06 November 2017

Short marriages – What's mine is mine and what's yours is…?

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Withers acted for the wife in the seminal case of Miller in 2006 which established key principles for family courts to adopt when deciding financial matters on divorce. In Miller, the wife was awarded £5m after a marriage of less than three years with Lord Nicholls commenting in his judgment, 'a short marriage is no less a partnership of equals than a long marriage'. The Court of Appeal's recent judgment in the case of Sharp v Sharp [2017] may have altered that consensus and has particular implications for dual income couples considering divorce after short childless marriages. In particular, the decision underlines the potential significance of the length of the marriage when determining how assets should be divided on divorce.

The facts

The parties were in their forties and had married in 2009. They had cohabited for two years prior to that giving a total relationship length of six years before separation. They had both worked throughout the marriage with similar basic salaries of £100,000 per annum. In addition, the wife's work as an energy trader had provided her with healthy bonuses of £10.5m during the marriage. At the date of trial, the assets were valued at £6.9m of which £4.17m was held in bank accounts and investments in the wife's sole name. Leaving aside the wife's pre-marital assets, the 'marital pot' for division was assessed at £5.45m.

In his first instance decision, Sir Peter Singer awarded the husband half of the capital built up during the marriage (ie £2.725m), stating that 'no sufficient reason has been identified in this case for departing from equality'.

The wife appealed successfully with the husband's award being reduced to £2m – comprised of £1.3m (being half the equity in their two jointly owned properties) and an additional £700,000 to reflect the combination of three factors: the standard of living enjoyed by the parties during the marriage; the husband's need for a modest capital fund in order to live in the property he was to retain; and some sharing of the assets accrued by the wife.

Wider implications

London is known as the 'divorce capital of the world' due to the generosity shown by the courts to financially weaker parties on divorce. Since the case of White v White there has been a presumption that marital assets should be divided equally on divorce unless there is a good reason for a departure from equality.

Sharp indicates that courts may consider a departure from equality in shorter marriages if, as in this case, there was little or no co-mingling of assets during the marriage, even where substantial wealth has been accumulated during the marriage. The fact that these spouses had largely kept their finances separate was a significant factor in the Court's reckoning.

It remains to be seen whether the courts will apply the principles of Sharp to longer marriages where both parties have been in full time employment.

Whilst pre and post-nuptial agreements continue to be the best way to protect assets from potential claims on divorce, in the light of the ruling in this case, dual income couples may choose to keep their domestic economy separate so as to provide potential additional protection.

This article forms part of our Autumn 2017 family newsletter, alongside the other articles found in the Insight section below.

Family law blog