Dealing with short childless marriages on divorce

The Family Court has a broad discretion when dealing with the financial matters arising from divorce. They must consider all the circumstances of the case, the first consideration being given to the welfare of a child of the family who has not reached the age of 18.

The factors the court must have specific regard to, are set out in Section 25 of the Matrimonial Causes Act 1973 including:

•  The income, earning capacity, property and financial resources available to the parties now and in the foreseeable future;
• The needs, obligations and responsibilities of the parties now and in the foreseeable future;
• The standard of living enjoyed by the parties before the breakdown of their marriage;
• The age of the parties and the duration of the marriage;
•  Any physical or mental disability of either of the parties;
• The contributions made or likely to be made by the parties to the welfare of the family, including looking after the home or caring for the family;
• The conduct of the parties, if the conduct is such that it would be inequitable to disregard it; and
• The value to each of the parties of any benefit (such as a pension) which by reason of the divorce that party will lose the chance of acquiring.

From these principles, case law has developed key aspects that the court will focus on including fairness, needs and sharing. 

In addition, the court will consider whether there should be a financial clean break and whether any previous agreement was made between the parties such as a prenuptial agreement or post-nuptial agreement for example which may influence the outcome.

What to share following a divorce?

With regards to the issue of sharing, on the face of it, parties to a marriage are entitled to share equally what the marriage has built up – otherwise known as “marital acquest” – so that the parties share any increase in the value of the assets built up during their marriage.  But what if the marriage was short in length and/or there were no children? Does this make a difference?

 In the recent case of E v L [2021] EWFC 60 (Fam) the Court considered these issues and how the sharing principle should be applied in a short, childless marriage.

The case involved a married couple in their 60’s who had been married for 2 years without any children. Although there was a disagreement between them as to whether they had cohabited before their marriage, it was agreed they were engaged 8 months before their wedding.

 The wife started divorce proceedings and applied for financial remedy soon after they separated. As the parties were unable to agree matters during the financial proceedings, their case went to a Final Hearing – otherwise known as a Trial – so that the Court would decide the outcome.

The husband immediately began financially supporting the wife when their relationship began 2 years before the date of their marriage. He was a successful production manager for live events, such as festivals and concerts. 

The wife was a housewife. She owned a London flat prior to the marriage in which she lived after the parties separated. During the marriage, the husband paid off the mortgage on the flat, but the wife re-mortgaged it to fund her legal costs associated with their divorce. The husband’s assets were primarily made up of his interest in six businesses, one of which was significantly valuable – the value of which they could not agree.

What happens when parties cannot agree on the value of an asset?

As is often the case in divorce, when parties cannot agree the value of an asset such as a property or business, the court can appoint a single joint expert to determine the value. However, in this instance, the husband did not agree with the single joint expert’s valuation and instead sought to rely on his own evidence from an expert of his choosing. 

The court allowed the wife to adduce evidence of her own expert too, meaning there were 3 valuations to be considered by the court.  The court found that the overall assets of the case totalled £9.2 million.

In deciding the outcome, the Judge looked at the following issues which the husband sought to rely upon to argue that the wife was not entitled to share in the marital acquest:

1.    The fact that the marriage was childless

There were no children of the marriage in this case. However, the Judge decided that the absence of children should not be taken into consideration when the Court is deciding whether there should be a departure from the equal sharing principle.

2.    The short length of the marriage

The parties were married for just 2 years. The Judge decided that except for non-family assets generated by one party alone during a short marriage (otherwise known as “non-matrimonial property” and where both parties are financially independent), there should be no distinction drawn between an accrual of assets over a short period of time versus an accrual over a long period of time.

When considering the length of the accrual period, the Judge confirmed that unless there has been undue delay between the date of separation and the date of the Trial, then the end date for the purpose of marital acquest is the date of the Trial.

 In reaching his decision, the Judge in this case concluded that the marital acquittal period ran from the date of the parties’ engagement through to the date of the Trial. 

Considering the expert valuations of the husband’s business (with all 3 experts given evidence remotely via video link) and applying a broad discretion in respect of a number of factors the court considered relevant to the value of the business, the Judge decided that the value of the company had increased by just over £3 million during the marital acquest period. 

Considering both parties’ assets, the Judge then ordered the husband to pay the wife a lump sum in the order of £1.5 million on a clean break basis.

This case shows that the court has a broad discretion when it comes to resolving the financial matters arising from a divorce. In big money cases, it gives authority that arguments advanced against the equal sharing of marital assets based on short and/or childless marriages may not be successful. 

It remains to be seen whether this will be applied in those cases involving modest assets where it is not uncommon for parties to argue that they should be put back into the position they were in pre-marriage rather than for their assets to be shared equally.

We are always happy to discuss matters with you and offer a free 15 minute initial telephone call. If you would like to take advantage of that, please call me on 01206 217378 or email shelley.cumbers@birkettlong.co.uk.