C v C

Post-separation earnings generated by an earning capacity are not matrimonial property subject to the sharing principle. They may nevertheless be relevant when assessing needs, compensation and overall fairness under the statutory discretion. The court should distinguish matrimonial from non-matrimonial property on the evidence. Where the evidence shows a clear dividing line, that distinction is applied at the discretionary stage. Where the assets form a complicated continuum, a broad assessment may be required rather than artificial mathematical precision. The resulting award must then be cross-checked against all relevant statutory factors. Proximity in time between separation and receipt does not, by itself, determine whether an asset is matrimonial. A needs-based award may justify a share of matrimonial assets exceeding 50%, without invading non-matrimonial property.

The wife applied for financial remedy orders following an eight-year marriage and separation in 2016. The parties had two children and assets of approximately £26.3 million. The husband sought a departure from equality by excluding post-separation remuneration, including supplemental compensation payments and restricted stock units, as non-matrimonial property. He proposed that the wife receive approximately £10.2 million, including the former matrimonial home.

The wife argued that post-separation receipts formed part of the financial continuum arising from efforts during the marriage and that she should share equally in them. The central issues were the classification of the husband’s post-separation earnings and deferred remuneration, the approach to identifying matrimonial property, and whether the proposed award met the wife’s needs and was fair overall.

1. Outcome. The court accepted the husband’s proposed extraction route in substance. The wife was to retain the former matrimonial home, receive lump sums of £1,877,854 towards the mortgage and £1,781,962 as a balancing payment, and receive agreed child maintenance. The court made a clean-break order and did not make a further costs adjustment.
2. Post-separation earnings. Applying Waggott v Waggott [2018] EWCA Civ 727, the sharing principle does not extend to an earning capacity or to property generated by that capacity after the marital partnership has ended. The husband’s post-separation salary, supplemental compensation allowance and the post-separation element of his RSUs were therefore non-matrimonial in character, subject to the court’s jurisdiction to consider them when assessing needs and fairness.
3. Classification of property. Following the approach in Hart v Hart [2017] EWCA Civ 1306, the court first identified the property as matrimonial or non-matrimonial on the available evidence. A clear evidential dividing line should be applied at the next discretionary stage. Where blending or investment churn creates a complicated continuum, the court should make a broad assessment. The final stage is an holistic cross-check against the statutory factors.
4. The husband’s RSUs contained a genuine and significant performance element. The court accepted his pro rata methodology as a broadly accurate assessment of the matrimonial and non-matrimonial components. The timing of receipt after separation was not determinative where the value could be attributed to the period in which it was earned.
5. The wife’s continuing contribution to the children’s welfare did not create an entitlement to share equally in the husband’s post-separation earnings. It remained relevant to the wider assessment of needs and fairness. The proposed award met her housing and income needs on a capitalised whole-life basis and left the non-matrimonial property unin- vaded.