One of the first times a family lawyer trained in a civil law system is puzzled when coming across English law is when they learn that financial remedy applications, in this jurisdiction, are decided on the basis of fairness.
The immediate rebuttal of the civil law lawyer is: how can a system with such little legal certainty and such disregard for the parties’ autonomy1 possibly be fair?
We have to admit that it does sound paternalistic in its conviction that the court always knows best. And yet, the whole thing has a strange appeal… and the puzzled lawyer, slowly but surely, becomes more and more fascinated by a series of abstract (or, as we euphemistically say here, “elastic”) concepts such as ‘sharing’, ‘needs’, ‘special contribution’ and, of course, ‘matrimonialisation’; and they end up, by some unidentified external force, defending the very system that puzzled them in the first place, as enthusiastically as if they had been born and raised in Middle Temple. But can that love last forever?
The general rule, with many caveats, is that marital property (accrued during the marriage other than through inheritance or gift) is subject to the ‘sharing’ principle, whereas non-marital property (accrued before or after the marriage, or during the marriage through inheritance or gift) is not. For the former category of assets, the court’s starting point will be an equal distribution; whereas, for the latter category, the court will try its best to leave those assets untouched, unless the ‘needs’ of the other party require the court to “invade” them.
Although English family law does not contemplate any matrimonial property regimes, which are otherwise ubiquitous (and mandatory) in every civil law jurisdiction, this categorisation of assets in marital and non-marital is akin to the statutory wording of many Civil Codes around the world (and to the provisions of many English nuptial agreements2).
In short, whether the spouses are subject to a regime of separation of assets or to one of community of assets, most civil law systems provide that non-marital assets will always stay with their owner; if the spouses are subject to a separation of assets, there are effectively no marital assets at all, other than those held in joint names; whereas, if they are subject to a community of assets, all assets accrued during the marriage (other than through inheritance or gift3) will be marital and shared equally on divorce.
Short, sweet, and certain – just how we like it on the continent. Is there any room to depart from these rules or to tailor the result to the specific circumstances of the case? Not at all; that would introduce an impermissible uncertainty.
Needless to say, these two English categories of marital and non-marital assets are not as rigid as its European counterparts. Firstly, because a marital asset might be shared unequally, and a non-marital asset might be “invaded” to meet ‘needs’. And, secondly, thanks to ‘matrimonialisation’ - a somewhat esoteric process by which an asset which is non-marital might be considered as subject to the ‘sharing’ principle4 all in pursuit of fairness5 – although, again, that does not necessarily mean that the ‘matrimonialised’ asset will be split equally between the parties6, because the court can still give some weight to the fact that the asset has a non-marital source. ‘Matrimonialisation’, therefore, blurs the line that separates these two categories, thereby complicating one of the few easily accessible concepts of English family law. Perhaps the natural tendency to differentiate itself from other legal systems and defend its flexibility, discretion, and focus on fairness, has had some bearing in the genesis of this concept, and in the decision to stand by it despite an express call to suppress it7.
The ‘matrimonialisation’ of non-marital property can occur in one of three ways8: where the alleged non-marital property represents such a low percentage of the overall assets that exploring the value and source of that property to exclude it from the ‘sharing’ exercise would be disproportionate; where marital and non-marital property has been ‘mixed’ in such a way that all the assets should be subject to the ‘sharing’ principle (by far, the most controversial scenario); and where non-marital property has been used to purchase the matrimonial home (an asset that is always considered marital and almost always shared equally).
A sector of the legal profession in this jurisdiction has been pushing for a while for the ‘Europeanisation’ of certain aspects of English family law; from arguing that nuptial agreements that meet certain criteria should be binding except where a departure is necessary to meet reasonable ‘needs’; to criticising forum conveniens as a principle that is too discretionary and that encourages litigation and the tendency of English courts to keep most cases here, no matter how loose the connection of the case with England (thereby arguing for the return of the predictability attached to the ‘jurisdiction’ race, where the first application has automatic priority); and standing against divorce tourism and the mis-use of Part III10 of the Matrimonial and Family Proceedings Act 1984. To this long list of grievances that may result one day in the end of affair between practitioners and English family law’s long-standing romance with flexibility, discretion and fairness, one can now safely add the potential ‘matrimonialisation’ of non-marital assets as something that should be, if not altogether eliminated, at least heavily regulated to narrow the scope for potential dispute.
Perhaps the best (but not necessarily the easiest or most realistic) way to achieve that would be for Parliament to put on a statutory footing the division between marital and non-marital property, narrowing any potential departure from the standard definitions and getting rid altogether of the ‘mixing’ scenario
11. The author suggests that the categories are clear enough for the definitions to be relatively straightforward:
‘Marital property’ means:
1. All property accrued during the marriage, save for property received by one spouse (a) as a gift from a third party, (b) by way of inheritance, or (c) forming part of a trust of which that spouse is a beneficiary (except where that trust is a nuptial settlement, where section 24(1)(c) of the Matrimonial Causes Act 1973 shall apply);
2. All property held in the joint names of the spouses; and
3. The matrimonial home.
The court shall share marital property equally between the parties, save that the court shall be entitled to depart from equality in light of sections 25(2)(b)12 or (f)13 of the Matrimonial Causes Act 1973, or where the parties have entered into a nuptial agreement that meets the relevant judicial criteria.
‘Non-marital property’ means:
1. All property accrued by either spouse before or after the marriage by any means; and
2. All property received by one spouse during the marriage (a) as a gift from a third party, (b) by way of inheritance, or (c) forming part of a trust of which that spouse is a beneficiary (except where that trust is a nuptial settlement, where section 24(1)(c) of the Matrimonial Causes Act 1973 shall apply).
Non-marital property shall be retained by its owner spouse, save that in the event that there is a dispute between the parties as to whether certain property is non-marital or not and the alleged non-marital property represents a low proportion of the overall assets, the court shall be entitled to find that it would be disproportionate and contrary to the overriding objective to allow either party to pursue this argument, and thus to determine that all property should be considered marital.
Modest and uncontroversial as these definitions might look to the continental eye, their introduction in the statute book would be a seismic change in English family law, no doubt to be met with some resistance from a cohort of judges and practitioners that are still very fond (and for very valid reasons, too) of their cherished discretionary system. However, as we await a radical change (and it is coming!) in how the future generations approach their relationships, their autonomy and the management of their finances, it would be a disservice to English family law for it to be on the back foot, a step behind society. Time to change?
1) Curiously, these characteristics appear almost exclusively in family law; in most other areas, English law is famously predictable, which is why many commercial contracts around the world are governed by English law, irrespective of the “nationality” of the contracting parties.
2) Although they tend to refer to Separate and Joint Property – the harmonisation of the nomenclature is another battle to be fought.
3)There are some examples of matrimonial property regimes under which all the assets owned by the spouses will become part of the community of assets, including pre-marital assets and assets received through inheritance or gift; for example, the French regime of communauté universelle. Such regimes are rare and almost never apply by default, i.e., the spouses must expressly choose the regime to apply to their marriage.
4) Standish v Standish [2024] EWCA 567 [162]
5) Standish v Standish [2024] EWCA 567 [160]
6) Standish v Standish [2024] EWCA 567 [166]
7) Standish v Standish [2024] EWCA 567 [161]
8) Standish v Standish [2024] EWCA 567 [163]
9) Standish v Standish [2024] EWCA 567 [162-163
10) Thankfully, the recent decision of the Supreme Court in Potanina v Potanin [2024] UKSC 3 is likely to get rid, finally, of ex parte applications for leave, and has put to bed the infamous knock-out blow previously required (wrongly) to set aside leave given at an ex parte hearing. As Ms Carew-Poole KC and Professor Baily-Harris brilliantly put it at the 2024 edition of the 1 Hare Court seminar, is England entitled to act as “the ultimate world-wide appellate court”?
11) The notion that the nature of an asset might change from non-marital to marital (but not the other way around) by virtue of how that asset is used inevitably results in endless disputes. Unless the parties actively choose to use non-marital property to purchase a matrimonial home or an asset held in joint names, there is no reason for the court to “re- categorise” a non-marital asset – which can still be deployed towards meeting ‘needs’ if necessary.
12) “The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future.
13) “The contributions which each of the parties has made or is likely to in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family.” This should encompass all the (rare) cases of special contribution and compensation.
14) Whilst it would be tempting to refer to a fixed percentage here (say, 5%), that would be far too specific for the English mind; it would be unfair, patently, to refuse this argument where the alleged non-marital property represents 4.99% of the pot but to allow it where it represents 5.01%.
First published on Thought Leaders 4 | HNW Divorce.
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