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Sharp proves exception to the equal sharing principle

Date:19 JUN 2017
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A former wife has successfully challenged a ruling that her ex-husband should get half of the fortune she built up during their marriage.

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In Sharp v Sharp [2017] EWCA Civ 408,  [2017] All ER (D) 74 (Jun), the Court of Appeal heard that both parties earned around £100,000 during their 6-year relationship but the wife, a trader, received bonuses worth £10.5m. The couple, in their early 40s with no children, had matrimonial assets of £5.45m at the time of the divorce.

The High Court awarded the husband capital worth £2.75m. Ms Sharp appealed. Lord Justice McFarlane, giving the lead ruling, noted that the principle that the matrimonial assets of a divorcing couple should normally be shared between them on an equal basis was established by the House of Lords in the 2001 case of White v White [2001] 1 AC 596, [2001] 1 All ER 1. ‘The present appeal requires this court to consider whether that is inevitably the case where the marriage has been short, 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,’ he said.

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Jo Edwards, Head of Family at Forsters, says: 

‘This judgment erodes the longstanding principle that the starting point is that capital built up during the course of a marriage should be shared equally, regardless of its length; the so-called sharing principle. Mrs Sharp’s lawyers have successfully argued that the application of the sharing principle is unfair given the relatively short length of their childless marriage, the fact that she was the source of the majority of the wealth and as their finances were kept largely separate throughout their dual-income relationship.

Whilst many will have a degree of sympathy with Mrs Sharp’s stance given the facts of the case, this judgment poses almost as many questions as it answers including: how long does a marriage have to be to be defined as “short”?; and at exactly what stage is someone entitled to share the wealth generated by their spouse?

It may be that in light of this decision, couples take a more relaxed attitude towards pre-nuptial agreements if they know that if their marriage is short and childless and they are both in work, one of them can point to this decision as a reason not to share assets built up during the marriage. This decision moves us some way closer towards the Law Commission’s recommendation of a clearer definition and treatment of matrimonial and non-matrimonial property, though the best advice remains to have a pre-nuptial agreement which sets out clearly your intentions on divorce.’

Neil Russell, family partner at Seddons, says: 

‘Marriage is still a partnership. The fruits of the partnership continue to be shared equally; unless there is good reason to depart from equality. As to the reasons, these remain for the courts to decide on a case by case basis. The litigation casino remains open with the roulette wheel continuing to spin.
There are eight main factors on the roulette wheel, listed under s 25 of the Matrimonial Causes Act (a-h). Generally, needs trump all, so a mother who has children to house, can get more than 50%. Age of the parties and length of the marriage remains relevant, but so too does the nature of the assets, for example a family home which may often be shared equally, even after a short marriage. 
As to the length of the marriage, cohabitation seamlessly into marriage will extend the term. The nature and source of the asset remains important. The lesson is that parties should be encouraged to enter into Pre-nuptial agreements. They can be of magnetic importance and may avoid the huge costs of uncertain litigation.’