B v B (Assessment of Assets: Pre-Marital Property)

JurisdictionEngland & Wales
CourtFamily Division
JudgeDavid Salter
Judgment Date16 January 2012
Neutral Citation[2012] EWHC 314 (Fam)
Docket NumberCase No HD08D00149
Date16 January 2012

[2012] EWHC 314 (Fam)




Mr David Salter

Case No HD08D00149




This judgment follows the hearing of the wife's financial remedy application. The wife was represented by Mr Martin Wood and the husband by Mr Rodney Ferm.


I begin this judgment by commenting that, far from there being agreed valuations in every instance, there is not even an agreed schedule of assets and liabilities. The reason for this will become apparent later in this judgment. Certain assets had been hotly contested throughout the proceedings only to be conceded at a late stage in the hearing. This has added significantly to the length of the hearing. It has also meant that those advising the wife felt unable to put forward detailed open proposals until the end of the hearing before me. The overall result is that this judgment is necessarily lengthier than it otherwise might have been given that I have been required to construct a schedule of assets and liabilities in order to carry out the distributive exercise required of me.



The parties married on 16 May 1997 having commenced cohabitation in March 1993. The wife is now aged 40 (and will be 41 in July); the husband is aged 61. There are no children of the family. The parties separated on 28 January 2008. I therefore treat the marriage as one of 15 years' duration. The wife now lives in rented accommodation; the husband remains at the former matrimonial home with his current partner and her mother. The wife filed a petition for divorce on 5 March 2008 upon which a decree nisi was pronounced on 5 August 2008.


When the parties began cohabitation, the wife moved into a property ('the first property') which the husband had purchased in 1976. In 2002, they moved to the former matrimonial home, which was purchased for £430,000 in joint names, funded in part by the proceeds of sale of the first property of £300,000 together with funds provided by the husband of £50,000 and a bank mortgage of £80,000.


When the parties met, the wife was aged 21 and was employed as a credit controller. She had left school aged 15 1/2 and has no formal qualifications. The husband was aged 42. The husband left school at the age of 16 and has pursued a successful business career. Having obtained an accountancy qualification, he did not pursue that profession, but worked on a self-employed basis initially as a potato merchant and then operating a garage before acquiring his first commercial property in 1983, the vehicle for which was A Co Limited ('A Co'). A Co was owned as to 74% by the husband and as to 26% by his brother, Robert Betts. It is in the sphere of commercial property that the parties' wealth has been built up.


The commercial property enterprise flourished such that the decision was taken in 1992 to proceed with a Stock Exchange flotation. The result was B Co Plc ('B Co'). B Co continued to acquire further commercial property. The husband decided to leave B Co in 1996 and, in about 1997, he set about realising his interest in that company. The sum so realised has been the subject of much forensic analysis.


At the same time, in 1997, the couple decided to move to Gibraltar to benefit from what they had been advised would be a significantly more benign tax regime. The wife gave up her employment at this time. An apartment was purchased in Gibraltar in the husband's sole name.


Following the husband's sale of his shares in B Co, he continued to use A Co (which had earlier been part of B Co) to develop small industrial units as well as incorporating a new company C Limited ('C Co') in September 1997 to purchase a site. This was carried out initially in conjunction with another shareholder, but the husband later acquired that individual's shares.


The husband's mother died in 1998 and he and his brother used their inheritance to purchase a commercial property in 1999, using as the vehicle for this D Limited ('D Co'), the shares in which are owned equally by the two brothers.


A Co, C Co and D Co own between them five industrial sites equating to 220,000 square feet let as industrial units. A Co and C Co have also provided a means for the husband to pursue certain hobbies. Each of these two companies owns motor vehicles. The husband has an interest in motor racing with vehicles owned by C Co. A Co has owned a number of motor yachts.


Following the supposed relocation to Gibraltar, the husband decided to reorganise his companies making A Co and C Co subsidiaries of a holding company incorporated in Gibraltar, A (Gibraltar) Limited ('AG Co'). On tax advice, the husband's brother transferred his 26% interest in A Co to the husband on 15 April 2006. On 19 December 2006, AG Co acquired the whole of the issued share capital in both A Co and C Co. At some point between June 2008 and August 2009, 25% of the shares in AG Co were transferred by the husband to his brother. It has been suggested by the husband that this transfer was in recognition of the historic 26% interest that the brother had had in A Co, although it is conceded that he also transferred to his brother a 25% interest in C Co which he had never originally held.


Shortly before the separation, the husband transferred 49 shares in AG Co to the wife. The wife's case is that she wanted more involvement in the business and had been requesting a shareholding. Whilst the husband had, on the wife's case, initially agreed to transfer a 49% interest, he transferred in the event only 49 shares, as he was suspicious about the reasons for the wife's request.


In a statement dated 22 January 2010, the husband set out his belief that the wife had then been living with Mr Z for 18 months. In a statement dated 12 April 2010, the wife conceded that she had occasionally been out socially with Mr Z since the separation. However, she denied that they were in a relationship or were living together. Specifically, she stated that Mr Z had never set foot in any property in which she had lived since the separation. The husband decided to instruct an enquiry agent who carried out observations on the wife's then home between 24 May 2010 and 30 July 2010. The agent's report reveals that, during this period, Mr Z stayed overnight at the wife's address on 21 out of 69 nights. The wife does not dispute the sightings. The wife asserts that there are dates during the period of the enquiry agent's enquiries, when no observations were carried out when her mother and sister stayed with her. She is frank enough to concede that she did not make any mention of Mr Z until the enquiry agent's report had been disclosed. She felt that she had no need to do so in view of the fact that she was not in a relationship. Her evidence is that he stays over at her home a couple of times a week. Mr Z is aged 50 and is a businessman. The wife claimed not to know about Mr Z's financial circumstances. The wife pointed to the fact that, prior to the separation, her circle of friends had been in the main the wives of the husband's friends. That circle has now gone. She had known Mr Z prior to the separation. She stated that she had no current intention of living with Mr Z. The husband, who has not seen the wife and Mr Z together, believes that she will, following the conclusion of these proceedings, live with Mr Z, in what he describes as the beautiful home Mr Z has.


Whilst in my judgment the wife was initially less than frank about Mr Z, I form the view that the husband has – perhaps because of injured pride – allowed this aspect of the proceedings to assume an unwarranted dominance.

Pre-marital wealth


The approach which the court should adopt to pre-marital wealth as non-matrimonial property has recently been comprehensibly reviewed by Mostyn J in N v F (Financial Orders: Pre-acquired Wealth) [2011] 2 FLR 533. He referred to two schools of thought, the first of which was simply to adjust the percentage from 50% and the second being to exclude the non-matrimonial property, leaving the matrimonial property to be divided in accordance with the equal sharing principle. He then went on to endorse a two-stage approach adopted by Burton J in S v S (Non-Matrimonial Property: Conduct) [2007] 1 FLR 1496 and Wilson LJ (as he then was) in Jones v Jones [2011] 1 FLR 1723. At paragraph [14], Mostyn J summarised the steps which the court needs to consider as follows:

"(i) whether the existence of pre-marital property should be reflected at all, this depends on questions of duration and mingling;

(ii) if it does decide that reflection is fair and just, the court should then decide how much of the pre-marital property should be excluded. Should it be the actual historic sum? Or less, if there has been much mingling? Or more, to reflect a springboard and passive growth, as happened in Jones?

(iii) the remaining matrimonial property should then normally be divided equally;

(iv) the fairness of the award should then be tested by the overall percentage technique."


Mostyn J was at pains to point out that consideration of pre-marital wealth was subject to the question of need. In most cases, the search for fairness begins and ends at the needs stage, as Lord Nicholls put it in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24. Furthermore, as Moylan J has recently observed in AR v AR [2011] EWHC 2717 (Fam), considering recent authorities including Robson v Robson [2011] 1 FLR 751 and K v L [2011] 2 FCR 597, fairness may require the application of the sharing principle to non-matrimonial property.


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