FACTS
Sharon Horohoe (W) and Ciaran Horohoe (H) married in 1994 but in 2010 decided to go their separate ways. They had accrued a number of sizeable assets over the past two decades and in 2012 they negotiated an agreement, with the help of a family friend, as to how their assets were to be divided.
This agreement involved W receiving the former matrimonial home and a number of rental properties, whilst H would receive the remaining rental properties and two companies through which he operated as a carpenter and property developer. At the time, the parties believed that the companies held no monetary value, though did not get any valuations.
The agreement was drawn up into a document. W did take this document to a solicitor who advised her not to enter into the agreement without proper valuations, however she chose not to proceed with the agreement in any event.
Over the next few years the properties were transferred, with W receiving properties with a total value of circa £1.82 million, and H £1.14 million.
In 2019 W petitioned for divorce and made an application for financial remedies pursuant to the Matrimonial Causes Act 1973. She claimed that the agreement reached between the parties some 7 years earlier was neither fair nor binding, particularly given that the total pot was now worth over £10 million. H’s companies had expanded considerably since the negotiations and W now sought a further £5 million capital contribution from him. W also claimed that H had ‘cheated’ her at the time of separation and provided erroneous valuations for his company.
W made play on the fact that the document containing the agreement reached in 2012 included the following terms;
‘This proposal has been prepared following meetings with both parties independently and is of course, still open for further discussion amongst the parties pending final agreement’.
W’s argument was that these words negated the possibility that the document could possibly record a final agreement.
DECISION
Holman J found that a binding agreement had been reached between the parties;
‘I am quite satisfied that the agreement was freely entered into by both parties. They were both of full and mature age, and full capacity, and of similar and good intelligence. As I have already commented, of the two, the wife was more numerate. Neither was in a dominant position, and neither exploited their position to gain an unfair or unreasonable advantage over the other’ [91].
As to the wording of the document drawn up in 2012, Holman J agreed that at the time that the agreement was written, either party could have initiated further discussion and if they had done so, that very document would not have contained a final agreement. However, neither party did so, and in fact both parties began implementing the terms of the agreement over the following years. Holman J did not consider it necessary to date when the agreement became final, save to say that it happened prior to W’s financial remedy application.
Despite holding that there was indeed a valid concluded agreement between the parties, different considerations applied to the treatment within the agreement of H’s company and its assets.
H’s contention in 2012 that the company was essentially worthless was incorrect. It was concluded that at the time of separation, the value of the company was in fact at least £1.5 million, of which W ought to have received a half share.
However, Holman J did not agree with W’s contention that H had ‘cheated’ her when he expressed that there was no value to the company in 2012. Instead, he concluded that H was genuinely mistaken as to the company’s true value. Given the fact that W had no real involvement in the company for several years at the point of separation, Holman J found that she was justified in trusting H’s belief in the company value, and therefore W had not failed in respect of not getting a proper valuation.
Holman J did note that at the time of the agreement, the company’s value was volatile and unpredictable, and this played a part in W receiving a greater share of the property. He therefore considered a fair share of the business at that point to W to be £600,000.
Although the rest of the agreement was to stand, for the reasons given above, H was ordered to pay W a further lump sum of £600,000 to remedy any unfairness she faced as a result of the mistaken valuation.
Lessons Learnt
The case acts as a caution to parties who attempt to reach agreements without fully exploring the worth of the assets involved. Had W undertaken a proper analysis of the company’s value at the time, she would have ended up with a greater share of the pot, and would not have been engaged in lengthy litigation years later. It also serves as a reminder of the court’s willingness to uphold agreements reached between parties, even if the court may have come to a different conclusion had they been the decision makers at the time.
Sophie Cole
