The recent Court of Appeal decision in Hart v Hart  EWCA Civ 1306 is timely clarification of how the court should approach the existence of non-matrimonial property and how, if at all, it should be reflected in the court’s overall determination.
The parties began living together in 1983, married in 1987 and separated in 2006. At the time of the first instance judgment the husband was 80 and the wife 59. The wife described the husband as being a man of substance at the outset of their cohabitation and he had several overlapping business interests. The wife, in contrast, had no substantial resources. The first instance judge found that the combined capital resources now stood at £9.4m – £3.9m in the parties’ names and £5.5m in a trust.
The first instance decision
The central issue considered by the judge was the relevance and value of the husband’s pre-marital wealth. He felt constrained by the decision in Jones to apply a formulaic approach but found that this amounted to “multiple speculation and produces a result upon which I could not sensible rely” in light of the fact that there was no reliable evidence of the husband’s then worth and that there had been subsequent mingling between the parties. He was critical of the husband’s disclosure which had been “very poor indeed”.
As a result the Judge adopted a “multi-faceted approach” and produced four different calculations of what the wife could achieve as follows:-
a. A needs based approach of £3.47m;
b. An analysis of mingled assets of £3.5m;
c. An analysis of non-matrimonial property of £3.85m; and
d. The retention by the wife of her assets and 25% of the trust assets of £3.94m.
The judge adopted the needs approach and awarded the wife £3,47m together with maintenance arrears of £96,000. He concluded that this was the most scientific approach and reflected his view that fairness required a departure from equality in the husband’s favour in light of his pre-martial worth.
The wife appealed on the basis that:-
a. H’s litigation misconduct had made it impossible for the judge to calculate his pre-martial wealth preventing the court from carrying out the formulaic approach in Jones, as a result of which the court should have awarded the wife 50% of the assets; and
b. If a departure from equality was nevertheless justified it was arbitrary and incorrect to base the award on needs.
Moylan LJ gave the leading judgment, with which Beatson LJ and Lloyd Jones LJ agreed, and dismissed the appeal.
The wife’s argument was based upon the fact that the court’s failure to carry out a mathematical calculation and make “precise, reasoned, evidence-based findings” was a result of the husband’s lack of clear disclosure and it was unfair for the wife to bear the consequences of his litigation misconduct. She relied upon various authorities, predominantly those of Mostyn J, and argued that the husband must show clear documentary evidence of his wealth.
The husband argued that, having conceded that the husband was wealthy at the outset of the relationship, it was not necessary for the Judge to undertake a full accounting exercise and that he had tested various approaches and reached a conclusion that was fair.
Moylan LJ undertakes a review of the relevant legal principles, noting that the identification of non-matrimonial property is relevant as the sharing principle applies with force to that property but does not apply, or applies with less force, to non-matrimonial property.
He determines that “the court is not required to adopt a formulaic approach either when determining whether the parties’ wealth comprises both matrimonial and non-matrimonial property or when the court is deciding what award to make” and that the court is entitled to take a broad overview as “the outcome will be the same, namely, when justified, an unequal division of the parties’ property”.
The following guidance emerges from the judgment:-
a. The court will need to make a case-management decision as to whether, and if so, what, proportionate factual investigation is required;
b. If an enquiry is justified, the court will need to make such factual decisions as it can on the evidence available;
c. There is no need for that evidence to be clear documentation and the usual evidential rules, including the court’s ability to draw inferences, apply;
d. The court may, having heard the evidence, find that there is insufficient evidence to make a finding of non-matrimonial property, find that there is clear dividing line between matrimonial and non-matrimonial property or find that there is a “complicated continuum” and that “it would be neither proportionate nor feasible to seek to determine a clear line”; and
e. Based upon these findings the court will carry out the section 25 discretionary exercise and if it is not possible to clearly quantify the non-matrimonial property it will “have to decide what award of such lesser percentage than 50% makes fair allowance for the parties’ wealth in part comprising or reflecting the product of non-matrimonial endeavour” and the court “can simply apply a broad assessment of the division which would affect overall fairness”.