Sheriff Appeal Court confirms treatment of pre-marital assets used for family purposes
Background
This case involved a financial provision claim following a 14-year marriage. The husband had invested over £100,000 of his own pre-marital savings into the purchase and improvement of the former matrimonial home. On separation, he sought exclusion of a corresponding amount from the net matrimonial property on the basis that the funds had not been derived from the marriage.
The wife opposed the exclusion, arguing that the funds had been ‘converted’ into matrimonial property through their use for family benefit and that she was entitled to a fair share of the whole asset.
Key legal issues
The key issue before the court was whether assets acquired using non-matrimonial funds automatically retain their exclusion from the matrimonial property pool. The court was required to consider the operation of section 10(4) of the Family Law (Scotland) Act 1985 and the wider fairness provisions under section 9(1).
On appeal, the husband argued that the Sheriff had erred in law in failing to treat the pre-marital funds as excluded property, and that his financial contribution should be ring-fenced.
Decision of the Sheriff Appeal Court
The Sheriff Appeal Court upheld the Sheriff’s original decision. It confirmed that once funds are applied to acquire matrimonial property — such as the family home — they lose their exclusionary character, particularly where there is no express agreement to preserve them as separate. The court observed that the parties had treated the property as a joint asset throughout the marriage, and the use of the husband’s savings was consistent with shared ownership and intent.
The court went on to affirm that fairness must be assessed with reference to all the circumstances. The division of matrimonial property in this case had been equal, and the wife’s domestic and childrearing contributions were found to justify that outcome.
Conclusion
This case is a clear statement of the law on the transformation of pre-marital property. It affirms that where non-matrimonial funds are invested in matrimonial assets, they may be treated as part of the net matrimonial property for the purposes of fair sharing. Parties wishing to preserve separate assets should take advice early and consider protective arrangements such as pre-nuptial or post-nuptial agreements.