What’s the recipe for success?
In his recent decision in JL v SL (no.2)  EWHC 360 Fam, Mostyn J sets out the considerations that apply when dividing assets that are matrimonial or non matrimonial. Here, the wife had challenged the first instance decision because she said that the lower court had failed to reflect what she said were non matrimonial, inherited assets and failed to deal appropriately with spousal maintenance.
The wife had received £465,000 in two chunks by way of inheritance from her parents. She had put £190,000 of this into her husband’s name. Mostyn J agreed, and held that the inherited wealth should have been treated differently to the extent that it was not matrimonial property and therefore the wealth should be unequally divided. As a consequence, once the wife had more funds, her maintenance claim would be affected because she’d have more money to invest.
However, since the original decision, there had been two significant changes in the husband’s financial circumstances, namely that his company had been sold and he received £586,000 net sale proceeds PLUS, a further £100,000 redundancy payment. So, Mostyn J decided he would hear the retrial instead of it going back to the court at first instance.
His approach to assessing the matrimonial pot gives guidance and pointers for the way in which the court deals with non matrimonial, matrimonial and also property which falls into the hands of a party after separation. All three elements were now present in this case.
‘Sharing is caring’
Mostyn J outlined the approach to take. He favoured excluding the non-matrimonial property before then dividing the remaining matrimonial property equally in accordance with ‘sharing’. Anything else is too subjective, or a ‘lawless science’.
Try to identify the matrimonial and non-matrimonial property, so that it is possible to calculate an equal split of the matrimonial property (usually), with the non-matrimonial property not being shared equally (usually), so long as needs are met.
Whether the pre marital property is included depends on things such as the duration of the marriage and any mingling of assets.
Is it fair and just to exclude it and if so how much?
Divide the remaining, matrimonial property equally
The 7 matrimonial ingredients
Here, Mostyn referred to his decision in Rossi to establish the approach to be taken. In that case Mostyn J established 7 points of principal:
1. The statute requires all the assets to be valued at the date of trial.
2. For the purposes of establishing the matrimonial property in respect of which the yardstick of equality will “forcefully” apply the value of assets brought into the marriage by gift and inheritance (other than the former matrimonial home), together with passive economic growth on those assets, should be excluded as non-matrimonial property.
3. Assets acquired or created by one party after (or during a period of) separation may qualify as non-matrimonial property if it can be said that the property in question was acquired or created by a party by virtue of his personal industry and not by use (other than incidental use) of an asset which has been created during the marriage and in respect of which the other party can validly assert an unascertained share.
4. If the post-separation asset is a bonus or other earned income then it is obvious that if the payment relates to a period when the parties were cohabiting then the earner cannot claim it to be non-matrimonial.
5. By this process the court should, without great difficulty, be able to separate the matrimonial and non-matrimonial property. The matrimonial property will in all likelihood be divided equally although there may be deviation from equal division (a) if the marriage is short and (b) part of the matrimonial property is “non-business partnership, non-family assets” (or if the matrimonial property is represented by autonomous funds accumulated by dual earners).
6. The non-matrimonial property is not quarantined and excluded from the court’s dispositive powers. It represents an unmatched contribution by the party who brings it to the marriage. The court will decide whether it should be shared and if so in what proportions. In so deciding it will have regard to the reality that the longer the marriage the more likely non-matrimonial property will become merged or entangled with matrimonial property. By contrast, in a short marriage case non-matrimonial assets are not likely to be shared unless needs require this.
7. In deciding whether a non-matrimonial post-separation accrual should be shared and, if so in what proportions, the court will consider, among other things, whether the applicant has proceeded diligently with her claim; whether the party who has the benefit of the accrual has treated the other party fairly during the period of separation; and whether the money-making party has the prospect of making further gains or earnings after the division of the assets and, if so, whether the other party will be sharing in such future income or gains and if so in what proportions, for what period, and by what means.
Mostyn J also highlighted two kinds of post separation assets (per Roberts J in Cooper-Hohn v Hohn  EWHC 4122 (Fam),  1 FLR 745):
- CONTINUUM – if owned at separation it is matrimonial but later increases in value can be unequally split (save for passive growth)
NEW VENTURE – if acquired later then they will be outside of the marriage and free from equal division
So, what happened in JL v SL?
It perhaps is self evident, that in light of his rationale above, Mostyn J decided in favour of the wife keeping her inheritance of £465,000 and it not being matrimonial in nature. Furthermore, he determined that the husband’s business deal proceeds of £586,000 were also outside of the marriage and free from sharing. But it still all comes back to needs – in this case the needs of the parties did not require invading the non matrimonial assets and as such, the parties kept them in their own right. The other assets were all deemed matrimonial and shared equally.
If you are looking to add to the pot, or perhaps want to avoid it turning into a cauldron, please speak to our specialist family lawyers at Paradigm Family Law. Call us on 0845 6020422 or email [email protected] for a free initial consultation and ask about our fixed fees.