Roberts J has made it clear that post-separation earnings can be ringfenced by virtue of being non-matrimonial property. It is only when there is a legitimate needs or compensation claim at play that the invasion of non-matrimonial property may be required to achieve fairness.
Case law so far
Case law has seen the wealth generator in the marriage argue that post-separation generated wealth should be categorised as “non-matrimonial property” rendering it immune to the sharing principle and thereby justifying departure from the yardstick of equality.
The court’s response to this line of argument has been mixed. On the one hand, the court has been prepared to conduct a forensic exercise of distinction between non-matrimonial and matrimonial property. This formulaic approach was taken in Rossi v Rossi where assets created post-separation were to be considered non-matrimonial property and were therefore not be shared. Similarly, inJL v SL (no 2), it was held that post-separation accruals need not be shared, particularly where such accruals relate to a truly new venture which has no connection to the marital partnership.
On the other hand, the court has shown a readiness to view post-separation accruals as part of a financial continuum. This (some say more holistic) approach was taken in CR v CR where Bodey J declined to segregate matrimonial and non-matrimonial property, on the basis that “attempted forensic distinction between the differing assets in the kitty creates issues which are in many (though not all) cases sterile” (para 41). Similarly, in Cooper-Hohn v Hohn, a portfolio which almost doubled in value during the period of separation was to be shared by virtue of its genesis as a matrimonial asset.
In Hart v Hart, Moylan LJ attempted to reconcile these approaches. He said that whilst non-matrimonial and matrimonial property should be segregated if appropriate, the court is still obliged to conduct an overall assessment of fairness regardless of any such segregation. Against this backdrop, the clear removal of earning capacity from the marital pot in Waggott v Waggott re-ignited the tension between financial continuum and new ventures arguments.
It can be said that by applying both Hart and Waggott, Roberts J has created a unified approach for the courts to take forwards. In this case, the husband argued that £6.5m of the parties’ assets should not be shared by virtue of being a product of his post-separation endeavour. Applying Hart, Roberts J found that (a) the £6.5m was non-matrimonial property and (b) having considered the s25 factors, the invasion of the husband’s non-matrimonial property was unnecessary to achieve fairness. Applying Waggott, Roberts J concluded that the £6.5m was not generated during a time of “marital” partnership and, absent of any arguments on needs or compensation, the wife was therefore not entitled to share equally in it. The sum was therefore removed from the marital pot and the remainder divided, meaning the husband was awarded around 62.4% of the total assets.
In practice, this judgement confirms that post-separation accruals can be ring-fenced from the sharing principle. It also arguably suggests that Waggott limits the approach endorsed in Hart, and that non-matrimonial property will only be pooled with other property (and thus shared) when a legitimate needs or compensation claim is on the table.