SK v WL

In financial remedy proceedings, fairness does not require a precise mathematical division between matrimonial and non-matrimonial property in every case. The court may adopt the degree of particularity appropriate to the circumstances. Where a business developed during the marriage continues to grow after separation, its value may remain substantially rooted in the marriage, even though post-separation work contributed to the eventual gain. The sharing principle remains the determinative principle, applied alongside the statutory factors. Valuations should use the best available evidence and known events where possible, rather than an artificial exercise that ignores subsequent history.

The parties had been married for many years and had jointly contributed to a family business structure. Before separation, the husband had incorporated a company in which he was the sole shareholder and director, although the company had been developed within the wider family business activities. It was sold several years after separation for substantial proceeds.

The wife sought an equal division of the current wealth. The husband contended that the sale proceeds represented a significant post-separation accrual generated by his individual endeavours and justified a substantial departure from equality. The central issues were the treatment of the company’s value, the utility of retrospective valuations at separation, and the weight to be given to post-separation contributions.

1. Outcome. The wife was awarded £7 million from current wealth of approximately £16.246 million, with the husband receiving approximately £9.4 million. The wife was also to receive 40 per cent of any additional net sums realised from the T property and loan notes.
2. The court’s task under the Matrimonial Causes Act 1973 was to determine the division producing the fairest overall outcome. The sharing principle was determinative, but it did not require a precise separation of matrimonial and non-matrimonial property in every case.
3. Following Charman v Charman [2007] 1 FLR 1246, the sharing principle applied to all the parties’ property. Non-matrimonial property could justify departure from equality, but the degree of precision required in identifying and valuing it was a matter for the judge. The approach should be pragmatic, proportionate and commercial.
4. The company was well established by separation, had developed from the parties’ family business activities, had been funded by related family businesses, and remained substantially rooted in the marriage. The husband’s post-separation work was a material factor, but it did not transform the sale proceeds into wealth generated solely outside the marriage. There was no sharp dividing line in the company’s development.
5. Retrospective valuations that ignored known subsequent events were of doubtful utility in determining a fair award. The court preferred the reality of the situation and the best available evidence. The husband’s proposed formula gave excessive weight to his post-separation work, while the wife’s claim for equality gave insufficient weight to it. A broad assessment of all the Matrimonial Causes Act 1973 factors produced the award made.