R v R

Financial remedy orders must produce a fair outcome in the particular circumstances, applying Matrimonial Causes Act 1973, section 25. Equality remains the starting point where both parties have made substantial contributions to a matrimonial business, including domestic, financial and professional contributions. Post-separation growth is not automatically excluded where it reflects potential developed during the marriage. A company shareholding is not necessarily illiquid merely because an immediate sale is inadvisable. The court may instead secure a party’s entitlement by deferred lump-sum payments and periodical payments, while avoiding a share transfer where continued co-ownership would create a real risk of future litigation.

The wife applied for financial remedy orders following the dissolution of a long marriage. The parties had built a substantial refreshments business during the marriage, although the husband held the majority shareholding at the time of the hearing. The wife had also incurred significant liabilities following the failure of her solicitors’ practice. The principal issues were the treatment of those liabilities, the parties’ respective contributions, the treatment of post-separation growth in the company, whether equality should be departed from, and the form and timing of the award.

1. Outcome. The wife was awarded the former matrimonial home, accompanying land and endowment policy, a total lump sum of £4 million, and periodical payments of £12,000 per month until payment of the first deferred instalment, thereafter £7,500 per month until further order, together with mortgage interest. A clean break applied as to capital.
2. The court applied the fairness principles in Miller v Miller; McFarlane v McFarlane [2006] 1 FLR 1186, as applied and explained in Charman v Charman (No 4) [2007] EWCA Civ 503, together with section 25 of the Matrimonial Causes Act 1973.
3. The company was a matrimonial asset. The wife’s contributions included financial support, legal and business advice, guarantees, administrative support, domestic work and childcare. Her contribution was at least equal to, and in some respects exceeded, the husband’s earlier contribution. The husband’s greater hands-on involvement after separation did not justify excluding the wife from the company’s value.
4. The company’s increased value after separation substantially reflected its latent potential and the foundations established during the marriage. The wife’s past contribution was crystallised through a deferred lump-sum order, while the husband’s future efforts were recognised in the structure of the award.
5. Equality was not to be achieved by transferring shares unless necessary. The wife’s continued shareholding could generate satellite litigation because of the husband’s and a colleague’s antipathy towards her. The shares were nevertheless marketable and were not properly characterised as illiquid. The company’s ability to raise capital justified deferred payment secured against the husband’s shareholding or its proceeds.
6. The wife’s debts were taken into account under section 25(2)(b). Debts arising from financial misfortune during the marriage, rather than mala fides, were treated as a family burden and deducted before division. The husband’s conduct in obstructing the proposed IVA was reflected in the overall award.
7. No order for costs was made under Part 28 of the Family Procedure Rules 2010, since the costs would come from the same resources used to fund the wife’s award. Permission to apply was granted concerning implementation and tax-efficient arrangements.