One of the many factors which make Family Businesses unique is the resources which they demand. Like other businesses, they demand money and time. However, families require other resources, such as nurturing and trust. One of the singular aspects of a Family Business is the role which love plays if it is allowed to.
Love, like other resources, is finite. Demand always seems to exceed supply. Where there is a perception that a demand is not being met, conflict can arise. Moving on from that simple “conflict equation”, ignoring the vital role that love plays, and all of the strong positive and negative emotions that can be caused by love, is done to the detriment and peril of the future of the Family Business.
Love is a special bond that makes Family Businesses more resilient than others. Love can see Family Businesses through the more difficult times and through circumstances which would cause other business ventures to simply disintegrate. Love is the building block which underpins the family values which are set out in a Family Constitution. Then again, if other issues or concerns are allowed to pre-occupy those who inhabit the Family Business system, as the old folk song would have it “Love grows old and waxes cold and fades away like morning dew”.
Sadly, we see all too often what happens when conflict pushes the loving relationship that exists in a family system into the background. The most recent example of that is the case of Shield v Shield [2014] EWHC 23 (FAM). This was a case which was all too common in terms of the impact of conflict on the Family Business but was unique in relation to some of the circumstances, and also in the cri de coeur made by the Judge, (Mr Nicholas Francis QC) at the end of the case itself.
The dispute arose from the divorce proceedings between Susan and Richard Shield. Their son Christopher was a third party with interest. At the time of the hearing Richard was 72 and Susan was 69. They were married in 1969 and had 4 children, Alexandra (40), Nicola (39), Christopher (36) and Fiona (30). Richard and Susan separated in July 2012 after forty-three years of marriage. The divorce has split the family with two of the daughters giving evidence at the hearing for Susan and Christopher giving evidence in support of Richard – and his own case as an interested third party.
The preliminary issue which was before the Court was whether or not Richard held his shareholding in the Family Business, RA Shield Holdings Limited (RASH) on behalf of and in trust for Christopher. Put very simply, the nature of the dispute related to the status of the shares held by Richard, 50.22% of the “A Ordinary Shares” in RASH. Although Richard recognised Susan’s contribution to the marriage and that generally the marital assets should be divided equally between them, Richard felt that the growth of the Family Business over the past decade was almost entirely due to the efforts of his son and not something to which either he or his wife should lay claim.
The value of the shares had not been determined but for the purposes of the hearing was put at “several tens of millions.”. If Richard was able to show that he held his shares in the company in trust for his son then those shares would be excluded from the matrimonial assets when it came time for the Court to decide who got what.
As a result of this dispute, the whole history of the Family Business and the fault lines which grew among the family members was laid bare before the Court and the public.
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