020 3372 5125 Email us today
Enquire today

Divorce can be an extremely challenging process for all parties, both emotionally and in terms of the legal procedure involved. One of the most sensitive and crucial aspects of a divorce, after children and childcare arrangements, is the arrangement of finances.

If you have recently began divorce proceedings and are concerned as to the division of your assets with your estranged spouse, please contact us and our specialist family solicitors would be glad to guide you through the process and provide clarity on any concerns you may have.

The main difficulty with a financial remedy, which is also commonly referred to as ancillary relief, is the division of assets between the parties. Generally, the starting point in financial remedy cases is the sharing principle which was introduced in the precedent case of White v White. The sharing principle states that as a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so.”

However, in the most recent case of Waggott v Waggott [2018] EWCA Civ 727, it appears that the courts have taken a different approach to the division of assets as some argue that this case has paved the way to stray away from the sharing principle.

The above case involved Mr and Mrs Waggott who were married for 21 years. The couple initially lived in Manchester and they were both employed as accountants; the marriage bore the couple with one child. In 2001, Mr Waggott was able to secure employment in London and as such Mrs Waggott decided to stop working in order to allow Mr Waggott to accept the offer of employment in London and further progress in his chosen career. During this period, Mr Waggott was able to earn a significantly high income thus increasing his earning capacity which allowed the couple to have live a luxurious lifestyle. It should be noted that this was a case concerning high net worth individuals as Mr Waggott had an income of approximately £3.7 million per year after tax. The marriage broke down and the couple commenced proceedings to legally end their marriage. The main issue within this case related to the division of assets and whether Mrs Waggott was entitled to receive an equal share of Mr Waggott’s post-separation income instead of being in receipt of spousal maintenance payments based solely on her financial needs.

What was the outcome?

The courts decided that Mrs Waggott should receive capital valued to the sum of £9.76 million and that her financial needs were to the sum of £175,000 per year. It was further decided that any shortfall had to be covered by Mr Waggott through spousal maintenance payments which were ordered to be paid on a joint lives basis. Spousal maintenance payments via of this kind means that one party must continue the payments to the other until either party passed away, or if one party remarried, or if the Court made another order.

Usually, the courts will consider the potential future earnings of each party and make a reduction accordingly, however the courts did not make a reduction for Mrs Waggott’s future earnings as the judge deemed this to be unfair due to the fact that Mr Waggott’s significantly high income and Mrs Waggott’s employment and future earnings seemed unclear.

However, both parties appealed the decision having not agreed with the judgment and the order made.

What were the grounds of appeal?

The appeal was based on the following grounds:

  1. The court should have considered Mr Waggott’s income following the separation as his earning potential was aided by Mrs Waggott. It was therefore argued that the post-separation income should be shared equally in accordance with the sharing principle.
  2. The court was unfair and discriminatory because it made an award which rendered both parties in serious financial inequality as Mrs Waggott would be left in a much weaker position to successfully continue her separate life due to Mr Waggott’s high earnings. Again, it was argued that Mr Waggott was only able to obtain such an earning capacity as the breadwinner which Mrs Waggott had to give up on and become the homemaker instead. In summary, the award discriminated in favour of Mr Waggott, the breadwinner, and that it was insufficient to give such an award to Mrs Waggott only because it met her needs as this is straying from the sharing principle.
  3. It should not be required of Mrs Waggott to rely on her capital to meet her income needs as the same is not required of Mr Waggott.
  4. The courts should award Mrs Waggott with open-ended maintenance as she would be placed in undue hardship once payments cease.

The legal representative for Mr Waggott stated that the sharing principle should not apply to an individual’s earning capacity. It was further stated that it is fair to terminate the share of financial resources if the needs of both parties are met as otherwise, this would not allow for a clean-break rendering one party with the right to continuously rely on the financial assets of the other party long after their divorce.

What was the final judgment?

It was stated that the sharing principle does not apply to the earning capacity of an individual and that this principle could only be applied if this was the only way in which she could meet her reasonable needs.

The Court of Appeal further stated that Mrs Waggott will need to use her capital to satisfy her financial needs once the spousal maintenance payments end which should allow a clean break but without placing Mrs Waggott in an undue hardship. It was argued that if the sharing principle was further applied to post-separation income, it would not allow the court to effectively implement a clean break.

The final judgment stated that the spousal maintenance payments would cease in 2021 which would allow a clean break to take place. Mrs Waggott’s income to be derived from her pension would only start in 2028 and as such Mrs Waggott is expected to rely on her invested capital for seven years, from the termination of maintenance payments in 2021 to the start of her pension in 2028.

This would therefore allow Mr Waggott to rely on his substantial income in its entirety as well as his capital and income from investments.

What is the impact of this judgment on homemakers?

This case suggests that there is now possible discrimination in favour of breadwinners thus leaving homemakers in an unequal financial position making it harder for homemakers to have the same chance in starting their lives separately.

As stated in the case of White v White, there is no place for discrimination between the breadwinner and the homemaker. However, this judgement has seemed to stray from this point with the decision to expect Mrs Waggott to rely on her capital to bridge the gap between the end of her maintenance payments and the start of her pension income which Mr Waggott is not required to do.

It should be noted that Mrs Waggott invested 21 years of her life in her marriage as a homemaker in order to allow Mr Waggott to further progress his career, without which he may not have had his earning capacity. Mrs Waggott had also not been in employment for some time, therefore, placing her in a difficult predicament in terms of her ability to secure employment and rely on her own income. It can be argued to some extent that homemakers may no longer face an entirely fair financial award and that the courts are now starting to favour breadwinners. The sharing principle has not been applied to its full potential in this case which is concerning as this may now pave the way for the courts to follow a similar approach thus placing homemakers in an unfair financial position and an uncertain future despite their investment and efforts as homemakers. This case has definitely highlighted the discrimination that could potentially be made against homemakers.

We have a dedicated team of solicitors who will be able to provide you with clear and detailed advice in a compassionate and friendly manner as we understand that financial arrangements in divorce can be a very sensitive and challenging time.

Contact us if you are unsure as to your rights over your spouse’s assets or if you are concerned about your finances following a divorce.

Please call us on 020 3372 5125 or get an online consultation

    Contact our experts in Family Law
    Director & Head of Family Law
    For legal advice
    call us today
    020 3372 5125
    Or complete our online enquiry form to make an appointment

      What Our Clients
      Say About Us
      Dealing with Rakhi was more like having In house counsel than hiring a law firm
      So Rakhi Singal of RVS has just handled my divorce, it was a very complex case and I came to Rakhi at the very last minute on a friend’s recommendation. My case was a mess and I stood to lose everything.

      Dealing with Rakhi was more like having In-House counsel than hiring a law firm, she does not approach her clients as a cash machine like many law firms do, she works with you to manage and minimise your costs and de-escalate conflict rather than throw wood on the fire.

      She took a huge personal interest in my case, she was always available on the phone, very quick to respond to emails and is very honest and trustworthy.

      My ex had huge spending power and used a team of high profile solicitors against me, Rakhi literally saved me from complete ruin and helped me get a very fair deal with me spending 6 times less than my ex on legal fees.

      Thank you, my new family and I will be forever grateful!!!!
      What Our Clients
      Say About Us
      Rakhi’s passion for her profession supersedes the norm
      On dealing with a very stressful and emotional situation involving my young child. I was personally directed to Rakhi Singal. From the very outset of my situation, Rakhi identified the immediate difficulties I faced and offered me a sympathetic and rational approach to my situation, ensuring that she had a full understanding of my issues and concerns. Rakhi’s approach to my case was monumental and customary to my needs and that of my child, which was a fundamental point for me.

      The communication and support I received in and outside of court was nothing short of extraordinary. Rakhi’s passion for her profession supersedes the norm and is clearly demonstrated through her results.
      What Our Clients
      Say About Us
      Really impressed with Rakhi’s dedication to our case
      Could not be more pleased with the results!

      I approached RVS solicitors as they were highly recommended and now I completely understand why. Soon as I contacted Rakhi I knew I wanted to use her, she was so professional and easy to get along with. I was faced with clients who were refusing the pay invoices, Rakhi immediately reassured me that she was able to help me and recoup these costs. She dealt with the whole process very professionally.

      Really impressed with Rakhi’s dedication to our case and her knowledge and experience on dealing with the case. She communicated with us throughout the process, providing me with regular updates. Thank you so much, I cannot vouch for her work enough and RAW Invites are happy for you to continue to act for all their matters in the future.
      What Our Clients
      Say About Us
      Very detailed advice, friendly and approachable
      Excellent service for my wife's spousal visa from Lusine: very detailed advice, friendly and approachable. Also flexible in contact by email and provided an excellent cover letter.
      What Our Clients
      Say About Us
      She is professional, intelligent, hard worker and cheerful!
      I highly recommend Dr. Lusine Navasardyan, as she is professional, intelligent, hard worker and cheerful, she helped us from the beginning of our case until the very end, when she prepared a strong bundle with over 385 pages, which helped us get a successful victory in our Asylum case . I strongly recommend her as I really appreciate all the professional work that she has done . Many thanks to her.
      What Our Clients
      Say About Us
      She has been very professional and a reliable person
      Dr. Lusine has been working on my case. She has been very professional and a reliable person. She was always attending to my queries and she has always been very friendly throughout my case.
      What Our Clients
      Say About Us
      She is very professional while creating a friendly and comforting relationship with her clients
      I am very happy with the level and quality of service I got from Dr. Lusine Navasardyan. She is very professional while creating a friendly and comforting relationship with her clients. The service from Lusine was professional,efficient and well organised. Lusine worked extremely hard at resolving my all issues while getting the best result.
      Latest News