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Short Marriage – Reduced Financial Settlement?

Sharp v Sharp [2017] EWCA Civ 408

Short marriages that end in divorce can result in many questions involving the financial settlement.  If a couple has only been married a short period of time (five years or less), should there be an expectation that the presumption of equal division of assets and property applies?  In the Court of Appeal case of Sharp v Sharp [2017] EWCA Civ 408, it was ruled that marital assets should not be evenly split in such a scenario.

Background to the decision

Energy trader, Julie Sharp, and her husband Robin Sharp enjoyed a seven-and-a-half-year relationship, living together for 18 months before marrying. The marriage ended after five and a half years.

Although their basic salaries were originally similar, over a period of five years the wife received annual bonuses totalling £10.5 million.

Throughout the relationship and marriage, the Sharps kept their finances completely separate. Robin Sharp brought two cars for her husband and funded the couple’s holidays. They owned two properties in joint names; however, Robin Sharp paid the purchase price for both.

The couple separated in 2013 after Julie Sharp became aware of her husband’s unfaithfulness. They had no children. Both engaged the best London-based family solicitors to argue their individual cases.

In the Family Division, the court followed the principle set out in White v White [2001] 1 AC 596, [2000] 2 FLR 981, one of the most important decisions in English divorce law. It set out the following principles when deciding on a financial settlement.

“…there is one principle of universal application which can be stated with confidence. In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles. Typically, a husband and wife share the activities of earning money, running their home and caring for their children. Traditionally, the husband earned the money, and the wife looked after the home and the children. This traditional division of labour is no longer the order of the day. Frequently both parents work. Sometimes it is the wife who is the money-earner, and the husband runs the home and cares for the children during the day. But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering paragraph (f) [of section 25(2)], relating to the parties’ contributions … If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the home-maker and the child-carer.”

The ‘sharing principle’ was then set out.

“A practical consideration follows from this. Sometimes, having carried out the statutory exercise, the judge’s conclusion involves a more or less equal division of the available assets. More often, this is not so. More often, having looked at all the circumstances, the judge’s decision means that one party will receive a bigger share than the other. Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so.

The judge in the Family Division duly followed the principles laid down in White and awarded the Robin Sharp £2.725 million of the total matrimonial assets of £5.45 million.

The Court of Appeal decision

 

Julie Sharp appealed to the Court of Appeal on the grounds that the equal sharing of the couple’s property was unfair, given that the briefness of the marriage, the fact there were no children and she had generated a majority of the wealth.

She further argued that it was a ‘fiction’ to suggest that the husband had contributed to her ability to generate income. He also had a relatively well-paid career (earning around £100,000 when they first met), and it had been a joint decision to keep separate finances.

Julie Sharp argued her husband should only receive £1.3 million, being a 50% share of the combined value of their two properties.

Robin Sharp argued that it was settled law that the marital pot should be divided equally regardless of who primarily generated the wealth, the length of the marriage and whether or not the couple had children.

He posited that except for where one had made a ‘special contribution,' or where there were truly non-matrimonial assets, the only basis for departing from an equal division of matrimonial property was where there was a valid pre-nuptial agreement.

In a comprehensive judgment, Lord Justice McFarlane rejected Robin Sharp’s arguments stating that automatically applying the equal sharing principle in all financial settlement cases would result in an ‘impermissible judicial gloss’ on the factors set out in section 25 of the Matrimonial Causes Act 1973.

He also concluded that Julie 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."

McFarlane LJ concluded that a “departure from the principle of equal sharing may occur in order to achieve the overarching goal of fairness.” He found that a “combination of potentially relevant factors (short marriage, no children, dual incomes and separate finances) is sufficient to justify a departure from the equal sharing principle in order to achieve overall fairness between these parties.”

The impact of the judgment

 

The case received a lot of media attention. The Telegraph led with a headline “The case that could change everything for couples divorcing after a short marriage.”

But is this the case following the decision?

The first point to note is that the courts have always had the ability to depart from the starting point of equal sharing. Lord Justice McFarlane also pointed out that the Sharp’s case was only one of a small number of cases where the departure of equal sharing was justified. If Robin Sharp did not have a job that paid what is, by anyone’s standards, a decent income, or children were involved, the decision may have been very different.

The fact that no reference was made to what the Court of Appeal believed constituted a ‘short marriage’ also indicates that this decision was not meant to be a game changer in the realm of family law.

However, this decision is important for two reasons:

  1. it is one of the increasing number of cases where it is the husband who is the financially weaker party. Although it may still be more difficult for a husband to make a claim against his wife, the fact that we now have a Court of Appeal decision with this gender dynamic shows that society has fundamentally changed; and
  2. although the case does not indicate a sea change in the court’s approach to the equal sharing principle, it does illustrate that there may be greater scope for one party to argue that deviation from the 50/50 principle should be applied, especially if the marriage was a short one, with both parties earning good incomes and no children are involved.

The only way to potentially protect individual assets and wealth from becoming part of the matrimonial pot is to enter into a pre or post-nuptial agreement. Having one in place may help facilitate a peaceful financial settlement, especially in the case of a marriage of short duration. It would be difficult for a court to find the contents of a properly drafted and signed pre-or-post-nuptial agreement unfair if the marriage had only lasted a few years and produced no children.

If you need legal advice on financial and property settlements following a short marriage or creating a pre-or-post-nuptial agreement, contact a specialist family solicitor as soon as possible.

OTS Solicitors is one of the most respected and family law firms in London and is highly recommended by the Legal 500. By making an appointment with one of our family solicitors, you can be assured of receiving some of the best legal advice available in the UK today.