BD v FD (No 2) (Application of the Principle of Need)

In a very wealthy financial remedy case governed principally by the principle of need, the marital standard of living is the appropriate starting point and benchmark for assessing future needs. It is neither a ceiling nor a floor. Any departure requires specific justification, including the length of the relationship, the period of family contributions, the applicant’s age, the available resources and the duration for which provision is required.

The sharing principle will generally have no effective application to inherited or other non-marital property absent specific justification. A percentage cross-check against total wealth adds nothing to the discretionary assessment. Reattribution for excessive expenditure is an application of conduct under section 25(2)(g) of the Matrimonial Causes Act 1973 and requires a high threshold, supported by clear evidence of dissipation containing a wanton element.

The wife sought financial provision following a marriage lasting from 2002 to 2013. The parties had four children. The husband’s substantial wealth principally comprised inherited and trust assets, while the wife had no earned income and sought capital provision for housing and lifetime income.

The parties agreed that the case was principally a needs case and that the award should provide for housing and income needs for life. They disagreed substantially about the appropriate standard of living, housing provision, annual income, capitalisation and the treatment of the wife’s expenditure after separation.

The central issues were whether sharing applied, how the wife’s needs should be assessed, whether part of her expenditure should be reattributed, and whether the award should be cross-checked by reference to the husband’s total wealth.

1. Applicable principles. The sharing principle had no effective application. The husband’s wealth was substantially inherited, the trust assets were not his outright property, and there was no specific justification for applying sharing to non-marital property. Need was therefore the determinative principle.
2. Assessment of need. Subject to the welfare of the children, the relevant factors included the length of the marriage, the period during which the applicant contributed to family welfare, the marital standard of living, the applicant’s age and the resources available under section 25(2)(a) of the Matrimonial Causes Act 1973. The marital standard of living was the starting point and benchmark. It did not impose an inflexible ceiling or floor, and the longer the period of marriage and family contributions, the more likely it was that needs would be met at a similar level. Conversely, where provision was required for a very long period, needs might properly reduce over time.
3. Housing and income. The wife had no sufficient justification for a second home. Her housing need was assessed at £3.6 million, with £500,000 for furniture, refurbishment and associated costs. Her annual income need was assessed at £175,000 and capitalised on a lifetime basis at £5 million. A non-amortised approach was accepted, but no further enhancement was justified for possible longevity or bequests.
4. Reattribution. Reattribution was an application of section 25(2)(g). The threshold was high and required clear evidence of dissipation with a wanton element. The wife’s expenditure was sufficiently exorbitant to justify reattribution of £300,000.
5. Percentage cross-check. The court rejected a cross-check based on the percentage of total wealth represented by the award. Fairness depended on giving appropriate weight to the relevant factors, not on an arithmetical percentage.
6. Disposition. The wife’s award was £8.8 million, comprising £9.1 million for housing, associated capital costs and income, less £300,000 for reattributed expenditure. Child maintenance was to continue at £15,000 per year for each child until completion of tertiary education.

This was a first-instance financial remedy determination in the High Court (Family Division). No appellate history was stated in the judgment.