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Sharp Decision from the Court of Appeal - Sharp v Sharp [2017]

Jun 15, 2017
A recent decision of the Court of Appeal has shed some light on division of assets following a short marriage where there have been no children.

Mr and Mrs Sharp cohabited from 2007 until their marriage in June 2009. Their marriage lasted until the divorce petition in December 2016. Each party had a relatively modest financial background. Mrs Sharp was a successful trader in the wholesale fuel trade and Mr Sharp worked for an international IT company. Both earned relatively similar incomes of £100,000 per annum however Mrs Sharp received discretionary bonuses which totalled £10.5m during the course of the marriage. 

The parties kept their finances relatively separate, splitting bills at restaurants and outgoings at their two properties although there was no deliberate or agreed intention to keep finances separate. Although Mr Sharp was aware that Mrs Sharp received a bonus, he was not aware of the amounts that she received. Mrs Sharp would often fully fund the couple’s holidays and had bought Mr Sharp three Aston Martins. 

The total matrimonial assets amounted to £6.9 million made up from £1.5million being the couple’s second property, £1.1million being their first property (purchased exclusively with Mrs Sharp’s funds although in joint names), and £4.2million credited to Mrs Sharp’s bank accounts. Mrs Sharp sought a settlement with Mr Sharp of £1.2million (including a share in the first property and a lump sum payment). He sought a total package of £3million. 

In the first instance the Judge found that there was “no sufficient reason… for departing from equality of division. The fact that this is in effect a husband’s claim against a wife rather than the more conventional claim… does not call for a discount”. The judge awarded Mr Sharp half of the £6.9million pot after deduction of £350,000 (for agreed pre-acquired assets) and the value of the first home to produce a final payout of £2.7million. 

The Law

Under s25 of the Matrimonial Causes Act 1973 the court must consider a range of factors in determining an application to make a financial provision. These factors include the needs of the parties, income, standard of living before the breakdown of the marriage, contributions made during the marriage etc. This was later compounded by the seminal case of White v White in which it was established that such decisions had to be fair. “Fairness” itself is measured against the “yardstick of equality”. The underlining principle is that one party should not be discriminated against the other, such as in the event of one party has worked and the other has been the home-maker and carer to the children. Both are seen as providing an equal contribution to the marriage and therefore the marital assets. 

The question of length of marriage comes in to play particularly when considering the issue of pre-marital assets or assets not generated by joint ventures. Over a period of time the distinction will diminish as more is contributed by the respective parties and the pots merge. As a general rule, a marriage over 10 years is considered to be a long marriage. Therefore the starting point in determining assets is sharing them equally. Lord Nicholls in his judgment went on to say that this principle should only be departed from where there are good reasons for doing so. The most likely factor is the needs of the parties. For example, if one party has stopped work to care for the children their income will be much lower, as will their pension and mortgage capacity. On the other hand the other party has been able to go out to work to build these areas up over time. In this instance the Court may make an award so as to split the assets 60/40 or 70/30 (depending on the needs of the more dependent party).

In his judgment, Lord Justice McFarlane commented that, in contrast to the traditional ‘breadwinner’/ ‘homemaker’, each partner worked full time and there are no children, it must be necessary to evaluate the extent, if any, by which the husband’s domestic contribution exceeded that of the wife. As Baroness Hale commented in White v White, if this is the case, “then the duration of the marriage may justify a departure from the yardstick of equality”.

Lord Justice McFarlane said that Mrs Sharp received bonuses “way beyond the level of her previous earnings purely as a result of her employment and... without any contribution, either domestic or business, from her husband”.

The manner in which the couple arranged their finances “was more than sufficient to establish that Mrs Sharp maintained her capital separately in a manner which is compatible” with the principle of stepping away from the yardstick of equality. Mr Sharp’s overall award was reduced to £2million being the interest of one of the jointly owned properties and a lump sum.

Discussion

This judgment raises a number of questions: how long does a marriage have to be to be defined as short, and at what stage is someone entitled to share the wealth generated by their spouse?

Despite these issues there is at least some guidance that if couples know that their marriage is short and childless and they are both in work, there is potential a ground not to split assets built up during the marriage. In a period where pre-nuptial agreements are fast becoming popular (although not strictly binding), this decision may be helpful to couples who find themselves at the end of a short marriage.

Lynn Cowley

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Lynn Cowley

Lynn Cowley joined Nockolds in 1990 and was made Partner is 1997; Lynn also heads the Family Team and International Team. Before joining the firm Lynn ...

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