at all times while employed with the Company the Wife received a salary. The Wife claims that the salary received by her was less than that received by other employees in similar positions and not reflective of the value of the services rendered by her to the company. According to the Wife she was responsible for the introduction of various innovative measures in the Company which measures were responsible for the Company’s increased success in the industry. The Husband disputed these claims and states that the Wife was at all times treated as a regular worker and paid for all services rendered to the company. As well, he states, during the period of her employment with the Company the Wife was trained at the Company’s expense which training now redounds to her benefit. According to the Husband when he met the Wife she was unemployed and during the course of the relationship in addition to the training financed by the Company he paid for her to do an interior-decorating course and a course in wreath-arranging thereby increasing her marketability.
It would seem to me that while it is not disputed that, while in the employ of the Company, the Wife received a salary, it is highly likely that there were some services rendered the Company by her over and above that of a regular worker. That said, it must also be borne in mind that the family also received benefits from the Company over and above the salaries received by them as, for example, accommodation prior to the acquisition of the matrimonial home and access to Company funds for the payment of household bills.
Attorneys for both parties have referred me to various United Kingdom (“UK”) authorities in support of their respective cases. It is not my intention to deal with these cases in great detail. At the end of the day there is one common thread running through the cases and it is that in applications of this nature the Court must strive to achieve fairness.
According to Lord Nicholls of Birkenhead in his opening lines
in the case of White v White [
2000] UKHL 54 at page 1.
“ Everyone would accept that the outcome on these matters, whether by agreement or court order, should be fair. More realistically, the outcome ought to be as fair as is possible in all the circumstances. But everyone’s life is different. Features which are important when assessing fairness differ in each case. And, sometimes, different minds can reach different conclusions on what fairness requires. Then fairness, like beauty, lies in the eye of the beholder.”
That said, it is important to note when dealing with the recent United Kingdom cases that in the United Kingdom the relevant legislation is not on all fours with our legislation. In particular there is no longer in the United Kingdom what Lord Nicholls in Miller v Miller and McFarlane v McFarlane [2006] UKHL 24 refers to as “the tailpiece”, that is the mandate to the Court as set out in section 27(1) of our Matrimonial Proceedings and Property Act (“the Act”) :
“to place the parties, so far as is practicable….. in the same financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other”.
This, it would seem, has been determined by our legislature to be the corner stone of fairness in this jurisdiction and it is to this mantra that our Courts must have regard when making an order under sections 24 and 26 of the Act.
That is not to say that the decisions of the House of Lords in White or in Miller are irrelevant in this jurisdiction, they are and will continue to have great persuasive weight in ancilliary relief applications provided that distinction is borne in mind.
The Act, by section 27(1), requires the Court to consider all the circumstances of the case including the matters enumerated in the section.
With respect to those matters I find as follows:
With respect to the Wife:
Despite claiming to be unemployed and describing herself as such in her affidavits deposed to after the 31st July 2003, under cross-examination the Wife admits that she is still an insurance agent employed full time with Guardian Life. Although she is certified as an Insurance Underwriter, according to her, her qualifications only allow her “to go on the road and sell insurance”. Her evidence is that in the year 2005, while continuing to describe herself as unemployed, she had much reduced income of $21,821.00. She is also certified as a bereavement counsellor, has training and experience in interior decorating and making wreaths and has in the past worked as a teacher of typing and short hand. She is in receipt of the sum of $923.00 a week from the Husband pursuant to an order for her maintenance pending suit.
Apart from her interest in the matrimonial home the Wife admits to assets in the form of a car valued at $33,000.00 on which there is an outstanding loan of $22,320.00; jewellery valued at $5,000.00, clothes and personal items valued at $10,000.00, a one fifth share in her parents’ estate valued at $30,000.00 and two bank accounts credited with the sum of $161.00. The Wife is also the owner of a life and pension policy the value of which she has not disclosed. The evidence is that $3,600.00 a month is paid towards the policy.
According to the Wife her monthly expenses for the house amount to $5,855.34; her personal expenses $5,934.00; for the minor child $840.00 and for her car $638.33 amounting to a total of $13,267.67. This does not include the mortgage instalments paid by the Husband.
With respect to the Husband:
Apart from his interest in the matrimonial home the Husband owns shares in the Company valued at $1,600,000.00. Under cross-examination the Husband admits that he is the owner of a timeshare in Miami but claims that he holds same on trust for the Company. The timeshare has not been valued but his evidence is that he purchased it a few years before with the Company’s money at a cost of $10,000.00 US. The Husband discloses an income of $30,000.00 a month gross with a take home pay of $25,000.00. He is also in receipt of a monthly pension from Guardian Life in the sum of $2,100.00. He has not disclosed any bank accounts or other assets.
According to the Husband his monthly expenses, including rent, amount to some $29,292.00 of which $8,025.00 represents the mortgage repayment on the matrimonial home. He claims a monthly loan from a drawings account in his name with the Company and states that in 2000 he was indebted to the Company in the sum of $240,104.36.00.
Save as to the Wife’s claim that she suffered five miscarriages during the marriage and that immediately after the marriage she suffered from stress and had to seek the assistance of a psychologist there is no evidence of any physical or mental disability of either party.
The matrimonial home has been valued at $900,000.00. According to the Wife as of the 10th April 2006 there was some $210,000.00 owed on the mortgages on the home. The Wife claims that the matrimonial home is in dire need of repair and although she has exhibited what she refers to as an estimate of the work necessary to be done to the home to put it into good repair, save for the sum of $45,000.00 which the contractor states is necessary to be allocated for painting and decorating, the estimate fails to disclose the cost of such repairs.
Despite the Husband’s claim that their life style was quite modest from the evidence as to their expenses and the description of the matrimonial home it is clear that the parties enjoyed a relatively good standard of living.
While the marriage lasted a little over 21 years the parties in fact lived together for at least two years prior to the marriage. The Wife is now 45 years while the Husband is 52 years.
With respect to the Husband’s shares in the Company, the Wife submits that these are joint assets in respect of which she is entitled to 1/3 of the value. The Husband, on the other hand, submits that the shares are not family assets and that the Wife is not entitled to any interest in them.
In my opinion this is not a case as in White v White where it can be said that it was a marital and also a business partnership. From the evidence I find that although the Wife worked in the business. She was at all times paid for her services and treated as an employee. Any additional assistance rendered to the Company was rendered qua Wife and must be viewed against the background of the benefits received by her and by the family from the Company. These additional services, in my view, did not result in the Wife acquiring any interest in the Company. This position is, in my opinion, confirmed by the history of the Wife’s employment with the Company and as an insurance agent. The Company, in my view, at all times remained a family concern limited to the children and siblings of its founder. A position jealously guarded by the members of the family.
In the case of Miller v Miller the court made a distinction between:
“(1) property acquired during the marriage otherwise than by inheritance or gift, sometimes called the marital acquest but more usually the matrimonial property, and (2) other property. The former is the financial product of the parties common endeavour, the latter is not.”
Per Lord Nicholls of Birkenhead in Miller v Miller and McFarlane v McFarlane at paragraph 22.
The stated intention being not to disregard “ the other property” but in taking it into account to consider the nature and value of the “other property” and the circumstances under which it was acquired when considering all the circumstances of the particular case. According to Lord Nicholls in that regard the length of the marriage could be of some assistance when considering how to apportion “the other property”. Given section 27(1) of our Act and in particular the wording of section 27(1)(f) I think that such a distinction and the manner or treatment suggested is appropriate. I would think also of assistance would be the manner in which the parties themselves treated the other property during the marriage. In the instant case, in the main, “ the other property” comprises the Husband’s gifted and inherited shares valued at approximately $1,200,000.00 and the Wife’s share in the estate of her parents valued at $30,000.00. From the evidence it would seem to me that neither of these assets were fully integrated into the “family pot” as it were. The Wife’s parents property perhaps because it was never distributed and he shares in the Company because of the nature of the Company referred to earlier.
On the evidence it is clear that the Wife worked throughout the marriage and, although she claims to be unemployed, is not unemployable. She has during the marriage acquired the capacity to earn an income in various fields.
Bearing in mind the Court’s mandate it would seem to me that the proper order to make would be one which will provide the Wife with a home and some financial assistance which together with her earnings will assist in giving her the standard of living she enjoyed during the marriage. This, to my mind, will place the Wife in the financial position she would have been had the marriage not broken down and the Husband had properly discharged his financial responsibilities to her.
The question is how far is this practicable given the circumstances of this case and bearing in mind that at the end of the day the bulk of the other assets comprise shares in a private company not easily disposable on the open market and which if disposed may affect the Husband’s earning capacity.
I must, as well, bear in mind that the matrimonial home is still encumbered by a mortgage of approximately $200,000.00.
It would seem to me that this is a case in which a clean break is preferable, in my opinion, periodic payments for the Wife are not, a viable option. In all the circumstances of the case therefore I order that the Husband transfer to the Wife the matrimonial home free from encumbrances. I have no evidence of any other assets owned by the Husband from which he can make a further lump sum payment over and above the $200,000.00 required to clear the mortgage but it is clear from the evidence that the Husband has the ability to access loans from a drawing account in his name with the Company and has in the past borrowed up to $240,000.00 on that account. In the circumstances the Husband is to pay to the Wife a lump sum of $250,000.00.
With respect to the Wife’s application for maintenance for the minor child of the family I dismiss the application. The evidence is that the child is in the de facto custody of the Husband who supports him. In my opinion the application by the Wife is, unreasonable. The sum of $840.00 a month, which she claims to spend on the child, is an expense that ought to be borne by her. In my opinion, given the age of the child and the circumstances that operate at present, there is no need to make a formal custody order.
A word on costs, given my order it is usual for the Court to order that the Husband to pay the Wife’s costs of the applications before the Court or at least those applications in which the Wife was successful. In this case I do not intend to follow the usual order for two reasons. First, I have found that the Wife has unreasonably pursued an application for the maintenance of the minor child of the family. Second, and to my mind of even greater importance, is the fact that even in the light of an order made by consent with respect to the appointment of a valuator to value the business the Wife contested the opinion of the expert even to the extent of leading evidence in opposition. Whereas there is no doubt that in the absence of an agreement to be bound by the valuation a party has a right to challenge the valuation that party does so at the risk of an order for costs being made against them. In the circumstances of this case while I am not prepared to make such a draconian order parties must bear in mind that operative on the Court’s mind when dealing with costs is not only the outcome of the case but also manner in which the case was presented to the Court and the reasonableness of each parties’ positions before the Court.
In all the circumstances of the case therefore I find that the Wife is only entitled to ¼ of her costs.
My order is as follows:
The Respondent shall, on or before the 30th April 2007, liquidate all mortgages on the matrimonial home situate at 1274, West Bank Road Palmiste and transfer to the Petitioner all his interest in the said matrimonial home free from encumbrances. In default of respondent executing the necessary documents the Registrar of the Supreme Court is empowered to execute same on his behalf;
The Respondent shall pay to the Petitioner the sum of $250,000.00 on or before the 30th April 2007 which together with the transfer of the
matrimonial home shall be in full and final settlement of all the
Petitioner’s claims pursuant to the marriage.
The Respondent shall pay to the Petitioner ¼ of her costs to be taxed in default of agreement.
Liberty to apply.
And I declare that the arrangements for the child Kershin Belgrove born on the 24th day of November 1989 are satisfactory.
Dated this 1st day of February 2007
…………………………….
Judith A.D. Jones
Judge
Page
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URL: http://www.commonlii.org/tt/cases/TTHC/2007/14.html