The nature of the family assets may be taken into account when considering how they are to be divided in ancillary relief proceedings on divorce, where these are businesses which will be crippled or lose much of their value, if disposed of prematurely in order to fund an equal division. Coleridge J said: ‘In the current climate now, where the court is engaged more in dividing up assets than in calculating a party’s reasonable needs, there would be logic in trying to calculate and include a figure for any asset which generates a secure income. At its most extreme that might include the valuation of a party’s earning capacity. However, in my judgment, the evaluation of such an ephemeral item would be pregnant with problems and lead to endless debate incapable of fair resolution. It would be even more problematic where there was ongoing provision for children.’
and ‘Mr Raynor also urges me to take into account the huge increase in turnover of the X group since the separation. He says that the real increase in the value of X has only occurred since that date and so in relation to any share the wife notionally would have in that asset it should be discounted. He says from a half to a third to reflect the fact that she made no contribution to it after separation.
Again, I think there is intrinsically some merit in this argument in this particular case but it needs to be approached with very great caution. There is no doubt that a glance at the figures reveals a very significant increase in the turnover of the businesses from 1997-2001 and this reflects directly on the value of the companies. Indeed, in relation to Z as it has been pointed out, it was not even in existence at the time of the separation. There is indeed a four-fold increase in turnover overall since the date of the separation and that is attributable to more than just natural price inflation.
Mr Mostyn urges me to reject this argument completely because, as he rightly points out, traditionally these applications have always been approached on the basis of the values existing at the date when the hearing takes place.
I am quite sure that even now in most cases that is the correct date when valuation should be applied. But I think the court must have an eye to the valuation at the date of separation where there has been a very significant change accounted for by more than just inflation or deflation; natural inflationary pressures on particular assets, for instance, the value of a house moving up or down in the housing market.
In this case the increase in value is attributable to extra investment of time, effort and money by the husband since separation and I do take into account the exceptionally steep increase in the turnover figures since the date of the separation. However, having done so it must be put in the context of the wife’s continuing contribution too which similarly did not cease at the date of separation. She too has continued to play the valuable part that she had done throughout the marriage, in looking after the home and the children.
Mr Mostyn asked the hypothetical question: what would the position be if the value had similarly declined significantly since the date of the separation? In my judgment that too, in an appropriate case, could be a factor to be taken into account, particularly perhaps where the decline was as a result of action or inaction by the paying party. But that is not the situation in this case and I am not making a statement of general application or anything of that kind.’
Judges:
Coleridge J
Citations:
[2001] 2 FLR 69
Statutes:
Matrimonial Causes Act 1973 25
Jurisdiction:
England and Wales
Cited by:
Cited – McFarlane v McFarlane; Parlour v Parlour CA 7-Jul-2004
Appeals were made against orders for periodical payments made against high earning husbands. The argument was that if the case of White had decided that capital should be distributed equally, the same should apply also to income.
Held: The . .
Cited – Miller v Miller; McFarlane v McFarlane HL 24-May-2006
Fairness on Division of Family Capital
The House faced the question of how to achieve fairness in the division of property following a divorce. In the one case there were substantial assets but a short marriage, and in the other a high income, but low capital.
Held: The 1973 Act . .
Cited – Rossi v Rossi FD 26-Jun-2006
W sought to challenge transactions entered into by H anticipating ancillary relief proceedings on their divorce. Nicholas Mostyn QC J said: ‘While of course no rigid rule can be expressed for the infinite variety of facts that arise in ancillary . .
Lists of cited by and citing cases may be incomplete.
Family
Updated: 13 May 2022; Ref: scu.198591