N v N

In ancillary relief proceedings, the sharing principle does not require inherited or gifted assets to be treated as an undifferentiated whole. Where there is good reason to depart from equality, the court should assess the appropriate treatment of the particular assets concerned, while cross-checking the result against the assets as a whole.

The assessment is broad and fact-sensitive. It may recognise the source and character of inherited property, the parties’ use of it during a long marriage, their contributions, and their expectations for retirement. Valuation should reflect the most practicable and realistic method by which value might be realised. A clean-break award should not ordinarily be structured on the assumption that family assets will be sold where that would conflict with the parties’ established arrangements and reasonable expectations.

The wife applied for ancillary relief following a long marriage. The parties had four children and substantial assets, including a family company holding property, the husband’s long lease of the former family home, inherited chattels and photograph albums, and shares gifted to the husband by his family.

The principal disputes concerned the treatment of inherited and gifted assets under the sharing principle, the valuation of the husband’s shares, whether a minority discount was appropriate, the parties’ needs and retirement expectations, and the amount and funding of the wife’s award.

1. Approach to sharing. The court adopted and applied the approach stated in J v J [2009] EWHC 2654 (Fam). Although the sharing principle applies to all relevant assets, a good reason for departing from equality may be assessed discretely in relation to particular inherited or gifted assets. The court should then cross-check the result by reference to the assets as a whole.
2. The assessment should not reintroduce a detailed distinction between matrimonial and non-matrimonial property. It is a broad evaluation of the source, character, use and treatment of the assets, the parties’ contributions, and the circumstances of the marriage. In this case the long marriage and the use of the family home supported sharing the husband’s leasehold interest and relevant inherited chattels equally, but the photograph albums were attributed wholly to the husband as family heirlooms. The husband’s company interest was treated as having a maximum matrimonial attribution of 50%, producing a 75/25 division of that interest. Post-separation bonuses were divided 70/30.
3. Valuation. A valuation may use the hypothesis of sale, even where sale is unlikely, but the methodology must retain a link to the likely practical means of realisation. For a family investment company, the likely purchasers might be the company or existing shareholders rather than an outside purchaser. The valuation therefore had to take account of the husband’s lease, marriage value, inherent tax and the likely negotiations on a share buy-back.
4. Minority discount and quasi-partnership. The evidence supported an equitable expectation that family shareholdings could be bought back at a non-discounted price where funds were available and the transaction did not harm the family interests. The husband was therefore not entitled to rely on a minority discount in assessing the likely price of his shares.
5. Needs and retirement. The wife required a housing fund of £2.5m and an income-producing fund providing approximately £110,000 to £125,000 per year on an amortised basis. The award had to reflect the parties’ retirement expectations and the likelihood that the company would continue as a going concern. It would have been unfair to base the award on the assumption that the husband would continue indefinitely to earn his highest banking income or would have to sell all his shares and cease living at the family home.
6. The wife was awarded a lump sum of £3.62m, producing total resources of about £5.3m after taking account of the New York apartment, other assets, liabilities and costs.

First-instance ancillary relief decision in the High Court (Family Division). No appeal or earlier decision is stated in the judgment.