On 13 June 2017, the court of appeal handed down a hotly awaited decision about how the division of assets built up during a short marriage should be approached.
Mrs Sharp asked the Court of Appeal to reconsider the award made to her ex-husband Mr Sharp of 50% of the total matrimonial assets (£2.725 million out of £5.45 million (after some deductions and concessions). Their marriage and cohabitation taken together amounted to six years.
The Court of Appeal reduced Mr Sharp’s award to £2 million and the decision provides useful analysis for future cases of how the sharing principle should be applied when short(er) marriages and civil partnerships breakdown.
The facts of Mr and Mrs Sharp’s case brought together several factors that pointed towards an unequal division of assets: there were no children, the cohabitation and marriage taken together were short (but not that short), both parties earned their own money and had their own careers and they kept their finances separate.
The Court of Appeal held that the unconditional imposition of a 50/50 division (equally dividing all assets acquired during a marriage) in short marriage cases like Mr and Mrs Sharp’s 'can only be an impermissible judicial gloss on the statute, which expressly requires the court to consider all the circumstances of the case.'
The court went on to say that: "if . . . the equal sharing principle of 50/50 allocation is now applied by courts and practitioners, in cases which are not pre-determined by 'needs', to all relevant assets in every marriage, without exception, from the moment the couple leave the church or the Register Office, this would seem to be a very significant and wholly unjustified development."
The length of the marriage / partnership is a factor that the courts are obliged to consider when deciding upon the division of assets and liabilities on divorce/dissolution because it is a factor enshrined in statute. Mrs Sharp’s argument was that because of this, a fair result would be to depart from the starting point (and usually the end point) in dividing assets on divorce: that of equal sharing of all matrimonial assets.
The Court of Appeal reduced the husband's award from £2.725 million to £2 million which was justified on the basis that Mr Sharp should receive 50% of the value of the parties' two properties (circa £1.3 million) with the additional award made to reflect other relevant factors which the court stated as:
- the standard of living enjoyed during marriage
- the need for a modest capital fund in order to live in the property that Mr Sharp is to keep, and
- some share in the assets held unilaterally by Mrs Sharp
The decision means ever more discretion in relation to the impact of the length of a marriage/partnership on the division of assets (over and above needs). This decision will mean that there is more focus in future cases on the date cohabitation started to seek to shorten the length of the marriage in future cases to depart from equal sharing.
Simon Blain of Penningtons Manches LLP commented: “Whilst the decision will be welcomed by some independently-minded couples, I am concerned that it raises as many questions as it answers, and nobody benefits from uncertainty. For instance, it is far from clear how short a marriage has to be to be considered “short” by the court. Is a six year marriage (as here) really short, when the average English marriage now last only eleven years? And at what point in the lifespan of such a relationship does the right to an equal share of the matrimonial property kick in? What is clear is that those wanting more in the event of divorce should consider entering into a pre-nuptial or post-nuptial agreement. It would be extremely unwise to rely on the judgement in Sharp.”
For the full Sharp judgment click here.