When a marriage or civil partnership comes to an end, both parties will usually have a strong claim to share all matrimonial property i.e. assets that have come into being during the marriage.
By way of example, this could include an equal share in the family home, pensions, cash in the bank, family business interests and more.
Conversely, many people are surprised to learn how courts deal with the distribution of non-matrimonial property. It is sometimes assumed that pre-acquired assets or assets acquired after separation can be ring-fenced from the pot available to the parties on divorce. This is not always the case.
In White v White [2000] UKHL 54, Lord Nicholls recognised that there was an argument for allowing a party to keep non-matrimonial property:
Property acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it. Conversely, the other spouse has a weaker claim to such property than he or she may have regarding matrimonial property.
However, he also provided that:
‘..this factor can be expected to carry little weight, if any, in a case where the claimant's financial needs cannot be met without recourse to this property."
Effectively then, if a spouse has financial needs which cannot be satisfied by the assets in the matrimonial pot, non-matrimonial assets can be invaded to meet need. For instance, if your spouse is unable to re-house following the divorce with the matrimonial assets available then non-matrimonial assets may be considered.
There has been an overwhelming amount of case law discussing the different approaches courts have taken in dealing with non-matrimonial property when parties’ needs cannot be satisfied by the matrimonial pot. However, it has generally been accepted that there are two main schools of thought, one of which is advocated by Mostyn J and the other by Moylan J.
Mostyn J
According to Mostyn J in N v F (Financial Orders: Pre-Acquired Wealth) [2011] EWHC 586 (Fam), the process for factoring in non-matrimonial assets should be as follows:
• The court should first decide whether the existence of pre-marital property should be reflected at all which depends on questions of duration and mingling (i.e. the mixing of non-matrimonial funds with matrimonial funds during the marriage).
• If the court decide that reflecting pre-marital property is fair and just, the court should then decide how much of the pre-marital property should be excluded. Should it be the historic sum? Or, should it be less if there has been lots of mingling? Or more, to reflect a springboard and passive growth? I.e. the increase in value of a non-matrimonial asset not attributable to activity on the part of the ‘owner’.
• The remaining matrimonial property should then normally be divided equally.
• The fairness of the award should then be tested by the overall percentage technique.
Mostyn J recognised that all of the factors above were subject to the parties needs being met.
In N v F, Mostyn J considered that it would be wrong and unfair for none of the husband’s pre-marital wealth to be excluded from the sharing principle as it was a significant factor on which the marriage was founded. Moreover, the marriage was long and the pre-marital wealth was mingled with matrimonial funds which arguably signified that the husband accepted that a large proportion of the monies would be shared with the wife. Mostyn J clarified that were it not for the wife’s needs, he would have possibly excluded the entirety of the husband’s pre-marital wealth.
Moylan J and others
Moylan J and others adopt a more broad-brush approach to non-matrimonial assets. For them, the court should consider all the value of the assets and start from a 50%/50% starting position and adjust the percentage share from that point in accordance with the judge’s overall assessment of the case.
The question then arises, which approach will the court take in respect of your non-matrimonial assets?
The answer seems to be a bit of both. In Versteegh v Versteegh [2018] 3 FCR 895 (Court of Appeal), King LJ provided that both approaches are correct, and the trial judge can choose whichever approach fits the overall objective of fairness, which will be case specific. Similarly, in JB v MB [2015] EWHC 1846 (Fam) Mr Cushworth QC also appeared to have factored in both approaches. According to him, where possible, Mostyn J’s approach should be adopted. However, if the facts of the case make Mostyn J’s approach unsuitable, then the broad-brush approach championed by Moylan J should be adopted.
To conclude, non-matrimonial property is not automatically excluded from financial proceedings if your spouse’s needs cannot be met from the matrimonial property available. When going through financial remedy proceedings, you may want to consider:
- The date non-matrimonial property was acquired.
- The original and current value of the asset.
- Whether the asset has been intermingled, and if so how and with which other matrimonial property.
- If you want to argue that specific property has been kept separate during the marriage, consider what evidence you can rely on.
To give you the best chance of protecting your non-matrimonial assets, we would recommend that you enter into a pre-nuptial agreement.
For more information on the topic, please contact a member of our Family Team.
