Case No. RS20D03594

v Hart [2017] EWCA Civ 1306; [2018] 2 WLR 509, in which Moylan LJ said at Paragraph [96]:-“If the court has not been able to make a specific factual demarcation but has come to the conclusion that the parties’ wealth includes an element of non-matrimonial property, the court will also have to fit this determination into the section 25 discretionary exercise. The court will have to decide, adopting Wilson LJ’s formulation of the broad approach in Jones, what award of such lesser percentage than 50% makes fair allowance for the parties’ wealth in part comprising or reflecting the product of non-marital endeavour. In arriving at this determination, the court does not have to apply any particular mathematical or other specific methodology. The court has a discretion as to how to arrive at a fair division and can simply apply a broad assessment of the division which would affect “overall fairness”. This accords with what Lord Nicholls said in Miller and, in my view, with the decision in Jones.”53.The second approach is to undertake a detailed calculation of the non-matrimonial property and then deduct the resulting figure from the overall assets to arrive at the matrimonial assets. Inevitably, this itself can be done in a number of different ways. The two most obvious are to be found in the cases of Jones v Jones [2011] EWCA Civ 41; [2012] Fam 1 and Martin v Martin [2018] EWCA Civ 2866, although even then there are a number of variations on the theme. The essential difference between the two approaches is that, at first instance, in Martin (then reported as WM v HM [2017] EWFC 25), Mostyn J used a straight-line approach to calculate the value of the non-matrimonial property. In other words, he calculated the number of years that a company existed before the marital partnership commenced and divided it by the total length that the company has been in existence. This gives a proportion of current value that can be excluded from the matrimonial pot. It has the benefit of simplicity. It does not require complex and expensive valuations many years after the event. Mostyn J said, memorably, that it resonated with fairness because “how could it be said that a day’s work in 1980 in creating this company was less valuable than a day’s work last week?”. The difficulty, of course, is that it does not reflect the situation in this case where the company was commenced in the 1950s but had only grown to less than 20 stores by 1997, as against exponential growth thereafter to a total of more than 100 stores on sale. For that reason, I reject that approach in this case. I consider it is far more likely to be of use in a case where it is one of the spouses who formed the business prior to the date of the marital partnership commencing, as opposed to a previous generation founding the company. 54.An alternative approach, found in the case of Jones v Jones, is to attempt to value the asset at the date the marital partnership commenced, with an appropriate uprating to that value to take account of things such as inflation that have taken place since. In Jones v Jones, the concept of the “springboard” effect was raised. In other words, although the value of the asset was low at the time, the foundations had been established from which significant growth in value proved possible thereafter. One difficulty with this approach is that I do not have a valuation of the business in 1997. All I have is an indicative valuation found in the memorandum by Mr D in 2006. It does have to be acknowledged that the Jones approach would, in this particular case, enable the court to consider the origins of the JVPs and the effect they had on the valuation of ABC Inc but I am clear that it also has weaknesses, such as the exponential growth in the latter years. Other cases have considered concepts such as active and passive growth. I remind myself that, in this particular case, the issue is set out starkly by the fact that it is the Husband’s case that the entirety of the proceeds of sale of ABC Inc should be excluded from the sharing principle because of the origins of the business long before the marriage. If I find that he is wrong about that, I will have to consider, in the round, the various approaches set out in the authorities. If I decide to go down this route, rather than the broad brush approach to be found in Hart, I will then have to come to a reasoned conclusion as to what proportion of the assets should be treated as non-matrimonial because of their origins. Whatever I decide, the result will clearly involve my making a number of findings of fact that are likely to lead me to a concluded view as to correct approach to adopt. 55.I was also referred to the cases on “matrimonialisation” and, in particular, the analysis by Wilson LJ in K v L (above) of Lady Hale’s observations in Miller that “the importance of the source of the assets will diminish over time”. Wilson LJ concluded, at [18] that the true proposition was that “…the importance of the source of the assets may diminish over time (