Court finds that shares owned by husband before marriage had become matrimonial property
When a court decides upon a financial settlement on divorce it will divide the ‘matrimonial property’ between the parties. Anything that is not ‘matrimonial property’ will usually therefore remain the property of the spouse who owns it (unless it is required to meet the other party’s needs).
‘Matrimonial property’ is essentially those assets acquired during the marriage, through the joint efforts of the parties to the marriage. Accordingly, assets owned by one party before the marriage (or at least before the parties began cohabiting), assets gifted to one party (including inheritances), and assets acquired by one spouse after the parties separated will not usually be considered to be ‘matrimonial’, and will not therefore be divided between the parties.
There is, however, one caveat to this concept of ‘matrimonial property’. It is possible that what was not matrimonial property may become ‘matrimonialised’ during the course of the marriage, because the parties have, over time, been treating it as shared between them.
A classic example of the ‘matrimonialisation’ of an asset is where one party uses money acquired by them before the marriage to purchase the matrimonial home. Clearly, if the parties then live in the matrimonial home for a significant period of time, then it would usually be considered to be a matrimonial asset.
In a recent case a wife argued that a shareholding in a company owned by the husband prior to the marriage had been ‘matrimonialised’, and should therefore be considered to be one of the matrimonial assets, which should be divided equally between her and the husband.
The husband disagreed, claiming that he should be given credit for the value of the shares before the parties began cohabiting. He therefore sought a 55%/45% division of the assets, which the court determined to be some £51.5 million, in his favour.
The judge agreed with the wife. Whilst the shares clearly started off as non-matrimonial, the husband did not realise any money from them until 2014, by which time he had spent seven years of the marriage working with the wife’s support. In that year the husband pledged his shares to borrow £6.5 million, which was paid into the joint bank account and spent on acquiring a London flat (£1 million), a Caribbean property and its renovation (£3.7 million), renovations to the matrimonial home, and other expenses of the family.
In this way, said the judge, “what started as a non-matrimonial shareholding at the outset of the cohabitation/marriage in 2007 had become, in my judgment, well and truly ‘matrimonialised’ by 2014 in eventually acquiring and being spent on jointly owned property and in deferring marital expenses from their joint bank account.”
Accordingly, the judge ruled that the assets should be divided equally between the parties.
You can read the full judgment in the case here.
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