J v J

In ancillary-relief proceedings, the sharing principle applies to all assets available for distribution. Equality may be departed from within that principle for good reason, including pre-acquired or gifted assets and post-separation enhancement in value.

The assessment is fact-sensitive and must pursue fairness under the Matrimonial Causes Act 1973. The court may consider the parties’ evident choices about how they organised their married life, provided this does not discriminate between domestic and financial contributions or circumvent the statutory test for conduct. A formulaic percentage exercise is inappropriate. The parties should identify the factual building blocks of their cases and the evidence needed to establish them at an early stage.

The parties, both on their second marriage, made cross-applications for ancillary relief after a marriage lasting approximately nine and a half years. The husband had created and developed a substantial company before and during the marriage. It was sold after separation at a substantially increased value. The wife had brought assets into the marriage and received substantial family funding, including an interest-free loan used to acquire her home.

The principal issues were the treatment of pre-acquired and gifted assets, post-separation growth in the value of the husband’s company, the relevance of the parties’ arrangements during the marriage, the wife’s needs, and the application of the sharing principle.

1. Principles. Fairness was the objective. The statutory starting point was the parties’ financial position and the matters in section 25 of the Matrimonial Causes Act 1973. Need, compensation and sharing informed the distributive exercise. Need described as generously interpreted was shorthand for a flexible assessment under the statute and was not an independent statutory test.
2. Sharing and departure from equality. The sharing principle applied to all assets available for distribution. Pre-acquired or gifted assets constituted a good reason for departure from equality. Post-separation gains or enhancement in value could also justify departure. The relevant assets were valued at trial, although events before and after separation could affect the distribution.
3. Choices and conduct. The court could consider the parties’ choices and the principles by which they had organised their married life, including arrangements which ring-fenced some assets and treated the company as the husband’s asset and income source. This did not permit discrimination between domestic and financial contributions. Conduct remained subject to the statutory requirement that it be grave, gross and truly exceptional before it could be taken into account under section 25(2)(g).
4. Post-separation growth. The court should consider the spring-board effect of assets and business opportunities created before separation. Increases attributable to passive market movement should be treated differently from increases resulting from work, skill, management decisions or the continuation of a business established during the marriage. In many cases no reliable mathematical formula could quantify those effects.
5. Method. The court should adopt a principled, fact-sensitive and commercial approach. It was usually unnecessary, and sometimes artificial, to divide assets precisely into matrimonial and non-matrimonial categories or to calculate the result by reference to percentages in earlier cases. The parties should identify the findings sought, the underlying facts, the relevance of each fact and the evidence required before trial.
6. Application and order. The wife’s home was treated as representing a pre-acquired asset and the family loan as a very soft loan. The husband’s company and sale proceeds represented his pre-marital creation, the marital contributions and post-separation growth. The wife’s needs were assessed at approximately £4.2 million plus costs. Applying the sharing analysis and standing back for overall fairness, the wife was awarded £5 million plus £432,424 for outstanding costs, giving credit for £1 million already paid and for her cars. The claim for a separate award for the wife’s child was refused.