Short marriage may not mean equal split
The Court of Appeal recently considered whether it is inevitable or not that matrimonial assets should be shared equally between a husband and wife upon a marriage breakdown.
The marriage in dispute was relatively short, lasting for just over four years, and with an additional period of 18 months pre-marital co-habitation.
The parties were relatively young — in their early forties — and there were no children. The wife was a trader and the husband worked in IT.
In the early years, the parties’ respective incomes were broadly similar at around £100,000.
However, the wife received discretionary bonuses totalling over £10m during the marriage and in November 2012, a year before the marriage broke down, the husband took voluntary redundancy.
The parties had not, it was said, deliberately agreed an intention to maintain separate finances, but there were a number of aspects of their financial arrangements which did indicate a notable degree of separation.
For example, the judge at first instance noted that the parties split restaurant bills and utility bills, that the husband was not privy to details of the wife’s bonuses and that the wife gifted the husband two cars during the relationship.
At the time of the first instance hearing the assets totalled £6.9m. The husband agreed that some of the value of the assets should be excluded from the overall pot in dispute to reflect the fact that they had been acquired prior to the marriage, reducing the assets in dispute to a value of £5.45m.
The judge at first instance determined that parties effectively subscribe to the sharing concept when they marry unless they opt or attempt to opt for a pre-nuptial agreement.
He therefore concluded that the value of the assets and sav- ings built up during the marriage should be shared equally, notwithstanding the different proportions which the parties had contributed and found that “no sufficient reason had been identified… for departing from equality of division” of those such assets.
The wife appealed, submitting that it was relevant that the parties had a short, childless, dual career marriage and that the structure of the parties’ finances, combined with those facts, justified a departure from the equal sharing principle.
The husband submitted that no distinction is presently made between ‘family assets’ and ‘ business/investment/unilateral assets’ and that the principle of equality applied to short marriages as much as to long ones being “no less a partnership of equals”.
The Court of Appeal held that the case of Miller was still the authoritative guidance in relation to such cases and that the “inescapable conclusion” of the majority approach in that case in relation to “short, childless marriages, where both spouses have been largely in full time employment and where only some of their finances have been pooled” fairness may require departure from, rather than a strict application of, the equal sharing principle.
Consequently the wife’s appeal was allowed on the basis that the notion that the sharing principle applied unless the parties had entered into a pre-nup agreement was “unsustainable and not supported by any authority”; the majority in Miller was that departure from equal sharing could be a possibility in cases involving a short marriage and dual incomes and the manner in which the parties arranged their finances sufficiently established that the wife maintained her capital separately in a manner compatible with that described by Baroness Hale in Miller.
Thus the husband’s claim was reduced to £2m made up on a 50% share of the value of the parties’ two properties held in joint names and a further lump sum to reflect the standard of living enjoyed by the parties during the marriage, the need for a modest capital fund to live in the property the husband was retaining and some share in the assets held by the wife.
Divorce can be a costly affair