Court Departs from the ‘Sharing Principle’ in a Divorce Settlement

In a recent ruling, in June of this year, the courts followed an increasing trend for financial settlements of divorcing couples to reflect more accurately the contributions that each partner made to the marriage.

In this piece Aaron Keene, Partner and Head of Family Law at The Wilkes Partnership Solicitors examines what this ruling means for couples seeking divorce in relation to the division of assets.

In this case, the marriage had been short, there were no children and the couple, in their early forties, had both worked and maintained separate finances.

Although the couple’s basic salaries had been similar, the wife had been paid very substantial bonuses of about ten million pounds by her employer. She contended that it was a fiction to suggest that the husband had contributed, even indirectly, to the generation of that income.

The court ruled that an automatic or blind application of a 50/50 split in every case would not be true to the intentions of the Matrimonial Causes Act 1973, which expressly required the court to consider all the circumstances of the case.

The court referred to guidance given by the House of Lords which indicated that where there had been a short, childless marriage with dual incomes and where only some of their finances had been pooled, the need to achieve overall fairness between the parties might require a reduction from a full 50 per cent share or the exclusion of some property from the 50 per cent calculation.

In this case the wife’s bonuses were not deemed to be “family assets” as they had not been generated by the joint efforts of the parties and the husband had made no domestic or business contribution to the source of them.

It was not a case where the husband was said to have contributed more to the home life or welfare of the family than the wife.  Accordingly, the bonuses were, in essence, removed from the financial settlement calculation.

In addition to retaining one half of the capital value of the two matrimonial homes, the husband did however, receive an additional award to reflect a combination of: (a) the standard of living enjoyed during the marriage; (b) the need for a modest capital fund in order to live in the property that he was to retain; and (c) some share in the assets held by the wife.

Aaron Keene, comments “This ruling is a major step forward for both sense and equality; with the courts taking a more reasoned view of what assets are personal and which are communal and belong to the family. However it should be noted that this was a case of a short and childless marriage. ”.

If you would like assistance in relation to a family matter, call Aaron Keene at The Wilkes Partnership on 0121 785 4400 for further information or email [email protected].