McMahon v McMahon [2025] CSOH 83 (Outer House, Court of Session)

Unequal division of matrimonial assets justified after husband deliberately reduced company value

Background

This recent Court of Session decision dealt with financial provision on divorce and the treatment of a jointly owned family business whose value had been deliberately reduced by one party.

Mr and Mrs McMahon married in 2010 and separated in August 2024. They were joint directors and equal shareholders in Advantage Wealth Management Ltd (“AWM”), an independent financial advice company which generated recurring income from client fees. After separation, the wife raised an action for divorce seeking a fair division of matrimonial property under the Family Law (Scotland) Act 1985.

While the parties agreed that an equal division would normally be fair, they disputed the value of AWM and how it should be divided. The wife contended that her husband had intentionally depressed the company’s value in order to defeat her claim for financial provision. The husband argued that any reduction in income was due to poor mental health and that he had acted responsibly by ceasing trading activity.

Key legal issues

The court was asked to determine:

• how the shares in AWM should be valued at the relevant date;
• whether deferred consideration (payments linked to future performance) should reduce the company’s notional value; and
• whether the husband’s actions amounted to dissipation of matrimonial property under section 10(6)(c) of the 1985 Act, allowing for an unequal division.

Expert valuation evidence from two accountants gave a relevant-date value for AWM between £1.68 million and £2.05 million, with roughly half of any purchase price normally paid over time.

The defender’s conduct

Evidence showed that shortly after separation, the husband had “switched off” client fees, moved many clients’ investments to cash, and applied to the Financial Conduct Authority for authorisation of a new firm — Advantage Wealth Management Group Ltd — through which he intended to transfer clients. He withdrew over £100,000 from AWM’s accounts and failed to appoint a locum adviser, despite knowing this was required.

The court found his explanation of ill-health unconvincing. He continued to meet clients and attend industry events. Lord Braid concluded that his conduct was deliberate and designed to reduce AWM’s value ahead of the divorce.

Decision

Lord Braid held that the husband’s behaviour amounted to dissipation of assets—a “special circumstance” under section 10(6)(c)—justifying an unequal division. The court valued AWM at a relevant-date figure of £1.02 million, with each share worth £510,888, rejecting the husband’s claim that deferred payments should halve that value.

Although the current value of the company had fallen to about £505,000, fairness required the court to treat the shares as retaining their relevant-date value because the fall was caused by the husband himself.

The wife was awarded a capital sum of £215,726, to be paid within one month, together with an order transferring her share in AWM to the husband. She retained ownership of the former matrimonial home. Interest was ordered at 8 per cent per annum on any unpaid sum.

Key takeaway

This case underlines the Scottish court’s willingness to prevent manipulation of matrimonial assets. Where one spouse intentionally diminishes the value of a business to frustrate financial provision, the court can restore fairness by treating that conduct as dissipation and ordering an unequal division of property.

The judgment also confirms that deferred or contingent payments should not normally reduce a company’s value for divorce purposes unless the risk of non-payment is genuine and not self-inflicted.

Citation: McMahon v McMahon [2025] CSOH 83 (Outer House, Lord Braid, 5 September 2025)