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E v L [EWFC] 60 (Fam) – Mostyn J considers short & childless marriages, company valuation and costs

Posted on 4 February 2022

The case involved a short, childless marriage. The husband sought to use those facts to argue that the wife's financial claim on divorce should be limited to meeting her needs. The husband argued that the having of children demonstrated a "different level of commitment" to marriages where the couple had not had children. Mostyn J was not persuaded by this argument. He considered it discriminatory to value marriages differently (for sharing purposes) based on whether there were, or were not children. The courts had long held that it was inappropriate to delve into how "good" one particular marriage or another had been and he considered that this was another manifestation of that. For sharing purposes, the presence or otherwise of children was completely irrelevant

Mostyn J also considered whether the wife should receive 50% of the assets generated during the (short) marriage, or whether her claim should be restricted to her needs. He was of the view that in virtually every case, an applicant should be entitled to 50% of the "marital acquest" (i.e. the assets generated during the marriage), regardless of the length of the marriage.

He then turned to company valuations and noted that the Court of Appeal had supported his "straight line" approach to valuations. He considered that valuations based on future maintainable earnings were problematic where the (husband) was a key man in the business – given that a future earning capacity is not a matrimonial asset to which the sharing principle applies, the court had to be careful not to indirectly turn the husband's future earnings into an asset (to be shared).

"68. The court must ask itself whether, and if so to what extent, the assessment of future earnings depends on the participation of the respondent. If the evidence is that the future participation of the respondent is indispensable, the court must ask itself whether the valuation is, at least in part, of the respondent as a person."

The Judge also noted that there was a difference of approach as to whether assets should be valued at the date of separation, or at the date of the hearing. He came down in favour of the latter and considered that the matrimonial acquest should continue until that date. He also commented that he didn't consider bonuses received shortly after separation should be considered non-matrimonial.

Regarding costs, Mostyn J gave the wife 25% of her costs due to the husband's "quasi-conduct" stance, but deducted some £24,000 on the basis that the wife had engaged in Imerman self-help. He considered that she should be responsible for the husband's costs in dealing with that disclosure.

Emma Willing says: In this case, Mostyn J put to bed previous debate as to whether a 'short childless marriage' justified a departure from the equal sharing principle.  Mostyn J concluded, that the fact that a marriage may be childless is irrelevant to a departure from the equal sharing principle and warned against any attempts to seek to evaluate the quality of a marriage -  which he considered to be discriminatory.  In his judgment, Mostyn J, stated 'for the court to start asking why there are no children, and whether this denotes a lesser extent of commitment to the relationship, is to make windows into people's souls, and should be avoided at all costs.'  Mostyn J further concluded that in virtually every case, an applicant should be entitled to 50% of the marital acquest (i.e. the assets generated during the marriage), regardless of the length of the marriage.  In the case, Mostyn J also adopted a more relaxed approach than some and provided much needed clarity to the question of post-separation accrual – stating that provided there is not an undue delay in bringing the matter to Court, post separation - post separation accrual would continue to be treated as matrimonial until the date of the hearing.  Finally, Mostyn J dealt rather neatly with the situation where the wife had engaged in Imerman self-help by simply directing that she should pay the husband's costs of dealing with that disclosure.

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