X v X (application for a financial remedies order)

In a financial remedies application, the court should ordinarily take the asset snapshot at the hearing rather than update valuations before judgment. A discretionary trust may constitute a resource even though the beneficiary has no proprietary interest or control, where a capital advance would probably be made on a realistic assessment of the trustee’s discretion. The court must assess the likely access to funds without exerting improper pressure on the trustee.

Share discounts may be allowed where a sale or transfer would probably affect the market, but the assessment may be broad where the evidence is speculative. Exceptional personal contribution requires an unusual contribution of such a nature that equality would plainly be unfair. The court adopted sharing, reduced the equality yardstick to 37.5 per cent, and confirmed that the needs outcome should be checked against the sharing award.

The wife applied for a financial remedies order following the breakdown of a long marriage involving four children and substantial wealth generated through a company founded and led by the husband.

The principal disputes concerned the value of the matrimonial assets, whether shares held in discretionary trusts were resources available to the husband, the appropriate discount on company shares, and whether the husband’s pre-marriage wealth, exceptional business contribution, post-separation work, and childcare justified departing from equal sharing. The court also considered whether the wife’s needs should determine the outcome.

1. The application was determined on the basis of an asset schedule used at the hearing. The court should be very slow to admit post-hearing valuation changes because there must be a logical point at which the asset snapshot is taken. Exceptional intervention might be justified by a wholly unexpected and massive collapse in a key asset, but predictable volatility did not warrant reopening the schedule.
2. For the purposes of Matrimonial Causes Act 1973, a discretionary trust is a resource if, on the balance of probabilities, the trustee would probably make a reasonable advance of capital following a request by the beneficiary. The question is access to the resource, not ownership or control. The assessment must be realistic and must not impose improper pressure on the trustee.
3. The trusts’ terms made the husband the primary beneficiary and gave the trustee a broad discretion to apply capital for the husband and his spouse. The trustee’s evidence, the family relationship, and the circumstances of the trust supported a finding that 50 per cent of the trust fund was a resource available to the husband. The court also treated the outstanding loan as likely to be waived if requested.
4. The evidence established that some discount was required on the company shares because of the husband’s pivotal importance and the likely market reaction to a reduction in his alignment with the company. The exercise was necessarily speculative and was dealt with broadly. An overall notional discount of 8 per cent was applied to shares held personally and in trust.
5. The husband’s pre-marriage savings used to support the family and establish the company justified some broad reduction from equality. His forfeited employment benefits did not. His business achievement, although very substantial, did not amount to the wholly exceptional contribution required to justify a special-contribution adjustment. His post-separation work in rescuing and developing the company did justify a broad adjustment. His childcare contributions did not, in the circumstances, justify a further adjustment.
6. The court rejected a needs-only approach. It adopted sharing with a broad reduction from equality, fixed the wife’s share at 37.5 per cent of a kitty of approximately £36.945 million, and awarded £13.854 million. That sum was sufficient to meet her reasonable needs, so the higher needs claim was not substituted for the sharing award.
7. A lump sum was ordered, payable by instalments of £7 million by 26 October 2016 and £6.854 million by 20 January 2017. The wife’s applications concerning a transfer of shares and variation of trust were stood over as protective measures.

First-instance decision of the High Court (Family Division). No appellate history is stated in the judgment.