When settlements in divorce cases are being determined, the contributions made to the marriage by each party will often be relevant. However, a recent decision of the Court of Appeal illustrates that the future earning capacity of the husband or wife at the time of marriage cannot be considered an asset.
The wife challenged an earlier decision of the High Court awarding her £5.4m, most of which represented a share of the net proceeds of £25m from the husband's sale of his company. The company supplied gases and equipment to the oil industry and, by the time of the marriage in 1996, had already been trading for nearly a decade. The High Court judge concluded that much of the increase in the value of the company between the time of the marriage and the time of its sale was attributable to the husband's considerable experience in the oil and gas service industry. On this basis, he concluded that 60% of the sale proceeds were non-matrimonial assets and awarded the wife half of the remaining 40%.
The Court of Appeal upheld the wife's appeal. In effect, the judge in the High Court had placed a large capital value on the future earning capacity of the husband at the time of the marriage, and treated this amount as a non-matrimonial asset. The Court of Appeal concluded that this approach was incorrect and increased the wife's award to £8m.
Click here for a guide to the financial aspects of divorce.