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

Unequal division after deliberate dissipation of company value — relevant-date valuation and deferred consideration

Background

In this high-value Scottish divorce case, Lord Braid determined financial provision where the main asset was an independent financial advisory company, jointly owned by the parties. Following separation, the husband turned off recurring client fees and moved clients into cash, asserting ill-health; the wife alleged he was manipulating value to defeat her claim. The court had to fix the relevant-date value of the shares and decide whether the post-separation conduct justified unequal sharing under the Family Law (Scotland) Act 1985.

Key legal issues

• How to value a closely-held company at the relevant date (recurring-income vs earnings basis; expert evidence);
• Whether deferred consideration/earn-out should reduce the relevant-date value; and
• Whether the husband’s conduct amounted to dissipation/alienation — a “special circumstance” under section 10(6)(c) justifying unequal division.

Evidence and reasoning

The court preferred a cautious earnings-based valuation at the relevant date, adjusting for a realistic payroll cost and addressing how much of any future deferred consideration would likely materialise without assuming the husband’s continued involvement (which would improperly let one party benefit from post-separation effort). Using a “broad-brush” approach, only a modest portion of the deferred element was included in the value.

On conduct, Lord Braid found the husband had deliberately brought about a reduction in company value: failing to appoint a locum, switching off fees en masse, withdrawing funds while cash was the main asset, and preparing to novate clients to a new vehicle. That behaviour squarely engaged section 10(6)(c) (destruction, dissipation or alienation) and warranted an outcome that restored the wife to the position she would have been in absent the manipulation.

Decision

The court granted decree of divorce and ordered a capital sum to the wife (and transfer of her shareholding to the husband) based on the relevant-date share value with a limited allowance for deferred consideration. Importantly, the judge explained that even if one starts from the current lower value, fairness can still be achieved by unequal division to reverse the effects of dissipation. Either route — relevant-date valuation, or current-value plus unequal split — produces the same equitable result.

Rooney Family Law commentary

For owner-managed businesses, the questions are: what would a willing buyer have paid at the relevant date, and what parts of an earn-out are truly probable without the spouse’s future efforts? This judgment is a clear reminder that turning off revenue or moving clients to cash post-separation can be treated as dissipation. Where that happens, the court can either keep the relevant-date value or adjust division to undo the unfairness.

If your case involves shares, deferred consideration or disputed conduct around the separation, get early valuation advice and a litigation-ready narrative. Our divorce lawyers in Scotland regularly act in complex business divorces, working with forensic accountants to protect value and outcomes.

Key takeaway

Scottish courts will not let a spouse depress a company’s value to reduce the other’s entitlement. The court can (i) hold to the relevant-date valuation with limited earn-out adjustment, or (ii) adopt an unequal division to reverse dissipation — whichever better delivers fairness.

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