Departure From Equality Of Matrimonial Assets In Ancillary Relief Proceedings

In the leading case of Sharp v Sharp [2017] EWCA Civ 408, the Court of Appeal (in an appeal against a decision to divide matrimonial assets on an equal basis) held that the appellant wife was correct to contend that the combination of potentially relevant factors, namely, short marriage, no children, dual income and separate finances, was sufficient to justify a departure from the equal sharing principle in order to achieve overall fairness between the parties.

Sharp v Sharp

Case details

The facts of the case are as follows:

• The parties met in 2007 and commenced a cohabiting relationship that year.
• In November 2008, they purchased their first home in joint names, with funds provided exclusively by the wife.
• In June 2009, the couple married.
• In October 2012, the parties purchased a second property, in joint names. Although the parties had both worked prior to, and during their relationship, at the time the parties decided to purchase their 2^nd property, the husband took redundancy.
• In September 2013, they moved to live in the second property. By that time, however, the marriage was already facing difficulties.
• In December 2013, the wife filed for divorce.

Assets

• At the time of ancillary relief proceedings, the total assets held by either party amounted to £6.9m. The second property represented £1.45m, the first property represented £1.067m and £4.171m was credited to the wife’s bank accounts. The balance was made up with a range of other smaller elements.
• The figure for matrimonial assets of £5.45m used by the Judge, in his final calculation was arrived at by subtracting £1.1m from £6.9m, being the rounded up value for the first property. The husband conceded that this ought to be kept out of the matrimonial asset pot on the basis that it had been acquired by the wife before the couple were married. The Judge then further subtracted £350,000 to reflect the balance of other pre-acquired assets.

The Judge found that:

1. There lacked any suggestion that there was a deliberate and agreed intention on the parties’ part to maintain strict separation of their finances.
2. There should not be an inroad into the sharing concept to which the parties in effect subscribed to when they married, unless they chose to opt out (or attempt to do so) with a pre-nuptial agreement.
3. The pattern with regard to the parties’ finances had been one of open-ended liberality and was regularly preserved to meet the wishes, and even the whims, which the wife had afforded them both.
4. There had been no sufficient reason that had been identified for departing from equality of division.

Therefore, the Judge held that the principled outcome would be that of the £6.9m of current assets, the husband would receive a sufficient amount to leave him with £3.275m, half of the £6.9m, but after deduction of the top of the agreed £350,00. After deducting from the pool of matrimonial property, the Judge held that there should be a total payment of £2.725m to the husband.

The wife appealed the Judge’s verdict.

Points to consider

The main issue was whether it was inevitably the case that the matrimonial assets of a divorcing couple should be shared between them on an equal basis where the marriage had been short, there were no children, the couple had both worked and maintained separate finances, and where one of them had been paid very substantial bonuses during their time together.

The present case had been one of a very small number of cases that justified the departure from the equal sharing principle. The Judge’s holding that the sharing principle had to apply unless the parties had entered into a pre-nuptial agreement was unsustainable and not supported by any authority. It followed that the Judge’s finding that the conduct of the parties in relation to separate finances had fallen short of supporting a finding akin to a pre-nuptial agreement had to fall away as no longer being relevant. On the facts, the manner in which the couple had arranged their finances had been more than sufficient to establish that the wife had maintained her capital.

On the facts of the case, the wife was right to contend that the combination of the potentially relevant factors (e.g. short marriage, no children, dual incomes and separate finances) was sufficient to justify a departure from the equal sharing principle in order to achieve overall fairness between the parties. In addition to retaining one half value of the two properties (£1.3m), the husband ought to receive an additional award to reflect a combination of the following three factors:

1. The standard of living enjoyed during the marriage.
2. The need for a modest capital fund in order to live in the property that he was to retain.
3. Some share in the assets held by the wife.

The Judge’s order as to the division of capital would be set aside and replaced with a property adjustment order allocating the first property to the husband and the second property to the wife, with an additional lump sum payment of £900,000 to the husband, with all other aspects of the Judge’s order to remain unchanged.

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