Waggott v Waggott

The 2018 decision of Waggott v Waggott provides valuable clarification by affirming what many family law practitioners have often grappled with: that earning capacity is not an asset to be divided in divorce proceedings, and there is no entitlement to share post-separation earnings. The decision also reinforces the Court’s statutory duty to consider a clean break where feasible, highlighting the importance of bringing closure to financial matters. 

If you’re considering or going through a divorce, click below for a free initial consultation with one of our expert divorce solicitors.

BOOK FREE CONSULTATION

This case concerned a couple who began cohabiting in 1991, married in 2000, had a child together in 2004 and separated in 2012. From 2001, Mrs Waggott, a former accountant, had not worked while her husband continued to have a very successful career, earning an annual salary of more than £3 million. 

The parties agreed to divide a total capital of more than £16 million, equally. The main dispute related to the husband’s ongoing and future earnings, much of which was performance-based.  

The judge at first instance ordered that Mrs Waggott receive £9.76 million. After accounting for her housing needs and pension provision, her ’free capital’ was roughly £3.5 million, which the Judge decided would generate an annual income of almost £60,000. However, Mrs Waggott’s income needs were assessed to be £175,000 annually, resulting in a shortfall of approximately £115,000 per year. To address this deficit, a spousal maintenance order for ’joint lives’ was issued. This meant Mr Waggott was obligated to pay the specified amount until one or both parties passed away, Mrs Waggott remarried, or the court issued a different order. 

Mrs Waggott appealed on the grounds that:  

• She should have received a larger share of the husband’s post-separation bonuses for a longer time.  

• The judge should not have attributed any income to her from her capital share.  

• The compensation principle was incorrectly applied, as she should have been compensated for the husband’s financial advantage.  

Mr Waggott cross-appealed, arguing that his earning capacity was not an asset to which the sharing principle applied, and a clean break should have been ordered. 

The Court of Appeal held that earning capacity is not an asset subject to division between the parties. Lord Justice Moylan stated that the sharing principle does not apply to earning capacity and that sharing should end "at or within a short time of the end of the relationship." Furthermore, the court ruled that Mrs. Waggott should be expected to use some of her ’free capital’ to meet her income needs, and Mr Waggott should only pay spousal maintenance until 2021. At that point, Mrs Waggott would be expected to rely on her invested capital for income. 

This case attracted significant attention, leading to speculation about whether the era of the so-called "meal ticket for life" is ending. 

Vardags’ team of top divorce lawyers delivers a bespoke legal service to HNW and UHNW individuals, their families, and businesses.