Who has what when a couple divorce is, inevitably, a source of debate and dispute. In 'big money' cases divorce lawyers are increasingly looking to the Courts for guidance on how assets should be divided.
In the recent case of Charman v Charman the Court was faced with the issue of “how business assets built up by one spouse alone during a marriage should be treated”.
Charman v Charman involved the biggest divorce settlement ever awarded by a Court in England. The matrimonial assets in the case were worth approximately £131 million and were built up during the course of the parties’ 27 year marriage through the skill and business acumen of insurance millionaire John Charman.
Mrs Charman, 53, had sought capital from the court of at least 45% of the matrimonial assets a sum of £59 million. She did so relying on the prevailing argument of fairness and that her contribution throughout the marriage had allowed Mr Charman to make his fortunes.
Mr Charman, 54, had offered to pay his wife a sum to bring her asset share to £20 million. He stated that he should have a greater share of the matrimonial assets as the business assets in the marriage should be treated differently to family assets and moreover, he had made a special contribution to the generation of wealth in the family. He argued that his wife had failed to support him throughout the marriage in his business endeavours.
In the High Court, the Judge started from the yardstick of equality. This is applied in most cases particularly where the marriage is lengthy. He then awarded Mrs Charman £48 million which represented 37% of all the assets. His decision to depart from an equal share was based on the reasons that:-
(a) the wealth created by the husband was categorised as wholly exceptional so that in this case a departure from equality was fair;
(b) Mrs Charman could receive cash whereas Mr Charman would continue to operate in the high risk insurance industry and;
(c) a wife such as Mrs Charman who fulfils the customary role of mother and home-maker was entitled to make a life of her own whilst the husband is at work.
Mr Charman was given permission to appeal and is asking the Court to reduce his wife’s settlement to £20 million. His appeal was heard in the Court of Appeal on 5th March 2007 and we are currently awaiting the Judgment.
It is hoped that the courts will seize the opportunity to provide comprehensive guidance to the extent to which there should be a departure from equality to reflect one party’s contribution to wealth generated through a marriage. Mr Justice Coleridge himself suggested a tariff of percentage bands. Could this be a workable option? The Court’s final decision and a clear guide on how businesses should be treated on a divorce would help business owners and their advisors know where they stand. The Court are unlikely to depart from general principles of equality, however we would all like to know how special a business contribution needs to be before the Court take it into account.
For more information, please email Tessa Barton or contact her on 01926 883034
