The difficulty of agreeing on the values of smaller items in a divorce can present a barrier to settlement. However, we have been reminded recently that proportionality is the “name of the game”*. To resolve a financial dispute there needs to be an agreement between the parties as to the values of the assets and the liabilities in the case. In reality it is not possible to agree exactly on all the figures, as they are a moving target: if solicitors prepare assets schedules on different days, for example, the stock market will have fluctuated, and the numbers will not be the same. With the large assets, the parties will carry out joint valuations if the values cannot be agreed. If the parties do not agree on the values of smaller items such as contents of their home, cars, or jewellery in Forms E, it may be that there can be mutual concessions, to work towards agreed figures, but what steps will the court take if agreement cannot be reached?
The recent case of B v B* which inspired this posting, found itself before the High Court, to decide whether Mr or Mrs B should retain their castle in Scotland, and how some private equity funds should be divided. These issues represented only a portion of the £40 million of assets in the case, as the couple had been able to resolve all other points, save for determining the exact lump sum which should be paid to the wife, as they could not agree how much her balancing lump sum should be until the judge had ruled on the value of a yacht, and how the cars and credit cards should be dealt with.
In a case such as this where the parties need to agree on values for all assets, as they want to pay one party a balancing payment to achieve equality, the valuation of smaller assets can be of crippling importance to resolution, because without resolving these small issues, the bigger question of the appropriate lump sum cannot be agreed upon.
The judge in B v B issued a “mild rebuke” that these smaller issues had been brought to court. He considered that parties to “can 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 is 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 is itself likely to apply that system in a broad, even rough and ready, way.”
If we work through an example, lets say that the husband believes that the wife has jewellery worth £30,000. He has a Lotus worth £20,000. The wife says that she lost some of the jewellery and the balance is worth £10,000. She says she saw the Lotus on Top Gear and it is worth £50,000. There is a difference of £20,000 in the jewellery valuations and £30,000 in the car valuations. If the net pot is worth £3 million (1% of this figure is £30,000) the court will not entertain submissions regarding whether the husband or the wife’s view is the right one. The court will expect the couple to resolve this themselves, or the court will bundle the disputed items together and place a value on them.
It is likely to be that in that situation, what you lose on the swings, you will gain on the roundabouts**: the court will deal with disputes of this nature in an extremely robust fashion, and may even “split the difference”. In my opinion, this judgement may support earlier settlement, as couples will be aware that the courts will defend proportionality’s sovereignty, and not hear disputes involving smaller assets.
*B v B [2013] EWHC 1232 (Fam)
**a traditional Milton Keynes saying
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