Greed in divorce
By Roxanne Ker
I want a share of your potential earning capacity!
Waggot v Waggot, a judgement of the UK Court of Appeal on 11 April 2018, dealt with the sharing of the spoils in a divorce action, with a twist.
The ‘clean break’ principle applies under South African divorce law, so that post-divorce the ex-spouses can move on with their lives independently of each other. The legal position in the UK is similar.
At the time of their marriage in 2000, Kim and William Waggot were accountants at a well-known firm. Soon after the marriage, Kim became a fulltime home-maker.
The Waggots separated in 2012, and in due course divorce proceedings were instituted.
The Court of first instance divided the estate with a larger slice for Kim (£9.76 million); and £7.8 million for William. This Court assessed Kim’s annual income need at £175 000, regarded her larger slice of the capital as de facto maintenance of £60 000 per annum, and ordered that William must pay lifelong maintenance to her equal to the balance of her annual income need.
Both ex-spouses appealed to the Court of Appeal. Kim argued that William’s higher future earning capacity was a matrimonial asset in which she ought to share by being awarded an even larger slice of the capital. William argued Kim could adjust to a termination of maintenance without undue hardship, and wanted the maintenance order to expire sooner.
The Court of Appeal dismissed Kim’s appeal and allowed William’s appeal:
“The sharing principle applies to marital assets, being ‘the property of the parties generated during the marriage’ … An earning capacity is not property and … results in the generation of property after the marriage.”
In accordance with the clean break principle, the Court held that it would be fair for Kim to have to utilise part of her capital to meet her income needs, and reduced the maintenance to apply only for a period of five years.
We are of the view that a South African Court will also regard future earning capacity as not being a matrimonial asset in which the other spouse is entitled to share.