H v H

In ancillary relief proceedings, business valuation is a broad forensic tool used to test the fairness of the proposed award. It is not a detailed accounting exercise and does not promise mathematical accuracy. Where a business’s value reflects many years of one spouse’s work, the court may regard attempts to separate matrimonial and non-matrimonial value as artificial. The court must assemble the relevant financial factors and then undertake a global assessment of fairness. Sharing, needs and the parties’ future income must be considered together. A clean break should be made only where it can be achieved fairly. Continuing periodical payments may justify a capital division that departs from mathematical equality, particularly where the business cannot fairly or practically be realised.

The Wife applied for ancillary relief following the breakdown of a marriage of approximately 15 years. The parties had two children and substantial assets, including a single-site London restaurant business operated by the Husband. The principal dispute concerned the value of that business, the extent to which its value reflected the Husband’s pre-marital work, and the parties’ respective capital and income needs.

Both parties sought a clean break. The Wife sought an equal division of the net wealth. The Husband proposed a substantially smaller capital award, together with a school-fees fund. The court considered the valuation evidence, the statutory factors, housing and income needs, contributions, costs and the feasibility of a clean break.

1. Business valuation. The court held that valuation evidence is intended to assist in testing the fairness of the proposed outcome. It is not a detailed accounting exercise directed to mathematical accuracy. Business valuations are often broad, uncertain and dependent on divergent expert opinions. Excessive investigation may be expensive and of doubtful utility. The court therefore adopted a broad assessment of maintainable earnings and the appropriate multiple.
2. The court assessed future maintainable earnings at £725,000 and applied a multiple of 6.5. It took the net value of the business at approximately £2.5 million. The assessment allowed conservatively for uncertainty concerning rates, benefits in kind and increased turnover.
3. Matrimonial and non-matrimonial property. Although the business had been acquired as an asset only shortly before the proceedings, its current value reflected the Husband’s work in it since 1974 and its successful operation at the same site for over 30 years. Applying the broad approach identified in Miller v Miller; McFarlane v McFarlane [2006] 2 AC 618, it would be artificial to divide the value sharply into matrimonial and non-matrimonial property.
4. Fairness and clean break. The court treated fairness as the pivotal consideration and carried out a global assessment after considering the relevant Matrimonial Causes Act 1973 factors. Neither party’s proposed outcome was fair. The Wife’s proposal would require the Husband to sell or heavily burden the business and would give her more than the available capital. The Husband’s proposal would fail to meet the Wife’s housing, income and sharing needs.
5. The court concluded that a clean break could not fairly be achieved. The available non-business resources were divided approximately £1.45 million to the Wife and just under £600,000 to the Husband. The Wife received the Canada Life pension and transferred her shares in Y Ltd to the Husband. The Husband was ordered to pay the Wife £60,000 annually and £20,000 annually for the children, and to meet the children’s school fees.