P v P (Financial Provision)
| Jurisdiction | England & Wales |
| Judgment Date | 1989 |
| Year | 1989 |
| Date | 1989 |
| Court | Family Division |
ANTHONY LINCOLN, J
Financial provision – calculation of financial resources – husband owning his own business – business incorporated – both spouses holding shares – company having no liquidity – source of future income and support of whole family – unnecessary to attempt to ascertain precise value of company.
The parties were married in 1975. There were two minor children of the family. The husband ran his own business. It prospered and extended and a company was set up. The husband held two-thirds of the issued shares in the company and the wife just under a third. The marriage broke down in 1984. In divorce proceedings the wife sought financial provision. She contended that the court should embark on an evaluation of the company so that a reasonable price could be put on her shareholding, and she sought to have her share "bought out".
Held – Once again the court was confronted with the fact that the total realizable funds of a family had been severely reduced by the incurring of vast costs by both sides in order to resolve an issue as to their respective shareholding in a family company. The wife's claim for capital provision from a proportion of the company's value could be met only if there was liquidity in the company. On the facts, it was impossible for the company, or the husband himself, to raise sufficient funds to purchase the wife's holding. The company should not be damaged as it was the source of the future income and support of the family as a whole. It was unnecessary to attempt to ascertain with precision the capital value of the company. The proper approach called for a general consideration of the husband's capital and a particular consideration of his liquidity. Potter v Potter [1982] 1 WLR 1255 and B v B (Financial Provision) [1989] FCR 146 followed. Adopting the approach in those cases an assessment should be made of the capital, income and needs of both parties and, following the criteria set out in s 25(1) and (2) of the Matrimonial Causes Act 1973, appropriate financial provision orders would be made for the wife and children.
Paul Focke, QC, and Philip Moor for the wife.
Nicholas Mostyn for the husband.
MR JUSTICE ANTHONY LINCOLN.In these proceedings a husband and wife are each
[1989] FCR 657 at 658
seeking various forms of financial relief, the two main capital assets being a private company and the matrimonial home. Once again I am confronted with the fact that the total realizable funds of the family have been severely reduced by the incurring of vast costs by both sides in order to resolve an issue as to the value of their respective shareholding. In the outcome that issue proved to be of little or no importance. In my view legal advisers in cases such as this should strain to adopt any viable alternative, compatible with the interests of their clients, in order to avoid costly valuations detrimental to both parties and particularly to the children. I do not believe that Parliament when enacting s 25 of the Matrimonial Causes Act 1973 envisaged such detailed, prolonged and damaging investigations.
The husband is a man of 45, the wife 39. There are two children of the marriage who are aged 11 and 7. In 1970, when the husband was a young man, he bought a van and started a haulage business. He lived in a house which he had purchased for £5,000. In the autumn of 1972 he met Mrs Priestley when he was already married. She was a dress designer. After a while they lived together. She appears to have encouraged the husband to stick to his business career and she helped him to improve the home.
In October 1973 the husband decided that it was necessary to incorporate his firm since it was expanding. He did so. They both became directors, and 99 shares were issued to the husband, 1 to Mrs Priestley. By November 1974 the company was running a fleet of 13 vehicles, and moved its site to another where more space was available. The company employed Mrs Priestley in a secretarial, administrative and book keeping capacity for a salary which ultimately rose to £17,000 per annum (which sum included benefits in kind).
Later in 1975, the husband sold his house and with the proceeds of £10,000 and a mortgage for the balance, he purchased and conveyed into their joint names the matrimonial home for £20,000. That house is still occupied by the wife and the two sons. The mortgage was later increased to £37,000 to raise cash for work to be done to the home.
On 21 June 1975 Mr and Mrs Priestley were married.
In December 1977, Mr BC was appointed as a director of operations to the company. In May 1978 the company moved to new premises, at the same time purchasing the lease and a business operating on the site. The company was further able, within a short time, to purchase the freehold at a discount. There was now a fleet of 26 vehicles. The growth of the company continued and the husband was advised in 1979 to set up a holding company. This he did and it holds two companies, first the trading company, secondly a company which owns the land.
The husband and wife were allocated shares in the holding company and the position today is that the husband holds 633 out of 999 issued shares in that company, the wife 316 and Mr BC 50; in the subsidiaries the holding company holds 2999 out of 3529, Mr BC 529, the husband 1, and in the company which owns the land the holding company has 999 and the husband 1. There is a further company owned by the husband and Mr BC but I am satisfied that it is dormant and not set up to siphon off the assets of the holding company. An undertaking to that effect should be given to the court.
The marriage began to deteriorate in the '80s. Not only was there domestic strain
[1989] FCR 657 at 659
but there was also friction between the two in the running of the companies. It would be pointless to consider who was at fault. By October 1984 the husband dispensed with the wife's services in the company, and on 27 December 1984 the husband left the matrimonial home never to return.
The domestic position today is this: the wife and the two sons have continued to live at the matrimonial home but it is common ground that the house will have to be sold. The net equity available for distribution is estimated at £260,000. The husband occupies rented accommodation but, on his own submission, lives for the greater part of his time with a Mrs S and her two children in her house. He retains the rented accommodation for his own furniture, clothes and so on, in case the liaison with Mrs S should come to an end. At the moment he goes on holidays with her and her children (as well as his own) and appears to me to have thrown in his lot with her, at any rate for the immediate future.
The wife, too, has a close male friend but so far as I am able to tell, apart from some rather odd...
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