New Case Highlights The Difficulty In Arguing ‘Unequal Contributions'

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Yet again the English courts have shown why London is known as the “divorce capital of the world.”  British judges tend not to discriminate between breadwinner and homemaker and order equal splits of combined fortunes.  In this particular case, the judge also made it clear that describing oneself as a ‘genius’ was not a way to win the hearts of the British judiciary.

In Work v Gray, the Court of Appeal considered the issue of ‘special contribution’ when determining a financial claim under the Matrimonial Causes Act 1973.

In financial order proceedings, the court must have regard to a range of factors that are set out in section 25 of the Matrimonial Causes Act 1973 or Schedule 5, Part 5 of the Civil Partnership Act 2004.  One of these factors is the contributions that each of the parties has made to the welfare of the family, i.e.:

 

'…the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family.'

 

These will include:

  • direct financial contributions, e.g. money brought to the marriage or earned during it, and assets received by inheritance and income
  • indirect financial contributions, e.g. where one party’s entitlement to a right-to-buy discount enabled the parties to own rather than rent a property
  • non-financial contributions, e.g. taking care of the family home and raising children

 

Stellar contributions

 

In cases involving substantial wealth, parties have argued that their contribution is so significant that the principle of equal sharing should be departed from and the final award increased in their favour.  The argument was recognised as valid in Cowan v Cowan, where the husband’s ‘genius’ in relation to his business enabled the court to award him a greater portion of the marital pot.

 

Two other cases that followed Cowan, Lambert v Lambert and Sorrell and Sorrell established that any recognition of ‘stellar contributions’ would only occur in exceptional circumstances.

 

The Facts of Work v Gray

 

Randy Work and Mandy Gray, both Americans, had been married for 20 years.  Mr. Work, 49, a former executive at Texas-based private equity firm Lone Star, had first claimed that Ms. Gray, was entitled to only £5 million of the couple’s £140 million fortune.

He claimed Ms. Gray had failed to stick to the terms of the pre-nuptial agreement she had signed and had an affair with the couple’s physiotherapist

The couple’s assets included a £30 million mansion in Kensington, west London, complete with swimming pool and fitness centre and an £18 million ski lodge in Aspen, Colorado.

The High Court rejected that Mr. Work had made an ‘exceptional contribution’ to the marriage.

According to The Guardian, Mr. Justice Holman told Mr. Work that his wealth contribution – which Work said totalled more than $300m in 10 years – was not “wholly exceptional” and rejected his claim to be a financial “genius.”

“I personally find that a difficult, and perhaps unhelpful, word in this context,” Holman said. “To my mind, the word ‘genius’ tends to be overused and is properly reserved for Leonardo da Vinci, Mozart, Einstein and others like them.”

Justice Holman also considered that a successful claim to a special contribution required some exceptional and individual quality in the spouse concerned.  Being in the right place at the right time or benefiting from a period of boom was not enough.  Hard work alone lacked the necessary quality of exceptionality: many people worked extremely hard at every level of society and employment.  In addition, to attach special weight to hard work in employment risked undervaluing, in a highly discriminatory way, the hard work involved in running a home and rearing children

A 50/50 split of the family wealth was duly ordered.

Mr. Work, who spent around £3 million fighting to stop his wife getting half the family money in a financial settlement appealed the High Court decision.

The Court of Appeals decision

The Court of Appeal upheld Justice Holman’s decision.  They noted that there have only been three reported cases since 2002 where there has been an unequal division of the assets made by the court based on the ‘special contribution’ argument.

Reference to the term ‘genius’ was also shot down by the Court of Appeal who stated, “We also agree with Holman J that the use of the word ‘genius’ is unhelpful.  It is sufficient for the court to determine whether the contribution is wholly exceptional.  As referred to above, this requires the court to look both at the nature of the contribution and to determine whether it derives from an exceptional and individual quality.”

They went on to say that exceptional earnings are to be regarded as a factor pointing away from equality of division when, but only when, it would be inequitable to do otherwise.

What this judgment means for high-net-worth couples seeking a financial settlement

The Court of Appeal’s judgment makes it clear how strongly English courts resist recognising that one party to a marriage has contributed more than the other, especially if the contributions being put forward are economic in nature.

Because of this, an argument can be strongly made that even in cases involving large amounts of wealth, alternative disputes resolutions such as round-table meetings and mediation are the best methods.  The result of taking a less confrontational approach to negotiating a financial settlement is likely to be less costly and longer-lasting.

Rosie Bracher is a specialist family law solicitors based in Barnstaple.  If you require caring, confidential information about any issues raised in this blog, please phone us on 01271 314 904 to make an appointment.