WX v HX [2021] and the issue of non-matrimonial property?

The recent case of WX v HX (2021) serves as a good reminder of the importance of establishing the different types of property when dealing with financial remedy issues on divorce.  

Background

The case of WX and HX concerned an application for a financial remedy order made by the Wife (WX) against her Husband (HX).

The parties had a long marriage of 33 years. They married in 1985 and separated in September 2018. They had 4 children together, but sadly their second child died from a brain tumour when she was very young. 

WX played the role as a mother and homemaker. She had looked after the family without any help from a nanny, despite having suffered periods of ill health at points in the marriage. 

HX worked in finance and became a partner in a bank at the age of 28. He made a very significant contribution to the marriage in terms of wealth creation. 

The family’s standard of living was high. In addition to their mortgage-free family home with a value of £13.75 million, the parties acquired a home in Oxfordshire which had a value of £10.65million, again mortgage free. 

Both WX and HX also came from wealthy families. WX was the beneficiary of two trusts which were worth £9million (net), and which provided WX with an income of £235,000 (net). It was agreed that HX would manage these funds on WX’s behalf. 

In total, the wealth available for distribution was around £50 million - £60 million. In addition, there was a sum of approximately $50 million held in an offshore trust, of which the parties’ children were the beneficiaries. It should be noted that WX accepted that the offshore trust funds were no longer "resources" to which HX had access and they were therefore excluded from division. 

HX offered to transfer to WX his half share of their London property. This would leave them each with a broadly equal split of the assets based on the values that HX attributed to the assets. WX did not agree to this and sought the family home and an additional cash lump sum of £10 million, to be paid from HX's personal offshore assets. Her proposal was made on the basis that her non-matrimonial inherited wealth, which was managed by HX during the marriage, was ring-fenced and should be retained intact by her at the conclusion of the proceedings.

Issue

It was for the Judge to establish which assets fell into the category of pre-marital/non-matrimonial assets. 

Decision

The Judge set out the established principles in relation to sharing in the context of matrimonial and non-matrimonial property, and held that WX's non-matrimonial property had throughout the marriage been preserved as her own separate property and had not acquired a matrimonial character, either in whole or in part, as a result of HX's activities as investment manager. 

The submission that HX's contribution operated to "matrimonialise" WX's separate property was rejected, and it was emphasised that both HX and WX made "an equal and significant contribution to their marriage" 

Having categorised the assets and computed their value, the Judge was satisfied that the husband would be able to meet his needs with 50%. Accordingly, there was no need to have recourse to the non-matrimonial assets which would remain with WX. The result was that WX was entitled to the full value of her share in the matrimonial assets, namely the family home in London and a lump sum of £6,362,445

The key points to note

It is important to note that the extent of the matrimonial assets here was key to being able to ring-fence the inherited wealth. If the matrimonial assets had not been sufficient to meet both of their needs, the court would most certainly have looked to the other assets to meet those needs.

A further key fact was the finding that the non-matrimonial assets had been kept separate and not intermingled with the other assets. This was a 33-year marriage and had they not been kept separate, they would have been considered matrimonial.

If you have inherited assets and would like to know more about the impact of divorce proceedings on those assets, please contact Nusrat Siddique on 020 8290 7331 or nsiddique@judge-priestley.co.uk.