What is the correct approach to a maintenance case? Listen to Sally Harrison KC (St John’s Buildings) and Farhana Shahzady (Streathers Solicitors) tell us how it is done.

Sally reminds us of the guidance of Mr Justice Peel in WC v HC (Financial Remedies Agreements) (Rev1) [2022] EWFC 22 (22 March 2022)

https://www.bailii.org/ew/cases/EWFC/HCJ/2022/22.html

when thinking about the quantum of a maintenance order. Mr Justice Peel found that needs are an elastic concept, to be judged by reference to consideration of financial needs and obligations, whether there are children, and the age of the parties. We discuss how the length of the marriage really impacts on how much the standard of living is taken into account. Farhana reminds of guidance of Mr Justice Mostyn in SS v NS (Spousal Maintenance) (Rev 1) [2014] EWHC 4183 (Fam).

https://www.bailii.org/ew/cases/EWHC/Fam/2014/4183.html

Sally and Farhana discuss the distinction between cases involving wealthy families where the Court may well be inclined to make a Duxbury award, as opposed to need based income awards in the majority of cases. We discuss the overall impression that Courts are being quite restrictive on terms and quantum of maintenance at present.

When talking about capitalising maintenance awards, Sally wrestles with the discrepancy between the Ogden tables having a -0.25% rate of return in England & Wales, as opposed to Duxbury’s 3.75% rate of return after inflation of 3%.

Sally considers the following cases:

HC v FW [2017] EWHC 3162 (Fam) (29 November 2017)

https://www.bailii.org/ew/cases/EWHC/Fam/2017/3162.html

Tattersall

Z (No.5) (Enforcement) [2024] EWFC 44 (04 March 2024)

https://www.bailii.org/ew/cases/EWFC/HCJ/2024/44.html

Farhana tells us why it is important to consider the impact of menopause, when considering maintenance quantum, term and nominal maintenance. She shares the details of her survey about the impact of maintenance in family law and financial remedy cases.

Resolution will be releasing a spousal maintenance handbook in Summer 2024. Please check the website for details.

This month we are treated to this tour de force by Robert Cole who is Head of the Family Team at Broadway House Chambers, Leeds and regularly sits as an arbitrator and ENE/pFDR adjudicator across the country, and Peter Smith from Quantis Forensic Accountants about how to analyse business accounts.

We immediately launch into a discussion about what should cause you concern in business accounts, and the well known issue that businesses always seem to be failing when people are getting divorced. Therefore, how professionals need to have four to five years accounts to be able to look at trends. Peter suggests we should take an overview of:

• Has revenue, sales or turnover gone down?
• Have gross profit margins gone down? And
• Have costs gone up?

These factors will provide a good indicator of any causes for concern.

Robert adds to that you should have look at what fixed assets there are, and whether the valuation has been updated. If you consider these points, you will have good insight into whether you need to ask for a valuer from the Court.

Peter and Robert give us some tips for questionnaires, including:

• Asking for a copy of up-to-date profit & loss accounts, management accounts and balance sheets as most decent size businesses with accounting software will have that immediately available;
• Summaries from the VAT portal;
• And always checking viewing the Companies Article of Association;

We discuss when valuations from the business’s own accountants are reliable. Before moving on to consider what type of valuations should be used for each business.

Robert advises us that to be successful in a Daniels v Walker application that you first need to have tried to clarify matters with the expert, but even where you are not going to pursue a Daniels v Walker application but just want to make submissions about the reliability of the conclusions then questions are important to tease out vulnerabilities in the report. Peter also points out that there is a distinction between wanting to challenge the expert’s judgment – which can be done without a separate expert – and where an expert has made a mistake for example an error in the factual basis.

We discuss when should a quasi-partnership apply, and Robert advises us to use the checklist from Re: Bird Precision Bellows [1986] 2 WLR 158:

• close working relationship between the shareholders (usually pre-existing the incorporation);
• restriction on the transfer of shares to a third party;
• the shareholders continue to be actively involved in the day-to-day running of the company (not necessarily employed but consulted about day-to-day and strategic decisions)

During the discussion, we refer to the following cases:

V v V (Financial Remedy) [2005] 2 FLR 697

J v J [2014] EWHC 3654 HTTPS://WWW.JUDICIARY.UK/WP-CONTENT/UPLOADS/2014/11/J-V-J-JUDGMENT.PDF

Martin v Martin [2018] EWCA Civ 2866 – risk and liquidity

https://www.bailii.org/ew/cases/EWCA/Civ/2018/2866.html

Versteegh v Versteegh [2018] EWCA Civ 1050 – on the lack of reliability in valuations

https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2018/1050.html&query=(versteegh)

Ebrahimi v Westbourne Galleries Ltd [1973] AC 360

https://en.wikipedia.org/wiki/Ebrahimi_v_Westbourne_Galleries_Ltd

G v G (Financial Provision: Equal Division) [2002] 2 FLR 1143 - Where shareholders act in concert and would be unlikely to sell separately then discount less applicable

Clarke v Clarke [2022] EWHC 2698 – on whether a minority discount should apply

https://www.bailii.org/ew/cases/EWHC/Fam/2022/2698.html

Technical factsheet from ACCA – for minority interests discounts

https://www.accaglobal.com/content/dam/ACCA_Global/Technical/fact/technical-factsheet-167.pdf

WM v HM [2017] EWFC 25 (09 May 2017)

https://www.bailii.org/ew/cases/EWFC/HCJ/2017/25.html