Key Issue: Determination of Marital vs. Non-Marital Property in Financial Remedy Proceedings Post-Divorce in the Case of FT v JT

Citation: [2023] EWFC 250 (B)
Judgment on

Introduction

The case of FT v JT provides an examination of several pivotal legal concepts within the context of family law, specifically the financial remedy proceedings following divorce. The judgement delivered by Recorder Nicholas Allen KC encapsulates critical issues such as determination of marital and non-marital property, contributions to marital prosperity, post-separation endeavours, and the treatment of newly realized business interests accrued post-separation. This article delineates the core legal principles as applied within this case, essential for legal professionals navigating similar terrains.

Key Facts

The parties, referred to as H (the Applicant) and W (the Respondent), underwent a protracted legal battle concerning their financial separation after divorce. Several critical dates and financial arrangements were in contention, such as the date of separation, whether a financial agreement was reached at the point of separation, and the financial contribution towards the children’s upbringing.

The case pivots around W’s shareholdings in a business called JP. A substantial matter in the proceedings was the question of whether the value accrued in W’s business after the separation should be considered matrimonial property subject to division. Also, the court scrutinized the notion of a financial cap, the financial support for the children, and the potential imposition of costs.

Marital Property vs. Non-Marital Property

The judgement elucidated the distinction between marital and non-marital property, a cornerstone of financial remedy law, deriving from the cases of White v White and Miller v McFarlane, emphasizing the goal of achieving fairness via principles of needs, sharing, and compensation.

Recorder Allen KC identified that the business interests of W’s company, JP, contained elements of both marital and non-marital properties. This distinction leaned on the judgement of Hart v Hart, articulating that assets could partially be the product of marital and personal endeavour not clearly divisible in the asset’s value.

Contributions and Post-Separation Efforts

The judgement dealt with the “continuum versus new ventures” question as presented in JL v SL (No. 2) (Appeal: Non-Matrimonial Property), highlighting the weight given to post-separation efforts. If the post-separation increase in value was tied to a new venture not connected to the marital partnership, the non-matrimonial classification was more likely, as ruled in DR v UG.

Sharing Principle and Caps on Value

The judgement further addressed the fairness of sharing the principle regarding the post-separation accrual of value in a business. The matrimonial portion was subjected to sharing while the non-matrimonial portion was not, as indicated by Rossi v Rossi. The Recorder decided against imposing a cap on the value H would receive from W’s future business proceeds, arguing that it was not fair since W traded with H’s undivided share.

Child Periodical Payments

Regarding child maintenance, the judgement referred to H v W (Cap on Wife’s Share of Bonus Payments) to justify the imposition of the child periodical payments without any backdating, besides a small and equitable adjustment for the months prior to judgement.

Outcomes

The court determined that 35% of the current value of W’s business interests had a matrimonial origin, while the remaining 65% were post-separation contributions. Accordingly, H shall share in W’s business interests at a rate of 17.5% uncapped up to and including the year 2038, and 10% thereafter.

For child periodical payments, H was directed to pay £18,000 pa for the three children without any contribution to private school fees, which W would be solely responsible for.

Conclusion

The case of FT v JT serves as an exemplar of the complexities surrounding the division of assets post-divorce, particularly in scenarios involving significant post-separation growth of a business. Recorder Allen KC’s judgement delivers a nuanced approach, underlining the subtleties between matrimonial and non-matrimonial property and the impact of contributions by both parties in a marital context. The court’s decision emphasizes the essence of fairness, ensuring that both parties’ efforts are recognized while also ensuring that the needs of children are met. This case reaffirms the importance of considering individual efforts and contributions in the context of shared matrimonial prosperity while addressing the finer points of financial provisions post-divorce.

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