CG v SG

In financial remedy proceedings, the court should identify the boundary between matrimonial and non-matrimonial property. Matrimonial property will usually be shared equally, while non-matrimonial property will usually be excluded from sharing, subject to needs.

Post-separation assets may be non-matrimonial where acquired through personal industry rather than the use of matrimonial property. Passive growth in matrimonial assets remains matrimonial. The valuation of a business must not become a disguised valuation of earning capacity, and a realistic market value must be established before enterprise value is attributed. Where capital adequately meets needs, a clean break is appropriate. Costs remain subject to the financial remedy costs rules, including the parties’ obligation to negotiate reasonably and responsibly.

The case concerned financial remedy proceedings following the divorce of the wife and husband after a long marriage. The principal disputes concerned the classification of post-separation investments and shareholdings, the value of the husband’s interest in a financial advisory limited partnership, the division of matrimonial assets, and costs.

The court also considered whether the judgment should be published with the parties and the husband’s business anonymised. The central issues were the proper application of the sharing principle, the distinction between enterprise value and earning capacity, the appropriate capital outcome, and whether either party’s conduct justified an inter partes costs order.

1. Financial outcome. The court ordered an equalising lump sum of £12,978,924, together with an additional £275,000 offered by the husband. The order transferred the family home to the husband and an overseas property to the wife, provided for mortgage and tax payments, and imposed mutual clean breaks.
2. Matrimonial and non-matrimonial property. The court adopted the approach in JL v SL, namely that the court should identify the partition between matrimonial and non-matrimonial property. Matrimonial property should usually be divided equally, while non-matrimonial property should usually not be shared. Post-separation acquisitions were non-matrimonial where they resulted from the husband’s personal industry and not from the use of matrimonial property. The relevant work and payment had both occurred after separation.
3. Business valuation. The court valued the husband’s limited-partnership interest by reference only to his capital account and shareholding. It rejected the proposed enterprise valuations because the business depended overwhelmingly on the husband’s personal relationships, expertise and reputation. The proposed valuations were effectively disguised valuations of earning capacity, contrary to Waggott v Waggott. The court also rejected the asserted surplus cash because it included sums due to investors and profits awaiting distribution.
4. Section 25 factors and clean break. The court considered the statutory factors, including needs, resources, age, contributions and earning capacity. The wife’s capital share was sufficient to meet her needs, so periodical payments were unnecessary and a clean break was appropriate.
5. Costs and publication. Applying Family Procedure Rules 2010 Part 28 and Practice Direction 28A, the court made no order as to costs. The wife’s position was not unreasonable merely because the court preferred the husband’s expert evidence, and the financial landscape had become clear only shortly before trial. The judgment was to be published in redacted and anonymised form, following the orthodox approach described in Clibbery v Allan.