A short sharp shock: fair doesn’t necessarily mean equal when dividing assets on divorce after a short marriage - Sharp v Sharp [2017]

Ms Sharp has successfully challenged the Court’s decision that her former husband, Mr Sharp, was entitled to half of the assets she built up during the course of their four year marriage.

This is an eagerly awaited decision which marks a change in the legal landscape where the generally accepted view had been that the equal sharing principle applied in all cases, regardless of the length of the marriage.

What is the equal sharing principle?

The equal sharing principle arises out of a string of cases (White v White, Miller v Miller and Charman v Charman) in which the majority view was that, assuming the marital resources were sufficient to meet the parties’ needs, there should be an equal division of the fruits of the marital partnership.

However, one of the issues which divided the judges in the above cases was whether this principle should be fully applied to short marriages or whether the length of the marriage could be a factor justifying a departure from the equal sharing principle.

The facts

Mr and Ms Sharp were both in their early 40’s and had no children. The marriage, including 18 months of pre-marital cohabitation, lasted from late 2007 until December 2013.

Ms Sharp was a city trader and Mr Sharp was employed by an IT company. In the early years of their cohabitation the parties’ respective basic salaries were similar, around £100,000. However, during the course of the marriage Ms Sharp received annual bonuses totalling £10.5m. The couple kept their finances separate during their marriage, although there was no deliberate and agreed intention to do so.

At the time of the first hearing the total assets amounted to £6.9m.

First hearing

It was agreed between the parties that the value of the matrimonial assets was £5.45m, discounting a property and other assets which were acquired by Ms Sharp prior to her meeting and marrying Mr Sharp.

The judge at the first hearing held that:-

1. The parties in effect subscribe to the sharing principle when they marry unless they choose to opt out with a prenuptial agreement.

2. Not sharing assets which one spouse has contributed towards the marriage would be a backwards step which would incidentally open up fresh grounds of factual dispute for spouses.

3. The value of assets and savings built up during the course of the marriage, irrespective of the very different proportions in which the parties contributed them, should be subject to the equal sharing principle.

Mr Sharp was awarded £2.725m. Ms Sharp appealed.

Appeal

Ms Sharp’s view was that there were two key features which justified a relaxation of the equal sharing principle, namely, that (i) this was a short, childless marriage where both parties enjoyed successful careers; and (ii) they kept their finances separate.

The appeal judge held that the majority approach in Miller should be followed: in relation to “short, childless marriages, where both spouses have largely been in full-time employment and where only some of their finances have been pooled” fairness may require a departure from, rather than a strict application of the equal sharing principle.

Ms Sharp’s appeal was allowed and it was held:-

1. The view that the sharing principle applied unless the parties had entered into a prenuptial agreement was “unsustainable and not supported by any authority”.

2. The majority opinion in Miller was that a departure from the equal sharing principle may be justified where there are unilateral assets in a short marriage where both parties earned similar incomes.

3. The manner in which the parties arranged their finances was more than sufficient to show that Ms Sharp kept her capital separate.

Mr Sharp’s initial 50% share was therefore reduced and his claim was limited to £2m (comprising a property worth £1.1m and a lump sum payment).

Implications

This is understandably a welcome decision from Ms Sharp’s perspective and anyone else who may be in her position, however the decision unfortunately raises further questions and creates uncertainty in the law now that there seems to be more scope for spouses to seek a departure from the equal sharing principle.

In particular, it is not clear where the line should be drawn between what is considered to be a “short” marriage and a “long” marriage.

The decision in this case also prompts discussions surrounding prenuptial agreements and the importance of having such a document in place in an attempt to achieve certainty and avoid the potentially high costs associated with lengthy Court proceedings.

For the full Sharp judgment click here.

If you would like to speak to a member of our Family Team to discuss any issues relating to your marriage then please contact 01603 610911.

Note: The content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any specific circumstance.