Barker Gotelee

It is not the case that a family business within divorce proceedings will automatically be protected.  The family business will always be treated as an asset of the family in the same way as the matrimonial home or any other asset.  Even if the business was acquired by one party before the marriage it is still an asset that needs to be considered.

This is shown quite succinctly in the case of N and N [2001]

“I think it must now be taken that those old taboos against selling the goose that laid the golden egg have largely been laid to rest;  some would say not before time.  Nowadays the goose may well have to go to market for sale, but if it is necessary to sell her it is essential that her condition be such that her egg laying abilities are damaged as little as possible in the process.  Otherwise there is a danger that the full value of the goose will not be achieved and the underlying basis of any offer will turn out to be flawed”.

However, it does still remain the case today that where possible the Courts will try to avoid a sale of a business if there is any other reasonable and practical alternative.  Some methods commonly used in divorce cases to prevent a business sale are as follows:

• Transfer of non-business assets
• Substantial periodical payments in return for small lump sum Dawe v Dawe [1975]
• Agreement that spouse receives percentage of net proceeds of sale on a future date, deferred charge Webber v Webber [1982]
• Disposal of other business assets - ie: property or vehicles
• Transfer of shares
• Lump sum payable by instalments over years - R v R [2003]
• Determining one spouse’s entitlement on what they need (a controversial method as arguably unfair - P v P [2004].

The cases above illustrate the creative solutions that can be found by lawyers and the court so as to keep a business in tact.  What is apparent from practising family law is that these solutions are easier to find where couples communicate with each other and try to sort out their problems in roundtable meetings, rather than becoming embroiled in lengthy correspondence and court attendances.

Katie Beaven

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