‘Non-matrimonial property’ and ‘equal sharing’ are two principles that family practitioners frequently come across when dealing with claims for financial remedy on divorce. Equal sharing of non-matrimonial property was recently discussed by the Court of Appeal in the case of Hart v Hart  EWCA Civ 1306.
This case involved a couple who met in 1979. At the time the husband was a 48 year old wealthy business man trading in used cars and car finance. The wife was a 27 year old air stewardess who had no assets except for a Porsche. The parties’ moved in together in 1983 and married in 1987. They separated in 2006 and the wife petitioned for divorce at end of 2011. The parties’ children were adults by this stage.
At the time of the financial remedy proceedings the parties’ total assets were estimated to be in the region of £9.4 million. The assets comprised of £1.64 million in joint assets, £490,000 in the Husband’s sole name and £1.75 million in the Wife’s sole name. There was also a £5.5 million trust fund which the Court treated as a resource available to the Husband. The wife was awarded approximately £3.5 million of the assets to meet her needs as determined by the judge. The wife appealed against that decision. She sought half of the £9.4 million total assets being an equal share of the husband’s pre-marital wealth. It was the wife’s position that she should not be made to suffer because of her husband’s failure to provide full disclosure of his pre-marital wealth.
The Court of Appeals decision
The Court of Appeal dismissed the wife’s appeal. They found that her needs had been fairly met with the use of the matrimonial assets. There was therefore no need to apply the sharing principle to the non-matrimonial assets brought into the marriage by the husband.
In his Leading judgement Lord Justice Moylan set out the approach that the Courts should take towards non-matrimonial property when considering a claim by application of the sharing principle. He started by explaining the necessity for the Court to classify matrimonial and non-matrimonial property when considering the ‘sharing principle’. He described non-matrimonial property as:
“...assets (or that part of the value of an asset) which are not the financial product of or generated by the parties’ endeavours during the marriage. Examples usually given are assets owned by one spouse before the marriage and assets which have been inherited or otherwise given to a spouse from, typically, a relative of their during the marriage...” (Paragraph 2)
Lord Justice Moylan emphasised the need to distinguish between the two as the sharing principle “... applies with force to matrimonial property but does not apply, or applies with significantly less force, to non-matrimonial property” (Paragraph 62).
The Court of Appeal’s decision in Hart v Hart  EWCA Civ 1306 has caused controversy and concern amongst family practitioners. Some critics believe that it has taken the law backwards to a time where discrimination existed between the spouse that was the financial contributor and main earner, and the spouse that stayed at home to care for the children. Others believe that this decision could also encourage spouses not to provide full financial disclosure if it means that they are going receive a better financial settlement from the Court.
It is difficult to predict how Lord Justice Moylan’s suggested approach will be applied in financial remedy cases in the future. On a strict interpretation there may be potential for arguments of discrimination and unfairness. However, we should not forget that when considering an application for financial remedy the Court must have regard to all the circumstances of the case with particular regard to matters such as any children, the available resources, the parties’ financial needs, standard of living and so on.
What we might find is a sudden increased interest in pre-nuptial or post nuptial agreements as parties seek to highlight their pre-marital assets, including any potential inheritances, with a view to safeguarding those (if possible) in the event of a marriage breakdown in the future.
If you are going through a relationship breakdown, or if you are considering entering into a pre-nuptial agreement, and you require legal advice, please contact our specialist family lawyers on 020 7935 3522.
Whatever your personal circumstances the above is only a guide and we would advise you to contact us to obtain definitive advice as you will appreciate that each person’s circumstances are unique to them.