ON APPEAL FROM THE HIGH COURT OF JUSTICE
Sir Peter Singer
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE KING
LORD JUSTICE HOLROYDE
| Camilla Eva Carin Versteegh
|- and -
|Gerard Mikael Versteegh
Mr Lewis Marks QC and Ms Elizabeth Clarke (instructed by Withers LLP) for the Respondent
Hearing dates: 7 – 8 February 2018
Crown Copyright ©
Lady Justice King:
The business structure in brief
i) KF: a former industrial site of some 56 acres being developed in conjunction with a local authority, the site having been acquired as long ago as 2003.
ii) CB: a beach development in Cornwall intended to be holiday homes. The site was acquired in 2002. As of trial, the development was on hold as a result of the change in stamp duty in relation to holiday homes.
The Parties' Positions at trial
i) That the wife had a full appreciation of the implications of the PMA when she signed it,
ii) That the variables it was necessary to apply in order to value the 4 major developments within H Holdings were so fickle that it was impossible to value them or any of them. Similarly, in relation to future liquidity, the evidence of the experts did not, he held, provide him with a "probability-based assessment of the amount of, or rate at which, funds might be made available to the wife from the business structure" ,
iii) That a fair outcome could be achieved by an equal division of the non-business assets and the transfer by the trustees to the wife of 23.4% of the shares in H Holdings.
"….it would leave the wife… with the entire proceeds of the London home (estimated at some £26.5m) plus the £67.2m lumps sum, out of which £93.7m once rehoused mortgage free she might retain £80m or thereabouts in free capital. In addition she would have the not so immediately or realisable shares £23.5m worth…of BM shares. Nor would such a distribution of component elements be fairly balanced: the wife on her side would be liquid as to 95% (that is to say treating the BM shares as too viscous to regard as liquid for this comparison). The husband by comparison would have £5m of equity tied into his two homes, a mortgage debt of twice that amount, and his interest in two Settlements from which about 35% (on the wife's valuation basis) would have to be extracted to pay her lump sum, less any tax liabilities which might arise in freeing up those funds for her."
a) Net proceeds of the London property: £40.2m (£28m + mortgage reduction via loan repayment of £12.2m)
b) Holiday properties: £1.6m
c) 35% share of the remaining outstanding loans to the husband : £12m.
The Grounds of Appeal
i) The judge's treatment of the Swedish Pre-Marital Agreement ("PMA")
ii) The judge's treatment of the non-matrimonial property
iii) The judge's decision that he could not properly place a value on a number of the projects within H Holdings or its liquidity going forward and the alleged impact that decision had on the sharing principle
iv) The judge's decision to make a so called Wells order in relation to part of the wife's settlement whereby, rather than receiving payment for her interest in H Holdings, ordinary shares in the business were to be transferred to her.
The Pre-Marital Agreement
a) …"I am not remotely persuaded that Mrs L was, as was put to her, giving invented evidence to further her social aspirations and to pander favour with the husband, nor because he had bribed her or because she hoped that he might do so, if only with invitations to desirable social events. Her evidence was clear, and to my eyes and ears compelling.
b) … So I find as a fact that throughout the marriage the wife has known and understood the impact of the PMA.
"The property owned by either of us is to remain the private property of the party in question. This applies to all and any property whether acquired or inherited by us, bequeathed to us under a will or given to us as a gift whether prior to the marriage or subsequently. It also applies to any property acquired to replace such property or any income derived from it."
"52. If parties who have made such an agreement, whether antenuptial or post-nuptial, then decide to live apart, we can see no reason why they should not be entitled to enforce their agreement."
Looking at the structure of the judgment of Lord Philips in Radmacher he identified three heads for consideration:
a) Factors detracting from the weight to be accorded to the agreement [68 – 73]
b) Factors enhancing the weight to be accorded to the agreement: the foreign element 
c) Fairness .
In considering those factors "detracting from the weight to be accorded to the agreement" Lord Philips said, as far as is relevant to the present case:
i) If an ante-nuptial agreement, or indeed a post-nuptial agreement, is to carry full weight, both the husband and wife must enter into it of their own free will, without undue influence or pressure, and informed of its implications;
ii) Sound legal advice is obviously desirable, for this will ensure that a party understands the implications of the agreement, and full disclosure of any assets owned by the other party may be necessary to ensure this. But if it is clear that a party is fully aware of the implications of an ante-nuptial agreement and indifferent to detailed particulars of the other party's assets, there is no need to accord the agreement reduced weight because he or she is unaware of those particulars. What is important is that each party should have all the information that is material to his or her decision, and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end;
iii)  It is, of course, important that each party should intend that the agreement should be effective;
iv) As we have shown the courts have recently been according weight, sometimes even decisive weight, to ante-nuptial agreements and this judgment will confirm that they are right to do so."
"When dealing with agreements concluded in the past, and the agreement in this case was concluded in 1998, foreign elements such as those in this case may bear on the important question of whether or not the parties intended their agreement to be effective. In the case of agreements made in recent times and, a fortiori, any agreement made after this judgment, the question of whether the parties intended their agreement to take effect is unlikely to be in issue, so foreign law will not need to be considered in relation to that question."
"The effect of the agreement is capable of altering what is fair. It is an important factor to be weighed in the balance.
It was in this context that Lord Philips 'advanced' his now well-known proposition that:
"The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement".
"I therefore reject all the arguments raised to say that it would not be fair for me to uphold the agreement insofar as it excludes sharing. It might have been very different if the agreement had also purported to exclude maintenance claims in the widest sense…."
"…. Mr Le Grice has argued, with some force, that the persuasive influence of this decision must be affected by a concession which appears to have been wrongly made…"
" In my judgment the requirement of "a full appreciation of its implications" does not carry with it a requirement to have received specific advice as to the operation of English law on the agreement in question. Otherwise every agreement made at a time when England and Wales was not on the horizon would be discarded. But in order to have influence here it must mean more than having a mere understanding that the agreement would just govern in the country in which it was made the distribution of property in the event of death, bankruptcy or divorce. It must surely mean that the parties intended the agreement to have effect wherever they might be divorced and most particularly were they to be divorced in a jurisdiction that operated a system of discretionary equitable distribution. I have respectfully suggested in Kremen v Agrest No. 11 that usually the parties will need to have received legal advice to this effect, and will usually need to have made mutual disclosure."
It follows that the concession made by the wife in Z v Z was wrongly made only if one agrees with Mostyn J that she should have had legal advice before it could properly be said she had a full appreciation of the implications of her PMA.
" The reason why the court should give weight to a nuptial agreement is that there should be respect for individual autonomy. The court should accord respect to the decision of a married couple as to the manner in which their financial affairs should be regulated. It would be paternalistic and patronising to override their agreement simply on the basis that the court knows best. This is particularly true where the parties' agreement addresses existing circumstances and not merely the contingencies of an uncertain future."
"177………Some of the precedents I have seen are of comparatively wealthy couples making a prediction of comparatively generous sums which ought to provide for the "reasonable requirements" of the recipient spouse in a way which might well have attracted the "millionaire's defence" in the days before White v White. In effect, therefore, they are contracting out of sharing but not out of compensation and support.
178. Provided that the provision made is adequate, why should they not be able to do so? On the one hand, the sharing principle reflects the egalitarian and non-discriminatory view of marriage, expressly adopted in Scottish law (in section 9(1)(a) of the Family Law (Scotland) Act 1985) and adopted in English law at least since White v White. On the other hand, respecting their individual autonomy reflects a different kind of equality. In the present state of the law, there can be no hard and fast rules, save to say that it may be fairer to accept the modification of the sharing principle than of the needs and compensation principles."
" There can be no question of this court altering the principle that it is the court… that will determine the appropriate ancillary relief when a marriage comes to an end, for that principle is embodied in the legislation."
And Lady Hale:
"163……the court always has to exercise its own discretion, if there is to be a starting point for the exercise of that discretion it has to be the statutory duty under section 25 of the 1973 Act. This applies to all applications for orders for financial provision, property adjustment and pension provision ancillary to divorce, judicial separation and nullity decrees. "
"…… For her part the wife… has throughout clung to the claim that the PMA should carry no weight whatsoever and should be disregarded entirely, and that she should receive her share in wholly liquidated form whatever the damage that might unleash. The issue which I have therefore to decide is whether the PMA should indeed be wholly ignored as a factor in this case, or whether it should only have some limited but less literal impact on the amalgam of factors upon which my discretion bears."
" ….I need in relation to the outcome of the case to consider only the inferences (perhaps a misprint for influences) as to the structural effect which Mr Marks asks me to accept: that this is not a case for determination, if it were possible, by reference to evaluated proportions, nor one where my order should threaten seriously to damage or to bring down the business structure."
"…such an outcome will fairly reflect the significance of the non-marital and therefore unmatched contributions made available to and employed by the husband both before and during the marriage, the considerations arising from the PMA to which I regard it as appropriate to give effect, and the overall exercise of the section 25 discretion."
"I say what she is to receive and that that is what fairness and justice between the spouses require."
" I appreciate that this is now something of a refrain, but I am perplexed how I am to decide the historic basis upon which to found conclusions about the legal effect of events, and therefore to define the status of many of the assets in question and the extent to which I should disregard their attributed value."
"…Criticism can easily be levelled at both approaches. In different ways they are both highly arbitrary. Application of the sharing principle is inherently arbitrary; such is, I suggest, a fact which we should accept and by which we should cease to be disconcerted. "
"…The problem with the first technique is that it is quintessentially intuitive….The technique may reflect the individual judge's instinct and intuition but it risks being described as a lawless science."
"…. Wilson LJ said in Jones…. "Application of the sharing principle is inherently arbitrary". Whilst I am not entirely happy with the concept that that sum I award to reflect these factors is arbitrary, I take it that Wilson LJ meant discretionary rather than susceptible to the application of a precise formula."
" This difference in treatment of matrimonial property and non-matrimonial property might suggest that in every case a clear and precise boundary should be drawn between these two categories of property. This is not so. Fairness has a broad horizon. Sometimes, in the case of a business, it can be artificial to attempt to draw a sharp dividing line as at the parties' wedding day. Similarly the 'equal sharing' principle might suggest that each of the party's assets should be separately and exactly valued. But valuations are often a matter of opinion on which experts differ. A thorough investigation into these differences can be extremely expensive and of doubtful utility. The costs involved can quickly become disproportionate. The case of Mr and Mrs Miller illustrates this only too well.
 Accordingly, where it becomes necessary to distinguish matrimonial property from non-matrimonial property the court may do so with the degree of particularity or generality appropriate in the case. The judge will then give to the contribution made by one party's non-matrimonial property the weight he considers just. He will do so with such generality or particularity as he considers appropriate in the circumstances of the case.
" In my view, the guidance given by Lord Nicholls in Miller remains valid today and, indeed, bears increased weight in the light of the courts' experience since that case was decided. It can, as he said, be artificial to attempt to draw a "sharp dividing line". Valuations are a matter of opinion on which experts can differ significantly. Investigation can be "extremely expensive and of doubtful utility". The costs involved can quickly become disproportionate. Proportionality is critical both because it underpins the overriding objective and because, to quote Lord Nicholls again: "Fairness has a broad horizon".
 In addition, with due respect to Mostyn J's extensive experience in this field, I am not sure there are different schools. In my view, the differences which he identifies are examples of the same principle being applied, but applied in a different manner depending on the circumstances of the case. One application may be more specific than the other but this will typically reflect the "degree of particularity or generality appropriate in the case": Miller (paragraph 27). The outcome will be the same, namely, when justified, an unequal division of the parties' property."
" 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."
" And indeed I do regard as relevant circumstances of this case the fact that the business structure had received its seed-corn very largely if not entirely from the husband's family resources and was nurtured and developed by his own endeavours in the period preceding the marriage; and that the business has subsequently benefited from external receipts over the last decade as already described. This in my view is why the wife has been right to concede that this significant element of non-matrimonial input should be reflected in my estimation of what should be awarded to the wife."
"The judge will then give to the contribution made by one party's non-matrimonial property the weight he considers just. He will do so with such generality or particularity as he considers appropriate in the circumstances of the case."
" a)…. Such an outcome will fairly reflect the significance of the non-marital and therefore unmatched contributions made available to and employed by the husband both before and during the marriage, the considerations arising from the PMA to which I regard it as appropriate to give effect, and the overall exercise of the section 25 discretion.
b) I wish to make it clear that strong as have been my comments on the wife's dishonourable attempts to claim ignorance about the wording and effect of the PMA I have not allowed that factor to affect my estimation of the provision which she should receive."
i) The judge's reiteration in J2 that "those findings do not in fact impact upon the amount which, globally, I think it is appropriate she should have" [J2: and
ii) The judge's treatment of the wife's behaviour as litigation misconduct which would, as is the usual course, be reflected in an order for costs. In his third judgment (J3), the judge took the view that the wife's 'flagrant and persistent conduct' was in the same category as serious concealment of assets and should be penalised in costs. Not to have marked her behaviour with costs consequences would, the judge held, have been "unjust and unprincipled". The judge therefore made an issue-based costs order against the wife to mark the court's "profound disapproval of her behaviour".
The valuation of the assets
" It would be possible to elaborate to a huge degree upon the interconnection and the interdependence of this amalgam of entities and businesses. But in view of the overall view I have formed about the unreliability of assessing an overall computation of value from major parts of the group such elaboration for the purposes of this judgment would not bring me closer to what I hope will be a fair decision. For the degree of refinement (and legitimate disagreement) about the future progress and viability of the group components and their capacity to create and release liquidity in the short and medium term are extremely subjective and variable as they depend upon individual assessment (including expert assessment from a number of perspectives) and methodology. Having considered a good deal of evidence on the question I conclude that this is an enterprise in relation to which it would be simplistic to assume that any particular part of the past is in any dependable sense a guide to the future."
" I am therefore reluctantly but firmly driven to the conclusion that the evidence taken as a whole does not provide me with a probability-based assessment of the amount of or rate at which funds might be made available to the wife from the business structure."
"i) …Both experts stated that a valuation could be made. The concerns the Judge identified, at the very most, should have led him to adopting conservative conclusions but not to refuse to reach any conclusions as to value. Further the professed valuation difficulties were largely of the Judge's own making due to the delay in preparing his judgment. The Judge should have ascertained the value of the Respondent's two umbrella companies, and by not doing so failed to ascertain the value of the family's assets. This was wrong."
" Nothing can disguise the width of the gulf between the proposal with which the wife comes out of her corner, that she should exit this litigation with a clear and, she would hope, enforceable order for a quantified lump sum (…) and the husband's diagonally opposed position that in some measure she should receive a significant proportion of her award in specie, in the shape of shares within the business structure of which he will remain largely, if not effectively, in control. "
"41….a Herculean exercise of monumental proportions with which experts have struggled, applying numerous levels and layers of sophistication to arrive at figures which are more or less cogent."
i) "to assign present day value, or range of values fairly attributable to the entirety of the parties' assets, including the business structure
ii) To ascertain how and how much access to liquidity can be achieved
iii) As an integral part and parcel of that future process to estimate (or perhaps the word is to speculate) as to the future performance of the business structure in an economic environment dominated by the uncertainty of the Brexit referendum decision which emerged just a few weeks before the final hearing commenced, and
iv) To canvass the taxation consequences of various extraction scenarios"
"Would be of little or no consequence for the fair outcome at which I strive to arrive if I could be persuaded that the final figure for these particular assets is within a reasonable margin of tolerance."
"….. if the sale of relevant assets were to be pushed back from the year when the discounted cash flow analysis supposes they will take place, then the effect on the valuation is dramatic. If the sales within ACo were to take place one year later then for £45.7M one would need to substitute £33.8M; if two years later, £23.8M. The nature of the business is such that deferrals for such periods would not be in any way surprising, as was indeed demonstrated in relation to two particular assets within ACo which I will call the Farms."
"….shed light on the ease and extent to which targets with such a significant impact on the computation of value can slide, for what may or may not prove to be good reason, but with significant impact on values ascribed."
"…  ….historically there has been a huge disparity between the management's cash flow forecasts (and I again recognise that all such must necessarily be predictive) and the actual outcome calculated when the chickens have come (or rather in the last two years have not come) home to roost."
" To arrive at his conclusion, however, he relies on the expectation (perhaps better described as a hope) that transactions will be concluded and expenses borne in accordance with Mr Bezant's adjustments based on the same management forecasts which led Mr Cottle to predict ( in practice unimaginable) -£15m shortfall."
" Even if, however, a court elects to adopt the sharing principle as its "starting point", it is important to put that phrase in context. For it cannot, strictly, be its starting point at all. As Coleridge J. himself stated in the passage cited in paragraph 59 above, the starting point of every enquiry in an application of ancillary relief is the financial position of the parties. The enquiry is always in two stages, namely computation and distribution; logically the former precedes the latter..."
" The judge's inability to place any value on the husband's shareholding was almost inevitable given its precarious state and the fact that in the preceding 3 years only 66,000 of its shares had been traded on the market."
" The experts agree that the exercise they are engaged in is an art and not a science. As Lord Nicholls said in Miller v Miller; McFarlane v McFarlane 2 AC 618 : "valuations are often a matter of opinion on which experts differ. A thorough investigation into these differences can be extremely expensive and of doubtful utility". I understand, of course, that the application of the sharing principle can be said to raise powerful forces in support of detailed accounting. Why, a party might ask, should my "share" be fixed by reference other than to the real values of the assets? However, this is to misinterpret the exercise in which the court is engaged. The court is engaged in a broad analysis in the application of its jurisdiction under the Matrimonial Causes Act, not a detailed accounting exercise. As Lord Nicholls said, detailed accounting is expensive, often of doubtful utility and, certainly in respect of business valuations, will often result in divergent opinions each of which may be based on sound reasoning. The purpose of valuations, when required, is to assist the court in testing the fairness of the proposed outcome. It is not to ensure mathematical/accounting accuracy, which is invariably no more than a chimera. Further, to seek to construct the whole edifice of an award on a business valuation which is no more than a broad, or even very broad, guide is to risk creating an edifice which is unsound and hence likely to be unfair. In my experience, valuations of shares in private companies are among the most fragile valuations which can be obtained."
"This is again a tangled thicket through which I struggle to reach a firm and informed outcome."
"…. In that situation, however, sharing is achieved by a fair division of both the copper-bottomed assets and the illiquid and risk laden assets. After all the wife was already a shareholder in Soundtracs and a substantial increase in her shareholding would at least have enabled her to participate in future prosperity by dividend receipts or capital receipts on sale or a cessation of trade. An increase in her share of the illiquid and risk-laden asset would have allowed a reduction in the Duxbury fund, if not in the housing fund. If profitability were not recovered, then both parties would share the experience of a marked reduction in standards of living."
Thorpe LJ went on to consider whether the allocation of the assets made by the judge at first instance had been fair saying:
" …..But, as the judge recognised, any analysis of the division of assets between the parties in percentage terms was dependent upon the valuation of the company. Once the judge found it impossible to value, it became no more than an uncertain source of future income for the husband. Its retention of course conferred on the husband a chance, namely the chance that he might trade out of deep difficulty and achieve a level of sustained profitability sufficient to create demand for the shares and with it a realisable value. The extent of that chance was not quantified and was probably incapable of quantification."
i) That the proposed order is contrary to the clean break principle. Where, as here, funds can be found (albeit some way in the future) which would allow there to be a clean break between the parties, that course should be adopted.
ii) The difficulty for the wife in having any real protection of her interest. This difficulty remains notwithstanding a shareholders agreement negotiated at great cost between the parties and settled by an arbitrator, and that the terms of that agreement allow her to have her own appointed non-executive director on the board of H Holdings.
iii) There is no foreseeable exit for the wife when she can anticipate the realisation of her interest in the company.
iv) The unusual level of hostility between the parties consequent upon the particular circumstances which led to the breakdown of this marriage after 21 years which feeds into (i) above.
"(1) Where on or after the grant of a decree of divorce or nullity of marriage the court decides to exercise its powers under section 23(1)(a), (b) or (c), 24 or , 24A, 24B or 24E above in favour of a party to the marriage, it shall be the duty of the court to consider whether it would be appropriate so to exercise those powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree as the court considers just and reasonable."
The court is under a 'duty' to consider whether the financial obligations of each party towards the other can be terminated. The judge undoubtedly did that [198 – 199], having quoted the subsection he went on to say:
" It does not seem to me obviously and certainly not necessarily inconsistent with that requirement for an order to leave one spouse with shares in a company in which the other holds shares, nor indeed to preclude part of the spouse's award including such shares."
" I therefore see no reason why such a continuing link is, in principle and in an appropriate case, so far from the gold standard outcome of a complete and effective economic and emotional clean break that it should never be employed. Moreover I believe that the facts and my findings in this case militate towards a solution along these lines if sufficient safeguards of the sort discussed can be achieved."
" But over and above that I will fix upon a proportion of the shares in H Holdings which should be transferred to the wife either in specie or by the creation of a different class or type as may best prove to be practicable in the light of the discussions between the parties and their advisers which will continue after this part of the determination, represented by this judgment, is concluded. And then if agreement is not reached I will need to decide between the options and consider what if any effect shortcomings which emerge during this process and cannot be safely guarded against need lead to any reconsideration of the orders relating to the lump sum element of the award.
"… the practicality of such an arrangement needs now to be given serious consideration on both sides to investigate what greater degree of security can be achieved both in terms of dividend or fixed interest income and end of date realisability"
"… I make it clear that if at the end of the day…. Adequate safeguards and an exit are not included within the structure of the shareholding proposed, then I have, as it were, reserved to myself the right to say that if that is the best you can do, if that is the best that can be managed—there may be technical reasons justifying it—then I do reserve the right to go back and think to what extent, if at all, the shortcomings in whatever structure is proposed should be reflected in some other way: in some award over and above what this interim judgment order contains…."
" I find myself driven to retreat from the aspiration I held that the wife should enjoy the confident expectation that she could, at some stage expect to receive value for the shares which are to form part of her award. That could only be achieved by imposing an obligation ( or seeking to do so) on the husband and the Trustees to issue preference shares. And, as I have described, that would require me to fix their value which I have already found I cannot and should not do.
 I accept that one result of holding ordinary shares in H Holdings may be that the wife does not realise their value. There are pre-emption rights which, were she able to seek to sell her shares, would involve a significantly discounted price being in effect imposed upon her. The outright sale of the company as a whole seems inherently unlikely having regard to its interrelationship with other components of the structure, but were such an opportunity to occur and to be agreed then she could expect to receive payment for her parcel of shares at the same price as the other shareholders would receive for theirs.
 I conclude that the ordinary share route should be followed, hoping that the protections for the wife can be strengthened in the course of the negotiations…."
"… I have also borne well in mind the unquantifiable but very significant contributions from external sources within his family which he has received and deployed both before and during the marriage and which to some significant extent played their part in the development of wealth within his business structure. When that consideration is combined with the necessary conclusion to be drawn from my findings in relation to the wife's understanding of the PMA, which encompassed acceptance on her part that she would not expect to participate in that wealth or its product, there seems to me to be substantial obstacles in her path in seeking to achieve via a preference share structure such a significant additional transfer of capital, however much deferred.
 I have in the event by no means limited her to an award reflecting her needs alone, and I remain of the view that the overall provision made for her is fair in all the circumstances of the case notwithstanding the limitations which may remain in the safeguards and availability of an exit route from her ordinary shareholding in H Holdings…."
" It was recognised on both sides that both these values were extrapolations from bases I had rejected as unreliable in the first judgment. Mr Mowschenson suggested that I should just take a stab at it whereupon (he rather optimistically, I thought, opined) the parties might just accept my figure. This seemed to me although perhaps pragmatic nevertheless unprincipled, and I declined to take up the suggestion.""
i) The judge was unable to value H Holdings.
ii) The court could not with any certainty estimate future liquidity. Further the company could be made vulnerable if substantial sums were required to be extracted annually for a number of years to satisfy a further lump sum payment to the wife.
iii) The wife had a full appreciation of the implications of the PMA and that included providing protection for the husband's business assets.
iv) There had been a substantial non-matrimonial contribution by the husband largely (although not wholly) reflected in the assets held within H Holdings.
v) The wife had a surplus liquid fund of £29.4m over and above her needs, she was therefore protected from all contingencies even in the event that she was unable to realise her interest in H Holdings for many years.
"…I would also urge the parties to have regard to the opportunity that still presents itself for them to come to a better solution by negotiated or mediated means. We are conscious that the parties, who are not inhibited as we are, may do better."
Lord Justice Holroyde:
Lord Justice Lewison:
i) Whether a PMA is contractually binding or not is irrelevant. The court should apply the same principles whether or not a binding contract has been made: 
ii) There is no need for black and white rules about the process leading up to the making of a PMA. What matters is whether each party has all the information material to his or her decision, and that each should intend that the agreement should govern the financial consequences of the marriage coming to an end: 
iii) Factors which would vitiate a contract will negate any effect that the PMA might otherwise have had: . But factors falling short of those which would vitiate a contract may reduce, rather than eliminate, the weight to be given to the PMA: 
iv) If the terms of the PMA are unfair from the start this will reduce (not eliminate) the weight to be given to it: 
v) If the parties to the PMA are nationals of a state in which PMAs are common and binding, that will increase the weight to be given to the PMA: 
vi) In principle, if parties have made a PMA there is no reason why they should not be entitled to enforce it: 
vii) Thus, the court should give effect to a PMA that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement: 
viii) Typically, it would not be fair to hold the parties to their agreement if it would prejudice the reasonable requirements of any children of the family ; or if holding them to the agreement would leave one spouse in a "predicament of real need": 
ix) But in relation to the sharing principle the court is likely to make an order reflecting the terms of the PMA: ,  – 
"But in order to have influence here it must mean more than having a mere understanding that the agreement would just govern in the country in which it was made the distribution of property in the event of death, bankruptcy or divorce. It must surely mean that the parties intended the agreement to have effect wherever they might be divorced and most particularly were they to be divorced in a jurisdiction that operated a system of discretionary equitable distribution." (original emphasis)
"Valuation by comparison is essentially objective, in that it is based on an analysis of the price achieved for sites with broadly similar development characteristics. The residual method, in contrast, relies on an approach that is a combination of comparison and cost and it requires the valuer to make a number of assumptions – any of which can affect the outcome in varying degrees."
"The residual method requires the input of a large amount of data, which is rarely absolute or precise, coupled with making a large number of assumptions. Small changes in any of the inputs can cumulatively lead to a large change in the land value. Some of these inputs can be assessed with reasonable objectivity, but others present great difficulty. For example, the profit margin, or return required, varies dependent upon whether the client is a developer, a contractor, an owner occupier, an investor or a lender, as well as with the passage of time and the risks associated with the development."
"The residual method is very sensitive to variations in the estimated costs and the accuracy with which costs can be assessed may vary greatly according to the specific site characteristics or the requirement, or plan, to retain specific structures, any unusual building specifications and the extent to which a new building has to reflect relevant sustainability policies."
"The approximate timings for the pre-construction, principal construction and post construction periods have to be determined. The valuer is recommended to liaise with the client, such professionals as might be appointed, or colleagues with relevant experience, to assess an appropriate, realistic time frame for each of the phases."
"6.35 The appropriate level of profit to be assumed in the appraisal cannot be specified in this Paper as market requirements vary from project to project and from time to time. Evidence may be deduced (with difficulty) by analysing transactions, but it is better obtained from the valuer's knowledge of the market or of developers' requirements.
6.36 In any event, the appropriate profit to be expected from a particular development may be influenced by a number of factors which might lead to the departure from the market 'norm'. High amongst these is the certainty of the information available to the valuer, and the general risk profile (for example, whether the interest rate is fixed, whether the scheme is pre-let or pre-sold) but the scale of development, the amount of financial exposure and the timescale are also relevant."
"The residual value is not necessarily the same as the value of the land as it has to be considered in the context of the valuation as a whole. The following matters may have an impact on the residual value and need to be addressed before the final conclusion is reached:
- Some elements of the calculations may be very sensitive to adjustments and, although these may be reflected in the cost calculations, such sensitivities may also be reflected in an adjustment to the residual value. A sensitivity analysis, for instance a 'Monte Carlo' simulation, may be undertaken and the results incorporated into the report;
- If at all possible an attempt can be made to compare the result with such market evidence as may exist because the residual method sometimes produces theoretical results that are out of line with prices being achieved in the market. For example, in a large, phased scheme (such as a major residential development) cash-flow constraints may prevent the theoretical value being realised (that is, there may be a quantum discount that applies in the market). Similarly, in some circumstances, for instance where site remediation costs are very high, the residual appraisal may produce a negative figure. There is plentiful experience of sites finding buyers even though a residual valuation shows a nil, or negative, value."
"The tribunal has made clear on a number of occasions that, in valuing land for the purposes of assessing compensation, a valuation based upon the residual method, or one that is derived from an assessment of the profitability of the land, is to be adopted only in the absence of some more reliable method. The reason for this … is that, in contrast to the situation in which the method is used by a vendor or a purchaser in prospect of an actual transaction, there is no external sanction facing the valuer who, for the purposes of an arbitration, produces what is a calculation of potential profit made in vacuo. The potentially wide range of plausible assumptions that could be made as to the inputs in such a valuation, and the wide variations in the final result that quite small differences in these assumptions might make, means that it is in general an unreliable valuation method."
"That this was the only viable route became plain during the evidence. Both W's accountant and H agreed that it was impossible to attribute anything other than a wild guess to the value of H's options. H would extend this uncertainty to the rest of his deferred assets. It therefore follows that a Wells sharing is the only way of achieving fairness. Indeed, it would seem to me that this should become standard fare where a case has a significant element of deferred or risk-laden assets. For why should one party receive most of the plums leaving the other with most of the duff?"
"Generally a Wells sharing arrangement should be a matter of last resort, as it is antithetical to the clean break. It is strongly counterintuitive, in circumstances where one is dissolving the marital bond and severing as many financial ties as possible, that one should be thinking about inserting the wife as a shareholder into the husband's company. … However, Wells sharing is not so objectionable if it only applies to a minority element of the claimant's award."