JL v SL

In ancillary relief proceedings, matrimonial property should ordinarily be identified and divided equally, while non-matrimonial property should ordinarily be excluded from the sharing exercise, subject to needs and exceptional circumstances. The court should determine the partition between matrimonial and non-matrimonial property rather than adopting an unexplained overall percentage. Property existing at separation retains its matrimonial character, although active post-separation growth may be divided unequally. A genuinely new venture, unconnected with the marital partnership or its assets, is ordinarily non-matrimonial and should rarely be shared. Fairness remains an intuitive assessment, but like cases should be treated alike through broadly articulated principles.

The wife appealed against an order made by District Judge Reid on 8 January 2014. The appeal was allowed on 7 October 2014 because the District Judge had wrongly treated a £465,000 inheritance received by the wife shortly before separation. The court deferred the fresh exercise of discretion because the husband had subsequently received substantial proceeds from shares in his employer and a termination payment.

The court therefore had to determine the treatment of the wife's inheritance, the husband's post-separation share proceeds, the effect of the husband's non-disclosure, the parties' needs, and the appropriate balancing payment.

1. Fairness and classification. Fairness in ancillary relief is ultimately intuitive and fact-sensitive, but consistency requires the court to articulate and apply broad principles. The court must distinguish matrimonial property, generated by the parties' partnership, from non-matrimonial property received or created outside it.
2. Partition and sharing. The court should generally identify the matrimonial and non-matrimonial components before applying the sharing principle. Matrimonial property should normally be divided equally. Non-matrimonial property should normally be excluded from sharing, although it remains within the court's dispositive powers where needs or exceptional circumstances justify an award.
3. Mingling and pre-marital property. Property introduced before marriage may acquire a matrimonial character when it becomes part of the economic life of the marriage. Even then, the court should generally exclude an appropriate amount attributable to the non-matrimonial source and divide the remaining matrimonial property equally. The matrimonial home will normally be matrimonial property, although unequal contributions may justify an unequal division.
4. Post-separation accrual. An asset existing at separation remains matrimonial property, but active growth achieved after separation may be divided unequally. Passive growth will ordinarily be shared equally. By contrast, a genuinely new venture, unconnected with the marital partnership or its assets, should be treated as non-matrimonial property and, save in a very rare case, should not be shared. The preferred method is to calculate the parties' shares in the existing pool and then separately assess the appropriate division of post-separation growth.
5. Application and orders. The wife's inheritance was non-matrimonial property and was excluded from the divisible pool. The husband's share proceeds were also non-matrimonial because they arose from new employment, begun after separation, in a different sector and without use of a marital asset. The husband had engaged in clear and indefensible non-disclosure by failing to reveal share purchases and takeover negotiations. He was ordered to pay £85,000 for the wife's first-instance costs and a balancing payment of £256,828, after which a clean break was to take effect.

1. High Court (Family Division): On 7 October 2014, the appeal from District Judge Reid's order dated 8 January 2014 was allowed: [2014] EWHC 3658 (Fam).
2. High Court (Family Division): The court subsequently exercised the statutory discretion anew and made the final financial orders in the present judgment, [2015] EWHC 360 (Fam).