P v P (Inherited Property)

In ancillary relief proceedings, inherited property must be included in the discretionary assessment under section 25 of the Matrimonial Causes Act 1973. Its inherited character is a factor affecting weight, not an automatic exemption or quarantine. The court must assess its importance in the particular circumstances, including the nature, value, timing and circumstances of the inheritance. Where inherited assets comprise a longstanding family farm brought into the marriage with an expectation of retention, an award based on the claimant’s reasonable needs may be fairer than percentage sharing. That approach does not cap the award at the other party’s immediately available free capital. The claimant’s reasonable accommodation and income needs must be met, while avoiding an unfairly disproportionate award. ([2004] EWHC 1364 (Fam))

These were ancillary relief proceedings following the breakdown of a long marriage between two farmers. Most of the family assets comprised a hill farm, related interests and cooperative shares inherited or brought into the marriage by the husband. The wife had made substantial contributions to family life, farm work and the children’s care, but had no equivalent contribution to acquiring the inherited capital.

The wife sought a percentage-based lump sum which was likely to require sale of the farm. The husband proposed provision limited principally to housing needs. The central issue was how fairness under section 25 of the Matrimonial Causes Act 1973 should be applied where the principal assets were inherited family property.

1. Applicable statutory approach. The court exercised its powers under section 25 of the Matrimonial Causes Act 1973, read in the light of White v White [2001] 1 AC 596. Fairness required equal regard to the parties’ different contributions, including domestic work and childcare, without discrimination in favour of the money-earner.
2. Inherited property. Inherited property was not automatically excluded from the assets considered. Its inherited character represented a contribution and was one circumstance among all the circumstances. The court had to decide how important it was in the particular case, considering the nature and value of the property and when and in what circumstances it was acquired. A longstanding family estate brought into the marriage with an expectation of retention could properly carry significant weight, although this was not an inflexible rule.
3. Assessment of the award. The court rejected both a percentage division and the husband’s submission that the wife’s claim was capped by his free capital. In the particular circumstances, the fair approach was to meet the wife’s reasonable needs for accommodation and income. That approach was justified by the farm’s longstanding family character, the retention of the land and tangible assets in the husband’s sole name, the devastating consequences of an immediate sale for him, and the fact that the wife’s reasonable needs could thereby be met.
4. Realisation of assets. Sentiment about retaining inherited land could not prevent the release of capital where necessary to meet proper needs. The husband had to adopt a realistic approach to raising funds, although the court did not require an immediate sale if an appropriate alternative mechanism could be devised.
5. Orders. The husband was ordered to pay the wife £400,000 for accommodation and £175,000 representing capitalised income needs. He was also ordered to pay child maintenance of £4,000 per child annually and the children’s school fees, with maintenance continuing until the end of secondary education or completion of a first degree or comparable course, whichever was later.

First-instance ancillary relief determination in the High Court (Family Division). No earlier decision or appeal is stated in the judgment.