Since a case known as White v. White in 2000 “the rule of thumb” is that all marital assets are divided equally for reasons relating to fairness (almost invariably the needs of one party over the other) – unless it is necessary to depart from this “principle of equality.”
All non-marital assets are not divided – unless required to meet the needs of one of the parties.
In other words, it is only the property which both parties have contributed to, directly or indirectly, that is available for division.
It is, therefore, vital to identify the “non-matrimonial property” in divorce proceedings.
Non-matrimonial property is property acquired by way of inheritance, gifts, and property the parties bring into the marriage with them and property acquired after separation.
Somewhat confusingly, there is no question of non-matrimonial property being quarantined, ring-fenced or excluded from the Court’s discretionary consideration. The approach adopted by the Courts is not always obvious.
However, the following arguments must be considered when seeking to preserve assets during a divorce: –
Although this is arguably non-matrimonial property in a case called P v. P (2004) the Court observed that fairness requires a different approach in different circumstances.
For instance, a small gift of money during the marriage may be treated differently to a land that has been within the family of one of the parties for many generations.
In the case of K v. L (2011) the wife had shares in a family company valued at about £57 million.
The Court only made an award to the husband on the basis of his needs, albeit an award of £5 million.
You may remember the case of McCartney v. Mills-McCartney in 2008.
Paul McCartney had brought £400 million into the marriage. His wife sought a lump sum in excess of £125 million but was only awarded total assets of £24.3 million. The Judge said that where the wife and the children were comfortably housed and looked after: –
Fairness requires that the wife’s needs (generously interpreted) are the dominant factor in the…exercise. Any other radically different way of looking at this case would, in my judgment, be manifestly unfair.
This principle was continued in S v. S (2014) where the total assets of the marriage were £25 million.
The husband said he had brought £13 million to the marriage.
After argument, the Judge found the pre-acquired asset was £13 million, deducted that from the £25 million, and divided the rest in half giving the parties £6 million each from the marital acquest.
Any additional amount for the wife due to her because of her needs would come from the non-matrimonial property (i.e. she had a potential “needs” claim on part of the £13 million the husband brought in.)
The Court normally approach this by trying to identify two types of accrual: –
- Continuum cases – Assets or interests in place at the point of separation increase in value.
- New venture cases.
Continuum accrual may be shared, but the spouse who has it is likely to keep the lions share.
New venture accrual is normally non-matrimonial property.
This is a difficult area of law. The parties may not agree on the facts, to the extent that the Court will have to make a determination.
Once the facts are agreed or decided, the Court’s discretionary approach requires careful analysis and application in each case.
Nevertheless, in spite of the difficulties, it is essential to identify non-marital property from the start of your instructions and to make sure your position on this issue is clearly set out for the Court in your financial statement and later on, in any witness statement the Court calls for.