Non-matrimonial assets – I owned the house before we met!

Since the landmark decision of White v White 2001 the courts have looked towards an equal division of assets on divorce. There are many exceptions and reasons why this might not happen (particularly the length of the relationship and the needs of the parties and their children) but 50/50 is often the starting point for most divorce negotiations.  Even in White, the House of Lords (these days the Supreme Court) recognised the difference between capital created during the marriage and “non-matrimonial” assets, i.e. money owned by one person prior to the relationship/money inherited during the relationship.  How should this be treated?

The common theme running through the statute (Matrimonial Causes Act 1973) and almost every reported case is that “needs” must be considered.  In most average families, this is how divorces are resolved. We do our best to make sure everyone can move on – with somewhere to live, enough income, and perhaps some pension or savings. In cases where there is money left over then the issue of non-matrimonial property becomes increasingly important.

In our view a recent case in the Court of Appeal is a high water mark.  In Hart v Hart the court effectively ringfenced all of the husband’s non-matrimonial capital.  This meant after a 23 year marriage the wife was left with £3.5m from the “pot” of £9.4m. Clearly this is a big money case. The final decision was based on meeting the wife’s needs which were assessed at £3.47m. It was (roughly) assessed that the husband was worth around £2.6m at the start of the relationship.

£9.4m – £2.6m = £6.8m.

£6.8m ÷ 2 = £3.4m.

This seems very simple but this is not how the case was worked out. Instead it was based on meeting Mrs Hart’s needs which were assessed at £3.47m. It is coincidental that the figures are so similar.

The eyecathching thing is that “needs” are assessed at £3.47m. This shows how everything is relative – if you were super wealthy during the relationship your needs will be based at this level. This is very similar to how we presented things at the start of the article – the priority is always making sure we have somewhere to live and enough income etc.

So on reflection this case isn’t earth shattering. It doesn’t mean that “non-matrimonial” wealth is automatically ringfenced.  In this particular case it was not unfair to ignore it. But the court can still make orders against non-matrimonial property when needed.  Another aspect is the rough and ready approach to calculating the value of the husband’s contribution.  Because of the passing of time it was impossible to come up with a precise figure so the court calculated an estimate. Also there is always scope for arguing about the meaning of “non-matrimonial”.  If you owned a house 20 years ago worth £100,000 which today is worth £1,000,000, which is the value of the non-matrimonial contribution? This issue is likely to feature in reported cases in coming years.

posted by Peter