Leading financial judge Mr Justice Mostyn QC considered the issues of non-matrimonial wealth via inheritance, as well as wealth accumulated post-separation, in a newly published judgement.
It is a very worthwhile read if you are interested in the legal principles involved and the ways in which the law has been clarified through case law in this area. The judgement also addresses the meaning of “fairness” in this area of the law, the identification of non-matrimonial assets as distinct from matrimonial assets, the treatment of both in a settlement, and how the mandatory cross check of the resulting award against the overall requirement to meet reasonable needs is carried out. This judgement is a gift, to law students and practitioners alike. In my view it is an absolute must-read.
Lay readers with an interest in legal matters will also gain some worthwhile insights.
This isn’t the venue for a detailed legal analysis of the judgement. But it is worth noting that it reinforces His Lordship’s approach as the treatment of post-separation accrual of assets in the case of Rossi v Rossi, and it is peppered with interesting asides about how other Judges have done it (incorrectly in His Lordships view).
JL v SL concerned the treatment of assets owned by a divorcing couple on an appeal. The wife had been unhappy, to put it mildly, with an earlier court ruling concerning an inheritance she received which a district judge had treated as a matrimonial asset available for equal division between the parties. She successfully appealed this ruling, with costs. However, unknown to the wife, the husband subsequently received a large sum when his employers were bought by venture capitalists, then received a further sum as a “termination payment” when he was made redundant. Consequently, some of the financial information previously used by the courts handling their case was no longer current and the financial picture was not quite what it had been at the original hearing.
Sitting in the Family Division of the High Court, Mr Justice Mostyn had ordered more information on the couple’s current status. He ordered them to make new statements and also requested a ‘single joint expert’ to assess the husbands’ employment prospects in light of his redundancy.
A single joint expert provides courts with reports and evidence concerning both parties to a case, or two or more parties including the claimant or appellant. It saves costs and additional court time of hiring two experts, one for each side. Written by Andrew Nicoll of Keith Carter & Associates, His Lordship was very complimentary about the resulting report, saying it was “a report of outstanding quality in terms of its analysis and conclusions as well as its literary style. It was a real pleasure to read it.” Quite a compliment indeed and one that will no doubt live long in the memory of Mr Nicholl and his firm!
The former high-flying barrister went on to consider the assets in dispute and arrived, by a process of judicial deductive reasoning, at an asset split that is almost precisely 50:50.
The wife had received a very large inheritance of £465,000 not long before the couple had separated, at a time, the Judge had noted in an earlier ruling, “when the wife believed that the husband was forming a relationship with another lady.” Mostyn said he had “no hesitation” in concluding that this inheritance was ‘non-matrimonial’, and therefore not subject to division in the couple’s divorce settlement.
Turning to the husband in the present case, the Judge considered the proceeds of some highly profitable share dealings the husband had engaged in. He had not initially declared these and Mostyn was unimpressed by this omission, noting the husband’s evasive claim that the dealings “must have slipped my mind”.
“I intend to mark my displeasure at this gross litigation misconduct by making an order that the husband pays [the wife’s legal] costs…in the sum of £85,000.”
Nevertheless, he went on to conclude that, since the share dealings had taken place in a different industry sector and close two years after the couple had separated, the proceeds (£586,000) were also non-matrimonial and therefore reserved for the husband.
If he had declared these earnings in the initial stages of the divorce proceedings, he could have saved himself no less than £85,000 by not having the wife’s legal costs! (Do note: It always pays to tell the truth…!) Added to the bill for the cost of the appeal, the husband had to pay an extra £100,000 for her legal costs.
His Lordship concludes by assessing each party’s reasonable needs and the amount needed to meet these. The wife’s total award comes to just under £3 million so against the cross check, the adjusted settlement meets the fairness test on all counts.
The judgement is available here.
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