Why did the husband receive more than half in “paradigm case for an equal division”?

When sorting out financial arrangements on divorce there is a general rule that an equal division of assets between the husband and the wife should be departed from only if, and to the extent that, there is good reason for doing so. This is known as “the sharing principle”.

Thus in a case involving a long marriage where all of the assets were accumulated during the marriage, both parties made a full contribution, and the assets are sufficient to provide for both parties’ needs, the sharing principle is likely to apply, resulting in an equal division of the assets between the parties.

This was the situation in a recent case in the Family Court in London. It was heard by Mr Justice Peel, who described it as prima facie “a paradigm case for an equal division”, as both parties in principle accepted.

So why did Mr Justice Peel decide that the assets in the case, which he calculated to be some £263 million, should be divided as to 55% to the husband and 45% to the wife?

The answer is, quite simply, that not all assets are the same.

In the case £218 million of the assets were business assets and £45 million were non-business assets. Mr Justice Peel essentially decided that the husband should retain all of the business assets, and pay a lump sum of £86 million to the wife in ‘compensation’.

But Mr Justice Peel felt that the illiquid business assets were “risky and uncertain”, whereas the wife would be left with assets, mainly cash, which did not carry any such risk. In the light of this, he felt that it would be fair for the husband to have a larger share of the assets. He stated:

“I reject the submission that because [the wife], as a spouse of decades standing, is entitled in principle to an equal share of assets, it is in some way discriminatory, or confiscatory, for her to receive less than half the assets by value. The function of the court is to achieve a fair outcome; fairness is not necessarily met by an equal share by value. The courts are alive to the type of asset, and the proposed structure. There are numerous reported cases where a discount from (say) 50% is justified by a carefully calibrated balancing exercise which reflects the different nature of certain categories of assets.”

You can read the full report of the case here.

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