A short sharp shock
An end to equal split of marital assets for short marriages?
Family practitioners have been sent reeling once again following the Court of Appeal decision in Sharp and left fumbling around in a murkier landscape on what was previously considered settled law.
The facts – this was a childless marriage of six years, including 18 months of cohabitation, both parties were in their 40s and earning broadly similar amounts at the start of their relationship. The wife accrued wealth disproportionately to the husband by way of discretionary bonuses totalling £10.5m during that time while the husband took voluntary redundancy towards the end of the marriage. Of note too was how the parties organised their finances during this time which indicated a clear degree of separation.
The wife appealed against and successfully challenged the lower court's financial order which awarded her ex-husband a pay out of £2.7m which represented half of the total matrimonial assets. She argued among other factors that he should not share in her bonuses being as they were "non-marital" monies although they accrued during the marriage.
The Court of Appeal ruled that the combination of potentially relevant factors - a short marriage, no children, dual incomes and separate finances - was sufficient to justify departing from an equal sharing principle to achieve overall fairness between the two parties and limited the husband's award to £2m.
The decision has raised far more questions than answered and has set the chattering classes of the family world chattering.
One particular feature that has excited family lawyers is the weight to be given to the length of the marriage in determining a fair outcome throwing into chaos what was previously considered and accepted as law following the landmark case of Miller. Prior to Sharp the courts' approach to the marital acquest (namely assets accumulated / built up during the marriage) was for it to be shared equally unless there was a good reason otherwise. Per Lord Nicholls in Miller; "a short marriage is no less a partnership of equals than a long marriage" and not considered to be a good reason to depart from the equal sharing principle.
However the Court of Appeal in Sharp was keen to point out that Lord Nicholls did not represent the majority view and indeed the House of Lords decision in Miller established that "departure from the principle of equal sharing may occur in order to achieve the overarching goal of fairness in a particular case" and that in the case of Sharp the cocktail of factors listed above was sufficient to justify this departure.
So now the length of the marriage, along with the nature, source and accrual of the assets in dispute, is a further argument to be used by warring spouses to erode his/her share of the marital pot. The question on everyone's lips is how long is long and how short is short and at what point does the marital acquest become shared? Should we be advising the financial weaker parties just to bite their tongues and stick it out to protect their share of the marital wealth.
A more pragmatic and less emotionally traumatic option is to enter into a pre-nuptial agreement which provides some certainty in the uncertain and ever evolving world of family law – although those anticipating a short, childless, dual career marriage may, on the back of Sharp, be better off without one given the court's latest, and some would arguably say more modern, approach in justifying a departure from equal sharing of the marital monies.
If you would like more information on how the points raised could impact you, please contact Lois Langton.