JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Moylan,Lord Justice Underhill,Lady Justice King
Judgment Date18 December 2019
Neutral Citation[2019] EWCA Civ 2262
Docket NumberCase No: B6/2018/0380
Date18 December 2019

[2019] EWCA Civ 2262






[2017] EWFC 76

Royal Courts of Justice

Strand, London, WC2A 2LL


Lord Justice Underhill


Lady Justice King


Lord Justice Moylan

Case No: B6/2018/0380


Miss L Stone QC and Mr D Brooks (instructed by Stewarts) for the Appellant

Mr L Marks QC, Mrs R Carew Pole and Miss G Howitt (instructed by Sears Tooth Solicitors) for the Respondent

Hearing dates: 26 th and 27 th June 2019

Approved Judgment

Lord Justice Moylan



This court made a Reporting Restriction Order on 18 th March 2019 which prohibits the publication of certain information as set out in that order. The terms of that order continue to apply. It is subject to a penal notice which means that any person who has notice of the order and does not comply with it may be held to be in contempt of court and subject to penalties which include imprisonment.


The wife appeals from the final financial remedy order made by Baker J (as he then was) on 21 st December 2017. In simplified terms, he ordered that the wife should receive capital resources which, when added to her own assets, would give her approximately £152 million being roughly 29% of the parties' combined capital resources of £530 million. The bulk of the award comprised a lump sum of £115 million, being 25% of the growth in value during the marriage of the husband's shareholding in a company, based on the difference between the value at the date of the marriage (as given by an expert instructed in the proceedings) increased by indexation, and the proceeds of sale realised when the shares were sold at about the end of the marriage.


The underlying factual context of this case is that the husband's shares in the company, which he, with others, had established some years before the marriage, realised a very significant sum when the company was sold. By the date of the hearing below, the proceeds received by the husband from the sale of his shares had become worth approximately £490 million net, out of the combined total of £530 million.


In summary, the judge based his determination on four factors. They were:

(a) that the parties had “to a very substantial extent kept their financial affairs completely separate during the marriage” which was “a matter of considerable relevance” to the extent to which the assets should be shared, at [238];

(b) that the shares in the company, through which most of the wealth had been created, were the husband's “business assets”; the “nature and source” of this property, having been “created through the husband's business activity”, were relevant to a fair division, at [239];

(c) that there was “latent potential” in the company at the date of the marriage which was not reflected in the expert's valuation and, to “a not inconsiderable extent, the later success was built on these earlier foundations”, at [240]. This meant that, while there was no “clear dividing line between matrimonial and non-matrimonial property”, this significant “latent potential” should be taken into account when dividing the wealth by “a broad evidential assessment”, at [241];

(d) that the husband's contribution to the “growth in the value of his business assets during the marriage comes within the concept of special contribution”, at [242].


The wife challenges each of the above factors. Ms Stone QC submits that, in differing respects, each of them is flawed and that they do not, either individually or collectively, support the wife being awarded only 25% of what, she submits, the judge determined was the “marital acquest” of £460 million, at [245/249]. In summary the grounds of appeal are as follows:

(i) that any principle, that the manner in which the parties managed their financial affairs might impact on the division of the marital wealth, has no application to this case;

(ii) that the husband's “business assets” created during the marriage were marital property which should have been shared equally between the parties;

(iii) that the judge was wrong to find that the company had latent potential;

(iv) that the judge was wrong to find that the husband had made a special contribution, in particular because he only considered the husband's financial contribution and did not balance this with the wife's contribution or consider the disparity in the parties' respective contributions when determining this issue;

(v) that the judge failed to quantify how each of the above factors, in particular latent potential and special contribution, impacted on his award;

(vi) that the judge's decision in respect of restricted stock units (RSUs) and stock options was flawed and he should have awarded the wife a share of these when received by the husband.


The wife does not seek a rehearing. It is her case that this court is in a position to determine the fair outcome which she submits would be to award her half of the marital property of £460 million, namely a lump sum of £230 million. In addition she should receive approximately 50% of the value of the husband's RSUs and options. The combined total she seeks is £235 million. If there were to be any departure from an equal sharing of the growth in the value of the shares, it is submitted that this should be only to a small extent.


The husband seeks to uphold the judge's order but submits that, if the wife's appeal succeeds in respect of latent potential value and/or special contribution, the case should be remitted for rehearing because, given their significance and nature, this court is not properly able to determine what alternative award to make. If the wife's appeal were to succeed only in respect of the other “smaller” points, Mr Marks QC submitted that this court would be able to determine what alternative award to make. The husband's case has been comprehensively argued, first in written submissions prepared by Mr Pointer QC with Mrs Carew Pole and Miss Howitt and, secondly, at the hearing at which Mr Marks replaced Mr Pointer.


I am very grateful for the submissions made by counsel which have set out their respective cases with considerable force and clarity.



The background is set out at length in Baker J's judgment reported as XW v XH (Financial Remedies) [2019] 1 FLR 451. It was reported with some passages redacted and with specific details either omitted or made anodyne with the intention of preventing identification of the family. I propose only to set out a brief summary: paragraph numbers are as in the judgment below.


At the date of the judgment the husband was aged approximately 50 and the wife 48. They married in 2008 and the marriage broke down in 2015.


The parties have one child, AB, to whom the husband and the wife “are both totally devoted”, at [30]. “Sadly, AB has a rare, life-threatening condition and also has significant disabilities. The vast majority of his care is carried out and arranged by the wife, although the husband plays an important role”, at [3]. The judgment sets out a summary of the wife's account of “her role in caring for AB”, at [34]. The husband described the wife as “an excellent mother who is totally devoted to the well-being of” AB, at [35]. The wife also acknowledged the husband's part in caring for AB, which is summarised in the judgment, at [35].


The husband worked as CEO of a company (“the Company”) which, as referred to above, he had set up with others some years before the parties were married. During the marriage, “and in particular in a period of 3 to 4 years between 2011 and 2015, the Company … became hugely successful”, at [4]. The Company was sold in 2015/2016. From the sale of his shares the husband received the then equivalent of approximately £370 million. By the date of the hearing the assets in which these funds had been invested were worth approximately £500 million gross (about £490 million net of tax), significantly because of exchange rate changes. The husband also owned some RSUs and stock options. Apart from these the husband had other, pre-marital, assets valued at £3.9 million.


When the parties met the wife was working as an artist. She is described in the judgment as being from a “very wealthy” family. Both “before and during the marriage her mother, who has established a series of family trusts, provided her with substantial financial support”, at [2]. The judge found that the wife would benefit from the assets in one of these trusts, valued at £23.2 million. In addition, she had assets which she had acquired with funds provided by her mother and which had a combined value, after deduction of liabilities including legal costs, of £10.5 million, at [41]. As determined by the judge, the wife had net assets of just under £34 million, at [248].


The parties jointly owned a residential property valued at £3.7 million net. This property was transferred to the wife as part of the final order.


An accountant was instructed for the purposes of the proceedings to value the husband's shares in the Company as at the date of the marriage. During the course of his submissions to this court, Mr Marks commented that the valuation undertaken by the expert was entirely prospective in that it did not take into account the manner in which the Company in fact developed after the date of the marriage. It was based on historic data, taken as at the date of the marriage, namely assessed maintainable earnings (EBITDA) and a multiple based significantly on one transaction (selected from a “large number of transactions”) which the expert considered best reflected the position of the Company. The expert had considered whether to apply “the concept of ‘spring-board’ value” which he took from family law cases, in particular Jones...

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