Mario Michael v Stalo Michael

In a financial remedy appeal, an appellate court gives very substantial weight to a trial judge’s factual findings, evaluative conclusions and discretionary decisions. It may interfere only for an identifiable error of law or principle, an unsupported finding, a material misunderstanding or omission of evidence, a rationally insupportable conclusion, or a decision outside the permissible ambit of discretion. A court may address highly uncertain future tax exposure through a formulaic order linked to the liability actually paid where the evidence does not justify a precise figure. Conduct may justify placing a greater share of a matrimonial debt on the spouse principally responsible. Post-valuation events may be considered where fair, but a party cannot obtain a reduction for costs caused by that party’s own default.

The husband sought permission to appeal from a final financial remedy order made by HHJ Hess on 1 July 2025. The order followed judgments on preliminary and financial remedy issues, reported at [2024] EWFC 463 and [2025] EWFC 245.

The first ground concerned the treatment of a potential tax liability arising from the finding that the CN Trust was a sham. The husband challenged the judge’s refusal to quantify the liability more precisely, the use of a reverse contingent lump sum mechanism, and the cap on his ability to recover tax paid from the wife. The remaining grounds challenged valuations of developments and a subsidiary company. The central issue was whether any of these matters gave the proposed appeal a real prospect of success or provided a compelling reason for permission.

The application for permission to appeal was dismissed. None of the proposed grounds, individually or collectively, had a real prospect of persuading the Court of Appeal that the financial remedy order was wrong, and there was no compelling reason to grant permission.

1. An appellate court gives very substantial weight to findings of fact and evaluative conclusions. It may intervene for an identifiable error, including a material error of law, an unsupported critical finding, a demonstrable misunderstanding or failure to consider relevant evidence, or a conclusion that cannot reasonably be explained or justified. For a multifactorial evaluation, intervention requires an error of law or principle. A discretionary decision must fall outside the generous ambit within which reasonable disagreement is possible. The court applied the approach in Henderson v Foxworth Investments Ltd and another [2014] 1 WLR 2600, Re R (Children) [2015] UKSC 35, and Lidl Great Britain Ltd and another v Tesco Stores Ltd and another [2025] 1 All ER 311.
2. The judge was entitled to find that the potential tax liability could not be narrowed beyond the expert evidence, which supported a range of approximately £6 million to £30 million. The required degree of specificity depended on the evidence and what was necessary to conduct the financial remedy exercise fairly. A formulaic reverse contingent lump sum, linked to tax actually paid, was a fair response to the uncertainty.
3. The judge was entitled to cap the wife’s reimbursement liability. His finding that the husband was principally responsible for creating and defending the structure causing the tax problem justified leaving him with a greater burden of the matrimonial debt.
4. The judge had a discretion to consider post-valuation events where fair and to decline to reopen a valuation where unfair. That discretion could be exercised differently for different assets. The findings concerning LR and PEL were rationally open on the evidence. The possible auction sale and increased borrowing concerning PEL did not undermine the decision.
5. The husband could not reduce the wife’s award by costs arising from his own failure to comply with interim orders. Such a deduction would effectively make the wife bear part of sums ordered to be paid to her. The new point concerning the Corporation Tax Act 2010 was also unavailable because it required expert evidence and had not been raised below, applying Singh v Dass [2019] EWCA Civ 360.

1. Court of Appeal (Civil Division): On 18 December 2025, Moylan LJ, with King LJ agreeing, dismissed the husband’s application for permission to appeal: [2025] EWCA Civ 1668.
2. High Court of Justice, Family Division: HHJ Hess, sitting as a Deputy High Court Judge, made the final financial remedy order on 1 July 2025, following judgments reported at [2024] EWFC 463 and [2025] EWFC 245.