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Hotel owner loses financial remedy appeal

Award of £2.2m to wife upheld by Court of Appeal

The Court of Appeal in Davies v Davies [2012] EWCA Civ 1641 has upheld an order awarding the wife of a hotel owner a lump sum of £2.2m.

The husband is the owner and operator of a successful hotel in Paddington. The husband's principal case was that the wife was no more than a receptionist who had been employed intermittently in his business during the years of co-habitation and marriage. The marriage itself was short and her entitlement was therefore modest. Alternatively he argued that the assets available to satisfy the wife's needs hardly extended to the hotel business which came to him from earlier generations and was not the product of any shared endeavour.

The husband claimed that the accounts demonstrated that the hotel business was of substantial value at the date of transfer from his father to him.

The wife's case was that the status of the hotel had risen almost dramatically as a result of her energy, enterprise and marketing skills. However, it was conceded on her part that one-third of the net assets should be excluded from the wife's claim.

At trial the wife's evidence was preferred where it conflicted with her husband's and her contribution to the increase in the family's net worh was held to be exceptional. The judge accepted the wife's claim that the hotel business was valueless at the date of transfer.

Upholding the judge's award, Lord Justice Thorpe said:

"Cross checking for fairness, the effect of the order was to give the wife approximately one third and the husband approximately two thirds of the total available assets. Such a percentage fairly reflected the derivation of the hotel and its trade. Given the resounding nature of the judge's findings in the wife's favour anything less than a third would have been plainly unfair."

For the judgment and the case summary by Richard Tambling of 1 Garden Court Family Law Chambers, please click here.