Case summary: CB v KB [2019] EWFC 78

The court was concerned with: first, the complex calculation and capitalisation of future income streams, which represented the realisation of assets built up during the marriage; and second, the question of whether this would be sufficient to meet future income needs.

The parties were married for 19 years (including cohabitation) with 6 children. The husband “H” was a bass player in a well-known band, the Wife “W” did not work. The assets totalled £5,769,464. The existing capital was not in dispute - both parties were rehoused.

Therefore, the issue was income. Going forward H would have 5 “streams” of income: 4 of which were made up of the royalties H would receive from the songs that had been written during the marriage. However, the fifth stream would be generated from H touring with the band. It was undisputed that income streams 1-4 represented the realisation of matrimonial assets and would therefore be subject to the sharing principle. The task before the court was the precise computation of H’s future income in order to calculate and capitalise W’s entitlement (by way of a mortgage). The parties would then be able to achieve a clean break.

The questions before the court were:

• What income would H receive from income streams 1-5?
• Should income stream 5 be subject to the sharing principle?
• What should H’s child maintenance obligation be?
• Would W’s future income needs be met by amortisation of the capitalisation of her share of H’s future income and the child support she would receive?

Calculation of income streams

Therefore, in order to capitalise W’s share of this matrimonial assets, the court was presented with the complex task of quantifying income streams 1-4 and ascertaining: a) for how long would H would receive the income; b) how much income H would receive.

Expert evidence was given on this issue. Unusually, the expert witnesses for both parties gave evidence together - topic by topic. Mr Justice Mostyn observed that: 1) this method allowed relevant evidence to be heard “contemporaneously and not separated by a hiatus”; 2) while no provision for this method exists within the FPR PD 25A-E it does within in the CPR; 3) “this process should be considered for use in financial remedy cases where competing valuers give evidence” [18].

Mostyn J found the total income H would receive for income streams 1-4 (those subject to the sharing principle) totalled £4,450,693 [41]. Mostyn J used various multipliers which took into account the relevant commercial risks and a limited non-matrimonial element to one of the income streams.

Income stream 5

There was a dispute as to whether income stream 5, H’s fee for touring, represented future earnings or the realisation of assets built up during the marriage. W’s case was that, as H would be playing songs written during the marriage, income stream 5 was a matrimonial asset and subject to the sharing principle.

Mostyn J rejected this argument and found income stream 5 would represent H’s future endeavours (“The fans are coming to see the band performing, not to listen to songs being played by a machine” [43]) and cited the analogy he drew in B v S [2012] EWHC 265 (Fam): a footballer who has developed his skills during the marriage must still play football to earn a salary [43].

Child maintenance

Neither party had put forward a logical proposal for child maintenance. Mostyn J re-stated the principle that the CMS calculation should be the starting point but there could be good reason for a departure from that formula (Re TW & TM (Minors) [2015] EWHC 3054 (Fam) citing GW v RW [2003] EWHC 611 (Fam) [48]. Mostyn J found no reason for departure

Needs & amortisation

Mostyn J concluded by finding that W’s needs would be amply met if she amortised the sum she would receive from the capitalisation of income streams 1-4 (in addition to child maintenance) [56]. He found it would be “eminently reasonable” to expect her to do so, adding: “I struggle to conceive of any case where in the assessment of a claimant’s needs it could be tenably argued that it was reasonable for her not to have to spend her own money in meeting them” [53].