Economic Disadvantage in Divorce: Can You Be Compensated?

Divorce

Contact

Lisa Pepper

Table of Contents

Giving Up High Earnings: Can A Party Be Compensated For Economic Disadvantage?

In financial remedies cases, the fact that one party acquired assets before the marriage usually means a deviation from an equal split. However, that position may change where assets have been ‘matrimonialised’ – or potentially where the doctrine of ‘compensation’ applies.

A recent case signals a greater inclination by the courts to compensate a party who has clearly given up lucrative earnings – putting them at an economic disadvantage. At Osbornes Law, the specialist financial remedies solicitors work with clients in very high value cases. We are highly successful in negotiating and securing fair awards for our clients.

The compensation principle

The compensation principle may enable a party to rebut a departure from the usual sharing principle. In other words, notwithstanding the existence of pre-acquired assets, the sharing principle should still apply.

Until recently, the courts have been most unwilling to apply the compensation principle because of the inherent problems and challenges it presented. It would only be applied in rare and exceptional cases, for instance where it was certain a party had abandoned a very highly paid career and, therefore, at least the level of earnings the other party now enjoyed.

Furthermore, compensation is to reflect the ‘economic disadvantage’ the party has suffered, but how should that then be quantified? The court must decide if and how such disadvantage should be reflected fairly in the final award.

A recent decision has clarified the circumstances in which the compensation principle may apply in financial remedies proceedings.

What’s the background?

This was a very high value financial remedies case [1AT v BT [2023] EWHC 3531]. W was an accountant and had given up a very successful and highly paid position in a top private equity house (where she had met H). Unfortunately, W had to leave the company because her fellow partners were concerned about a potential conflict of interest after she became engaged to H (who was then in a senior role at a rival firm).

The parties subsequently married and had two children before they separated in 2002.

W sought more than £9.1m as a lump sum on the basis of the sharing principle and the principle of compensation. However, H argued that as some of the assets were non-matrimonial assets, this was purely a needs-based case. He offered W a relatively paltry £3.54m.

The dispute around non-matrimonial assets centred partly on trust funds to which H had access. While W conceded some of the assets were non-matrimonial, she argued that they had been ‘matrimonialised’.

The judge carefully reviewed the current position as to the compensation principle and the correct approach to be taken. He noted that W had given up “what was already a glittering career at the age of only thirty-seven, for reasons directly connected with her relationship with the husband”.

Her case was far from speculative. The judge went so far as to say that to ignore compensation in this case would “be an affront to the proper application of the compensation principle”.

The award

In order to make a fair award, all the assets (including pre-marital assets and trust monies, and accounting for tax on the trust that would later fall due) would be considered by the court.

The net value of the matrimonial assets was calculated at £13,789,582. Allowing for necessary adjustments, the judge ordered an equal split between the parties. This was sufficient to meet W’s needs.

Finally, W’s argument for matrimonialisation of pre-marital assets was not considered given the judge’s approach to calculating the final award. You can read more about matrimonialisation of assets in our review of Standish v Standish (2024).

How we can help

This is an important ruling providing much-needed clarity for lawyers on the compensation principle. It is likely to embolden individuals – particularly the wife – who have given up highly-paid careers to including a claim for compensation as part of a final award.

If you have a query or need legal advice, get in touch with the experienced financial remedies team at Osbornes Law. Contact us by:

  • Filling in our online enquiry form below;
  • Call us on 020 7485 8811

Share this article

  • “Osbornes handle a significant amount of complex, high-value divorce work.”

  • “The family law team at Osbornes is one of the strongest in London; across all areas of work from international cases, financial and children work, Osbornes is a market leader.”

Get Expert Legal Advice Today Our experienced team offers clear, practical advice tailored to your needs Get Expert Guidance

Contact us today

Email us Send us an email and we’ll get back to you






    • Osbornes is a hugely impressive firm that offers strength and depth to its clients.

      Legal 500 2025

    • Lisa's substantial insight into financial disputes involving high-net-worth individuals is where her skills lie.

      Legal 500 2025

    • Yael Selig is bilingual in Spanish and English. She is the go-to person for divorce cases involving Gibraltar particularly, or Spain.

      Legal 500 2025

    • Lisa pepper heads the Mediation team and she is often mediating for high-net-worth individuals in both financial and private children matters.

      Legal 500 2025

    • The family law team at Osbornes is one of the strongest in London.

      Legal 500 2025

    • Osbornes‘ family team is headed up by Mark Freedman, a mediator and fighter who will get the job done on both complex financial matters and international children cases.

      Legal 500 2025

    • A market leader across public law, international cases, financial and children work.

      Legal 500 2025

    • Lisa Pepper is particularly recognised for her role as a mediator in complex cross-border disputes. Her practice also includes handling prenuptial agreements and issues arising from divorces. She is additionally skilled in Schedule 1 and other child arrangement matters.

      Chambers UK 2023

    • Mark Freedman frequently takes on high-value financial and children proceedings that involve complex tax, trust and accounting issues.

      Chambers UK 2023

    • "Andrew Watson is respected and tenacious in matrimonial finance. You would want him on your team."

      Legal 500 2023

    • "David Leadercrammer is such an experienced wonderful lawyer who you would want on the other side of your case. He’s sensible, pragmatic and hugely experienced in money and children cases."

      Legal 500 2023

    • Andrew secured me the best financial settlement for my claim. He is a credit to Osbornes Solicitors.

      Family Department Client

    • "Lisa Pepper was recommended to me as non-nonsense and able to help me with a difficult and confrontational divorce. She more than lived up to that – she was practical, collected and always available with a clear opinion and suggestions of how to move forwards. She also was open and helpful about costs and how to mitigate them"

      Legal 500 2021

    • "Mark Freedman is a very capable lawyer, renowned for not being a pushover and pushing his clients’ cases as much as he can, but will always talk sensibly about settlement. He is among the best – tenacious, good judgment and tactically aware."

      Legal 500 2021

    • "Mark Freedman is a dynamic and highly experienced family lawyer who fights extremely hard for his clients and is always in their corner, thus ensuring their loyalty and confidence. In a trial you would always want him on your side."

      Legal 500 2021

    • "She has impressed me as someone who fights my corner but also understands the importance of resolving issues without unnecessary escalation. She is calm and reassuring."

    • "Her mediation practice is exceptional; she is also a great solicitor and has a breadth of skill which is really useful."

      Chambers UK 2021

    • "He is really experienced and wise. He has a lovely manner about him and clients feel safe with him."

      Chambers UK

    • "Jo Wescott is top notch and widely recognised as a rising star throughout the profession. She brings a winning combination of great judgement, an immense work ethic, and a relaxed and charming way with opponents and clients alike. Someone you want on your side”

      Legal 500 2021

    • "Osbornes is pre-eminent for family law in North London. Mark Freedman is a real rainmaker. He is an excellent lawyer and has a top-notch practice"

      Legal 500 2020 - Mark Freedman

    • Mark Freedman is intelligent and personable and has a good selection of high-net work cases.

      Legal 500 2020 - Mark Freedman

    • "Exceptional value for money. Highly competent and reasonably priced. Mark Freedman: one of the best in the field."

      Legal 500 2020 - Mark Freedman

    • "Client-focused. Ready to fight the clients’ corner, but also ready where possible to steer client from unnecessary dispute. Mark Freedman – very experienced, with good instinct for the eventual result. Clients love him and he thinks ahead and directs the client to the best result for the client."

      Legal 500 2020 - Mark Freedman

    • Mark Freedman is a serious player. A fearless family law litigator, who protects his clients’ interests passionately.

      Legal 500 2020 - Mark Freedman

    • Breadth of knowledge and willingness to go the extra mile is what makes it stand out. Mark Freedman – devoted to his clients

      Legal 500 2020 - Mark Freedman

    • Mark Freedman frequently takes on high-value financial and children proceedings that involve complex tax, trust and accounting issues. Sources praise the "tenacity and common sense" he brings to challenging disputes.

      Chambers UK

    • "Mark is very experienced, competent, good with clients and takes a sensible approach to cases. He knows exactly what he's doing."

      Chambers & Partners Directory 2020, Mark Freedman

    • "An exceptional outfit. They take on difficult cases, fight hard and win."

      Chambers UK

    • "The team frequently deals with cross-border estates for high–net-worth individuals."

      The Legal 500

    • "Mark Freedman is a real heavyweight litigator who has dealt with some very significant cases."

      The Legal 500

    • "Mark Freedman boxes clever, keeps his powder dry and when it comes to the end game he negotiates a really good deal."

      The Legal 500

    • "Mark Freedman has a specific focus on high-net-worth divorces and finance cases where there are overseas assets and trusts."

      The Legal 500

    • "Lisa Pepper somehow manages to get parties to settle on matters where there isn’t much hope to start out with."

      The Legal 500

    • "Well-regarded family practice assisting clients with substantial matrimonial disputes and sensitive children proceedings."

      Chambers UK

    • "Mark Freedman draws acclaim for his work in high net worth divorce cases, including those involving company structures, family trusts and overseas assets."

      Chambers UK 2019

    • "He never gives up. He fights for you to the end and has boundless energy."

      Chambers UK

    • Mark Freedman advises high-net-worth clients and knows his stuff.

      Legal 500

    • Highly regarded for his experience as a litigation and mediation expertise, Mark Freedman is tenacious and determined. Clients really feel that he is fighting their corner.

      Chambers UK

    • Andrew handled a very complex, 3 year legal battle for me, with a tremendous amount of patience and professionalism. He is very approachable, always kept me up to date, by phone and e-mail, and responded very quickly to my queries with excellent advice, sound strategic thinking and strong letters to put the other side under pressure. With top contacts for barristers, joint experts and mediation.

      Family Department Client

    • [The Family Law department] handles significant matrimonial finance cases and complex nuptial agreements. Respected for its expertise in cross-border children law matters.

      Chambers UK

    • Mark Freedman represents high net worth clients in complex financial disputes. Sources say that "he's a determined negotiator who'll always do the very best for his clients.

      Chambers UK

    • "Mark Freedman receives a lot of instructions from clients based abroad, often relating to complex divorce proceedings. Sources say: “His main strengths are his enthusiastic passion for the job in hand and his total dedication to his clients.”

      Chambers UK

    Accreditations

    • The Times Best Law Firms 2025
    • children law
    • Spears 500 logo
    • Resolution-Collaborative-logo
    • resolution logo
    • Resolution-mediator-logo
    • Legal 500 2025 - leading firm
    • Chambers UK 2025 - Firm Logo

    Related InsightsVIEW ALL

    1. court of appeal
      3.12.2024

      Beneficial Interest in Property

      What does beneficial interest in property mean? A beneficial interest in property gives someone the right to share the benefits...

      Read more
    2. French Team
      4.11.2024

      Anglo-French Divorce: Jurisdiction Guide

      Anglo-French Divorce: which jurisdiction is right for you? It has been a year since we launched our Anglo-French department in...

      Read more
    3. Matrimonial Property
      24.10.2024

      Can a Declaration of Trust Stand in Matrimonial...

      Matrimonial Homes: Can A Declaration Of Trust Of Beneficial Ownership Stand? Resolving issues relating to ownership of the former matrimonial...

      Read more
    4. financial relief
      23.10.2024

      When Abusive Behaviour Affects Divorce Financial Relief

      When is Abusive Behaviour Relevant To Financial Relief on Divorce? Domestic violence and other abusive behaviours are a contributing factor...

      Read more
    5. Savings after divorce
      25.9.2024

      What Happens to Savings & Investments in Divorce?

      Divorce often raises important questions about the division of assets, particularly savings and investments. Understanding what happens to these financial...

      Read more
    6. footballer
      23.9.2024

      International footballer fails to comply with financial disclosure

      UD v TQ: The importance of complying with financial disclosure Recent divorce case involving an unnamed international footballer is a...

      Read more
    7. osbornes hampstead office
      20.9.2024

      Pension Attachment Order: A guide

      Pensions are quite often valuable assets in a marriage. In some cases, they can be worth more than the family...

      Read more
    8. pension pot
      27.8.2024

      Pension Sharing Orders

      Pension Sharing in Divorce With so many things to consider when dividing up your finances during a divorce or dissolution...

      Read more
    9. berry bush
      20.8.2024

      What is pension offsetting?

      In this article, we will explore the concept of pension offsetting and how it can play a crucial role in...

      Read more
    10. 12.8.2024

      NA v LA [2024] EWFC 113: Judge Orders Non-Court Dispute...

      Financial Claims: Judges Can Order Parties To Attempt Non-Court Dispute Resolution As was expected, the court has been quick to...

      Read more
    11. court of appeal
      1.8.2024

      Standish v Standish: Court of Appeal Decision on...

      Court of Appeal reduces wife’s divorce award by £20million Dealing with financial matters on divorce can be complex. And...

      Read more
    12. bmw outside house
      1.8.2024

      Matrimonial vs Non-Matrimonial Assets

      Matrimonial vs Non-Matrimonial Assets in Divorce During a divorce, people often make the mistake of assuming that everything they own...

      Read more
    13. man with girl
      1.8.2024

      What is a Periodical Payments Order?

      Periodical Payments Orders in Divorce Throughout the process of a divorce or when unmarried couples with children split up, numerous...

      Read more
    14. 2 people working out finances
      1.8.2024

      What is a Lump Sum Order?

      A lump sum order is a crucial element of divorce settlements that can significantly impact the financial future of both...

      Read more
    15. home in hyde park
      25.7.2024

      What is a Property Adjustment Order?

      A property adjustment order is a key legal mechanism used during a divorce to fairly divide property and assets between...

      Read more
    16. green house
      14.6.2024

      What Happens If You Have a Joint Mortgage...

      Understanding whether you can keep a joint mortgage after divorce is crucial, especially if both parties are still liable for...

      Read more
    17. path into a forest
      10.6.2024

      What is Financial Disclosure in Divorce?

      Introduction to divorce financial disclosure A divorce ends your marriage but it doesn’t end your financial ties to your...

      Read more
    18. couple sitting apart
      7.6.2024

      What is a Clean Break Order?

      In this article, we will explore the concept of a clean break order, examining its advantages and disadvantages. We will...

      Read more
    19. Divorce
      6.6.2024

      Court reduces Wife’s award by £20 million

      The biggest “Divorce Cut” in legal history Court of Appeal judges have just made history by reducing the divorce award...

      Read more
    20. Marriage rings
      28.5.2024

      Short-term marriage divorce settlements

      A Marriage is a Marriage — Even if it’s short and childless When deciding who gets what in a divorce,...

      Read more
    21. money
      13.5.2024

      Impact of extended family wealth on divorce

      Can the wealth of extended family affect your divorce outcomes? While there is no fundamental legal difference between a high-net-worth...

      Read more
    22. Hampstead Hill Gardens
      21.12.2023

      Financial Remedy Orders Explained

      It is common for disagreements to arise over the finances during a divorce, even if you are on good terms...

      Read more
    23. divorced man with empty wallet
      4.12.2023

      My spouse is going bankrupt. Will it affect...

      Divorce and Bankruptcy In 2022, more than 1 in 10 businesses reported a moderate-to-severe risk of insolvency. More than one in five (22%) of...

      Read more
    24. man signing paperwork
      29.10.2023

      What is a consent order?

      Most divorcing couples agree on how their finances will be divided without going to court. A consent order is what...

      Read more

    VIEW ALL