Non-Matrimonial Property When Applying the Sharing Principle: Home Is No Longer Where the Hart Is.

In bygone years it was perhaps the norm to marry young and to do so with your childhood sweetheart. However as time passes, society evolves and nowadays it is far more likely that parties will marry later in life, or multiple times. As a result there is a greater likelihood that one or other of them will have acquired wealth prior to meeting their spouse. The Court of Appeal recently considered the approach the court should take to non-matrimonial property when determining a financial remedy case by application of the sharing principle.

Case Law

In Hart v Hart [2017] All ER (D) 14 (Sep) the parties met in 1979 and began cohabiting in 1983, when the husband was 48 and the wife 27. At this point the husband was already a “man of substance” in the words of the wife, having pursued a number of business interests, including property development. The wife was working as an air stewardess and her only assets at that stage was a Porsche. The parties separated in 2006, by then aged 80 and 59 respectively, and with two children of the marriage, both having reached majority.

At trial the Judge found the parties’ combined resources to be £9.4million, comprising of assets in the parties’ names at £3.9 million and assets within a trust totalling £5.5 million. The Judge found the assets in the trust should be considered as part of the husband’s resources. The proceedings were commenced by the wife in 2001 and did not conclude until this year, the parties incurring in excess of £500,000 in costs.

The wife was awarded approximately £3.5 million, which the Judge held was required to meet her needs. The wife appealed, such appeal raising three issues, (1) the approach to take to matrimonial and non-matrimonial property when applying the sharing principle, (2) whether the husband’s pre-marital wealth justified unequal division, and (3) whether, even if departure was justified, whether the decision to base the award on the wife’s needs was correct.

In respect of point (1) the Court of Appeal found that a formulaic approach was not required when determining whether the assets comprised matrimonial and non-matrimonial property or when deciding upon the appropriate award. The sharing principle would apply with force to matrimonial property and with either a lesser degree of force, or indeed none, with regard to non-matrimonial property. In a case where the sharing principle was to be applied, the correct approach was to firstly case manage effectively in deciding whether, and to what extent a factual investigation is required. If there was a clear distinction between matrimonial and non-matrimonial property then the court could use that distinction when making its determination. However if a lengthy, expensive investigation would be required, or its potential outcome of uncertain use, the court may well determine that such an investigation was not justified or proportionate. If a lesser form of investigation were required the court would determine the nature and depth required.

Thereafter the Court would need to make such factual decisions as it was able to, based upon the evidence before it. It was within the court’s power to decide that non-marital contribution was not of sufficient weight or significance to justify a finding that any such asset was non-matrimonial property. In the event there was a clear distinction between matrimonial and non-matrimonial property then the court would utilise that distinction at the next stage of deliberation. However if there is a complex history and it is not possible to draw such a line easily, the court may determine that it is not proportionate or worthwhile to engage in a full investigation to achieve such a conclusion, but instead a broad assessment without specific determination of how the assets should be apportioned would be sufficient.

Finally, regardless of whether the court had made a clear distinction between matrimonial and non-matrimonial property it would still need to exercise its discretion utilising the section 25 factors. In the event that the court had only undertaken a broad assessment, finding that there was an element of matrimonial and non-matrimonial property, it would have to utilise that finding in the discretionary exercise under section 25, deciding what share provided a fair outcome having taken into account that which was deemed non-matrimonial. As is often the case, there is no specific formula or method that was required to be applied, the court had a discretion and could utilise the aforementioned broad assessment.

The court would however need to make findings in respect of the value of any available assets, notwithstanding the engagement or otherwise of a party, as the court would need to ensure that the particular award it was imposing could be satisfied.

In respect of point (2), whilst it was accepted that the husband was already a “man of substance” prior to the relationship, his litigation misconduct made the court’s role of assessing both his pre-marital wealth, and what became of any such wealth during the marriage, effectively impossible. The wife appealed on the basis that the Judge had been required to adopt the formulaic approach in Jones v Jones,[1] and should thus have awarded her an equal share. The wife also asserted that a detailed enquiry was required. The Court of Appeal disagreed, holding that the husband’s litigation conduct did not necessitate a particular outcome, albeit the Judge was of course able to draw such adverse inferences as were appropriate in the circumstances.

Finally, under point (3), the wife asserted that the utilisation of a needs assessment, which in this instance provided the lowest award of each of the calculations used by the Judge, was arbitrary and incorrect, irrespective of the husband’s conduct during the proceedings and any evidential deficiencies. However the Court of Appeal had found that the Judge had not been wrong to do so, the primary reason being that the Judge had independently conducted an overview of the matter to ensure the proposed award was fair. He expressly performed the alternative approach endorsed in Jones, he had to perform at some stage of the process he was seeking to undertake so as to test his other tentative conclusions or as a “cross-check.”

[1] [2011] All ER (D) 231 (Jan)