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This article was first published in Solicitors Journal on 3 July 2017 and is reproduced by kind permission.
The decision in Sharp adds further uncertainty to the already inexact science of the division of finances on divorce, writes Pippa Allsop.
The Court of Appeal decision in Sharp v Sharp recently cast further uncertainty over the subject of how financial issues are dealt with on divorce.
Julie and Robin Sharp began living together at the end of 2007, were engaged by August 2008, and married in June 2009. Both came from a ‘relatively modest financial background’ and had well-paid jobs earning similar amounts, Mr Sharp as an IT consultant, and Mrs Sharp as an energy trader. They separated in September 2013, with Mrs Sharp issuing divorce proceedings in December. At the time both parties were in their early 40s and had no children.
During their six-year relationship and less than four-year marriage, Mrs Sharp received £10.5m in discretionary annual bonuses. She purchased and refurbished properties, bought her husband three Aston Martins, and funded luxurious family holidays. The judge in the first instance made clear that ‘it would indeed have had quite another cast if [Mrs Sharp’s] bonuses had been in the bag before they met’. However, this was not the case and he awarded Mr Sharp capital totalling approximately £2.7m, being 50 per cent of the matrimonial assets.
Mrs Sharp appealed this decision, on the basis that the principle of ‘equal sharing’ had been wrongly applied, because (a) the marriage was a ‘short, dual career, childless’ one and (b) the couple had ‘structured their finances in a particular way’, namely, deliberately kept them separate wherever possible.
Counsel for Mr Sharp argued that he had made a significant contribution by managing the couple’s properties and overseeing renovations which should be taken into account. He also disagreed about the extent to which their finances had been kept separate, asserting that there had been more intermingling than Mrs Sharp alleged.
On appeal, Lord Justice McFarlane stated that the case ‘concerns a possible relaxation of the “sharing principle”’. The principle was initially established in White v White [2000] and is based on the concept that parties to a marriage are equal and therefore it follows that they should share the ‘fruits of the matrimonial partnership’ equally on divorce.
The principle actually evolved from the desire to achieve fairness in light of what the court in the present case described as the ‘traditional bread-winner/home-maker model’ by recognising that the contribution of the latter should be given equal weight to that of the former. The distinction in this case was that both Mr and Mrs Sharp worked full-time, at least for the majority of the marriage, and both also contributed to their ‘family life’.
Mrs Sharp’s appeal was allowed, with Lord Justice McFarlane concluding that ‘the combination of potentially relevant factors (short marriage, no children, dual incomes, and separate finances) is sufficient to justify a departure from the equal sharing principle to achieve overall fairness between these parties’. Mr Sharp’s award was accordingly reduced by approximately £700,000 to £2m.
The case is undoubtedly a very interesting one. However, as many commentators and practitioners have already pointed out, it may only add further uncertainty to the already inexact science of the appropriate division of finances on divorce. The judge in the first instance described Mr and Mrs Sharp’s marriage as ‘not so desperately short… but still by no means lengthy’.
Herein lies one of the key problems which some fear this decision may exacerbate – what is a ‘short’ marriage? The absence of children is a straightforward box to tick, but the length of marriage issue far less so. It remains to be seen whether further case law will test the boundaries of this distinction.
For more information please contact Pippa Allsop, Associate in the Family Law team.
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