KANIKA KAPOOR – The Divorce Papers In Full! Now That Is Money!!

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It seems as if the documents surrounding the divorce of Bollywood singer Kanika Kapoor have now been made public and a concerned party has given us permission to print the documents, so sit back grab a coffee as this makes stunning reading! Money makes the world go round they say….

On 14 January 2014, and after 11 days of hearing evidence and submissions, His Honour Michael Horowitz QC, sitting as a Deputy Circuit Judge, handed down a 64 page, 280 paragraph judgment.

The order that he made provided that the wife obtained equity in matrimonial property to the value of £106,000 in her sole name, representing the only assets of the marriage that remained. The husband retained his NHS pensions but was to be solely responsible for the parties’ considerable indebtedness, estimated to be just over £900,000. The judge made a periodical payments order in favour of the wife and the children in the total sum of £3,000 per calender month divided as to £1,000 to the wife and the balance between the children. The judge declined to make a school fees order, with the consequence that the children’s education at a fashionable private school in London has come to an end. The judge decided that there should be no order as to costs between the parties or between the wife and the paternal family, who had been joined as intervenors. As part of that decision he decided that a costs order made at an interim hearing by a District Judge against the husband should not be enforced so that the overall financial redistribution was not prejudiced.

The single judge granted permission to appeal on two bases: (a) as to the evaluation of the needs of the wife and the children, and (b) as to the remittal of the interim costs order. The second issue is not pursued before us given the communications that there were about it which took place subsequent to judgment being handed down.

The context of the case is important. The husband is a General Practitioner in a business and professional relationship with his parents who are retired but who continue to provide medical services. He is also employed part time as a medical member of a NHS commissioning group. He has over time been involved in property and other business ventures with his brother, who was also a doctor. It is a sad fact that his brother died shortly before this appeal came to be heard.

The wife is a classically trained dancer in the Indian tradition, although she has not utilised that training for any financial reward since the parties married in 1999.

By the time of the parties’ separation on 3 July 2012 they were living in expensive rented accommodation in central London with a view to buying a property of some significance in one of London’s well-known leafy squares. At the point where the husband left the flat they were occupying in Cadogan Place they were paying £67,500 per annum rental and £35,000 per annum school fees. Their lifestyle was variously described by the judge as “consumer affluence” and high spending to aspire to the “lifestyle of the Indian rich settled in London”.

The wife’s case was that the husband was a property entrepreneur whose assets were simply not disclosed to the court. His medical profession was, according to her, a secondary activity. She claimed a lump sum of £2 million for a new home, a school fees order and £84,000 per annum periodical payments on the payment of the lump sum to her by her former husband.

The husband’s case was that he was a General Practitioner and an NHS medical administrator who had taken part in the family’s broader business activities. His case was that the spending of himself and his former wife was unreal, could not be sustained and could not continue to be supported by his family. He offered the surviving equity in their properties, part of his pension and £2,5000 per calendar month periodical payments.

By the time that the hearing had finished before His Honour Michael Horowitz the parties had expended more than £500,000 in costs.

There was an issue about the value and possession of the family jewellery, with which this court has not had to be concerned. There is no issue between the parties that the judge identified the legal principles that are to be applied and carefully dissected the financial arrangements of the parties.

The judge comprehensively found against the wife and did not accept that the husband had failed to make material disclosure of his assets or income. In that context there was a very limited exercise he could perform in the redistribution of the agreed remaining assets, debts and income to meet the need of the parties and their children. He discounted the question of conduct within the marriage.

The judge’s treatment of each of the properties in the businesses and in the matrimonial pot is not in issue. Likewise, the fact that he declined to find a resulting trust or an inchoate common intention trust as between the parties and the husband’s parents is not an issue in this appeal.

At best all that there was to redistribute was that agreed between the parties as the surviving equity in their matrimonial properties and the availability to the husband of resources in his extended family, which he had enjoyed in the past, something materially different from a legal or beneficial interest in undisclosed or other non-matrimonial assets held by third parties, which was the wife’s case.

On the key question relating to the issue in this appeal the judge records that the wife’s case began at the maintenance pending suit hearing with an assertion that she had annual expenditure of £154,400. In her Form E she annexed a budget of £119,320 for herself and £43,000 for the children, that is £13,526 per calendar month. The judge commented the document was difficult to analyse. He was being kind. It is woefully inadequate. The wife’s section 25 narrative statement is devoid of merit or detail in this regard. There was no structured budget, only a purported reliance on personal high-end spending.

During the course of this hearing the wife sought to adduce additional evidence to produce such a budget. We declined that invitation for reasons given by my Lord, Jackson LJ. The exercise was, in effect, a covert attempt to make a variation application to this court.

The husband’s presentation was little better, although he at least conceded, the wife would say disingenuously, that their joint spending had to stop.

The essence of this part of the appeal is that the wife neither opened nor subsequently in closing made any real attempt to identify her needs and those of the children. The judge was left with the husband’s income and the parties’ earning capacities with which to make any redistribution that might make provision for need. The court cannot redistribute that which does not exist or which is never likely to exist. The income position was, of course, intimately bound up in the parties’ cases. The wife in opening asserted the husband had earnings of £400,000, moderated in closing only to £350,000. The judge fundamentally rejected her case and that left only the husband’s evidence of his medical and rental incomes, out of which he must begin to discharge the parties’ indebtedness.

The judge awarded the wife and children 50 per cent of the husband’s disposable income, that is £3,000 out of £6,100 per calendar month. He could have done little more given that she was to retain the equity in the matrimonial asset and the husband was to make arrangements to service the hard loans while remaining resident with his parents.

I entirely accept the judge’s treatment of need is opaque. That is because the wife failed to put an alternative realistic case to her extravagant claim to maintain the parties’ unrealistic lifestyle. If the husband’s income position changes, she may be able to apply for a variation in the future but she would also have to consider whether, when the children are old enough, she has a capacity to utilise her skills to some effect.

The judge could not and cannot invent a case for the wife and there was no material sufficient to draw inferences about her need. It would have been much better in the parties had presented their Form E budgets and been required to suggest alternatives in respect of each other’s case. Neither party did that and the judge accordingly allocated the only identified assets and an appropriate share of the disposable income to the wife and children.

The case put to this court on behalf of the wife is materially different from that put to the court below. Mr Shaw QC abandons the wife’s extravagant claims and instead submits on her behalf that the judge could and should have made a finding of fact that the husband’s parents would continue to provide him with financial support, at least at a level sufficient to meet the award that the wife now seeks. That aware would be periodical payments at the rate of £6,000 per calendars month. In the alternative, he submits that the judge, having come to the conclusion that the husband’s family had financially supported him until the separation, should have inferred from that history an expectation in the future that they would continue to do so.

It is important that I record that neither of these cases was put to the husband’s parents, who were made parties to the proceedings in the court below. If it was a case to be relied upon it should have been put. The court below heard and saw all of the witnesses and it is not for this court to substitute its version of the findings of fact made and the inferences to be drawn therefrom unless the judge can be shown to have been wrong and plainly wrong in relation to the findings of fact that were made.

Mr Shaw cannot go that far. He has done his best with very limited material to demonstrate that it was a case available to the judge, but frankly no more, i.e. that there was a pattern of subsidy which could have given rise to a prediction of further support for the husband.

Mr Shaw puts a third element into his case, namely that the husband could reorganise his work so that he would maximise his earnings and, in effect, go some way, if not a long way, towards the claim the wife now makes. He may be able to do that, although that is denied on his behalf by Mr Fairbank. But that again is a case that has not been tested in cross-examination and is no more than an hypothesis before this court.

On behalf of the husband, Mr Fairbank points out that the case before this court is materially different. He submits that there is a real difference between an expectation that a donor will provide for a donee, just as a fiduciary might for a beneficiary, a position that would need to be based on fact, and pressure put on a potential family member by a court when that is the only way an order can be made. Even if it might have been appropriate for a court in this case to conclude that the husband’s parents could, would and should support the family into the future, Mr Fairbank points out that the effect of what the court has ordered already requires them to do so.

The husband has to service a very significant indebtedness. It is estimated by him that £719,500 of it is not immediate but £270,000 of it is. That will require a sum of £5,750 per calendars month to service at the moment. That will change over time but it exhibits the fact that if one takes that sum together with the periodical payments ordered of £3,000 per calendar month, then the husband is already in debt in the further sum of £2,100 per month before any living expenses are factored in.

The reality therefore is that for the foreseeable future the husband’s only available liquidity is in the extended family. The immediate hard debts have to be paid and the wife is released from that obligation.

Mr Fairbank was astute to highlight for the court that the wife had as yet taken no steps to maximise her position since the order complained of was made. She pays, he says, an unnecessary buy-to-let mortgage instead of occupying a property, and she has not downsized an expensive car and so on. These are matters for her, not for this court.

The reality is that the judge trod a very difficult path through the wreckage that is this couple’s financial affairs. He did that with precious little assistance from the wife. In most appeals it would be fatal or near-fatal to point to a lack of analysis of need. In this case the judge analysed everything that there was. He is not to be criticised for failing to analysis a case that was not put. I would dismiss this appeal.

LADY JUSTICE SHARP: I agree.

LORD JUSTICE JACKSON: I also agree.

SMITH BERNAL WORDWAVE

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