9 May 2025

MPS or Misstep? The Costs Trap in Maintenance Pending Suit

In DSD v MJW [2025] EWFC 119 (B), Deputy District Judge David Hodson delivers a candid—and cutting—judgment on a £500-a-month maintenance pending suit (MPS) application that cost nearly £13,000 in legal fees to argue. The case is a cautionary tale for lawyers and litigants alike: just because an interim application can be made doesn’t mean it should be.

What is Maintenance Pending Suit?

MPS is a form of interim financial support paid by one spouse to another after separation but before the final financial remedy order. It’s designed to meet genuine short-term needs and preserve fairness while financial issues are resolved. The test is reasonableness, but this case shows that reasonableness isn’t just about the recipient’s budget—it includes timing, proportionality, and commercial sense.

The Application: A £500-a-Month Dispute That Cost £13,000

In this case, the wife sought £500 per month in MPS for three months—at most £2,000 including any backdating. By the hearing date, she had incurred £8,716 in costs, and the husband had spent £4,170 responding. That’s almost £13,000 in legal fees for a claim worth, on paper, a tenth of that. The judge’s conclusion? “How can that ever be?”

Judge Hodson made clear that while MPS applications can be justified in situations of genuine need—such as pending homelessness or the sudden loss of income—this was not such a case. The wife had:

  • A stable income of around £38,000 from the armed services.
  • Subsidised housing.
  • Shared child arrangements (and expenses) with the husband.
  • Support from her parents, who were funding her litigation.

What tipped the scale, however, was the lack of urgency and the lateness of the application. The FDR had taken place four months earlier, and the final hearing was just three months away. If support had truly been needed, it should have been raised at the FDR or immediately afterwards—not two months later.

Judicial Frustration: “This Was a Bad Application”

Judge Hodson did not mince words:

“This was a bad application to make at this late stage in the case. It should not have been made.”

He went on to note that the application had not only failed the legal test, but it had:

  • Diverted time and resources from trial preparation.
  • Increased animosity between the parties.
  • Brought the family courts—and family lawyers—into disrepute due to the absurd costs.

Could It Have Been Avoided? Yes.

The judge suggested a practical workaround: with over £700,000 held on account, why didn’t either party propose that £2,000 be paid out to each side to tide them over until trial? That would have been quicker, cheaper, and would have avoided the hearing entirely. Instead, litigation strategy took precedence over common sense.

Key Lessons for Family Lawyers and Clients

  • Think twice before pursuing small MPS claims late in proceedings. If the final hearing is imminent, courts are unlikely to intervene unless there’s a pressing change in circumstances.
  • Proportionality matters. Costs must bear some relation to what is at stake. Spending £9,000 to pursue £2,000 isn’t litigation—it’s financial self-sabotage.
  • Use interim funds creatively. Withheld capital can sometimes be released by consent to avoid unnecessary interim disputes.
  • Don’t expect courts to rubber-stamp late-stage tactics. If the application appears to be part of a broader litigation strategy (e.g., to inflate future capitalised maintenance), expect scrutiny.

Final Thought

DSD v MJW is a sharp reminder that MPS applications must be rooted in genuine need, made in good time, and pursued with commercial realism. Interim applications are not free hits—they come with cost consequences, strategic risks, and, sometimes, judicial rebuke.

24 January 2025

Valuing Love: Lessons from AF v GF [2024] on Non-Matrimonial Assets and Pensions

The case of AF v GF [2024] EWHC 3478 (Fam) offers family law practitioners a masterclass in tackling complex financial remedy disputes involving high-value business assets, pensions, and the nuanced distinction between matrimonial and non-matrimonial property. Beyond the substantial legal fees and extensive litigation, this case highlights key principles and practical tips for practitioners navigating similar scenarios.

The Story Behind the Numbers

This case concerned a long marriage between AF (the wife) and GF (the husband), marked by significant financial complexities. At the heart of the dispute were:

  • The valuation and classification of GF's business interests in the investment management sector.
  • Arguments over the extent to which non-matrimonial assets had been "matrimonialised" through the wife’s involvement in growing the business.
  • The drastic decline in asset values during the litigation, leading to competing expert valuations.

The total asset pool, initially estimated at £10–13 million, was later revised to a mere £2.779 million, a drop that complicated the fairness assessment.

Key Issues and Legal Principles

  1. Matrimonial vs. Non-Matrimonial Assets
    The court grappled with whether GF's pre-marital business interests (founded in 2007) had been transformed into matrimonial property through AF’s contributions as Managing Director.

    • The court relied on Standish v Standish [2024] EWCA Civ 567, which emphasised that matrimonialisation should be applied narrowly and fairness should guide whether non-marital assets are brought into the sharing principle.
    • The judgment reinforced that not all contributions transform non-marital property into matrimonial property; the distinction depends on usage, mixing, and intent.
  2. Fragility of Business Valuations
    The collapse in the value of GF’s business interests highlighted the volatility of private company valuations. Echoing Versteegh v Versteegh [2018], the judgment noted that such valuations are inherently fragile due to market conditions, lack of liquidity, and reliance on hypothetical projections.
  3. Addbacks and Conduct
    Both parties sought to add back amounts they alleged the other had wasted.

    • The court declined to add back GF’s substantial loss from the purchase of a yacht, as it was deemed a business decision rather than wanton dissipation.
    • Similarly, AF’s maintenance expenditure was not penalised despite GF’s claims of unnecessary spending.

Practical Tips for Practitioners

  1. Be Proactive About Valuations
    • Always scrutinise business valuations early in the proceedings and ensure clients understand their inherent volatility.
    • Encourage clients to provide clear and complete financial disclosure to minimise disputes.
  2. Understand the Limits of Matrimonialisation
    • Advise clients that contributions to a business may not necessarily convert non-marital assets into marital property.
    • Where clients seek to argue matrimonialisation, gather evidence showing active involvement and the integration of assets into the marital framework.
  3. Manage Client Expectations
    • Cases involving non-marital assets often lead to unpredictable outcomes. Set realistic expectations early, especially when valuations fluctuate.
    • Highlight the cost-benefit analysis of litigation; in this case, legal fees of £1.6 million significantly eroded the available asset pool.
  4. Addbacks Require High Thresholds
    • Emphasise that claims for addbacks (or reattributions) require proof of wanton dissipation of assets. Frivolous spending or unwise investments typically do not meet this standard.
  5. Clean Breaks vs. Wells Orders
    • This case underscores the practical challenges of devising clean break settlements where assets include volatile business interests. Wells orders, which defer payments until realisations occur, may provide a pragmatic alternative.

Reflections: Navigating the Storm

AF v GF serves as a cautionary tale about the emotional and financial toll of protracted litigation. For practitioners, the key takeaways are the importance of robust evidence, early resolution efforts, and managing the inherent unpredictability of asset valuations.

Ultimately, this case reaffirms the court’s commitment to fairness, even in the most complex financial landscapes. It also highlights that when love turns to litigation, the best outcomes often stem from thorough preparation and a pragmatic approach.

1 November 2024

Splitting the Hits: Valuing a Music Catalogue in Divorce – Lessons from ED v OF [2024] EWFC 297

The ED v OF [2024] EWFC 297 case sheds light on how assets like music catalogues and private companies are valued and divided during financial remedy proceedings in the UK, offering significant lessons for high-net-worth and creative industry divorces.

Background: A Complex Asset Portfolio

This case involved a well-known musician and producer, whose assets included a valuable music catalogue, multiple companies (such as a recording studio and publishing companies), and various investments. The couple had a 16-year marriage and two children. Central to the dispute was the valuation and division of the husband’s music-related assets, particularly the catalogue, which was considered a shared matrimonial asset despite its growth stemming largely from the husband’s work.

How the Court Approached Valuation of Creative Assets

Valuing a music catalogue, especially one tied to ongoing projects and business interests, is complex. The Court referenced Versteegh v Versteegh and Miller v Miller; McFarlane v McFarlane to emphasise that valuations of private companies and intellectual property are inherently fragile and volatile. These valuations are often based on future projections of income, making precise accounting difficult. The Court ultimately relied on a single joint expert’s Discounted Cash Flow (DCF) valuation, though it acknowledged the valuation’s fragility due to changing market and industry factors.

Additionally, the Court considered past sale offers but ruled them unreliable for assessing current value, focusing instead on expert valuations and realistic adjustments based on industry benchmarks.

Key Takeaways for Family Law Practitioners

  1. Intellectual Property and Matrimonial Assets: While the husband created much of the music catalogue’s value, the Court deemed it a matrimonial asset, demonstrating that creative and business contributions during marriage are typically shared regardless of whose name appears on legal titles.
  2. Handling Volatile Assets: Valuing intangible assets requires careful balancing. In cases where assets are volatile, practitioners should prepare clients for realistic expectations, as courts will use “broad evaluative” methods rather than precise calculations, focusing on fairness over accuracy.
  3. Equal Division and Clean Breaks: The Court leaned toward a clean break, ordering the husband to either buy out the wife’s share of the catalogue or put it up for sale if he couldn’t raise the funds. This approach underscores the importance of securing financial independence for both parties post-divorce, particularly when dealing with complex business interests.
  4. Ongoing Income and Family Needs: The Court awarded the wife a share of the income from existing assets, including a company-related income stream, while also confirming her role in the family home. By doing so, the Court balanced the couple’s financial future and stability while addressing the wife’s housing and income needs.

Conclusion

The ED v OF judgment underscores the challenges in valuing creative assets and business interests in divorce, especially when asset volatility and artistic contributions play significant roles. For family law practitioners, this case serves as a reminder to carefully evaluate creative assets and advise clients about realistic valuation expectations, the importance of expert valuations, and preparing for structured settlements that provide financial security for both parties.

The case highlights the growing importance of balancing creativity, business interests, and equitable outcomes in family law, particularly for high-profile or high-value creative cases.

 

Resources

Key case references from the report in ED v OF [2024] EWFC 297 related to valuing business and creative assets:

  1. Versteegh v Versteegh [2018] EWCA Civ 1050
    • Discusses the challenges of valuing private businesses and the limitations of financial certainty in court decisions.
  2. H v H [2008] 2 FLR 2092
    • Moylan LJ notes the fragility of business valuations and the difficulties in applying exact financial values to private company shares.
  3. Miller v Miller; McFarlane v McFarlane [2006] UKHL 24
    • Highlights the variable nature of asset valuations and the potential for divergent expert opinions.
  4. Wells v Wells [2002] EWCA Civ 476[2002] 2 FLR 97
    • Establishes the concept of “Wells sharing,” a method to balance asset volatility by dividing the asset in specie.
  5. Martin v Martin [2018] EWCA Civ 2866
    • Reinforces the need for a balanced approach in allocating private business interests, emphasising broad evaluations over precise accounting.
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