Jones v Jones ============= The case of *Jones v Jones* \[2011\] EWCA Civ 41 concerned the [value of a business in relation to matrimonial proceedings](https://vardags.com/law-guide/how-the-courts-decide-a-financial-settlement/the-matrimonial-portion-of-a-business). The parties had met in 1996 and separated in 2006. When they married, the husband owned a business worth around £2 million. By the time they had separated, it was worth £12 million, but was sold the following year whilst the proceedings for financial settlement were under way, with a net profit of £25 million. In the husband's [Form E](https://vardags.com/law-guide/divorce-finance-process/what-is-form-e)affidavit, he had stated that the value of his company was £3 million, which was later held to be a dishonest estimation as he would have known at that time that he was going to receive at least £20 million, given that he was in active negotiations for its sale. **If you're considering or going through a divorce, click below for a free initial consultation with one of our expert divorce solicitors.** [BOOK FREE CONSULTATION](https://vardags.com/contact "BOOK FREE CONSULTATION") In the High Court, Charles J awarded the wife £5.4 million on a [clean break](https://vardags.com/law-guide/alternative-dispute-resolution/clean-break-settlement) basis. He determined that 60% of the net proceeds represented what the husband had brought to the marriage and was therefore a non-matrimonial asset which should not be shared. The remaining 40% was shared equally, and the wife was also awarded an additional sum to cover her costs. The wife appealed, arguing that she should be awarded 40% (£10 million). The appeal raised the question of how the proceeds of a sale of a company, which had been brought into and built up over the course of a marriage, should be treated by the courts when deciding a financial settlement. The husband had set up his business 10 years prior to the marriage, after 19 years of working in the oil and gas industry. This previous experience likely contributed to his business' success. On this basis, he argued that a departure from the sharing principle was justified. He offered the wife £5 million, which was calculated by looking at the increase in the business' value from the start of the marriage until the separation, and then dividing the difference equally. The wife rejected this. In the Court of Appeal, Wilson LJ held that Charles J had wrongly placed significant capital value on the husband's earning capacity, thereby capitalising it and treating it as a non-matrimonial asset. Whilst the earning capacities of parties will be considered when deciding a financial settlement, Wilson LJ held that a party's earning capacity should not be held to be an asset in of itself. The court also held that the latent potential of the business at the start of the marriage should be considered as a ["springboard"](https://vardags.com/law-guide/how-the-courts-decide-a-financial-settlement/the-matrimonial-portion-of-a-business) in the valuation. Therefore, Wilson LJ doubled the expert valuation of £2 million to £4 million to reflect this latent potential or "springboard". This was then increased to £9 million to take into account the business'"passive growth", which was determined by reference to the FTSE All Share Oil and Gas Producers Index. This meant that the proper valuation for the company at the start of the marriage was £9 million, rather than £2 million. On that basis, the court held that [the matrimonial portion of the business](https://vardags.com/law-guide/how-the-courts-decide-a-financial-settlement/the-matrimonial-portion-of-a-business) should be valued at £16 million, to reflect the net increase in the business' value over the course of the marriage, and divided equally. Wilson LJ then tested this outcome against his overall view of fairness to both parties. He considered that the wife's claim of 40% would be unfair to the husband, and a fair bracket was 30-36%. An award of £8 million amounted to 32% of the net profit of £25 million, and so survived this test. This case is an example of the court taking a more mathematical approach when considering the division of assets in financial proceedings. It also provides useful insight into how the concepts of passive growth and "springboard"may be used to value a business. To learn more about how businesses are valued in divorce proceedings, read our guide [here](https://vardags.com/law-guide/divorce-finance-process/valuation-of-a-business-in-divorce-proceedings). About Us -------- Ayesha VardagFounder & President "A DIVORCE LAWYER WIDELY REGARDED AS ONE OF THE WORLD'S BEST" The Metro Vardags offer a unique approach to the law, specially tailored to the needs of HNW individuals. We offer City-quality representation for your divorce and family law needs. Our lawyers come from the very best universities and receive the very best training - they are determined, diligent, and dedicated to getting the best outcome... [read more](https://vardags.com/about-us) [BOOK FREE CONSULTATION](https://vardags.com/contact) Related Guides -------------- [How to value a business for divorce](https://vardags.com/law-guide/how-the-courts-decide-a-financial-settlement/valuation-of-a-business-in-divorce-proceedings "How to value a business for divorce") [Valuing the matrimonial portion of a business](https://vardags.com/law-guide/how-the-courts-decide-a-financial-settlement/the-matrimonial-portion-of-a-business "Valuing the matrimonial portion of a business") The information on this website is intended as a guide and does not constitute legal advice. Vardags do not accept liability for any errors in the information on this website, nor any losses stemming from reliance upon the statements made herein. All articles and pages aim to reflect the legal position at time they were published, and may have been rendered obsolete by subsequent developments in the law. Should you require specialist advice, tailored to your situation, please see how Vardags can help you. What our clients say -------------------- The team who supported my case at Vardags over several months, led by Nikki Hale (Senior Associate), were outstanding. Nikki navigated me through unchartered territory with expert counsel. It was a blend of confidence, honesty... and objectivity with my best interests always in mind. Further to the professional qualities Nikki and her team possess, they were so personable and I felt they really appreciated and considered any emotional or sensitive matters. I have since recommended Niki and Vardags to friends which is the greatest compliment I can pay. Philip Rogers What should have been the worst year of my life was resurrected by this firm. The Manchester based team of Anne-Marie Bradley and Kate Taylor were exceptional. They treat you as a human being rather than a client. I can't thank... them enough for all their expertise, choice of barrister and expert witness. If I am ever unlucky enough to repeat this horrible episode, they will be my first port of call. Can't recommend these two enough. Mark Gallagher Throughout my time using Vardags I felt that I have always been in the best possible hands. I enjoyed an excellent level of service and received accurate and precise legal advice. The lawyers are hugely talented, sensitive and... focused on getting the very best results. Their no-nonsense and direct approach is most valuable when time and costs are of the essence. I highly recommend them over and above any other law firm I have ever dealt with. Thank you Vardags. Valerie Knowledgeable, respectful and empathetic service and team. Michelle Ravden Getting any kind of family problem is really when you are at your most vulnerable variables and their whole team were incredibly supportive, kind, attentive and caring throughout the entire experience. The whole team were... incredibly supportive, kind, attentive, and caring throughout the entire experience. Geeta Sidhu-Robb Immediate advice was gratefully received. No hesitation in recommending Vardags. Stewart Little OUR LEADERSHIP TEAM ------------------- [### Ayesha Vardag](https://vardags.com/solicitors/london/ayesha-vardag "Ayesha Vardag Founder & President Divorce & Family") [### Stephen Bence](https://vardags.com/solicitors/london/stephen-bence "Stephen Bence Vardags CEO") [### David Lister](https://vardags.com/solicitors/london/david-lister "David Lister") [Founder & President](https://vardags.com/solicitors/london/ayesha-vardag "Ayesha Vardag Founder & President Divorce & Family") [Chief Executive Officer](https://vardags.com/solicitors/london/stephen-bence "Stephen Bence Vardags CEO") [Senior Partner and Head of London Family - Divorce & Family](https://vardags.com/solicitors/london/david-lister "David Lister") [### Ayesha Vardag Founder & President ](https://vardags.com/solicitors/london/ayesha-vardag "Ayesha Vardag Founder & President Divorce & Family")"Ayesha Vardag - Britain's top divorce lawyer." The Telegraph [### Stephen Bence Chief Executive Officer](https://vardags.com/solicitors/london/stephen-bence "Stephen Bence Vardags CEO")"Dr Stephen Bence is a financial genius." Lewis Marks KC [### David Lister Senior Partner and Head of London Family - Divorce & Family ](https://vardags.com/solicitors/london/david-lister "David Lister")"Brilliant with a real spark which clients love" Legal 500 [Meet the rest of the team](https://vardags.com/team) [Vardags climbs ranks of UK's biggest firms in The Lawyer's UK 200](https://vardags.com/posts/vardags-london-climbs-ranks-of-uks-biggest-firms-in-the-lawyers-uk-200)