HHJ Hess. A final hearing in financial remedy proceedings heard over six days.

Both parties were in their sixties and had a long marriage of 30 years. The children were all adult and independent. During the marriage, the W, a qualified nurse, had taken on the role of home maker and primary carer of the children while the H had a long and successful career in financial services. There were significant assets including the FMH (with c.£14m of equity), two further properties, investments, artwork and trusts.

The main issues were the valuation of the H’s business and whether the value of the investments which had been made by the H post-separation were matrimonial.

The W argued, in respect of the investments made, that the income which H received post separation and had then invested was generated by the ‘continuum matrimonial business’ and therefore the investments were matrimonial. The evidence was that the relevant income received by the H related to success fees for work which was completed post separation. HHJ Hess found that the term ‘continuum matrimonial business’ was not used correctly in this context and the fact that the business relationships which led to that work were formed during the marriage did not alter that. He therefore found the investments, worth c.£690k, were non-matrimonial.

The H’s business had been valued by a single joint expert at £8.8m using an EBITDA x multiplier and then adding surplus working capital approach. Both parties had then made successful Daniels v Walker applications for their own experts. The W’s expert used the same approach as the SJE (although obviously used different figures) to achieve a value of £18.85m. The H’s expert valued the business at £133,000 and maintained that there was no meaningful EBITDA separate and distinct from the H’s earnings.

The crucial point was that the H was one of two fee earners in the business but his fees accounted for 90% of the fees generated as a result of his knowledge, reputation and contacts. Neither the SJE, nor the W’s expert had referenced the 90% figure in their report and, in evidence, the W’s expert accepted that the valuation of any business would be different based on the proportion of work generated by different fee earners. However, he attempted to maintain his valuation on the basis that he had used a reduced multiplier.

HHJ Hess used the H’s expert’s valuation of the business and then divided the matrimonial assets broadly 50/50 between the parties. This was more or less in line with the H’s open offer.

In a supplemental written judgment, HHJ Hess made no order as to costs. The parties had incurred c.£1.72m in costs between them. HHJ Hess accepted that he substantially, if not entirely, accepted the H’s position (the H’s open offer was the W to receive £13,244,243, the lump sum ordered was £13,253,924 – where the W’s open offer was a lump sum of £20,859,703). HHJ Hess considered the relevant procedure rules and the judgment of Mostyn J in OG v AG, and found that the W’s reliance on her expert’s report was not unreasonable or irresponsible and that, in fact, the financial landscape did not become clear until late in the day as the joint meeting between experts occurred a week before the final hearing and the preference of the H’s expert’s view only became clear in cross-examination.