21 April 2015

What makes a contribution special?

When it comes to dividing matrimonial assets on divorce, one of the fundamental principles is that the court should not discriminate between the roles of homemaker and breadwinner — both are equally valid contributions to family life. As Lord Nicholls famously said: 'Each in their different spheres contributed equally to the family'.

Cowan – the floodgates opened

In some cases one party to the marriage argues that their contribution should be held in higher regard than that of their spouse, and that should be reflected in the division of resources. Following the landmark decision in Cowan v Cowan (2001), where the husband successfully argued that his contribution to the family finances was so extraordinary that he should receive 62% of the assets, rather than 50%, there were a spate of cases where this argument was put forward. Coleridge J said at the time: ‘Hardly a case is heard nowadays but that one party (usually the husband) seeks to establish that he has played a markedly more valuable part in the accumulation of the wealth and the marriage partnership so that he should be specially rewarded by way of a greater share of the assets.'

Lambert – Pandora's box was shut

The applications inspired by the decision in Cowan left judges in the unpalatable position of trying to balance the need to consider all the circumstances of the case without embarking on the distasteful task of unpicking the minutia of family life; they were keen to avoid a ' a detailed and lengthy retrospective involving a general rummage through the attic of their marriage to discover relics from the past to enhance their role or diminish their spouses.’

In the case of Lambert (2002), the Court of Appeal effectively shut the Pandora’s box that had been opened by Cowan. Thorpe LJ said that this argument should be limited to exceptional cases. Since then there have only been 3 reported cases where special contribution has been accepted by the Court as being a valid reason for departing from an equal division of the wealth built up during a long marriage.

First, in Sorrell in 2006, Mr Justice Bennett decided that the evidence established that the true explanation for the extraordinary success story was that the husband possessed a 'spark' or 'force' or 'seed' of genius which was the primary generator of the family's fortune. That justified a 60:40 division of assets (giving the wife £40 million out of approximately £100 million). In the case of Charman in the following year, the wife conceded that the husband had made a special contribution and the argument focused on the extent to which that should be reflected in the division of assets in awarding the wife £48 million out of approximately £130 million – a 63.5:36.5% split in the husband's favor. The most recent decision is that of Cooper- Hohn v Hohn, where Roberts J decided that the husband was a financial genius in his particular field of financial investment such that the vast wealth generated by his business success could properly be viewed as 'exceptional'. Thus, the Judge concluded there had been a special contribution made by the husband that should be reflected in a 64:36% division of the marital wealth of approximately US$1.5 billion.

One other common feature of all three of those reported cases was that the successful husband was represented by the Withers family law team.

In amongst these rare cases where the court has acknowledged one party’s special contribution in a long marriage, there are other examples where such arguments have failed. The most recent decision is that of Mr Justice Holman in Gray v Work, which was handed down in April 2015.

Gray v Work (2015)

Mr Work and Ms Gray were married for 20 years. They are both from Texas, but had spent some of their married life in Japan and Hong Kong. Latterly, they moved with their children to England. In 1997, Mr Work was offered a job with Lone Star in Japan and he made an enormous success of this opportunity and as a result of his hard work, the total profit for investors was over $700m.

The entirety of the £144 million wealth had been built up during the marriage; Mr Work sought to argue that a post nuptial agreement, and his special contribution were reasons to depart from the principle of equality of division. Holman J found that the post nuptial agreement was good and fair for the wife in terms of the percentage of assets, but grossly unfair in its provision for deferred payment by instalments without interest. He went on to consider the husband's claim that he had made a special contribution.

Holman J made clear that the rarity of the cases does not detract from the existence of special contribution, but it does reinforce the exceptional nature of claims and the 'specialness' required to succeed.

He went on to consider relevant case law on special contributions, and set out his analysis as follows:

  • The circumstances must be of a wholly exceptional nature. They need to be obvious and gross.
  • Exceptional earnings will be regarded as a factor pointing away from equality only when it would otherwise be inequitable.
  • Only if there is such a disparity in their respective contributions to the welfare of the family that it would be inequitable to disregard it, should this be taken into account in determining their shares.
  • It is extremely important to avoid discrimination against the home-maker.
  • A special contribution requires a contribution by one which is unmatched by the other.
  • The amount of the wealth alone may be so extraordinary that it is easy for the party who generated it to claim an exceptional quality, but often they will need to establish that quality independently from just the extent of wealth. A windfall is not enough.
  • There is no identified threshold for such a claim to succeed. Each case turns on its own facts.

Having reviewed the case law, he said that he found the attribution of the word 'genius' to be unhelpful in this context. He said: ‘To my mind, the word 'genius' tends to be over-used and is properly reserved for Leonardo Da Vinci, Mozart, Einstein, and others like them’ and that any person with a modicum of modesty, would not describe themselves as such.

Holman J said that Mr Work's claim for special contribution did not have the required exceptional and individual quality which deserved special treatment. While he had obviously made an enormous success of the business in Japan, and that whilst he was very good at his job and worked hard, he was not unique and there was no evidence that what he did could not have been done by another – there was an element of being in the right place at the right time. The Judge found that his contribution was not unmatched by his wife, who had made sacrifices by coming with him to Japan and to raise their children there.

The Judge awarded an equal division of the assets (subject to resolution of some outstanding valuation issues).

Homemakers and breadwinners

Holman J made clear that hard work alone is not exceptional; many people work extremely hard at every level of society. He was concerned that attaching special weight to hard work in employment risks discriminating against the homemaker.

As soon as parties have a family, the extent to which the breadwinner works will inevitably lead to an additional strain on the homemaker in terms of caring for the children. A special contribution must be unmatched. However, if there is to be no discrimination between breadwinner and homemaker, then surely there is scope for a homemaker to make a special contribution?

This case serves as a useful reminder of the difficulties inherent in the court seeking to identify and quantify the parties’ respective roles in order to determine the question of special contribution. Moylan J's view, that it requires a striking evidential foundation which so clearly stands out that the question of whether the contribution is special almost answers itself, is helpful in discouraging too detailed an analysis. However, in practice, particularly as the contribution must be demonstrated to be unmatched (whilst not discriminating against the non-earning spouse) – a claim based on special contribution is bound to involve a degree of 'rummaging' notwithstanding the disapproval of the courts.


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