How does the Court deal with finance cases where there are many assets available? ST v AR [2025] EWFC 4
A look at the difference between the needs and sharing principle – Part 2
Last week, we looked at the difference between the needs and sharing principle in detail. We touched, briefly on what happens in cases where there are not enough assets to meet the needs of both parties.
This week we will look at the other extreme, when there are more assets than needed to meet the needs of both parties. We will also look at what else the case of ST v AR can tell us.
What happens when the parties have more than they need?
For cases such as these, when an equal division of the resources will leave parties with far more than they require to meet their needs, the court is left with the question of whether to apply the sharing or the needs principle. The court is faced with the question of: just because there are surplus assets available, does this mean that they should be shared?
In this recent case, the judge made it clear that when the result suggested by the needs principle is greater than the award as a result of the sharing principle, the former shall apply. Simply put, the judge made it clear that if sharing out the matrimonial assets equally is not enough to meet both parties’ needs, then the case must be dictated by the needs of the parties rather than an equal division of the assets. When considering needs, the court must ensure that the needs are realistic but must also be mindful of the standard of living enjoyed during the marriage.
In short, the court’s approach will start and end with the parties’ needs, and the sharing principle will only apply when there are surplus assets over and above the needs of both parties. However, if the assets so greatly exceed the needs of the parties, as was the case here, arguments regarding non-matrimonial assets can be made and the court can also consider whether sharing everything is fair and reasonable in the circumstances of the case and in light of the types of assets available.
What else can this case tell us?
The treatment of inherited assets
In this case, the court carefully considered the arguments around matrimonial and non-matrimonial wealth. The judge helpfully set out that there are usually 3 origins for non-matrimonial wealth, and these are:
- Property brought into the marriage by one party;
- Property generated by one party after separation; and
- Inheritance and gifts.
The judge also highlighted the idea that parties are ordinarily entitled to an equal division of marital and that non-marital assets are ordinarily retained by the party to whom they belong in the absence of good reason to the contrary.
In this case, the husband was successful in his argument that his significant property portfolio and investment account should be retained by him as they were inherited by him and his brother and the growth in the portfolio remained passive during the parties’ marriage. The court ultimately decided that, because the inherited assets were not needed to meet the needs of the parties, and due to the tax implications of withdrawing funds from the assets, the husband could retain these things, the wife was not entitled to a share of them.
Cohabitation prior to marriage
The judge in this case made it clear that the period of cohabitation prior to a marriage is relevant and should be taken into consideration when considering all of the circumstances of the case. On this particular set of facts, the judge found that the period of cohabitation pre-marriage was a relevant circumstance to consider as it established patterns which continued into the marital relationship.
In particular, this period of time set up the precedent for the marriage which was that both parties could pursue activities that they wished to and they were not concerned with working for financial gain.
Costs
In this case, the husband gave a payment of £500,000 to the wife to assist with her legal fees, he then made the argument that these funds should be deducted from the final settlement awarded to the wife as the intention was that these funds would be credited against the final settlement. Of the £500,000, £203,345 had been used to pay legal fees and to meet some household expenses incurred by the wife. No real explanation was given as to how the remaining funds were depleted.
As part of her case, the wife sought the sum of £275,000 to meet her remaining legal costs, the wife had also taken out a litigation loan to assist with meeting her costs having requested further funds from the husband and this request being declined on account of the fact that the wife had funds available in a JP Morgan account.
The judge was not convinced that the wife had no option other than to take out an expensive litigation loan and therefore the judge determined that the husband should not make up the shortfall caused by the wife’s choice to take out an expensive loan.
With regards to the £500,000 payment to the wife, the judge determined that there is a difference between payments for interim maintenance that need to be taken into account and payments made for the purposes of helping to meet legal costs to aid the financially weaker party to be on an equal footing to the other party. Put simply, the judge deemed that the payment should be taken into consideration but should not be automatically offset against the final settlement as it was clearly earmarked for costs and was not an express interim maintenance payment.
The judge concluded that the funds had come from a joint pot that the husband and wife both had access to, and that the wife should be able to pay her legal fees, the same as the husband has been able to pay his. The judge also reconfirmed that in family proceedings, the usual rule is that each party bears their own costs and that cost orders are only made in exceptional circumstances.
To conclude…
This case can act as a good tool to tell us a lot about how the Courts are dealing with finance cases. It shows us how the needs and sharing principles are applied, it also shows what happens when there are a lot of assets available within the marriage.
Put simply, this case shows us that, just because there is more available within the matrimonial pot, does not necessarily mean that all of it needs to be divided equally.
While the needs of the parties are really important, the courts also ensure that awards reflect realistic post-separation financial independence. In this case, the court awarded the wife 65% of liquid assets (just 9% of the total assets), focusing on her income needs rather than equal division.
This decision also highlights wealth preservation and how the courts consider assets that are non-matrimonial in nature (in short, the court will closely examine where an asset has come from, what it has been used for and whether it has been woven into the matrimonial pot), therefore deterring exaggerated needs claims.
Finally, the case also tells us that, while cohabitation cannot be seamless where there has been a period of separation (nine months in this case) the judge found that the prior period of cohabitation was relevant if it set the dynamic for the parties’ future financial relationship, as it did in this case.
Contact GoodLaw Solicitors
At GoodLaw Solicitors LLP, our Familly Law team has a great deal of experience dealing with many types of cases, from those where there are not enough assets to meet both parties’ needs, to cases where there are far more assets than needed.
Therefore, if you are going through a divorce or are thinking about a divorce and would like to discuss how finances are dealt with on divorce, please do not hesitate to get in touch with our Family department.
We offer a free initial consultation in qualifying circumstances and would be happy to discuss your options with you.
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