Case No: BM 07 D 01137
Neutral Citation Number: [2010] EWHC 3768 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Friday, 26th February 2010 

Before:

MR JUSTICE MOYLAN
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Between:

	SK	Applicant/
Wife 	
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	WL	Respondent/
Husband	

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MR R. ANELAY QC and MR B. SOMERVILLE appeared for the Applicant Wife
MR N. MOSTYN QC and MR P. DUCKWORTH appeared for the Respondent Husband

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Judgment

MR JUSTICE MOYLAN: 

1.	This judgment follows the hearing of the wife's ancillary relief application.  The wife is represented by Mr Anelay QC and Mr Somerville, and the husband is represented by Mr Mostyn QC and Mr Duckworth.  The wife seeks an equal division of the current wealth.  The husband seeks a very substantial departure from an equal division, with the wife receiving approximately 25% of the current wealth.
2.	The husband's case is based on his assertion that there is a "very significant post-separation accrual" which is the product of his endeavours in the period following the separation.  It is submitted that this justifies the outcome he seeks.  He accepts that, but for this, the wife would be entitled to an equal share of the wealth.  The husband's case relates to that part of the current wealth which reflects the sale proceeds received by him on the sale of a private company which was incorporated in 2001, some three years before the separation, and sold in 2008, approximately three and a half years after the separation.  The husband contends that the success of the company, and consequently the sale price achieved, was due to his "endeavours alone performed outside the partnership of marriage".
3.	The wife challenges the husband's factual case on this issue, contending that the value achieved on the sale reflects a number of factors of which the husband's role post-separation is just one.  The wife submits that the current wealth should be divided equally.  This, she submits, would be a fair outcome which gave appropriate weight to all the factors in this case, including that in the period between separation and trial the husband has continued to "trade with" the family assets, including the wife's notional share both in the private company and, more generally, in the family's wealth which, as a result, has been at risk.
4.	The evidence at this hearing has focused principally on the dispute as to the extent to which the success of the company and the price achieved reflects the husband's post-separation endeavours.  However, as counsel agree, in order to ensure that my award is fair, I must stand back and assess the fairness of my proposed award by reference to all the circumstances of the case.  This is to ensure that I do not lose sight of the overarching objective and that I determine my award on a broad basis and not by focusing unduly on those factual parts of the case which happen not to be agreed. For reasons which will become apparent later in this judgment, I consider that the case advanced on behalf of the husband has focused too narrowly on the issue he has raised.  
History
5.	The parties married in 1985. The wife is now aged 46 and the husband is aged 49.  They have two children aged 19 and 23.  The parties separated in September 2004, following which the wife and the children remained living at the former matrimonial home.
6.	In their written statements, the parties referred to elements of the history of the marriage, in part to support their respective cases as to the contributions each had made during the marriage and also to deal with the alleged state of the marriage at various time.  In addition, they have filed a number of statements from third parties, again in part to support their respective cases in respect of these contributions.  It is not clear to me why this extensive evidence was thought to be necessary or indeed appropriate.  Neither party sought at this hearing to rely on conduct or exceptional contributions during the course of the marriage, quite rightly, as it is clear to me that the marriage was very much a partnership.  In his evidence the husband was considerably more generous about the wife and her contributions than appeared from his written evidence, and, through Mr Mostyn, he accepts that the wife made a full and equal contribution to the date of separation.  I do not therefore propose to deal with much of the historical evidence in this judgment.
7.	In the early years of the marriage both parties worked extremely hard in very demanding circumstances.  They lived on a small farm and worked in the family business.  
8.	As a result of difficulties in the early 1990s, the precise circumstances of which I do not need to investigate, the husband was made bankrupt in 1993 and the family home and the farm were put on the market for sale by the receiver.  The position was retrieved, but I have no doubt that, as the wife says, "it was a real challenge".
9.	Thereafter the parties had two businesses: C Partnership (“CP”) and TCo.  The former was a farming partnership.  It was a successful business.  The latter was incorporated to buy back the family home and land from the receiver.  It then diversified into haulage.
10.	After his discharge from bankruptcy the husband and the wife were equal partners of both businesses.  The businesses clearly thrived in the second half of the 1990s - the husband talks of them being "awash with funds".  
11.	The husband says that he first had the idea of going into food production in early 2001.  He sets out in his written evidence the steps he took to progress this business idea.  The wife has set out in her evidence the work she says that she undertook in respect of this project.  
12.	In December 2001 PCo was incorporated.  The husband was the sole shareholder and director.  In his first statement the husband says that "he regarded the business as entirely external to our marriage and wholly separate from" the wife.  The evidence does not support this assertion and, in any event, it would in my view be difficult for a business founded during a marriage to be entirely external to it. 
13.	In an application for a grant for PCo, completed probably towards the end of 2001, it is said that the husband will be the project director and that the wife will be responsible for accounts, administration and human resources.  In fact the wife's involvement was substantially less than that, but I am satisfied by the evidence that she played more than a minor role in the very early development of PCo.
14.	In his report, the husband's expert accountant describes the growth of the business from small beginnings and how it developed into selling to retail multiples and even branched into exporting foodstuffs.
15.	At the date of separation the parties had assets, excluding PCo, which are currently worth just over £2 million.  
16.	The husband asserts that from 2004 he, to use his word, "transformed" PCo.  I will deal with this aspect of his case later in this judgment.  During the course of 2005 to 2006 PCo created a new production facility in some buildings that were owned by TCo and had been built some two to three years previously.  
17.	In October 2006 the husband incorporated another business, DCo.  This business was not sold when PCo was sold.  At present this business has not been successful.  The husband appears to have lent the company in excess of £1.5 million.  The net value, appearing in the agreed asset schedule, is £24,000.
18.	In April 2008 PCo was sold for £37 million gross; £31.6 million net of debt.  Of this, £8.5 million was paid in loan notes and £21.5 million was paid in cash.  After the deduction of tax of £2.8 million the husband had cash of £18.5 million.  In addition, the husband rolled over £47,500 to retain a percentage interest in the holding company, HCo.
19.	Following the sale of PCo, the husband has, relative to the wife, been able to spend with significantly greater freedom. A schedule has been produced showing how he has utilised the sum of £18.5 million.  He has purchased properties and has lent substantial sums to the businesses.  Taking the values appearing in the agreed schedule of assets, it is apparent that some of the husband's investments since April 2008 have been successful, whilst some have not.  This can be demonstrated by the fact that the net cash received by the husband of £18.5 million is now represented by assets worth £14.3 million. 
20.	Part of this difference is accounted for by living expenses of £750,000, legal expenses of about £300,000 and staff gifts of £130,000.  The husband has also spent £1.5 million on (as set out in the schedule) “yachts, boats, etc”, cars and furniture.  The yacht was purchased for £1 million and sold for £550,000, and the husband has spent £136,000 on a car for his personal use.  Also, as I have said, part of the difference consists of monies invested by the husband and which have been "lost", at least to the extent that they find no current reflection in the agreed schedule of assets.  
The Proceedings
21.	The Petition is dated 24th April 2007 and Decree Nisi was pronounced on 11th February 2008.  The wife's Form A is dated May 2007.  
22.	I have heard oral evidence from the wife and the husband, from two other witnesses of fact, and from the parties' respective expert accountants (whom I shall call “WA” and “HA").  There is a substantial volume of written evidence, including statements from a number of other witnesses.
Valuation Evidence
23.	Turning now to make some general comments in respect of the valuation evidence which has been produced in this case.  In three respects the valuation evidence has, in my view, been deficient, in that it has not been based on the best available evidence.  As a general proposition, and as is frequently expressed, family courts determine financial applications by reference to "the reality of the situation" (e.g. Glidewell LJ in Thomas v. Thomas [1995] 2 FLR 668, at 678.)  This requires that valuation evidence should itself take account of all relevant facts.
24.	First, HA’s first report.  At the First Appointment the husband was ordered to serve “an expert accountant's valuation of the parties' business interests and liquidity”.  This was done with the filing of the report dated 7th February 2008 by HA.  The principal business interest to be valued was the husband's interest in PCo, which had not by then been sold.  By the date of the report, however, PCo had effectively been on the market for sale to private equity houses through BDO since December 2007, and a number of indicative offers had been received by the end of January 2008 ranging up to £40 million. This was not referred to in HA's report beyond a general reference to the fact that BDO’s corporate finance department had been instructed "to examine a number of short term funding possibilities for (PCo).  The likely outcome of this transaction will be that (the husband) will recognise a proportion of the business as cash."
25.	In fact, as I have indicated, the husband was seeking to sell the whole business and had already received an indicative offer of £40 million.  I make clear that no blame for this can be attributed to HA, who was not provided with this information, nor to BDO, who were complying with their confidentiality policies.  The effect, however, was that a document was filed which was materially defective.  This was explained on the basis of commercial confidentiality.  This does not, in my view, justify the filing of incomplete or inaccurate evidence.  The matter could easily have been addressed with the assistance of the court, if required.  Ancillary relief proceedings are private and the media can be excluded if justified.  Further, any information disclosed consequent on the obligation to make full and frank disclosure remains confidential to the proceedings and can only be used for the purposes of the proceedings.  I can see no reason, therefore, why the information could not have been disclosed to the wife and her advisers and to HA.  As I have said, if there were considered to be any difficulties with this, an application could have been made to the court.  Nothing turns on this issue in this case because the true position was disclosed very shortly thereafter and the proceedings were adjourned until the sale was completed.
26.	Secondly, the valuation of the T Cattle Market.  For the purposes of the agreed schedule of assets, this property has been valued by a jointly instructed expert at approximately £700,000.  The expert was informed of the existence of an option agreement made in July 2009 under which a developer has agreed to pay £3 million for the property in the event of certain planning permission being obtained for the site.  In his oral evidence the husband made it clear that he is confident planning permission will be obtained.   I do not suggest that the husband was seeking to hide this fact, as he was completely open about it in the witness box.  However, again somehow a potentially very significant inaccurate figure was being used for the purposes of these proceedings.  This should not have happened.  Again, nothing now turns on it as the husband accepts and proposes that, if the option is exercised, the wife's award should be increased proportionately to reflect the net sum realised.
27.	Thirdly, the accountants were, among other matters, instructed by the parties to value PCo as at the date of separation (September 2004).  Putting to one side the question of whether this exercise was justified in any event, the accountants were instructed, and/or felt constrained, to undertake this exercise without taking into account what happened to PCo thereafter - save that WA used management accounts to the end of October 2004.
28.	I expressed surprise, at what appeared to me to be a blinkered approach, at the commencement of the hearing and again during the parties' final submissions.  In response, Mr Anelay questioned the whole validity of this artificial process.  Mr Mostyn submitted the approach taken by the accountants was justified, or even necessitated, by accountancy orthodoxy.  In his closing submissions he referred me to one authority in support of this proposition, Holt v. Inland Revenue Commissioners [1953] 1 WLR 1488.  The case concerned the valuation of shares in a private company for the purposes of estate duty.  The principles applicable to such a valuation exercise had been settled by the House of Lords in Inland Revenue Commissioners v. Crossman [1937] AC 26.
29.	In Holt, Danckwerts J remarked on the exercise which he was required to undertake in the following terms:
"The result is that I must enter a dim world peopled by the indeterminate spirits of fictitious or unborn sales.  It is necessary to assume the prophetic vision of a prospective purchaser at the moment of the death of the deceased and firmly to reject the wisdom which might be provided by the knowledge of subsequent events." 
He shortly thereafter referred to the accountants’ opinions as being "guesswork, though of course intelligent guesswork".
30.	I do not see why the Family Division should enter the "dim world" identified by Danckwerts J. Valuations, when required, should be based on real and known events.  This approach ensures that valuations are more likely to be closer to the reality of any given situation than the result achieved by ignoring known history.  It is difficult also to see how the latter approach, of ignoring known facts, could be consistent with the court's obligation to achieve a fair outcome based on the factors set out in section 25 of the Matrimonial Causes Act 1973.  As Wilson LJ said in White v. Withers [2010] 1 FLR 859, if the court is to discharge its duty (I emphasise) under the Act, it must be "furnished with true information about the parties' resources".
Section 25
31.	Turning now briefly to recite the section 25 factors, or some of them in any event.
i)	Financial Resources - capital.  An agreed schedule of assets has been produced.  Excluding the loan notes and any increase in the value of the T Cattle Market, the total net wealth is £16.4 million.  The loan notes have been valued by the accountants at £2.7 million and £8.6 million.  The parties propose that, because of the uncertainty as to their true likely value, the loan notes should be divided proportionately.  The husband's interest in HCo is currently valued at nil.  In his opening written submissions Mr Anelay raised a question as to whether these shares might in fact have some value.  I am satisfied that the shares have no current value.  I am also satisfied that there is no sufficient prospect of them acquiring a significant value as to require me to take this value into account when determining my award in this case or as to justify a deferred sharing of these shares.
ii)	Income.  Both parties will use the resources allocated to them to generate an income.
iii)	Standard of living.  The standard of living enjoyed by the family during the marriage has fluctuated considerably.  The resources now available to the family are more than sufficient to provide them both with sufficient resources to meet their income and capital needs at a generous level.
iv)	Financial needs and obligations.  I am satisfied that my award is sufficient to enable both the husband and the wife to meet their respective financial needs.
v)	Contributions.  Each of the parties has made full contributions during the marriage.  They have both continued to make contributions, albeit in a different form, to the welfare of the family since September 2004.  The children were then aged 18 and 14.  I will deal with the factual issues raised in respect of the husband's contention that the success of PCo and the sale price achieved reflect his post-separation endeavours after I have summarised the parties' respective submissions.
Submissions
32.	Counsel have made extensive written and oral submissions.  I have taken all the matters raised by them into account when reaching my decision, but I propose to summarise their respective submissions relatively succinctly in this judgment.  
33.	Mr Anelay submits that, looking at the whole picture and by application of the wide discretion given to the court, an equal division of the current wealth would represent a fair outcome.  He relies on a number of matters, including the length of the marriage and the contributions made by the wife to the welfare of the family both during the course of the marriage and since the separation. 
34.	Based on the acceptance by the husband that the wife was entitled to 50% of all the assets existing in September 2004, including PCo, Mr Anelay also submits that the wife should receive 50% of the current wealth because the husband has "continued to trade with the wife's unascertained 50% share in (PCo) and the then existing assets which were utilised to carry on business and obtain further assets".  He relies on the fact that the wife's share of the wealth has, as a result, remained fully “at risk”.  As the wife could not, in fairness, claim, and has not sought, to be cocooned from losses incurred since the separation, so the husband should not be entitled to seek to exclude her from benefiting fully from gains generated since the separation in part through trading with her share of the wealth.
35.	Mr Anelay submits that PCo developed as part of the family business structure which was effectively a group of three interrelated and interdependent businesses.  He submits that by September 2004 PCo was a substantial established business with an established method of production and an established brand, and that the development of PCo after 2004 was not the result of any special contribution by the husband as asserted by him.  It was, he submits, a continuation in the development of the company benefiting from and deriving from its development prior to September 2004.  
36.	As a result of the way in which he puts his primary case, Mr Anelay submits that the 2004 valuation of PCo provides little assistance.  However, he submits alternatively that WA's valuation is far more realistic that HA's, which he says is based on an unduly pessimistic view of the likely future progress of PCo.  He submits that WA's valuation is based on a more realistic assessment of PCo's future maintainable earnings and on a multiplier which was sufficiently discounted to reflect, among other factors, the risks that the earnings figure which WA had taken would not be achieved.
37.	Mr Mostyn submits that the very significant post-separation accrual justifies the substantial departure from equality which the husband seeks.  In his oral submissions Mr Mostyn submitted that I “must” first separate the two “classes” of assets - matrimonial and non-matrimonial. When I questioned his use of the word "must", he acknowledged that this submission was, perhaps, expressed a little dogmatically.  He later submitted that the degree of specificity required in a case is a matter in the discretion of the judge.  
38.	The essence of the husband’s case is that the manner in which assets are shared will depend significantly on the extent to which an asset or part of the wealth originates in and derives its existence from the marriage, or originates in and derives from work outside the marriage; in other words, the extent to which it has its roots in the marriage or derives from "extraneous actions" - namely, in this case the husband's endeavours after the separation.
39.	Accordingly, Mr Mostyn submits that my award "should primarily reflect the inescapable fact that the success of the business was down to the husband's endeavours alone performed outside the partnership of marriage".  He submits that the "scale of departure from equal sharing of the post-separation accrual is judged from where in the spectrum, bounded by the notions of embryo and continuum, the facts of the case fall".  It is the husband's case that by the date of separation PCo was still in its “infancy” and was very much in the embryo stage of its development and that following the separation the company had to reinvent itself through a series of step changes.
40.	Mr Mostyn makes a number of additional submissions in respect of elements of the wife's factual case, but I do not propose to incorporate those submissions into this judgment.
41.	The husband's proposal, as made in Mr Mostyn's final submissions, is as follows:
a)	The assets, apart from PCo, which existed at the date of separation and which have been valued as at the date of this hearing, are to be divided equally.  This will give the wife just over £1 million.
b)	PCo is to be valued as at the date of separation and half of that value, without any additional adjustment, is to be awarded to the wife.  This would provide the wife with an additional sum of £1.1 million by reference to the husband’s valuation and £2.3 million by reference to the wife’s valuation.
c)	The balance of the current wealth - £9.6 million or £11.9 million - should be divided as to 20% to the wife and 80% to the husband.
d)	The husband will additionally assign to, or hold on trust for, the wife 20% of his interest in the loan notes.
e)	The wife should receive an amount equal to 20% of the T surplus, being the difference between £700,000 and any sum realised on the exercise of the option less tax.
42.	On the husband's case, the total which the wife would receive under (a), (b) and (c) is £4.6 million, based on the husband’s valuation, with the husband retaining a total of approximately £11.8 million.  The percentage division would be 28% to the wife, 72% to the husband.  The sum which the wife would receive under (d) would be £535,000 based on the husband’s valuation, and £1.7 million based on the wife’s valuation.  The overall percentage division then becomes 27% (£5.1 million) to the wife, and 73% (£13.9 million) to the husband; or 25% (£6.35 million) to 75% (£18.7 million).  The sum which the wife might receive under (d) is estimated very approximately at about £380,000.  
43.	Before turning to consider some of the authorities to which I have been referred, I propose to deal with my conclusions in respect of the factual issues raised concerning the husband's post-separation endeavours, namely, the development of PCo and the 2004 valuations, starting first with the development of PCo.
The Development of PCo
44.	The husband seeks to distance the development of PCo after the parties separated from its development prior to that date in support of his contention that a substantial part of the sale price it achieved is not matrimonial property but, as I have said, is down to his endeavours alone performed outside the partnership of marriage.  
45.	It is self-evident that the company continued to develop after September 2004.  However, as the husband himself asserts, PCo's “take-off was impressive".  By 31st March 2003 it had a turnover of £400,000 and by 31st March 2004 £1.9 million.  It had an operating profit of just over £400,000 in 2004.  The turnover continued to grow impressively in each of the subsequent years, reaching nearly £13 million by 31st March 2008.  The operating profit for the year ended 31st March 2005 was £1.2 million.
46.	It is the husband's case that the manner in which the business developed after the separation transformed it into a different business to that which existed at the date of separation.  He asserts, as I have indicated, that PCo was in its infancy at the date of separation and that its development after the separation was significant and due to his work during this period.  He refers to a number of matters in support of his case, including his "championing the brand", changes in the customer base and the restructuring of the business.
47.	Mr J, a member of BDO Stoy Hayward's corporate finance team, has given written and oral evidence.  BDO were instructed by PCo in 2006 to assist with compliance and to help develop and grow the company by providing strategic direction with the objective of realising value for the husband.  In his written statement Mr J identifies the steps which were required if PCo was to develop.  These included putting in place an effective senior management team and developing the capacity and ability to deliver to larger retail multiples which would require "huge development which could only come at significant risk and cost".
48.	In his oral evidence Mr J agreed that when he first became involved with PCo the company was "a good business with good prospects".  It was still, he said, a local  business, but it "had a very good base for future development".  BDO's role was to make it into an even better business.  He also agreed, without a doubt, that with the benefit of hindsight what had happened to the company after 2004 could be seen as a natural progression.  As to the sale, it is Mr J's view that "the high sale price can be attributed in part to the well-run and competitive negotiating process".  In his oral evidence he said that the husband was "heavily and fundamentally involved in the sale process".  
49.	I am satisfied that PCo was well established by the date of separation.  I accept Mr J's description of it as "a good business with good prospects".  Whilst I accept that the husband worked hard in this business between September 2004 and its sale, I do not accept that what happened after the separation means that its progress after the separation and the sale price achieved did not derive from or originate from its development in the marriage.  
50.	It is clear to me that the three businesses - CP, TCo and PCo - were significantly enmeshed (at least in the early years of PCo's development) and that they effectively operated as part of a group; in other words, although the husband was the sole owner of PCo, they were all part of the family's business activities.  The businesses all used and traded from the same site and premises - owned by TCo - albeit with PCo paying rent for that part of the premises it occupied.  They were also interlinked in other ways.  This included PCo being funded initially with significant loans from CP and TCo and only modest direct bank loans.  Neither the amounts lent by CP and TCo, nor the dates when such loans were repaid, were clearly established by the evidence.  However, it is clear from a document dated 31st March 2003 and headed "Bank transfers - related companies", that by that date CP had transferred £200,000 to PCo and TCo had transferred £70,000.  These were very significant contributions.
51.	I reject the husband's assertion, as put in Mr Mostyn's submissions, that the "success of the business was down to the husband's endeavours alone performed outside the partnership of marriage".  The success of the business was down to a variety of factors, one of which (and only one of which) was the husband's endeavours performed after the parties' separation.  The husband was clearly an important element, but it was not a one-man company.  He obtained advice from BDO and acted on it with the introduction of a strong management team.  Further, its success was built on the development which had taken place from its inception.  I cannot identify any sharp dividing line in the growth of the company as at the date of separation, or indeed as at any other specific date.  The sale was astutely managed by BDO and, although Mr J referred to the husband as fundamental to that process, in my view BDO were a substantial factor in the successful sale of PCo.
The 2004 Valuations
52.	Turning to the 2004 valuations.  HA and WA adopt the same methodology, broadly, when seeking to ascribe a value to PCo as at September 2004.  They both value the company by reference to their estimate of maintainable earnings, HA using EBIT, and WA using profit after tax multiplied by an estimated multiplier.  I have already indicated that I consider the approach they took to be flawed for the purposes of these proceedings, as they ignored later events, especially as they were seeking to calculate future maintainable earnings (when we know what they are) and as the company was in fact sold in 2008.  I do not therefore consider that they provide me with much assistance when determining what award is fair.  However, I propose, briefly, to give my assessment of their respective valuations.
53.	HA's valuation of the company as at September 2004 assumes no growth in turnover beyond that which results from pro-rating the results for the period ended 30th June 2004 to the year ended 31st March 2005.  Accordingly, he worked from an assumed turnover of £3.165 million and an operating profit of £1.15 million.  That both of these were significant underestimates can be demonstrated by reference to the actual figures.  I also agree with WA when he said that "the company was expanding rapidly and all the indications at the time of separation were that the growth would continue".
54.	The multiplier selected by HA was based on the EBIT multiple achieved on the sale of a company called "Furnace Foods".  During cross-examination it became clear that HA had selected this as an appropriate comparable on the basis of the proximity of the sale to September 2004 and of the turnover being the closest in amount to PCo's turnover.  He had undertaken no further investigation to ascertain whether Furnace Foods was in fact a company which could be said to be comparable to PCo.  In my view, the selection of the EBIT multiple achieved by one company, for the reasons given by HA, is a very tenuous foundation on which to build a valuation.  It is too narrow a focus when he accepts he does not in fact know whether the company was actually comparable to PCo.  
55.	Accordingly, I consider that HA's valuation of PCo as at September 2004 was a significant undervalue. As I have described, HA also valued PCo as at February 2008.  He adopted the same methodology - an EBIT of £2.86 million and an EBIT multiple of 10 - and arrived at a total gross value of £28.56 million.  
56.	I have referred in previous cases to the fragility of valuations of private companies.  The fragility of HA's valuation and of this whole exercise can be seen from the fact that, within approximately two months of February 2008 (without, as far as I am aware, any significant changes in PCo), it was sold for £37 million gross, an increase of approximately 30% on HA's valuation as at that date.
57.	WA values PCo by reference to future maintainable profit after tax. rather than HA's EBIT, and a P/E multiplier. As to the former, WA has pro-rated the figures in the management accounts to 31st October 2004 to the year end.  He has then assumed that the turnover of PCo would continue to grow by the same percentage in the years 2006 and 2007, as was achieved in the year ended 31st March 2005.  He also assumes that the profit margins would remain the same.  The only additional element he allows for is depreciation on the new factory (with no financing costs in respect of the new factory).  The operating profit figure taken by WA can be seen to have been a slight underestimate for 2005, an overestimate for 2006 and a significant overestimate for 2007.  
58.	As for the multiplier, WA took a P/E multiplier of 4.75.  He was cross-examined about his selection of this multiplier principally on the basis that he had allowed an insufficient discount for the risk that his future maintainable profit figures might not be achieved and on the basis that P/E ratios are calculated by reference to historic and not future earnings.  In answer, WA explained that the discount he had applied had allowed for risk, even though this was not expressly identified in his report.  I accept his evidence on this point.  As to the latter point, both HA and WA used future maintainable earnings figures and both used the same analysis to identify an appropriate multiplier.  The difference is that HA stopped the projection at 31st March 2005, whereas WA continued the projection for a further two years.  I do not accept, therefore, that the use by WA of P/E ratios, in part from the same figures used by HA, undermines his valuation; nor do I accept that for the purposes of his calculations WA insufficiently discounted the P/E ratio he used.
59.	On a theoretical basis, WA's figure for the value of PCo as at September 2004 was too high because his assumed operating profit was too high.  However, as between his value and HA's valuation, I consider that WA's figure was much closer to the notional value which could be ascribed to PCo as at September 2004.  The comparative sensitivity calculations that he produced during the course of his oral evidence demonstrate to my satisfaction that, if a lower figure for future maintainable earnings had been taken, a higher multiplier would have been justified as there would have been less risk. The range of gross figures produced by WA in these calculations was between £5.4 million and £6.9 million, as against the figure in his valuation of £6.3 million.  Accordingly, I am satisfied that, if required, WA's valuation provides a better guide to the notional value of PCo as at September 2004 than HA's.
Authorities
60.	Turning now to the authorities.  In a number of respects the present case engages the same issues that arose in my previous decisions of H v. H [2008] 2 FLR 2092 and C v. C [2009] 1 FLR 8.  I have also been referred to Miller and McFarlane [2006] 2 AC 618, S v. S [2007] 1 FLR 2120, H v. H [2007] 2 FLR 548, CR v. CR [2008] 1 FLR 323, Fallon v. Fallon, and J v. J [2009] EWHC 2654.  
61.	My task is to determine "the division of property which best achieves the fair overall outcome": Charman v. Charman [2007] 1 FLR 1246 paragraph 67.  Charman also establishes that the sharing principle is not confined to "matrimonial property, namely the property of the parties generated during the marriage otherwise than by external donation".  It applies to all the parties' property "but, to the extent that their property is non-matrimonial, there is likely to be better reason for departure from equality" (paragraph 66 of Charman).  In other words, the existence of property which can properly be described as "non-matrimonial" can, of itself, justify a departure from equality.  
62.	The authorities also establish, as Charles J said in J v. J  (paragraph 391) that:
"A principled approach does not lead to the court taking a formulaic or mathematical approach … or an approach that requires it to closely identify and quantify (by valuation or otherwise) assets that fall to be treated as matrimonial assets and those which represent pre-acquired or gifted assets and post separation assets."
Later in his judgment (in paragraph 424(xiii)) he says:
"In many cases it will not be practical or sensible to assess the impact of some of the relevant factors by reference to a formula  or valuation methodology and their impact will have to be assessed in a broad way by reference to the findings of fact in that case."
He then refers to the need for the court to adopt "a pragmatic, proportionate and commercial approach".  
63.	These points apply with force to Mr Mostyn's initial submission that I must separate the assets into matrimonial and non-matrimonial.  I repeat what I said in C v C at paragraphs 40 to 47.  In my view, Mr Mostyn was right to acknowledge that the degree of specificity required in any case is itself a matter in the discretion of the judge.  To repeat what Lord Nicholls said in Miller and McFarlane in paragraphs 26 and 27:
26.  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."
I would interpolate that, in my view, the same applies to the date of separation.  Continuing with Lord Nicholls' speech:
"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."
Adding that "The case of Mr and Mrs Miller illustrates this only too well".
"27.  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."
Conclusions
64.	Turning now to my conclusions.  I do not consider that, in this case, I should seek to define with precision that part of the wealth which can be described as "matrimonial property" and that which can be described as "non-matrimonial".  The costs which have been spent in these proceedings are so substantial in part because very significant sums have been spent on expert evidence, including the accountants.  To adopt Lord Nicholls' words, the accountancy evidence is of "doubtful utility" in guiding me to a fair award.  It is of doubtful utility in part because it is an artificial, hypothetical exercise, the need for which was substantially diminished, if not eliminated, by the fact that PCo was sold not long after the end of the marriage.  Further, as a result of the approach adopted in this case, the September 2004 valuations prepared by the accountants were prepared on a wholly artificial basis in that they ignored the known subsequent history.
65.	As WA said in his oral evidence, the accountants were instructed to undertake "an artificial, hypothetical exercise for the purposes of which they had to make a whole series of assumptions".  To seek, therefore, to use their respective valuations to create a sharp line as at the date of separation is, in the circumstances of this case, to seek to use a building block which is riven with uncertainties and which, if used to support a formulaic approach, would give no more than a spurious mathematical validity to the discretionary exercise in which I am engaged.  Further, I am satisfied that the amount for which PCo was sold to a significant extent originated in, and derived its existence from, the marriage.  This is very much "a springboard case", to use Charles J's description from J v. J.  
66.	The only guiding principle to which I have been referred is that of sharing, and I agree that this is the determinative principle in this case.  Once again, I find myself faced with the parties each having adopted extreme positions such that, in my view, they cannot both be within the discretionary bracket, broad though it is.  
67.	The husband's case is based on his factual assertion that the sale price achieved for PCo is the product largely of his own endeavours outside the marriage.  I have already made clear that I reject this factual case.  However, I accept that the sale price which was achieved reflects the development of the company after the separation and was in part the product of the husband's work during this period.  
68.	I also accept that the husband in this case was trading with the wife's notional share of the family wealth.  During the course of the husband's evidence, when he was being cross-examined about the way in which he had spent money after the sale of PCo, he said that he considered it to be "the family pot until it was split".  This is an accurate description of what occurred.  The family's wealth was indeed, and still is, "the family pot" until its division, and it was being invested and used by the husband as such.
69.	Balancing these factors with the other section 25 factors, including the length of the marriage and the contributions made by the parties not only to the date of separation but beyond, in my view the outcome proposed by the husband is not fair and gives far too much weight to the work undertaken by him since 2004; bearing also in mind that the husband has "lost" a significant sum since the sale of PCo.
70.	When I consider the wife's case, in my view it gives insufficient weight to the contributions made by the husband to the development of the company between September 2004 and the date of its sale and to the fact that P was not sold until over three years after the separation.  
71.	Balancing all these factors, I consider that, of the current worth of £16.246 million, the wife should receive £7 million, leaving the husband with £9.4 million.  In my view, to provide the husband with the additional amount of £2.4 million fairly reflects the development of PCo and the work undertaken by him in respect of PCo after the separation.  As to any additional sum received from the T property and any sum realised from the loan notes, balancing the factors to which I have referred, I propose that the wife should receive 40% of any additional net sum received in respect of both the T property and of the loan notes.  
72.	The wife will, under my award, receive a total of just over 40% of the overall assets, the actual sum depending on the amount received, if any, in respect of the T property and the loan notes.  In my judgment, this is a fair outcome which gives an appropriate degree of weight to the factors present in this case.
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Else Solicitors LLP, Birmingham for the Applicant Wife
Clarke Willmott LLP, Birmingham for the Respondent Husband