MAP v MFP

In financial remedy proceedings, the sharing principle requires equal treatment of the parties’ contributions, without discrimination between breadwinner and homemaker. The court must also consider needs and compensation where relevant.

An add-back requires clear evidence of gross and obvious conduct involving wanton dissipation. Extravagant expenditure, addiction-related spending or moral culpability does not automatically justify reattribution. The court must assess motivation and whether it would be inequitable to disregard the conduct.

Fairness may require balancing secure, liquid assets against illiquid or risk-laden business assets. A final financial remedy order may bring related claims between the spouses to an end.

The petitioner sought financial remedies after a very long marriage in which the parties had built a substantial property maintenance company. The parties accepted that their contributions were equal and that the sharing principle applied.

The principal disputes concerned alleged dissipation of matrimonial assets, the treatment of an overdrawn director’s loan account and associated tax, the petitioner’s lost Entrepreneur’s Relief following her suspension and dismissal from the company, timing of lump-sum payments, interim periodical payments, retention of shares and finality of the order.

The central issues were whether expenditure should be added back, how the parties’ business and other assets should fairly be divided, and what orders were required to achieve a clean financial separation.

The court made financial remedy orders in full and final settlement of the parties’ claims arising from the marriage.

1. Applicable principles. Under the Matrimonial Causes Act 1973, the court applied the statutory factors and the principles of sharing, needs and compensation. Following White v White [2001] 1 AC 596, there was to be no discrimination between breadwinner and homemaker. Equal sharing was appropriate because the parties’ contributions were equal. The assets were sufficient to meet needs and neither party had suffered compensable loss of earning capacity.
2. Risk and liquidity. Fairness required regard to the difference between the wife’s readily realisable property and cash and the husband’s illiquid, risk-laden business interests. The approach in Wells v Wells [2002] EWCA Civ 476 was relevant to that assessment.
3. Add-back. Conduct under section 25(2)(g) had to be gross and obvious. Add-back required wanton dissipation of assets, assessed with particular regard to motivation and moral culpability. Such cases were rare. The husband had spent very substantial sums, including on cocaine, prostitution, property works and treatment. However, the spending was not deliberate or wanton dissipation intended to reduce the wife’s claim. His addiction and personality were relevant circumstances, and the court would not allow the wife to take the benefit of his abilities while avoiding the financial consequences of his flaws. No add-back was made.
4. Adjustments and orders. The court deducted tax on the director’s loan account, limited to the balance at the valuation date, but added back the wife’s lost Entrepreneur’s Relief because her dismissal had been instigated by the husband. The wife was awarded the unpaid dividend and arrears, a first lump sum payable within 42 days, and a second lump sum payable by 13 February 2018. Periodical payments were fixed at 3% net until that date. Her shares were transferred, subject to an equitable charge ranking behind Santander’s charge.
5. The court declined to impose a cap on the husband’s drawings. If the second lump sum was unpaid, judgment-debt interest would accrue and the wife could seek an order for sale under section 24A. The order was made in full and final settlement, with a contingent lump sum protecting the position if an employment tribunal later awarded the wife compensation.