HHJ Hess. Modest asset case exploring whether a departure from equality is appropriate where there were four consecutive family homes during the marriage, all of which were acquired by one party prior to the marriage.

Facts

The parties began cohabiting in 2005 and married in 2007. The wife was aged 52 and the husband aged 75. There were two children born of the marriage – ‘A’ was aged 16. A lived with the husband and was estranged from the wife. The parties’ second child, ‘B’, was born in 2010 but tragically died aged 8. The parties separated in 2020.

There were four real properties within the case (‘1 & 2 London Apartments’, a ‘Country Cottage’ and a ‘Property in a European Country’). All four properties were owned by the husband prior to the parties’ first meeting in 2004 and remained in his sole name. At the time of the hearing the wife was living in 1 London Apartment which was the flat immediately below 2 London Apartment which was occupied by the husband and A.

The wife had a number of modest defined contribution pension schemes and in due course may have been able to qualify for a (partial) UK state pension. The husband had an energy company pension which was in payment with a CE value of £30,358.

The wife worked in the civil service (having joined a few months earlier). She earned £2,441 pcm net. The wife paid £351 pcm to the husband as child maintenance, so her monthly disposable income was £2,090. The husband was retired and had not worked remuneratively for several years. HHJ Hess declined to attribute an earning capacity to the husband given his age. The husband received various sources of unearned income (pension income, pension credit, child benefit and child maintenance payments from the wife) which produced a monthly disposable income of £1,601. It was agreed between the parties that this was a clean break case.

Discussion

Establishing the parties’ reasonable housing needs was a key part of the case. The husband articulated his housing needs as being able to continue living with A at 2 London Apartment whilst A completed his secondary education and then to sell that property, buy A his own flat in Cambridge (assuming he got into university there), and then the husband would spend his 'twilight years' at the country cottage (his 'spiritual home'), utilising what was left of the sale proceeds of 2 London Apartment to subsidise his pension income. He acknowledged that the wife had a housing need which should be met by him. The husband was prepared to contemplate selling (or borrowing against) 1 London Apartment and the property in a European country to fund such a settlement for the wife in the sum of £365,300; but otherwise declined to contemplate any plan different from his own proposal. HHJ Hess found that the husband’s plans fell into the category of ‘wants’ rather than ‘needs’.

When examining the wife’s housing needs HHJ Hess considered the fact that during the long marriage of 15 years (including cohabitation), the parties resided in various properties, with the last property they resided in together being worth £1,175,000 (2 London Apartment). Whilst the husband owned all the capital assets before the marriage began, the wife made contributions to the marriage in the form of home-making and child-care over a number of years which needed to be taken into consideration, despite the situation with A at the time of the hearing. The husband proposed properties for the wife in the range of £450,000 to £500,000 (two-bedroom flats in East Dulwich or Forest Hill). The wife proposed properties for herself costing £800,000 to £850,000 (two-bedroom flats in Notting Hill, Fulham, Maida Vale and Richmond).

HHJ Hess explored the sharing principle and whether this was a case where a departure from equality was appropriate. The wife argued that, despite the fact that the properties were owned by the husband prior to the marriage and remained in his name, all four properties had been family homes at various points during the marriage. All four had accordingly become ‘matrimonialised’ and were thus matrimonial property to which the sharing principle applied.

HHJ Hess heard evidence of where the family lived during the marriage and found that there were three family homes in this case, albeit consecutively rather than simultaneously. A 50% share of all these properties would produce a lump sum of £730,844 – slightly more than what HHJ Hess had assessed as her needs. The parties’ advocates explored the law around matrimonialisation and discussed whether there was a restriction on how many family homes can be so characterised. Counsel for the wife argued that once a property has been a family home, even for a short period, it immediately becomes matrimonial property and remains so, even if the party moves to a different home. Counsel also argued that there is no restriction on how many family homes can be so characterised. Counsel for the wife’s conclusion was that the wife should have her half share of the properties which had been family homes, even if the outcome exceeded her needs.

Counsel for the husband argued that the court’s focus should be on fairness and the s 25 factors. In this case the court should not disregard the unmatched contributions of one party and also the length of the occupation of a particular property as a family home. If the mathematical consequences of treating the sequential occupations of different properties as family homes, where they have all been contributed to by one party, produces an unfair result, then the court should steer away from it. Counsel for the husband also reiterated that it is well established that a court can depart from an equal division of matrimonial property, even of a family home, where fairness requires it.

Held

Taking into account all the circumstances of the case, there was a justification for departing from an equal division of the net equity of the three properties which have been family homes, in the husband’s favour. The fair outcome was for the wife to be awarded the amount that meets her needs per HHJ Hess’s analysis below.

A reasonable fund for a housing budget for the wife was £650,000 plus purchase, moving in and furnishing costs of £30,000. It was reasonable to expect the wife to fund some of this figure with mortgage finance. Her mortgage capacity was assessed as £75,000 (she had only recently started in her present role at the Civil Service and some of her income would be taken up by CMS payments – for two years – and making pension contributions for retirement). The wife also had significant debts to be settled before her mortgage could be taken out. After paying the wife’s lump sum, the husband would be left with £1,232,704. HHJ Hess was satisfied that the husband could meet his needs for accommodation and living costs from this sum.

HHJ was concerned about the practicality of the current living arrangements and how the husband would either arrange a sale of 1 London Apartment or procure an equity release in respect of the property to fund the wife’s lump sum (tensions between the parties were high as there had been FLA 1996 proceedings since 2020). HHJ Hess ordered that the husband would pay the wife an additional lump sum of £17,500 to fund rental accommodation for six months plus a deposit on a date 42 days after approval of the financial order. On payment of this lump sum, the wife would simultaneously vacate 1 London Apartment.

In addition, the husband would pay the wife a lump sum of £657,000 four months after the wife vacated 1 London Apartment. This sum is made up as follows: £680,000 to rehouse (including moving and furnishing costs) less the wife’s £75,000 mortgage capacity plus £52,000 to settle the wife’s debts. There would otherwise be a clean break in both directions.

No order as to costs.

Other points to note

HHJ Hess made a strongly worded comment about the negative impact of adjournments (as the husband sought an adjournment at each stage of the proceedings), which he says ‘often have the unhappy consequence of achieving nothing apart from delaying resolution and increasing costs and stress’. HHJ also commented that ‘parties and lawyers allocated a slot in the court diary really should concentrate on getting themselves ready for it rather than becoming distracted by making unmeritorious adjournment applications’.