Financial Remedies and ‘Short’ Marriages

The recent, high profile case of Sharp has muddied the waters somewhat as to the division of assets in financial remedies applications where the marriage has been short lived. We look at the issues and the uncertainty the ruling brings.

In essence, the Court of Appeal decided in Sharp v Sharp [2017] EWCA Civ 408 that the party who made no contribution to the short marriage was not entitled to an equal division of assets generated during that marriage.

When Mr and Mrs Sharp met, their earnings were comparable. However, Mrs Sharp (a trader) earned bonuses in the region of £10.5m during the marriage. The parties divorced after four years of marriage, and at the time of the divorce their joint assets totaled around £7m. Roughly £5.5m had been generated during the marriage. There were no children and, importantly, they had kept their respective finances separate.

The High Court awarded Mr Sharp half the assets on the basis that the roles of breadwinner and homemaker are of equal value, so that matrimonial assets should be split 50/50 on a divorce unless there are exceptional reasons why not.

However, the Court of Appeal took a different view. It distinguished between ‘long’ and ‘short’ marriages for the first time – and reduced Mr Sharp’s award to just £2m.

Mr Sharp’s case was that according to settled law (except for special contribution or truly non-matrimonial assets) all assets are to be divided equally between spouses irrespective of the length of the marriage or the manner in which the parties have conducted their financial life. The only basis for departing from such a division arises where a formal pre-nuptial agreement has been made.

The Court of Appeal questioned whether the equal sharing principle was inevitably the case where the marriage has been short, where there are no children, the couple have both worked and maintained separate finances, and where one of them has been paid very substantial bonuses during their time together.

So what factors were so important to the Court of Appeal that it took its unprecedented approach? Quite simply, this was a ‘short marriage, dual career’ case. The Court focused on the fact that Mr Sharp had made no contribution, ‘either domestic or business’, to the marriage. No children aside – the parties had dual incomes and separate finances. In particular, Mrs Sharp had maintained her liquid capital separately throughout the marriage, and it was not to be treated as part of the matrimonial assets for equal sharing purposes.

This case was described by MacFarlane J as ‘non-business partnership, non-family asset case' where the bulk (indeed effectively all) of the property has been generated by the wife”. The Court therefore justified its departure from the equal sharing principle.

Whether the ruling will be followed in subsequent cases involving ‘short marriages’ will be interesting to watch. However, an important issue not addressed by the Court was what amounts to a ‘short’ marriage (or, indeed, a ‘long marriage’). Practitioners will be watching with interest.



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