|Pre-marital Wealth of GBP5 Million Distributed on Needs Basis|
The ex-wife in S v S (2014 EWHC 4732 Fam) has obtained a financial remedy of GBP5.6 million on the basis of her needs, although virtually the whole of the couple's combined assets of GBP25 million were brought into the marriage by the husband.
The couple were married in 2003 after several years' cohabitation following the husband's divorce from his first wife. The husband, now aged 71, is a successful property developer. The wife is a florist, but has not worked since closing her flower shop in 2006. The couple had no children.
The wife issued a divorce petition in April 2013. For her financial settlement she sought a lump sum of GBP8.7 million on the 'sharing' principle, representing between 33 and 40 per cent of the couple's combined assets. The husband opposed this, maintaining that the settlement should be made on the basis of needs, because all the assets were brought by him into the marriage, or grew from those assets. Thus there was in fact no matrimonial property. He offered a needs-based settlement of GBP3.5 million. (These figures include the division of real estate as well as cash.)
The case engages two of the most contentious aspects of financial provision claims: pre-marital assets; and the 'needs' versus the 'sharing' principles.
Last year the Law Commission of England and Wales published a report recommending that the courts' application of the ‘needs principle’ should be governed by explicit and authoritative guidance, aimed at helping both parties to move towards independence in a set time.
More recently, the family courts' current approach to dividing non-matrimonial property was set out by Mostyn J in his judgment in the financial settlement case of JL v SL (2015 EWHC 360 Fam). In that case, where the wife received a large inheritance shortly before the couple separated, Mostyn J said an award to share non-matrimonial property, as opposed to having a sum awarded from it to meet needs, would be 'as rare as a white leopard'.
The S v S case came to court with these controversies unresolved. A judgment was delivered last December but the transcript has only just been made available.
In the event, Mr. Justice Bodey accepted that the settlement should be made on the basis of the wife's needs. This meant that the non-matrimonial property was not to be excluded from the financial remedy, and could be distributed to the wife.
Mr. Justice Bodey decided that she needed a standard of life that 'bears a proper relation to that to which she has been accustomed and to that of the husband[...] It should not be assessed, as the husband has said, in the context of her rented accommodation in East London in 1994.' Moreover, because she was so much younger than her husband, she needed proportionally more of the assets.
He assessed her needs at: (a) a GBP2 million house in the country town where the couple had lived; (b) a GBP8000,000 flat in London; (c) a GBP65,000 new car; (d) a GBP2.5 million lump sum to provide her income; and (e) legal costs of GBP410,000. However, he refused her request for an extra GBP37,000 per year to fund her mountaineering expeditions.
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Mar.17, 2015