The Court of Appeal recently considered whether matrimonial assets should always be shared between the parties on an equal basis on divorce, no matter what the length of marriage. In the case of Sharp and Sharp the parties were both in their early 40s and had no children. The marriage, including 18 months of pre-marital cohabitation, lasted for some 6 years. The wife was a City trader while the husband was employed by an IT company. In the early years of cohabitation, the parties’ respective basic salaries were similar, around £100,000. However, the wife received annual bonuses that totalled £10.5m during the marriage while the husband’s bonuses were trivial. In November 2012, the husband took voluntary redundancy. Whilst there was no “deliberate and agreed intention” to maintain strict separation of their finances, there were several significant aspects of their financial arrangements. Some of the factors picked out by the judge were: the splitting of restaurant bills and household utility bills between the parties; the fact that the husband did not know the details of his wife’s bonuses, and the wife’s gift of three cars to the husband.
The court decided that the approach taken in an earlier case, of Miller, was the right one.The “inescapable conclusion” was that in relation to “short, childless marriages, where both spouses have largely been in full-time employment and where only some of their finances have been pooled” fairness may require departure from, rather than a strict application of, the equal sharing principle. This departure may occur via “a reduction from a full 50% share or the exclusion of some property from the 50% calculation”.
The husband’s claim was limited to a 50% share of the jointly owned properties and a ‘modest’ lump sum to reflect three factors: (i) the standard of living enjoyed during the marriage; (ii) the need for a modest capital fund to live in the property the husband was to retain; and (iii) some share in the assets held by the wife.
How the case is applied in the future will have to wait for other cases to be decided but the uncertainty of the court’s approach may mean more couples enter into pre-nuptial agreements.
If you wish to discuss pre-nuptial or other family agreements give Rebecca Kershaw a call on 01405 813108.