B v B

In high-value financial remedy proceedings, equal sharing of wealth generated by the parties’ joint efforts during the marriage is the normal starting point for capital assets. The assessment is discretionary and seeks overall fairness rather than artificial arithmetical precision.

An asset arising after separation is not automatically excluded where the respondent’s post-separation efforts form a seamless continuum with activity undertaken during the marriage. The court should recognise both the matrimonial contribution and later effort. The further into the future an asset is created or acquires ascertainable value, the less readily it will be treated as matrimonial.

Co-investment funds and carried interests may require different treatment. Lesser assets should be dealt with proportionately and, where appropriate, by adopting a broad overall valuation.

The parties had been married for more than 20 years and had two children. Their assets were worth approximately £40 million, rising to about £52 million when certain future receipts were included. They agreed that the marital assets should be divided broadly equally and had resolved most issues.

The remaining disputes concerned the destination and valuation of a Scottish castle and yacht, the treatment of cars and other lesser assets, the sharing of private-equity co-investments and carried interests, the balancing lump sum, and periodical payments for the children.

The central issues were how far future private-equity receipts represented matrimonial wealth, how post-separation endeavour should be assessed, and what outcome achieved overall fairness.

1. Equal sharing and discretion. The equal division of wealth generated by the parties’ joint efforts during the marriage was the ordinary starting point for capital assets under the Matrimonial Causes Act 1973. Fairness was not achieved by precise arithmetic alone. The court had to exercise its discretion by recognising reasonable arguments and the parties’ respective contributions.
2. Post-separation receipts. The date of trial was ordinarily the date at which the matrimonial pot and its value were assessed. It was too simplistic to exclude an asset merely because it came into existence after separation. Where post-separation effort was a seamless continuation of pre-separation activity, the court had to balance the expertise and wealth-generating capacity developed during the marriage against the later effort. The further into the future an asset was created or acquired ascertainable value, the less it could sensibly be categorised as matrimonial.
3. Private-equity interests. Co-investments were in the nature of capital saved from annual income, whereas carried interests were bonuses for generating super-profits and became ascertainable only at the end of the investment process. The wife was awarded 50% of all co-investments, including cash and undistributed escrow funds, in the three funds at trial. She was awarded 50% of Fund A carry and 20% of Fund B carry when received. Fund C carry was treated as having only a very small matrimonial element, taken into account in fixing the other percentages.
4. Proportionality and outcome. The court adopted a broad approach to lesser assets, accepted the husband’s yacht valuation and ignored the cars and credit cards. The wife was awarded a lump sum of £5.4 million. The children were to receive £30,000 each per year until they ceased tertiary education, subject to the stated arrangements for payments during university.