D v D

In ancillary relief proceedings, inherited or gifted property does not automatically fall outside the sharing principle. A family farm or farming company may justify a departure from equality, but the court must assess all the circumstances in a fact-sensitive way.

Need may inform or determine the extent of the departure, but it does not necessarily cap the award. A clean break should not be achieved at the expense of fairness. The court must examine the company’s value, liquidity, borrowing capacity, future profitability and the risks of any proposed funding mechanism. Where a fair clean break cannot be achieved, a combination of property transfer, lump sum and periodical payments may be appropriate.

The wife sought ancillary relief after a long marriage. The principal assets were the matrimonial home, the husband’s home and his majority shareholding in a family farming, packing and processing company.

The husband argued that the inherited and gifted farming business should effectively be excluded from the sharing exercise, subject only to the wife’s needs. The wife sought retention of the matrimonial home and a substantial lump sum. The central issues were the application of the sharing and need principles, the treatment and valuation of the company, the affordability of proposed borrowing and whether a fair clean break could be achieved.

1. Sharing and inherited property. The fact that assets derive from inherited or gifted farming property does not create a special rule excluding them from the sharing principle. The court must consider the whole history of acquisition, development, management, gifts, windfall gains and the parties’ domestic and financial contributions. Need may inform or dictate a departure from equality, but does not as a matter of principle cap the award.
2. Company and valuation. The company had developed substantially during the marriage through active management decisions, expansion, packing, processing and land acquisitions. The husband’s shareholding therefore could not simply be treated as wholly non-matrimonial. Its value had to be considered both as a capital asset and as a future income source, with proper regard to marketability, contingent tax, goodwill, liquidity and future profitability.
3. Affordability. The court required properly particularised evidence of borrowing capacity, business prospects and the effect of proposed distributions. The husband’s generalised business plan and late banking evidence did not establish that the company could fund the wife’s proposed lump sum and survive as a going concern. However, the evidence supported borrowing of about £1.5m and the payment of periodical payments.
4. Clean break. A clean break is not to be purchased at the price of fairness. A lump sum payable by instalments may retain variation issues, particularly where affordability is uncertain. A fair award could not be based on an assumed sale or liquidation of the company, nor could the wife fairly be confined to an award below the fair range merely to preserve a clean break.
5. Orders. The matrimonial home was transferred to the wife. The husband was ordered to pay a lump sum of £1.5m and periodical payments of £44,000 per annum. Costs and detailed timing matters were reserved.

First-instance decision. No prior appellate decision is stated in the judgment.