Wednesday, March 23, 2011

N v F: Taking pre-marital wealth into account

N v F [2011] EWHC 586 (Fam) dealt with "the vexed question of how the court should, when exercising its powers to award ancillary relief, reflect, if at all, the property that the husband bought to the marriage back in 1993".

The facts: The parties were married in 1993, at which time the husband ("H") had assets worth £2.116m, which equated to £4.2m today. It was agreed that the assets in the case now amount to about £9.714m in value ("This is a not very big money case", said Mr Justice Mostyn).

H did not ask that all of the value of his pre-marital property be reflected in the result, proposing that the wife ("W") should receive £4.17m out of the £9.714m, or 43%. W argued that there should be no departure from equality, on four grounds:

1. That H's pre-marital property had now merged with matrimonial property signifying, in effect, an agreement by H to share it with W;

2. That H had "alienated" certain sums during the marriage;

3. That H had since 2007 eschewed the exploitation of a substantial earning capacity in the financial sector in favour of a lowlier paid job as a schoolmaster; and

4. That H had conducted the litigation unfairly, and had caused unnecessary costs to be incurred.

As a result, the parties were £687,000 apart. "Not very surprisingly," said Mr Justice Mostyn (at paragraph 5), "the combined costs of the parties amount to £652,000. It seems to be an iron law of ancillary relief proceedings that the final difference between the parties is approximately equal to the costs that they have spent."

Held: After reviewing the law, Mr Justice Mostyn concluded (at paragraph 44) "that it would be wrong and unfair for none of H's pre-marital wealth to be excluded from the sharing principle". However, "the marriage was long and the monies were well and truly mingled with marital funds, signifying an acceptance by H that to a great extent the monies, or at least their growth or earnings, would be shared with ... W" (he rejected W's arguments in paragraphs 2-4 above). He concluded from that that £1,000,000 should be excluded from the 'divisible amount' of £9,474,000 (£9,714,000 less £240,000 set aside for the daughter's education), saying that this satisfied the justice of the sharing principle, whilst still just leaving sufficient to meet W's needs.

W therefore received 50% of £8,474,000, or 44.7% of the divisible amount.

2 comments:

  1. Interesting case. I have had quite a few cases of late where one party is trying to ring fence one thing or another (e.g. pension/inheritance etc). The first thing that strikes me here are the legal costs (why don't I ever get cases like?!)and the fact that it cost them as much to fight for the same amount - its just mad eh?! On a serious note, I find that its difficult to advise the client on which way inheritance is likely to go especially in the case of a long(ish) marriage. Problem is, what one judge thinks, the other won't hence the very wide discretion that judges have. No doubt, another case will come along shortly and tell us something very different which doesn't help anyone.

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  2. Unfortunately, I never had a case like this either! Amusing that Mr Justice Mostyn says it is not a very big money case!

    Yes, advising can be difficult when all one has to go on is a line of often contradictory decisions.

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