XW v XH

Property generated by marital endeavour must ordinarily be shared equally. The fact that it is a business asset, or that the parties kept their finances separate, does not itself justify unequal sharing outside the narrow context of a short, childless marriage.

A court may make a broad retrospective assessment of the non-matrimonial element in a business brought into the marriage. It must nevertheless explain sufficiently how that assessment affects the award. A special contribution requires a sufficient disparity between the parties’ respective contributions to the welfare of the family. The court must balance financial and domestic contributions and should not examine their minutiae.

The wife appealed a final financial remedy order made by Baker J in the Family Court. The order gave her a lump sum of £115 million, a transfer of the jointly owned home, and total resources of about £152 million.

The judge had awarded the wife 25% of the indexed growth in the husband’s shares in a company founded before the marriage. He relied on the parties’ separate finances, the business source of the wealth, latent pre-marital potential in the company, and the husband’s special contribution. He made no separate award for restricted stock units and stock options.

The appeal concerned whether those factors justified departure from equal sharing under the Matrimonial Causes Act 1973, and whether the court could determine a substituted award.

1. Appeal allowed. The judge was right to begin with equal sharing of matrimonial assets, but his cumulative 25% award could not stand.

2. Business wealth generated by endeavour during the marriage is matrimonial property. The fact that it was generated through the husband’s business activity, or that the parties had run separate finances, was not a freestanding justification for unequal sharing. Outside short, childless marriages, that approach would be discriminatory and would undermine the sharing principle established in White v White [2001] 1 AC 596 and developed in Miller v Miller; McFarlane v McFarlane [2006] 2 AC 618.

3. The judge was entitled to find that part of the company’s value reflected non-marital endeavour and was not confined to the indexed formal valuation at the date of marriage. A broad evidential assessment was permissible. But he had to identify sufficiently how that conclusion affected the award, particularly because special contribution operates on the division of matrimonial wealth rather than on its classification.

4. The special-contribution finding was set aside. The required inquiry was whether there was such disparity between the parties’ respective contributions to the welfare of the family that it would be inequitable to disregard the husband’s contribution. The judge’s critical reasoning considered only the husband’s financial contribution and did not balance the wife’s incalculable domestic and caring contribution.

5. The court itself assessed 60% of the proceeds derived from the shares as matrimonial and 40% as non-matrimonial. It found no sufficient disparity to justify unequal sharing of the matrimonial element. The judge had been entitled to disregard the restricted stock units and options because they depended on future performance.

6. The substituted award was a lump sum of £145 million, together with the jointly owned property valued at £3.7 million. This produced an equal division of the total matrimonial wealth.

• Court of Appeal (Civil Division) Allowed the wife’s appeal and substituted a revised financial remedy award: [2019] EWCA Civ 2262.
• Family Court Baker J made the final financial remedy order on 21 December 2017, awarding a £115 million lump sum and transferring the jointly owned property to the wife: [2017] EWFC 76.