Privy Council Offers Guidance on the Treatment of Non-Matrimonial Property in Divorce Proceedings

The UK Privy Council handed down a December 2016 judgment in a matrimonial appeal from the British Virgin Islands which challenged the lower courts’ ruling on the division of property in divorce proceedings.

The appellant, Mr. Scatliffe, appealed against an order for ancillary relief made in favour of his ex-wife in Scatliffe v Scatliffe. The Privy Council dismissed the appeal on the basis that the order for division of property made by the BVI High Court and upheld by the Court of Appeal was fair to both parties in light of all the relevant circumstances of the case. In the process of dismissing what the Privy Council termed as Mr. Scatliffe’s “ill-starred appeal,” the Board took the opportunity to offer some guidance and clarity on the judicial treatment of non-matrimonial property.

“Matrimonial property” is taken to broadly encompass property acquired during a marriage, which is the financial product of the parties’ common endeavour, while “non-matrimonial” property includes property owned by only one of the parties acquired before the marriage, or property acquired during the marriage as an inheritance or gift to that party only.

In commenting on the fact that Mr. Scatliffe’s guest house which he inherited from his parents was erroneously disregarded by the lower courts, the Board outlined the extent to which the non-matrimonial property of a party may still be relevant in the court’s division of assets.

    1. The court indicated that pursuant to Section 26(1)(a) of the Matrimonial Proceedings and Property Act (MPPA), the court must have regard to the “property and other financial resources which each of the parties… has or is likely to have in the foreseeable future.”
    2. It is only in circumstances where neither party has an interest in a given property that no account should be taken of it.
    3. It is not correct to describe a non-matrimonial property as those assets which neither party of the marriage has an interest in. The term non-matrimonial property connotes “property owned by one spouse before the marriage, and inherited property, whenever acquired.”
    4. The phrase non-matrimonial property, therefore, refers to property owned by one or other of the parties. The phrase matrimonial property, on the other hand, refers to property owned by one or other or both of the parties.
    5. Matrimonial property is subject to the sharing principle, which presumes as a general guide that the equal division of assets will be the just and practicable result. This general presumption in favour of equality can, however, be rebutted.
    6. While the non-matrimonial property is also subject to the sharing principle, in practice a spouse’s non-matrimonial property is generally only transferred to the other in cases where it is necessary to meet the other party’s needs, commonly referred to as the “needs principle.”
    7. The proper approach is to apply the sharing principle to the matrimonial property and then ask whether in light of all the circumstances of the case, and the relevant factors outlined in section 26 of the MPPA, the result of so doing is appropriate overall disposal. In particular, it should be asked whether the needs of either party require any additional adjustment in the form of transfer of further property, including non-matrimonial property.

Based on the Board’s ruling, it would, therefore, appear that the division of non-matrimonial property should only be a last resort in the event that one party’s needs will not be adequately met without recourse to the non-matrimonial property.

The Board’s judgment offers a timely reminder that it is important for parties to be advised that non-matrimonial property, such as gifts and inheritance, are not completely off-limits and may be subject to division by the court. It is also important for family law practitioners to consider, and include, these assets as fair game when acting on behalf of applicants who are in positions of financial need which may not be adequately satisfied by the division of matrimonial assets.

O’Neal Webster instructed Nigel Dyer, Q.C., who appeared on behalf of Mrs. Scatliffe, the successful party on the appeal.

About O’Neal Webster:

O’Neal Webster is a leading offshore law firm with offices in Tortola, British Virgin Islands, and London, UK. Since 1989 the firm has served national and international clients in areas of corporate, finance, banking, business, real estate, funds, regulatory, and trust and estate. The firm focuses on transactional as well as contentious matters in the BVI and provides legal counsel of the highest quality to a broad client base. Domestic clients include banks, public utilities, communications companies, statutory corporations, individuals, and tourism sector businesses. International clients include major banks, financial services companies, trust companies, investment houses, corporations, high net worth individuals, and global law firms.


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