|
This is a long standing argument of, say, Husbands (for ease of this article) who own their own business and upon divorce, the business is added into the matrimonial pot in dividing up the assets. Is this fair? There is no straightforward answer but yes, in long standing marriages, the Wife's contribution would be seen as equal in the development and growth of the Husband's business and this, as an asset, would be considered in the overall matrimonial asset pot.
However, what if the business was established before the marriage? What is the Wife's entitlement in that situation and how is her share quantified in a business which was in existence long before she ever met the Husband?
This is a common scenario the Courts are often presented with and the recent case of Jones v Jones [2011] reached the Court of Appeal this year after the Husband appealed the decision in the first instance of Charles J.
Facts
The principal issue in dispute between the parties was as to how the Husband's company should be treated. He had owned the company for 10 years before the parties married. The parties had been married for 10 years. One year after the parties separated, the Husband sold the company for £25 million. Not your average case and not your average company.
The wife relied on the sharing principle which the Court will adopt for the division of matrimonial assets and sought a lump sum of £10 million which equated to 40% of the net assets.
The Husband applied a less simplistic formula and argued that the Wife should receive a lump sum which was equivalent to one half of the increase in value of the company from the date of the marriage through to value of the company at the date of separation. However, the company was valued at £12 million at the date of separation and yet was sold one year later for £25 million! The Husband's position was that the Wife should not benefit from any value of the company prior to the marriage or a share in the post separation increase.
Appeal
The starting point for the Court was to look at total assets of £25 million and determine what amount reflected matrimonial assets and what reflected non-matrimonial assets. The Judge did agree with the Husband's proposed formula for determining the share the Wife should receive and agreed that the value of the company at the date of the marriage, should be deducted from any sum the Wife should receive as it was a non-matrimonial aspect of the assets.
|