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Court of Appeal determines that application of ‘sharing principle’ is unfair in short marriage

Award against Julie Sharp reduced to £2 million

Julie Sharp has been successful in her appeal against the lower court's order which had awarded capital totalling £2.725 million to the husband, which represented exactly 50% of the total matrimonial assets of £5.45 million (after deductions and concessions). The award to the husband has been reduced to £2 million.

In Sharp v Sharp [2017] EWCA Civ 408, their Lordships unanimously agreed that a blanket approach to the equal sharing principle of 50/50 division of all assets acquired during a marriage 'can only be an impermissible judicial gloss on the statute, which expressly requires the court to consider all the circumstances of the case.' [86]

The Court stated 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.' [86].

Mrs Sharp argued on appeal that the duration of a marriage is still, by statute, a factor the courts should specifically consider when making a final order. As a consequence therefore fairness is likely to dictate a different approach to that of equal sharing of all matrimonial assets depending on the length of the marriage.

This was a short and childless marriage during which both parties had their own careers and maintained separate finances. It was argued that these individual factors could justify an argument for a departure from equality but when combined as in this case, created a 'perfect storm' which justified a departure from equal-sharing. It was therefore wrong for the High Court, at first instance, to award Mr Sharp capital representing 50% of the total matrimonial assets.

The Court of Appeal has reduced the husband's award from £2.725 million to £2 million, their Lordships considering that the husband should receive 50% of the value of the parties' two properties (circa £1.3m) and an additional award to reflect the combination of three factors:

(a) standard of living enjoyed during marriage;

(b) the need for a modest capital fund in order to live in the property that he is to retain; and

(c) some share in the assets held unilaterally by the wife.

Their Lordships assessed this additional award at £700,000. 

Jo Edwards, Partner and Head of Family at Forsters, commented:

"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."

Graeme Fraser, Partner at Hunters Solicitors, noted:

"Today's judgment further opens up the Court's discretion regarding the length of the marriage, particularly if the couple have no children, both are in full time employment and keep at least a proportion of their finances separate. Increasingly, couples will live together before they get married or enter into civil partnerships, and this has resulted in effectively increasing the length of the marriage when the Court exercises its discretion about how much to award each spouse.

"The courts may expect more arguments about when a couple have started to cohabit in future cases following Mrs Sharp's success. This is particularly relevant for same sex couples, for many of whom same sex marriage and civil partnership was not available until the relatively recent introduction of legislation.

"The Courts will not apply an automatic or blind application of 50/50 in every case as all the circumstances of the case must be considered."

Frank Feehan QC and Deepak Nagpal, both of 1 King's Bench Walk (instructed by Josiah-Lake Gardiner), represented Mrs Sharp. Jonathan Southgate QC and Joseph Switalski, both of 29 Bedford Row (instructed by Harrison Clark Rickerby), represented Mr Sharp.

For the judgment, click here. Family Law Week will publish a detailed summary soon.

13/6/17