(Family Division, Coleridge J, 21 May 2013)
Following divorce the husband and wife reached a financial agreement in relation to assets of £40m, aside from a few remaining issues including, inter alia, who would own a 16th Century castle in Scotland, how the husband's interests in three private equity firms would be shared and how other lesser assets would be divided.
There were no precedents or practices to assist the court in relation to the issue of the castle ownership and in the end the court was no more likely to achieve fairness by tossing a coin. However, the judge decided in favour of the husband because since separation there was an agreement or assumption that while the wife would retain the matrimonial property the husband would retain the castle. They had worked upon that assumption until the wife recently changed her mind. The husband had since looked after the property and visited when he could. To deprive him now without reason would be unfair. What the parties once agreed was fair was more likely to be as fair as any contrary decision imposed by the court. The matrimonial property was worth more than double that of the castle and the wife would be remaining there. The wife would transfer her interest the castle to the husband.
The husband had interests in three private equity firms and the parties could not agree how those interests would be shared. The substantive dispute was whether the wife should be entitled to share in the co-investments and carried interests since separation.
To achieve fairness it was necessary to recognise fully the tension between the fact that the wealth was in part generated by the use of expertise built up during the marriage and in part by the expenditure of effort after the separation. Both elements were important. The wife would receive 50% of all co-investments up to the date of the trial which amounted to approximately £5m. In relation to the carried interests she would receive 50% of one fund and 20% of the other, amounting to approximately £12.5m but possibly much more.
The small differences (as a proportion of the pot) in the value of the yacht, the approach to cars, the credit cards did not merit the time (and costs) spent on them. As the rules now made clear, proportionality was the name of the game when costs were so high and court time was more and more at a premium. A much more rigorous approach to case management (especially in the field of the employment of experts) was being introduced in other areas of the family justice system to save precious time and money. This type of high value litigation could not expect to be immune and parties to it could expect to be confronted more and more by a refusal by the court to participate in these disputes over the lesser assets and where in each case the difference was around 1% of the net value of the pot or less. Assets falling in this category should be bundled up together and an overall value for them all agreed. If not the court was itself likely to apply that system in a broad, even rough and ready, way.