SK vTK

In financial remedy proceedings, equality remains the starting point where the sharing principle applies. Departure requires a good reason, assessed without discriminating between money-earning and domestic contributions. Special contribution is exceptional. Pre-marital value must be established at the relevant commencement of the relationship; future earning capacity is not itself an asset. Business risk may justify adjustment, but the court must consider the whole circumstances and may reflect risk in the valuation rather than by awarding a larger share. A clean break may make a contingent future-sharing order inappropriate where it would require continuing supervision.

The applicant wife sought financial remedies following a 17-year marriage to the respondent husband. The parties had two teenage children and net assets of approximately £18 million. The husband had built and retained an interest in a successful technology company, Limelight.

The principal issues were the valuation of Limelight, the treatment of the husband’s business interests as special or pre-marital contributions, the effect of business risk, the parties’ respective financial contributions, the children’s educational costs and child periodical payments. The court also considered whether a contingent lump sum should be ordered in respect of possible future proceeds from Limelight.

1. Applicable principles. Section 25 of the Matrimonial Causes Act 1973 required consideration of all the circumstances, with first consideration to the welfare of the minor children and particular regard to the statutory factors. The sharing principle applied. Equality was the starting point, and departure required a good reason. Domestic and childcare contributions were not to be treated as less valuable than financial contributions.
2. The approach in Miller v Miller; McFarlane v McFarlane was applied. The court first considered sharing and possible departures from equality, then needs and compensation. The wife’s sharing award exceeded her needs, and compensation was not in issue.
3. The husband’s business success did not amount to a special contribution. Such departures were exceptional. His skills and achievements, although substantial, were not sufficiently exceptional to justify treating his contribution as superior to the wife’s domestic contribution.
4. The husband’s interest in Vision was not a pre-marital contribution. The business had no significant value when the relationship became permanent, and the husband had not yet made the contribution relied upon. Following Jones v Jones, earning capacity at the date of marriage was not an asset capable of valuation.
5. Business risk could justify a departure from equality or a sharing of risk-laden assets, consistently with Wells v Wells. In this case the husband retained the opportunity associated with Limelight, had substantial other assets and earning capacity, and received most dividends pending sale. Risk was therefore reflected in a conservative valuation rather than by unequal division.
6. The net assets were divided equally on a clean-break basis. The proposed contingent lump sum relating to future proceeds from Limelight was refused because future changes in ownership, shareholdings, contributions and the need for supervision would make it unfair and inconsistent with a clean break.
7. The husband was ordered to pay half the children’s school and university fees. Child periodical payments were fixed at £10,000 per annum per child, subject to reduction if the husband undertook to meet the children’s higher-education living costs in full. The provisional view was no order as to costs.