Facts

In this important judgment handed down by HHJ Joanna Vincent on the 9th January 2025 at the Family Court in Oxford, the issue of when assets become matrimonialised was grappled with in a noticeable way.

The husband [“H”] was 70 years old, the wife [“W”] was 51 years old. H worked as a sculptor, although it was accepted that his wealth was acquired from his inheritance from his grandparents. W had a degree in architecture but was not qualified to practise and had not worked throughout the marriage, or the majority of the pre-marriage.

The parties met in the late 1990s, commenced a relationship in December 2002 and began co-habiting in February 2003. Following a brief separation in 2012, the parties reunited in August 2012 and were married on 8th October 2012. The parties had their only child in 2015. The family relocated to different countries, before eventually settling in the UK in 2020 and purchasing the FMH.

W issued the divorce application on 31st May 2023 and a subsequent application for financial provision on 19th June 2023.

Positions

H argued that W had unrealistically inflated her assessment of her needs.

H and W both sought to retain the FMH and both agreed that whoever did not retain the home, should have a considerable housing fund to purchase a similar property nearby.

H offered to settle at £11 million ( which included £3.5 million housing fund, £4,744 million for capitalised income, £250k for costs and £1.5 million contingency fund), less the sum of £500k made for a “Charman” payment to W in 2024.

W maintained her assessment of her needs, asserting it reflect the standard of living the family had enjoyed for 20 years. W sought to retain the FMH in addition to a payment of £14,789,991 for an income fund, £464,501 for works to the FMH, £3.5 million for a second property and £275,400 to discharge her outstanding litigation loan. Additionally, she maintained a claim of £83,351 a year until the parties’ child finished education and a school fees order.

The Assets

H was the beneficiary of a large inheritance from his grandparents, which is mostly comprised of property. H’s position is that this was managed by a private equity investment company, whereas W argued H was involved in the management and therefore should be considered more than “merely a passive investor”. This argument went to the core of whether these assets had been “matrimonialised” or not.

The family had a high standard of living, without a need to budget their finances.

The FMH was worth £3.6 million, an additional property purchased by H abroad was valued at £2 million, H’s bank account stood at £1,694,293 and W’s at £202,436. Joint accounts held by both parties were valued at £10,000. H’s investments were valued at £14.305,769. Therefore the total assets stood at £23,708,713.

The Law

The judge considered WC v HC [2022] EWFC 22.

Needs and Sharing

W accepted her claim should be determined on a needs basis, albeit with regard to the scale of her sharing claim. She asserted H had transformed his investment portfolio through the course of the marriage, valuing it at £51 million. H argued he was a passive investor and therefore that the source of his wealth was non-matrimonial.

Cohabitation before marriage

On the issue of cohabitation, H referred the judge to GW w RW [2003] 2 FLR 108 whilst W relied on IX v IY [2018] EWHC 3035. The court considered that neither of these cases were determinative.

The Evidence

The court heard from both H and W. The court considered that W was unable to give definitive answers when asked about the future and wasn’t able to clearly show that her needs justified the amount requested. The court considered H’s evidence was more straightforward.

Evidence was also heard from H’s brother, who was the other beneficiary of the paternal grandparent’s estate, and the Chief Financial Office of the private equity management company.

Matrimonialisation

The source of H’s wealth was deemed to be his share of inheritance from his grandparents. W suggested that H was involved in the day-to-day management of the property portfolio. The court disagreed with this, convinced by the evidence of H and his brother. The reasons for the court’s decision included;

  • W’s evidence H was involved in day-to-day management was limited to a few emails from many years ago where H was demonstrating some interest in practical aspects of refurbishment.
  • H’s brother’s evidence was that the brothers would occasionally be involved, but any attempts they made to be involved did not materially increase the value of the portfolio, sometimes the opposite.
  • The fact that the private equity firm went to great efforts to keep H and his brother involved in the process of their investments was reflective of the size and value of the portfolio and did not make H and his brother more than passive investors.

Other matters

H has £170k in outstanding legal fees, W had £270k and also owed her sister £11,251.

The court considered it unlikely that W would ever find work, given she had not worked since 2006 and was not qualified. The court considered there was no expectation that W work during the marriage or pre-marital relationship. W asserted whilst the child was in education, she would not be focused on finding work.

Need of parties

Both parties considered they should retain the FMH. W’s case was also that she needed to fund a second holiday home for her and the child.

W advanced a budget of £742,379 per year for income. H suggested a starting point of £213,000.

Decision

The court decided that H should retain the FMH. W had not been convincing about her attachment to the property and has also requested almost half a million for refurbishment. The FMH was 5 minutes walk from H’s studio and H’s assistant had lived on the grounds for 20 years. The court considered W should have a rehoming fund of £4million.

The court did not consider a second holiday home had been a significant feature of the family’s lives since having their child and so no allowance was made for a second home for W.

In terms of income, the court did not find H was restricting the W with his offer for income, but did consider he was applying a different standard to her than himself.

The court assessed W’s capital sum need at £8million (£320 annual income, £30k for the child with a 10% uplift for contingencies = £385k per annum). This figure is to be reduced once the child reaches majority by 25%. The court added an additional enhancement figure of £1.5 million, following Lord Nicholls in Miller v Miller: McFarlane v McFarlane [2006] UKHL 24.

Charman Payment and Costs

H’s total costs totalled £793,889.43, W’s were £728,342.57. W had taken out a litigation loan with high interest. W sought a payment of £275k to meet her remaining costs.

A Charman payment had been made by H to W to enable her to continue instructing lawyers. H had intended for that to be offset against her eventual award, whereas W said the amount should be taken into account but not offset against it.

The court awarded W £250k, because it was not persuaded she needed to take out the costs associated with the litigation loan. The court considered the Charman payment came from a pot which belonged to both the parties, and so no deduction was made in respect of the Charman payment.