The law in relation to the treatment of non-matrimonial assets
in the English Family Courts continues to evolve and JL v
SL ([2015] EWHC 360) is the latest to join the alphabet of
cases dealing with this issue. There had been two different schools
of thought about how non-matrimonial assets should be treated. On
the one hand, some judges have favoured a broad brush approach,
effectively putting all the assets in a case on the balance sheet
and then using their assessment of fairness to arrive at a division
that reflects the fact that some of those assets arise from a
source external to the marriage. On the other hand, some judges
have adopted a more arithmetical approach, effectively separating
non-matrimonial assets and matrimonial assets, dividing the
matrimonial assets equally, and then considering the extent to
which non-matrimonial assets should be divided by reference to the
facts in each case. The award is then 'cross checked' to
make sure it is fair. The latter of these approaches seems to be
the one gaining most traction as this recent case
demonstrates.
In his Judgment, Mr Justice Mostyn started by revisting Lord
Nicholls's Judgment in the case of White v White
[2000]. In that case, in the context of a discussion of the
possible reasons for a departure from sharing assets equally at the
end of a marriage, Lord Nicholls said, 'the nature and value of
the property and the time and circumstances in which the property
was acquired, are among the relevant matters to be considered'.
This statement was followed by Sir Mark Potter's Judgment in
the Court of Appeal in Charman v Charman [2007] where he
made it clear that sharing would apply to all property and not only
to matrimonial property when he said, 'We [the Court of Appeal]
consider the answer to be that the principle applies to all the
parties' property but, to the extent that their property is
non-matrimonial, there is likely to be better reason for departure
from equality'. Examining both of these statements in this
case, Mr Justice Mostyn acknowledged the inherent difficulty in
their application and the interrelationship with an assessment of
fairness. He agreed that 'fairness' lies in the eye of the
beholder, commenting that that it was an elusive concept and an
instinctive and intuitive response to a given set of facts. He
emphasised the need for consistency from one case to another as
otherwise the law would be but a 'lawless science'.
Mr Justice Mostyn's preferred approach is, therefore, to avoid
the intuitive scaling of the asset division down from 50/50 but
instead to apply a more regimented approach in first determining
the matrimonial and non-matrimonial property, dividing the
matrimonial property equally and then only invading the
non-matrimonial property insofar as is necessary to meet needs. His
approach can be summarised as follows.
- Determine first whether the existence of non-matrimonial property should be reflected at all. This, he says, depends on the duration of the marriage and the extent to which non-matrimonial assets have been mingled with matrimonial assets.
- If it is fair to reflect it, then the Court should decide how much of the non-matrimonial property should be excluded: i.e. an actual sum, perhaps less if there has been much mingling, or perhaps more to reflect the fact that the non-matrimonial property was a seedcorn that then grew.
- The remaining matrimonial property should then normally be divided equally.
Mr Justice Mostyn's decision also touched on whether assets
accrued post-separation should count as matrimonial or
non-matrimonial property. His view was that such assets may be
matrimonial if it can be said that they were acquired or created by
a party by virtue of his or her use of an asset created during the
marriage in respect of which the other party can assert an
unascertained share. Where a post-separation asset is a bonus or
other earned income, then it depends on whether it was earned
during the marriage or after it. The further away the separation
from the bonus coming in, the more likely it is to be
non-matrimonial but at this point Mr Justice Mostyn himself admits
that there is an element of arbitrariness.
He goes on to say that the Court will consider whether the
Applicant has proceeded diligently with his or her claim (so there
has been no delay designed to catch further assets falling into the
net), whether the party who has had the benefit of the accrual has
treated the other fairly during the period of separation, and
whether the money making party has the prospect of making further
gains and whether those further gains are going to be shared.
However, it seems at this point that 'lawless science'
begins to creep in again. Whilst the position on matrimonial and
non-matrimonial property appears to have become clearer, the
approach to post-separation accrual is still variable.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
