Supreme Court: A Spouse Seeking Compensation for Their Own Share of Marital Property Does Not Have to Deposit the Compensation Amount With the Court
⚖️ Ukraine | Family Disputes | Division of Marital Property
Case Details
Case No.: 235/5146/16-ц
Proceedings No.: 61-36716св18
Court: Supreme Court, Second Judicial Chamber of the Civil Cassation Court
Decision Date: 3 February 2020
Case Category: Family Law
Subject Matter: Division of Marital Property
Sub-Subject: Monetary Compensation / Termination of Joint Ownership / Court Deposit
Marriage Period: 1993–2013
Property in Dispute: Apartment, two vehicles, a trailer and a garage
Disposed Property: Two vehicles and a trailer sold by the husband without the wife’s written consent
Agreed Value of Disposed Vehicles: UAH 250,565.15
Key Issue: Whether a spouse seeking compensation for their own share in jointly owned marital property must first deposit the compensation amount with the court
Outcome: The Supreme Court held that the prior-deposit requirement does not apply where the claimant seeks termination of their own interest in jointly owned property in exchange for compensation.
Background of the Dispute
The spouses were married from 1993 until 2013.
During the marriage, they acquired an apartment, two vehicles, a trailer and a garage. The vehicles and garage were registered in the husband’s name.
In 2012 and 2013, the husband disposed of the vehicles without the wife’s knowledge or consent. The vehicles were subsequently registered in the names of new owners.
The parties disagreed over the value of the jointly owned vehicles but eventually agreed that their total value amounted to UAH 250,565.15.
The dispute concerned the division of their marital property and, in particular, the wife’s entitlement to monetary compensation for her share in property that the husband had already disposed of.
Property Acquired During Marriage Was Jointly Owned
The courts established that the disputed property, except for the garage used by the husband as a member of a cooperative, had been acquired during the parties’ registered marriage.
It therefore constituted joint marital property, with the spouses having equal interests in it.
Because certain assets were indivisible, the apartment and trailer remained in the parties’ shared ownership in equal shares.
The vehicles, however, presented a different problem: the husband had already disposed of them without the wife’s written consent.
The courts consequently awarded the wife monetary compensation corresponding to one half of the value of the jointly owned vehicles.
When Must Compensation Be Deposited With the Court?
The principal legal issue before the Supreme Court concerned the interaction between the different mechanisms governing compensation for a share in jointly owned property.
Article 71 of the Family Code of Ukraine provides rules for dividing property constituting joint marital property.
Where one spouse is to receive monetary compensation instead of their share in the jointly owned property, such compensation generally requires that the other spouse first deposit the appropriate amount into the court’s deposit account.
The purpose of this mechanism is clear: if one spouse is being deprived of their proprietary interest and is to receive money instead, the law seeks to ensure that the promised compensation will actually be available.
The Supreme Court, however, held that this rule does not apply indiscriminately to every case involving monetary compensation.
Two Different Types of Compensation Claims
The Court distinguished between two legally different situations.
The first occurs where one spouse asks the court to terminate the other spouse’s ownership interest in jointly owned property and seeks to retain the property personally.
In such a case, the interests of the spouse who may lose their ownership right require protection. The statutory mechanism may therefore require the relevant compensation amount to be deposited with the court in advance.
The second situation is fundamentally different.
A spouse may ask the court to terminate their own interest in jointly owned property and award compensation to that spouse for the value of the interest being surrendered.
The Supreme Court held that this type of claim is governed by a different legal mechanism.
No Prior Deposit Where the Claimant Seeks Compensation for Their Own Share
The Court concluded that the requirement to deposit compensation with the court does not apply where the claimant seeks termination of their own share in jointly owned property and payment of compensation in their favour.
In such circumstances, the claimant is not seeking to deprive another co-owner of property.
Instead, the claimant is asking for compensation for the termination of their own proprietary interest.
The Court connected this type of claim with Article 364 of the Civil Code of Ukraine, which provides that a co-owner whose share in jointly owned property cannot be separated in kind may obtain monetary or other material compensation corresponding to the value of that share.
The legal nature of this claim is therefore different from a claim seeking compulsory termination of another co-owner’s rights.
Why Article 71 of the Family Code Did Not Require a Deposit
The Supreme Court analysed parts four and five of Article 71 of the Family Code as a unified legal mechanism intended to protect the spouse who agrees to receive compensation for their share while their ownership right is terminated.
The advance deposit requirement ensures that the spouse losing the property interest will actually receive the compensation.
However, where the claimant personally asks for termination of their own interest and payment of compensation, that protective mechanism serves a different purpose and does not require the claimant to deposit the very compensation that they are seeking to recover.
Accordingly, the Court rejected the argument that the wife’s claim should fail merely because no compensation amount had previously been paid into the court’s deposit account.
Compensation for Vehicles Sold Without the Wife’s Consent
The Supreme Court also confirmed the treatment of the vehicles disposed of by the husband.
Because the vehicles had been acquired during the marriage, they formed part of the spouses’ joint marital property.
The husband had disposed of them without the wife’s written consent.
The wife was therefore entitled to monetary compensation corresponding to one half of their value.
The parties had agreed that the value of the relevant vehicles amounted to UAH 250,565.15, and the lower courts used that agreed valuation when resolving the property dispute.
The Supreme Court’s Decision
The Second Judicial Chamber of the Civil Cassation Court of the Supreme Court upheld the lower-court decisions.
It confirmed that the rule requiring the prior deposit of compensation does not govern cases in which the claimant asks:
to terminate their own right to a share in jointly owned property; and
to receive compensation corresponding to that share.
The Supreme Court therefore left unchanged the Krasnoarmiisk City District Court of Donetsk Region judgment of 26 January 2018 and the Donetsk Regional Court of Appeal judgment of 2 May 2018.
Why This Decision Matters
The judgment draws an important procedural and substantive distinction between two superficially similar compensation claims.
A claim to take another spouse’s share in exchange for compensation is not legally identical to a claim to surrender one’s own share and receive compensation for it.
That distinction determines whether the statutory court-deposit requirement applies.
The decision is particularly relevant where:
an asset cannot practically be divided in kind;
one spouse wants to exit the joint ownership arrangement;
one spouse has disposed of marital assets without the other’s consent;
monetary compensation is sought instead of physical division; or
a claim is challenged because the compensation amount was not deposited with the court before proceedings were commenced.
Lions Lawyers’ Analysis
The practical significance of this decision lies in the formulation of the remedy sought.
A claim seeking compulsory termination of the defendant’s ownership interest raises different legal considerations from a claim in which the claimant voluntarily seeks termination of their own interest in return for compensation.
The Supreme Court expressly treated these legal relationships differently.
This distinction can affect both the substantive basis of the claim and the procedural steps required before or during litigation. In marital-property disputes involving indivisible assets, the precise formulation of the requested relief should therefore be considered before proceedings are commenced.
The case also reinforces the consequences of disposing of marital property without the other spouse’s consent. Where restoration of the property itself is no longer practical, compensation may provide the mechanism for reflecting the other spouse’s proprietary interest in the division.
Lions Lawyers advises clients on family and property disputes in Ukraine, including division of marital property, monetary compensation for jointly owned assets, termination of joint ownership, unauthorised disposal of marital property, real estate and cross-border family matters. We provide full-service legal representation as well as standalone legal opinions, enabling clients to assess their existing strategy and, where appropriate, identify alternative legal approaches.
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