B v B

In ancillary relief proceedings, equality is a yardstick and a check against discrimination, not a universal starting point or presumption. The court must begin with the parties’ financial position and the statutory factors, and determine fairness on the individual facts. Pre-marital or inherited property may justify departing from equality, particularly where the marriage did not generate or augment the capital and the parties’ needs do not require its use. The outcome must also preserve reasonable housing and income security and, where appropriate, enable a spouse to continue a successful business. A clean break should not be purchased at the price of an unfair distribution. On these facts, the wife’s appeal was allowed and a structure preserving her ownership of the business premises, while giving the husband continued occupation and half the net sale proceeds, was substituted.

The wife appealed ancillary relief orders made after the parties’ marriage ended. The available capital had originated in her inheritance and other pre-marital assets. The husband had built up and operated a successful carwash business from premises bought and owned by the wife, and the parties’ son was initially living with the wife.

The District Judge transferred the carwash premises to the husband, applying approximate equality, and ordered a lump sum and periodical payments. On appeal, the Circuit Judge upheld the broad aim of equality, adopted a higher valuation for the premises, and varied the financial orders. The Court of Appeal considered whether equality was appropriate given the source of the assets, the parties’ needs, the husband’s business, and the desirability of a clean break.

1. Appeal and cross appeal. The wife’s appeal was allowed. The husband’s cross appeal and renewed application for permission to add a further valuation point were dismissed. The Court of Appeal exercised the discretion under Matrimonial Causes Act 1973, section 25, afresh.
2. Applicable approach. White v White [2001] 1 AC 596 and Miller v Miller; McFarlane v McFarlane [2006] UKHL 24; [2006] 2 AC 618 do not make equal division the universal starting point. The court must consider the parties’ financial position and section 25, with fairness as the objective. Need, compensation and sharing inform the exercise, and monetary and non-monetary contributions must not be discriminated between.
3. Source of assets. Inherited or pre-marital property is a circumstance to which the court must have regard. Its significance depends on the nature and value of the property, when and how it was acquired, and whether the parties’ needs can be met without using it. Here all available capital came from the wife before the marriage and had not been augmented by the marriage. The husband’s successful business justified a fair, limited share, but did not justify an equal division or outright transfer of the premises.
4. Practical distribution. The husband should be able to continue operating the carwash. The wife should retain the capital and income security arising from the premises. The appropriate arrangement was continued sole occupation by the husband for business purposes, half the market rent payable to the wife, and an entitlement for the husband to half the net sale proceeds, charged on the property until sale. The wife was to give undertakings preserving the business and restricting dealings with the premises.
5. Clean break and equality. Section 25A commends a clean break, but it could not fairly be achieved here by an equal division or by depriving the wife of sufficient capital to become self-supporting. A continuing landlord-and-tenant relationship was preferable to an indefinite maintenance tie because the rent machinery was simpler and the wife’s income was better secured. Sir Mark Potter, P, and Wall LJ agreed with Hughes LJ’s reasoning and proposed orders. Wall LJ stressed that the case was a fact-specific demonstration of discretion, not a precedent establishing a new rule.
6. The relevant paragraphs of the Circuit Judge’s order, including the outright transfer and periodical payments provisions, were set aside. The school-fees responsibility remained with the husband, the child periodical payments order was set aside, and the dismissal of the parties’ remaining ancillary relief or inheritance claims stood.

• Court of Appeal (Civil Division) — [2008] EWCA Civ 284. The wife’s appeal from the ancillary relief orders was allowed. The Court exercised its discretion under section 25 of the Matrimonial Causes Act 1973 afresh, substituted new arrangements, and dismissed the husband’s cross appeal.
• Kingston-upon-Thames County Court — The District Judge made the initial ancillary relief orders. On appeal, the Circuit Judge varied those orders by order dated 27 April 2007, but retained the transfer of the carwash premises to the husband and the broad aim of approximate equality.