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Compensation on marriage breakdown and divorce

View profile for Karen Johnson
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Compensation on marriage breakdown and divorce

In recent news, there has been talk of a case decided by Mr Justice Moor following a private hearing in London. He awarded a wife compensation of £400,000, in addition to 50% of their £10 million matrimonial pot, to reflect his finding that she had sacrificed her career for the good of the family. 

The couple, who are not named, are apparently both solicitors in their 40’s, were married for 10 years and have two children together. It is reported that the wife had been educated at Cambridge University but that she and her husband had agreed that she would prioritise raising their family. This cost her her own career prospects, whilst the husband was able to focus on his career and see this flourish. 

It is not uncommon for married couples to make decisions like this during, what they hope will be, a long and happy marriage. Whilst they are married, such an arrangement is likely to work to both of their advantages. They are able to enjoy and bring up a family, whilst also reaping the financial rewards of career success. 

The difficulty arises upon relationship breakdown. One party finds that the decision means that they cannot achieve the same level of income that they might otherwise have done, because they agreed to hold back their career for the good of the family. They now face the prospect of earning much less than their ex partner, who has not made the same sacrifice. 

When dealing with financial claims on marriage breakdown, a court aims to find an outcome which is fair. It has regard to all the circumstances of the case including the parties’ needs, incomes, earning capacities, resources, length of marriage, conduct and past and future contributions.

It is rare for a court to make orders for compensation

The reason for this is that case law sets out the way in which the court should approach financial claims on divorce. In modest asset cases, the starting point for consideration is an equal division of the assets built up during the course of the marriage, unless there is to be a departure from equality to allow needs to be met. 

Although, “compensation” is not awarded in these cases, the practical effect of a reduced earning capacity may be reflected in a spouse with lower earning capacity receiving a greater share of the matrimonial assets in order to meet their needs and potentially spousal maintenance. 

Compensation is only likely to be found in significant asset cases such as this one. An equal division of the assets is more than sufficient to meet needs, yet an inequality remains. This being due to the long lasting effects of the contribution made by the spouse who gave up their career to look after the children, and who may be making that contribution on an ongoing basis.

Even then, it is not going to exist in every high value case as it is also dependent upon a finding of a significant contribution or sacrifice. Simply changing your hours to work part time is not likely to be sufficient. Giving up a well-paid career or job opportunity may. 

If you are considering or in the process of separation, our team of specialist family lawyers based in Colchester, Chelmsford and Basildon can provide legal advice specific to your circumstances. We aim to achieve a good outcome which allows you to move forwards. For more information and to discuss how we can help you, call me for a free 15 minute telephone consultation on 01206 217305 or email karen.johnson@birkettlong.co.uk.

 

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