An article by pupil barrister Keiron McCabe.
The matrimonial home is an important environment in which spouses share their lives, and so unsurprisingly it has a special status in financial remedy proceedings. When the combined wealth of parties exceeds their needs, it is often assumed that the family home should be split and shared equally. Yet whilst the simplicity of this approach may seem attractive, it can create unfairness if one party contributes substantially more towards buying the home. The question therefore arises: how to approach the issue of sharing?
Can the home be excluded from sharing?
The starting point of sharing is equality. However, in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 Lord Nicholls outlined an important distinction between the sharing of matrimonial and non-matrimonial property (in practice it now being established that parties won’t have to share property if it wasn’t generated by or during the marriage, such as an inheritance or pre-marital wealth). Given this, you might assume that if the home already belonged to one of the parties before their marriage – in effect a classically non-matrimonial asset – it shouldn’t be capable of sharing. Yet, this is not the approach the courts have taken. In Miller, Lord Nicholls stated that the “central place” of the home means that regardless of how it was acquired, it “normally” should be considered matrimonial property and therefore capable of sharing. This view was subsequently endorsed in K v L [2011] EWHC Civ 550 when the courts considered if a spouse’s use of non-marital resources to purchase the home, enabled it to be non-sharable. According to Wilson LJ it did not, as in his view when a party chose to invest their assets into a family home, the importance of recognising and protecting the initial non-marital status of that contribution diminishes with time.
Can the home be shared unequally?
Shortly after Miller, the practice of unequally dividing the family home was hinted at in several cases. The key judgment to bring together these various threads was S v AG [2011] EWHC 2637 (Fam); a decision of Mostyn J, involving a family home that had been purchased in the wife’s sole name using her lottery winnings, and which the husband had lived in for 3 years. When summarising the position on sharing and the marital home, Mostyn J said:
“In Miller & McFarlane Lord Nicholls specified that the matrimonial home should always be designated matrimonial property, whatever its source. He stated at para 22 that “the parties’ matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose.” This is reflected in the remarks of Wilson LJ in K v L at para 18(c). But even the matrimonial home is not necessarily divided equally under the sharing principle; an unequal division may be justified if unequal contributions to its acquisition can be demonstrated.”
In other words, when one party makes an unmatched contribution towards the purchase of the home, whilst its importance may diminish with time, fairness still dictates that the final financial award reflects this contribution in some way. Hence in S v AG, Mostyn J ruled that instead of giving the husband a 50% share of the home, a 15-20% proportion was appropriate.
The High Court confronted the issue of unequal sharing and the matrimonial home again in FB v PS [2015] EWHC 2797 (Fam). This was a case where the home had been the matrimonial property of the husband’s parents and was purchased by him using an early inheritance. Moor J noted that whilst the husband and wife occupied the property for 15 years, the circumstance of its original transfer was a “very significant unmatched contribution”. Thus, he did not consider it fair to share its value 50/50. In discussing how to account for this contribution in the overall award, he observed that:
“There are, of course, two ways in which a court can approach the matter. The first is to allow a discount to equal sharing to reflect this unmatched contribution. The second is to remove an appropriate share of the value of AR [the home] from the matrimonial assets to reflect the unmatched contribution and then divide the figure that is left equally. I propose to approach the matter on the second basis and then check it by undertaking the first exercise.”
Under this formulation, Moor J held that attributing £500,000 as a sharable value to the property was the appropriate way to reflect the husband’s contribution. Therefore, he removed £2,912,500 from the overall schedule of assets, as this was the value of the family home minus the £500,000 award and its expected cost of sale. Interestingly, he also noted that under the first approach, the wife would have been entitled to a 42% share.
Current Position
Following FB several cases have supported the idea of unequally sharing the family home.
In AD v BD [2020] EWHC 857, Cohen J stated that a “range of cases” now supported the idea of a marital home’s unequal sharing, or exclusion in its entirety from the sharing exercise. (Although the exact cases he had in mind were not mentioned). In this judgment, the following facts were highlighted as favouring a departure from equality: (a) the fact the property was the first one owned by the parties and had only been brought 3 years before their separation, (b) that its entire purchase price had come from the husband’s father, and (c) that it had been registered in the husband’s sole name. Interestingly, Cohen J adopted the first approach discussed by Moor J and determined that only 40% of the home should be added to the sharable marital acquest to reflect the husband’s unmatched contribution.
Whereas AD v BD dealt with a home purchased a few years prior to separation, in DE v FE [2022] EWFC 71 Cohen J was asked to determine how a husband’s property that had been cohabited in for 18 – 24 months before marriage should be treated. Somewhat curiously, this decision did not appear to rely on the concept of unmatched contributions but instead suggested that the matrimonial nature of the home was not an “all or nothing” argument. The wife argued inter alia that because the property was their first home together it should be treated as matrimonial. The court agreed finding a “genuine but small” matrimonial element to the property and awarded the wife 30% of its value.
In E v L [2021] EWFC 60,Mostyn J again affirmed that assets brought into a marriage but “matrimonialised” over time (to use the term he popularised) could justify a departure from equality. Specifically highlighting “a dwelling used as a matrimonial home” as an example when this would be the case, he held “that the law recognises the possibility of unequal sharing of such an asset: see Vaughan v Vaughan [2010] EWCA Civ 349 at [49] per Wilson LJ.”
ARQ v YAQ [2022] EWFC 128 was another decision of Moor J, considering a family home that had been purchased by the husband and then subsequently registered in both spouses’ names. Once again, it reinforced the principle that “the matrimonial home may not be divided equally if unequal contributions to its acquisition can be demonstrated.” However, on the facts of the case, Moor J found that the home had “occupied a central part in the marriage”. Thus, he did not discount a proportion of its value from the marital acquest. (Although note at the time of writing this case is subject to appeal under the name “Standish v Standish”.)
Finally, against this trend in X v X [2016] EWHC 1995 (Fam) Body J considered that the “generally accepted approach” for using non-marital resources to purchase the family home was to treat them as “swallowed up by the matrimonial property”. In his judgment, FB was an exception to this rule. Thus, he made no allowance in the final award for the fact that the home had been purchased using the proceeds of sale from the previous family home (also brought outright by the husband) and a £600,000 gift from the husband’s father.
Key Take Aways
Overall, the following points appear to flow from the above authorities:
- Although strictly speaking, it is only “normal” for the family home to be a matrimonial and sharable asset, in practice, it will be considered sharable in virtually all cases;
- The matrimonial nature of the home is not an “all or nothing” position, as the application of the sharing principle does not necessitate equal sharing;
- Whilst it is trite law that the courts can depart from equality to meet needs, a far less commonly recognised basis for doing so in the context of sharing is unmatched contributions. The source of funds used to purchase the home should therefore be scrutinised, as any evidence of an unmatched contribution can justify an unequal sharing of the home. Evidence of this would include bank statements showing a transfer of funds, or trust documents/company accounts demonstrating the non-marital origins of the resource used to purchase the home;
- The fact a property was the first home of the parties appears to be a significant factor in justifying unequal sharing. Indeed, this may be one basis upon which X v X can be reconciled with the more recent case law on the subject since it would have been difficult in that case to trace the unmatched contribution through the various property transactions made; and
- Finally, in determining how to account for an unmatched contribution, it may be too early to say for sure, but the preferred approach appears to be discounting a proportion of the matrimonial home’s value. However, the second approach of Moor J remains an option.
