Following the welcome introduction of “no fault divorce” in April 2022, it is now easier than ever to get divorced painlessly and with the minimum amount of acrimony. A divorce application can be made by one party or jointly, on the basis that the marriage has broken down irretrievably, without the need to assign fault. There remains the procedural hurdle that you must be married for over a year before divorce proceedings can begin. However, it is often the issue of resolving the parties’ finances that turns out to be the stumbling block following a short marriage.
Section 25 of the Matrimonial Causes Act 1973 lists the matters to which the Court is to have regard in determining how to exercise its powers to make financial orders on divorce. One of these factors is “the duration of the marriage”: but what is a “short marriage” and how does that impact the approach taken by the Family Court?
What is a “short marriage”?
Clients often assume that that a marriage of a few years would be treated as a “short marriage”, possibly alighting upon a range of years that would fall within a defined bracket. However, first, we need to consider the length of any pre-marital cohabitation.
In the case of GW v RW [2003] EWHC 611 (Fam), Mostyn stated that, “where a relationship moves seamlessly from cohabitation into marriage without any major alteration in the way the couple live, it is unreal and artificial to treat the periods differently. On the other hand, if it is found that the pre-marital cohabitation was on the basis of a trial period to see if there is any basis for later marriage then I would be of the view that it would not be right to be included as part of the ‘duration of marriage’”. The majority of couples today tend to live together before they get married, and such a period of seamless cohabitation therefore will elongate the marriage for the Court’s purposes.
In the recent case of VV v VV mentioned above, Mr Justice Peel found that parties’ engagement was not sufficient by itself to give rise to a sharing claim in respect of those assets acquired after engagement, but before cohabitation and marriage, which may have impacted the level of the financial award. Furthermore, the Court of Appeal in Sharp v Sharp [2017] EWCA Civ 408 provided helpful guidance as to determining the length of a marriage. In this case, there was a period of pre-marital cohabitation from 2007, a period of 18 months prior to the parties’ marriage in 2009, with the marriage itself lasting until the divorce petition was lodged in 2013. The judge described this 6-year period as “not so desperately short…as some, but still by no means lengthy”.
Therefore, a consensus has developed in family law to suggest a marriage of 5 or 6 years, including any periods of seamless cohabitation, is the high water mark for “short marriages”.
How does the Court approach “short marriages” when making financial orders on divorce?
When considering the financial orders to make on divorce, the Court will have the principle of “fairness” in the forefront of its mind. The Court will apply the factors as set out in Section 25 of the Matrimonial Causes Act 1973, which include consideration of the parties’ financial resources, needs, ages, the standard of living enjoyed during the marriage and, notably, the duration of the marriage. The Court will then turn to the three strands of fairness: needs, sharing and compensation, with a focus on the first two, depending on the marital assets available in the particular case.
When assessing “needs”, the court will ask what the parties need to meet their capital (i.e. housing) and income needs. However, when the assets in the case exceed the amount needed for the parties to, for example, each purchase a suitable property and meet their expenditure needs for a period – which will often be a short period if the marriage itself is short – the sharing principle will come into play. This is the principle that the matrimonial pot will be divided equally between the parties unless there is a good reason to depart from equality. Where there is a short marriage, there is often a debate as to when the period of seamless cohabitation begins, which has an impact on whether assets are considered martial or non-marital, and consequently, whether the principle of sharing applies to these assets, thus affecting the level of the financial award.
A stark example
The parties in the recent case of VV v VV were married for only 5 months before their relationship broke down and became the subject of extensive and costly litigation. The parties were both in their 50s and had met on the Eurostar in 2018; they became engaged within a year, married in January 2020 and separated in June 2020. The wife argued that they began cohabiting in November 2018, whereas the husband indicated that the relevant date of cohabitation was December 2019, when they purchased and moved into a property in Kensington. The date when the parties started to cohabit was vital to determining whether the husband’s units in a company, which he was awarded over the period from August 2018 to November 2019, were marital or non-marital, and whether the equal sharing principle applied to these assets.
In early 2021, the husband pre-sold a portion of the units in a clandestine manner and received over $11m from the sale, which he failed to disclose to either the wife or the Court. Upon the official listing of the company, which took place in 2021, the value of the shares peaked on the first day and fluctuated between $450 and $700 per unit, which meant the remaining units the husband was entitled to were valued as high as $315m-$490m. Following this, their value plummeted and stood at $22 per unit at the date of the hearing.
Unfortunately, the husband had been unable to sell any of his remaining units upon the listing of the company, because the wife had been in communications with the founder of the company beforehand. Her dialogue with the company putting them on notice of the divorce proceedings interfered with the husband’s contractual entitlement to the units and had effectively blocked the release of the units to him. As a result of the non-release, the husband was unable to fulfil his IOU obligations in respect of the pre-sales and unable to realise the possibly extraordinary value of the shares upon the company’s listing.
In his judgment, Mr Justice Peel agreed with the husband that they started cohabiting in December 2019 and found that the marriage was only a period of 7 months; therefore, the units were non-matrimonial in nature and did not automatically give rise to a sharing claim. Mr Justice Peel determined that the wife’s award should be needs based, totalling £750,000 to redeem the mortgage on her property and meet her liabilities, and £450,000 in capitalised maintenance, which represented 3 years of “rehabilitative maintenance”, given the brevity of the marriage. Furthermore, in a subsequent judgment, the wife was ordered to pay £100,000 of the husband’s costs, which further encroached on her needs based award. Despite the wife’s conduct being a factor in this award, the law is unable to compensate the husband for his financial losses in the sum of “tens of millions of dollars” as a result of the interference with his contractual entitlement.
Final word
When in the honeymoon phase, the possibility of relationship or marital breakdown is, understandably, not something that couples want to consider. Yet marriage is one of the most significant financial decisions a person can make in their life and, as pessimistic as it sounds, the financially prudent would do well to consider the financial reality of divorce and consider making a nuptial agreement in the same breath as making plans to pick out a ring.
If you are getting married or considering your position following marriage, our specialist family team at Payne Hicks Beach are able to provide bespoke advice on how to best protect your financial position prior to marriage or in contemplation of separation.
For further information, please contact Laura Hallahan by email or your usual contact in the Family Department or, alternatively, telephone on 020 7465 4300
