FRB v DCA (No. 2)

In financial remedy proceedings, the court must first assess the resources available to the parties, including resources whose precise value cannot be established because of deficient disclosure. An award may be made without quantifying undisclosed assets where their existence and the paying party’s capacity are established.

Assets acquired before marriage or provided by third parties are subject to the sharing principle but will not normally be shared unless required to meet needs. Where matrimonial wealth has been built on pre-existing or externally provided assets, the court must make a broad evaluative assessment of the respective contributions.

Conduct may reduce an award where it would be inequitable to disregard, but the court must avoid double counting. In a family-controlled quasi-partnership, a minority discount may be inappropriate.

The parties, who had been married for about 14 years and had one child, applied for financial remedy orders after separating in 2017. The husband was a highly wealthy businessman whose assets and business interests were held through a complex network of companies, trusts and family arrangements.

The wife alleged substantial non-disclosure and sought an award based on sharing. The husband contended that much of the wealth was non-matrimonial, subject to family clawback arrangements, or unavailable to him. The wife also relied on the husband’s discovery that he was not the child’s biological father and argued that the resulting conduct issue should affect the award.

The court had to determine the parties’ available resources, the treatment of pre-acquired and externally provided wealth, the effect of deficient disclosure, the relevance of conduct, and the appropriate financial and child-maintenance orders.

1. Available resources and disclosure. The husband’s disclosure was seriously deficient. The court was satisfied that he owned or controlled substantial assets which had not been fully disclosed, including an interest in Company V, although their value could not be quantified. An award could nevertheless be made without quantifying those resources because their existence and the husband’s ability to meet the award were established. This approach was consistent with Moher [2020] 1 FLR 225.
2. Sharing and non-matrimonial property. The sharing principle applied to assets built up during the marriage. Gifts, inheritances and other provision from outside the marriage would not normally be shared unless required to meet needs. Where wealth had been built during the marriage on the foundation of pre-existing or externally provided assets, the court had to make a broad assessment of the matrimonial and non-matrimonial elements. Twenty-five per cent of the husband’s wealth was treated as non-matrimonial.
3. Conduct. The wife had not known that the child was not the husband’s biological child, but it was impossible to accept that the possibility had never crossed her mind. Her conduct in allowing the husband to raise the child believing him to be the natural father was sufficiently egregious that it would be inequitable to disregard it. The relevant issue was the effect of that conduct, not the circumstances or duration of the affair, as explained in Miller, McFarlane [2006] AC 618 at paragraphs 64–65. The conduct could reduce the award, but the court declined to reduce the wife’s percentage because doing so would create double jeopardy in light of the husband’s non-disclosure.
4. Valuation. The companies were operated as a family unit and there was no history of family members acting to each other’s detriment. They were therefore a quasi-partnership for valuation purposes, and minority discounts were inappropriate.
5. Orders. The matrimonial home and attached mews were transferred to the wife. The husband was ordered to pay a lump sum of £49 million, subject to further consideration of liquidity and payment arrangements. He was also ordered to pay the child’s school fees and associated educational expenses, together with £60,000 per year. For enforcement purposes, the minimum maintenance needs of the wife and child were assessed at £41,046,388, following reference to AAZ v BBZ [2016] EWHC 3234 at paragraphs 129–133.