January 5, 2017

Who gets what? Non-matrimonial assets in divorce

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As is the case in so much of family law, we have to turn to case law for guidance but unfortunately we don’t get a clear answer! In recent years however the approach to these issues has divided into two distinct channels – art and science.

The Scientific approach

Mostyn J, helpfully set out the difference between the two approaches in the case of N v F (Financial Orders; Pre-Acquired Wealth) [2011] 2 FLR 533. When using his scientific approach, the court has to start by identifying the entire matrimonial “pot” ie the total assets however acquired. Then separate that entire pot into matrimonial and non-matrimonial assets. The court must then “identify the scale of the non-matrimonial property to be excluded, leaving the matrimonial property alone to be divided in accordance with the equal sharing principle.

The final hurdle on the scientific approach is fairness but there is also the issue of needs; and a needs argument trumps all others. A court might find that certain assets are non-matrimonial but if the reasonable needs of a party can’t be met without using those assets then it’s highly unlikely that they’ll be left out of the equation.

The Artistic approach

This is less formulaic and more discretionary. The starting point is a 50/50 split of the “pot” and if non-matrimonial property is claimed and acknowledged as being non-matrimonial then the judge uses “judicial feel” to decide what the shift from equal division should be to reflect the existence of the non-matrimonial property.

Of course the main criticism of the artistic approach is that it’s all down to one single judge and their personal take on a matter. The inevitable risk is that this produces a somewhat arbitrary result and that there won’t be consistency between cases.

Which method will the judge use to split our assets?

As there is no strict rule requiring the judiciary to apply one method or the other it’s inevitable that there’s now a line of cases supporting each approach. This makes it really hard for family lawyers to advise clients who want their non-matrimonial property to be reflected in the outcome of their financial remedy proceedings. Until recently, the only advice we could really give was to say that if the entire assets weren’t used to meet needs, the outcome would depend on whether the judge was scientifically or artistically minded. Not very satisfactory on any view!

However it looks as though further guidance may now be emerging that perhaps makes things a little easier. In JB v MB [2015] EWHC 1846 (Fam) Mr Cusworth QC (sitting as a Deputy High Court Judge) gave the view that if in a particular instance you can use the scientific approach then it’s preferable for the court to provide its judgement on that basis. He also recognised that no two cases are ever the same so you can’t apply a one size fits all approach. “There are bound to be many cases where even to make such an attempt would appear futile.”

So unfortunately there is still no one clear rule on this but we are perhaps moving towards a degree of clarity in this difficult area which is undoubtedly fertile territory for dispute.

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