JB v MB

In financial remedy proceedings, property held at separation may retain its matrimonial character even where its later increase results substantially from one party’s post-separation endeavour. The court should distinguish the matrimonial element from post-separation accrual where the evidence permits, rather than express the award solely as an unreasoned percentage of the total assets. The matrimonial element will ordinarily be shared equally, subject to fairness, while active post-separation growth may be divided unequally to reflect the contributing party’s unmatched effort. Passive growth will ordinarily remain subject to equal sharing. A genuinely new venture unconnected with the marital partnership may be non-matrimonial property and, save in a very rare case, will not be shared. The approach remains discretionary and fact-sensitive, but the reasoning and quantification should be explained.

The husband and wife had cohabited from 1990, married in 1997 and separated in 2006 or 2007. Their principal asset was the husband’s 70% shareholding in Z Ltd, which had been a matrimonial asset at separation but had increased substantially through the husband’s post-separation work and the company’s reinvestment strategy. The wife sought financial provision, including a share in the company’s eventual sale proceeds. The husband accepted by the end of the hearing that she retained an interest, but proposed a substantially smaller percentage.

The court determined the character and value of the shareholding, the effect of delay and post-separation conduct, the wife’s capital and income needs, and the timing and security of payment.

1. Outcome. The court awarded the wife 20% of the husband’s current shareholding in Z Ltd, valued at £1.59 million, together with the former home, an additional lump sum of £77,000, a pension share and periodical payments of £3,000 per month. Child maintenance was ordered at £1,000 per month for each child, with school fees for the remaining year. Permission to apply and suitable security were also to be included.
2. Characterisation of the shareholding. The shareholding was matrimonial property at separation. The later increase was not merely passive growth. It resulted substantially from the husband’s active and unmatched economic endeavour, although the company remained the vehicle through which his earlier ideas and business activity had been developed. The asset therefore retained a matrimonial character, but the post-separation increase could fairly be divided unequally.
3. Method of assessment. The court applied the approach discussed in JL v SL (No. 2) [2015] EWHC 360 (Fam): first identify the share of the pool without the post-separation growth, ordinarily equal; then determine the appropriate share of that growth, ordinarily unequal where active endeavour is established. A genuinely new venture, unconnected with the marital partnership or its assets, may instead be non-matrimonial and ordinarily should not be shared.
4. The evidence supported attributing 60% of the current value of the husband’s holding to post-separation accrual and 40% to the matrimonial asset. The wife therefore received half of the matrimonial element and 20% of the whole holding. The court acknowledged that the exercise involved value judgment and some arbitrariness, but held that a reasoned delineation was preferable where practicable to an unexplained overall percentage.
5. The wife’s needs did not require rehousing in the former family home or an immediately larger property. Pending sale of the company, her income needs were assessed at £48,000 per year and were met by periodical payments, child maintenance and the capital provision ordered. Any dilution of the husband’s shareholding exceeding 10% was to trigger recalibration of the wife’s entitlement.