What are non-matrimonial assets? - What constitutes a non matrimonial asset is an issue than can often be the cause of considerable conflict for a couple – and massively escalate legal costs.
Introduction:
1. In the broadest sense non-matrimonial assets are:
(1) acquired by a party before the marriage;
(2) acquired by a party after separation;
(3) gifted to a party;
(4) inherited by a party;
(5) obtained by a party through a previous divorce settlement;
(6) obtained by a party through a legal settlement with origins outside the marriage – such as a personal injury.
2. In contrast, matrimonial assets are those that are accrued through the marital acquest – usually during the currency of the marriage. It is often extremely difficult to persuade a court that the family home is not a matrimonial asset. A non-matrimonial asset can be a property, savings, a business or any other form of investment – this can even include certain chattels such as gold bars or family jewellery, heirlooms and paintings.
How to identify non-matrimonial property:
3. As soon as a client seeks advice, it is important to assess each asset and determine whether the asset is matrimonial or non-matrimonial.
4. The most important issue is to determine is when the asset was procured and whom by.
5. The key questions to ask would be as follows [assuming the asset is a property]:
(1) Who purchased the property? [To establish whether it was purchased by the parties to the marriage].
(2) When was the property purchased? [To establish whether the property was purchased prior to the marriage].
(3) What was the purchase price?
(4) What was the deposit?
(5) Who paid the deposit?
(6) How much was the mortgage?
(7) Who were parties to the mortgage? [It may be necessary to join a third party].
6. If there is a non-matrimonial asset such as a house/apartment, it may become necessary to join a third party if they hold a legal or beneficial interest in the property.
The key cases pertaining to non-matrimonial assets?
7. The most significant case is and remains White v White [2001] 1 AC 596, a decision of the House of Lords, wherein, the position regarding non-matrimonial property was summarised, as follows, 610:
'Plainly, when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should how important is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered. However in the ordinary course, this factor can be expected to caryy little weight, if any, in a case where the claimant’s financial needs cannot be met without recourse to this property'.
8. The second material case is Miller v Miller, McFarlane v McFarlane [2006] UKHL 24, this too was a House of Lords judgment, Lord Nicholls of Birkenhead held obiter, at paragraph 22:
'This does not mean that, when exercising his discretion, a judge in this country must treat all property in the same way. The statute requires the court to have regard to all the circumstances of the case. One of the circumstances is that there is a real difference, a difference of source, between (1) property acquired during the marriage otherwise than by inheritance or gift, sometimes called the “marital acquest” but more usually the matrimonial property, and (2) other property. The former is the financial product of the parties common endeavour, the latter is not. The parties matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose.'
How does the court deal with non-matrimonial assets?
9. As the above cases demonstrate non-matrimonial assets are not automatically excluded from the matrimonial pot. The court will consider the individual facts of each case before making an determination. When resources are particularly limited – where it is not possible to meet the “needs” of the parties – it is more likely that non-matrimonial assets will be brought into the matrimonial pot.
10. The judicial analysis at the conclusion of the case aside the key point is this – it is important to highlight from the outset if there is going to be a request or attempt to “ring-fence” an asset. It is important to get all the evidence ready and obtain any documentary evidence to support the claim. This is because a case management decision will need to be made at the very outset as to what will be proportionate in terms of investigation – whether there needs to be a preliminary issue hearing or otherwise.
11. Increasingly the opposing party will try to persuade a court that a non-matrimonial asset is in fact matrimonial and should be included in the matrimonial pot – this is referred to as “matrimonialisation”.
12. My next article will consider when non-matrimonial assets become “matrimonialised”.
Aysha Miah
33 Bedford Row
12th August 2024