England and Wales has for better or for worse developed a reputation of being the “divorce capital of the world”. Not due to the number of divorce petitions issued but the generous awards granted by family courts to spouses of wealthy individuals.
Family courts do not distinguish between homemakers and breadwinners. All contributions to a marriage are valued.
According to the landmark case of White v White  UKHL 54, the division of assets acquired during marriage should be measured against the yardstick of equality. This was not simply about applying a 50/50 split but it was a move away from only meeting the needs of the poorer spouse.
In short marriages the likelihood is that the majority of assets have been acquired prior to the marriage therefore settlements are not expected to be a large share of total assets owned by the couple.
This was not the case in Sharp v Sharp  EWCA Civ 408. At the time of divorce the couple’s assets totalled £7 million. A substantial £5.5 million was amassed during the marriage. Including cohabitation this was a marriage of roughly 6 years. Not necessarily a short marriage but not particularly long either.
The couple had similar basic salaries of approximately £100,000 per annum during the marriage. Mr. Sharp was an IT consultant and Mrs. Sharp was a successful energy trader. Mrs. Sharp amassed staggering bonuses during the marriage totalling £10.5 million benefiting from a soaring energy market.
In May 2015 the family court awarded Mr. Sharp £2.75 million, half of the assets amassed during the marriage. Mrs. Sharp appealed this decision.
The Court of Appeal judgment was handed down on 13 June 2017. Mr. Sharp’s award was reduced to £2 million which came as a surprise to many. This consisted of the former matrimonial home valued at £1.1 million and a modest lump sum of £900,000 from the wife’s assets.
The Court stated that “an automatic or blind application of a 50/50 split in every case can only be an impermissible judicial gloss on the statute, which expressly requires the court to consider all the circumstances of the case”.
Accordingly to section 25(2) of the Matrimonial Causes Act 1973 various factors need to be considered when dividing assets upon divorce which I summarise below:
• The income and earning capacity of each spouse;
• The property and/or financial resources each spouse has or is likely to have in the foreseeable future;
• The financial needs, obligations and responsibilities of each spouse;
• The family’s standard of living during the marriage;
• The age of each spouse;
• The duration of the marriage;
• Any physical or mental disability of either spouse;
• The contributions made by either spouse;
• The conduct of either spouse; and
• The value of any benefit which a spouse may lose (e.g. pension).
The Court of Appeal found that Mr. Sharp had made no domestic or business contribution to the source of Mrs. Sharp’s bonuses. He had also made no additional contribution to the home life or welfare of the family. This was a short marriage, the couple did not have any children and overall the couple maintained separate finances. On this basis the Court of Appeal held it was sufficient to justify departure from the established equal sharing principle.
This case highlights the importance of individual factors and circumstances in each case. This decision nevertheless leaves open questions such as what should be deemed a short marriage and at what point should wealth be shared. We will have to wait and see what impact this case has on future judgments however in the meantime family lawyers across the country will be rethinking their negotiations in cases that could be deemed to be “short marriages”.
If you have any queries on family law matters please contact Jennifer Gray on [email protected] or by calling 020 8971 1056, alternatively please visit our Family Law team page to contact another member of the team.
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.