Family Law

In C v C, the court applied the test set out by the Court of Appeal in Hart v Hart [2017] EWCA Civ 1306, [2017] All ER (D) 14 (Sep) to post-separation earnings in the form of bonuses and share awards, in the context of the decision in Waggott v Waggott [2018] EWCA Civ 727, [2018] All ER (D) 44 (Apr). Key points are:

1. where the evidence establishes a clear dividing line between matrimonial and non-matrimonial property, the court should determine the sharing claim on that basis

2. while the court must still undertake a holistic assessment of fairness by deploying any and all relevant factors under section 25 of the Matrimonial Causes Act 1973 and the ‘cross-check’ of fairness, any adjustment must be principled on the basis of compensation or needs

Practical advice for cases concerning post-separation accrual are that:

1. parties seeking to ring-fence their post-separation earnings should consider placing them, upon receipt, into a separate bank account, to evidence the segregation of funds

2. insofar as remuneration is in the form of share awards vesting of a number of years, it will be important to calculate what element of the period is pre-separation and what is post-separation

The husband had a substantial remuneration package comprised of:

1. a basic fixed annual salary (£257,000 net) paid monthly

2. a supplemental compensation allowance (SCA) awarded retrospectively at the end of each year and paid in tranches throughout the next financial year (circa £1.2m net in 2017)

3. a discretionary bonus (US$1.8m in 2015 and US$600,000 in 2016) paid exclusively in restricted stock units (RSUs)

The husband’s income in 2016–17 was £4.3m net, with 2018 net receipts of £3.1m. This included RSUs vesting from previous awards which had a vesting period over four years having been awarded for the previous years’ service. 

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