XW v XH [2019] EWCA Civ 2262


  • The parties married in 2008 and their
    marriage broke down in 2015. They had one child who had “a rare,
    life-threatening condition and also significant disabilities”
  • The husband’s (H’s) shares in a company,
    which he, with others had established some years before the marriage, were sold
    and the proceeds received by H came to be worth approximately £490m net.
  • Mr Justice Baker (as he then was) ordered
    that the wife (W) should receive capital resources which would give her
    approximately £152 million, roughly 29% of the parties’ combined capital
    resources of £530 million. This determination was based the following four

    • that
      the parties had “to a very substantial extent kept their financial affairs
      completely separate during the marriage” which was “a matter of considerable
      relevance” to the extent to which the assets should be shared;
    • that
      the shares in the company through which most of the wealth had been created,
      were H’s “business assets”; the “natures and source” of this property, having
      been “created through the husband’s business activity”, were relevant to a fair
    • that
      there was “latent potential in the company at the date of the marriage which
      was not reflected in the expert’s valuation and, to “a not inconsiderable
      extent, the later success was built on these earlier foundations. This meant
      that, while there was no “clear dividing line between matrimonial and non-matrimonial
      property”, this significant “latent potential” should be taken into account
      when dividing the wealth by “a broad evidential assessment”;
    • that
      H’s contribution to the “growth in value of his business assets during the
      marriage comes within the concept of special contribution”.


  • W then appealed the final financial remedy
    order made by Baker J, to the Court of Appeal, on the following grounds:

    • (i)
      that any principle that the manner in which the parties managed their financial
      affairs might impact on the division of the marital wealth had no application
      to this case;
    • (ii) that H’s “business assets”
      created during the marriage were marital property which should have been shared
      equally between the parties;
    • (iii) that the judge was wrong to find
      that the company had latent potential;
    • (iv) that the judge was wrong to find
      that H had made a special contribution, in particular because he only
      considered H’s financial contribution and did not balance this with W’s
      contribution or consider the disparity in the parties’ respective contributions
      when determining this issue;
    • (v) that the judge failed to quantify
      how each of the above factors, in particular latent potential and special
      contribution, impacted on his award;
    • (vi) that the judge’s decision in
      respect of restricted stock units (RSUs) and stock options was flawed and he
      should have awarded W a share of these when received by H.

Held, upholding W’s appeal

  • Importantly, on the question of special
    contribution, issue (iv) above, Lord Justice Moylan held that the judge
    failed to consider whether there was such a disparity in the parties’
    respective contributions to the welfare of the family that it would be
    inequitable to disregard. As a consequence Baker J’s finding in this respect
    was set aside.
  • On the first two issues, addressed under the
    heading of unilateral assets, Moylan LJ held that:

    • the
      judge was wrong to decide that the fact that the “assets which grew so
      substantially during the … marriage were the husband’s business assets” was
      relevant to the division of that wealth between the parties;
    • insofar
      as they were the product of endeavour during the marriage, they were marital
      assets which should be shared equally between the parties absent other factors;
    • Baker
      J’s separate determination that the way the parties ran their lives, could not
      stand because it was not a distinct factor which stands on its own.
  • On the issue (iii), the issue of latent
    potential, Moylan LJ held that:

    • the
      judge was entitled to find that part of the proceeds of sale of the shares was
      non-marital property to which the sharing principle did not apply;
    • he
      was also entitled to determine what proportion was not marital property other
      than by applying the expert’s valuation increased by indexation. It was open to
      him to undertake “a broad evidential assessment” and to conclude that there was
      significant value not reflected in the formal valuation.
    • however,
      this was affected by issue (v) as Moylan J went on to hold that because the
      judge did not set out his determination of the extent of the marital property
      in this case, the court was unable to separate out that aspect of his decision
      for the purposes of deciding whether or not to uphold it.
  • In addition, on issue (vi) Moylan LJ held
    that he was not persuaded that Baker J was wrong to decide that the RSUs and
    options were “dependent on future performance” and should, therefore, be
  • The Court of Appeal then found that a
    rehearing was not required and consequently ordered an equal division of the
    total marital wealth of £296.7 million. This led to W receiving a lump sum of
    £145 million (in place of Baker J’s £115 million) and the jointly owned
    property worth £3.7 million. This then gave W 34.5% of the parties’ combined
    wealth and left H with 65.5% as opposed to the 28.75% to 71.25% division
    effected by Baker J’s award.