contribution

Special contribution and “geniuses”

Hunter & Uro partner, Philip Hunter, has recently authored an article on the topical issue of special contribution to the welfare of the family and the notion of “genius”in enabling the court to deviate from its presumption of equality in matrimonial finances proceedings. The article was published by the Solicitors Journal and can be found here.

There have been a recent series of reported cases considering the thorny issue of “special contributions”.

Fundamentals

Section 25(2)(f) of the Matrimonial Causes Act 1973 (MCA 1973) requires the court to consider the contributions made, or is likely to make in the foreseeable future, by spouses to the welfare of the family. The courts recognise that in some circumstances, one party may have made a “special contribution” to that welfare, which may result in a departure from presumptive equality in favour of the party that made the special contribution.[1]

In Miller, Lord Nicholls stated, “Parties should not seek to promote a case of ‘special contribution’ unless the contribution is so marked that to disregard it would be inequitable. A good reason for departing from equality is not to be found in the minutiae of married life.”

Echoing Coleridge J in G v G[2], Lord Nicholls further took the view that “…exceptional earnings are to be regarded as a factor pointing away from equality of division … only when, it would be inequitable to proceed otherwise. The wholly exceptional nature of the earnings must be … obvious and gross.”

In Charman, then President of the Family Division, Sir Mark Potter also supported Thorpe’s view that there will be cases where the total asset pot alone justifies reaching the conclusion that there is evidence of a special contribution. However, without some evidence of “exceptional and individual quality” in generating a vast wealth, arguments for special contribution would be hard to establish.

However, Sir Mark Potter then went further in support of Coleridge J’s original findings, in that any adjustment from equality should be “significant as opposed to token”. Successful submissions on special contributions should see a minimum split of 55/45%, rising to 66.6/33.3% at the upper end of the scale.

 

Test

Although argued for by Nicholas Mostyn in Sorrell, the courts have long resisted to impose an objective assessment or threshold test by which special contribution arguments might be measured. Submissions will be considered on a case by case basis.

In Charman, Sir Mark Potter restated Thorpe LJ’s earlier comments that that by their nature, special contributions were exceptional and in turn, it was “…futile and dangerous even to attempt to speculate on the boundaries of the exceptional.” Yet, some “exceptional and individual quality which deserves special treatment” would justify a departure from equality.

The guidance from Miller and Charman is as follows:

  • The characteristics or circumstances which would result in a departure from equality have to be of a wholly exceptional nature such that it would very obviously be inconsistent with the objective of achieving fairness for them to be ignored: per Bodey J in Lambert but quoted with obvious approbation by Lord Nicholls of Birkenhead in Miller at paragraph 68.
  • Exceptional earnings are to be regarded as a factor pointing away from equality of division when, but only when, it would be inequitable to proceed otherwise (Lord Nicholls of Birkenhead in Miller at paragraph 68).
  • 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 (Baroness Hale of Richmond, in Miller at paragraph 146).
  • It is extremely important to avoid discrimination against the home-maker (the Court of Appeal in Charman at paragraphs 79 and 80).
  • The amount of the wealth alone may be so extraordinary as to make it easy for the party who generated it to claim an exceptional and individual quality which deserves special treatment. Often, however, he or she will need independently to establish such a quality, whether by genius in business or some other field (the Court of Appeal in Charman at paragraph 80). A windfall is not enough.

 

Current Cases

Recently reported and considered cases concerning special contribution are:

  • Chai v Peng
  • Taylor v Taylor
  • Work v Gray
  • Giggs v Giggs

Chai v Peng

Pauline Chai pursued a half share of the family assets, following the breakdown of her marriage to Dr Khoo Kay Peng, non-executive chairman of Laura Ashley Holdings. The mother of five has rejected earlier settlement offers, based on Dr Peng’s special contributions to the family’s wealth. Mrs Chai argued that she should receive an equal share of the assets, estimated at £205 million, following the parties’ 42 year marriage.

Dr Khoo has argued that he has made a “special contribution” to the matrimonial finances, utilising his business genius to generate the family’s wealth. Mrs Chai stated that she felt an equal contribution had been made, in shouldering the domestic burden, supporting her husband and children.

Mrs Chai also stated that she did not think that Dr Khoo was a business “genius”. She told the judge that Dr Khoo has been “…an extremely successful and talented businessman, (but) a lot of people have been extremely successful in business without going into that extra realm of genius, which would justify a special contribution.”

The “titanic litigation” was heard earlier this month in the High Court, with Mr Justice Bodey agreeing that the contributions to the marriage were equal.

Work v Gray

These were particularly combative proceedings, with the parties adopting intransigent views on settlement. Prolonged litigation has been reported this week from the Court of Appeal, addressing earlier submissions by the husband that he had made a special contribution to the welfare of the family, to be deemed in his view as gross and obvious, based on wealth estimated at US$300 million.

The court took the view that the wife’s movement to Japan and dealing with the household affairs was commensurate with the contributions to welfare produced by the husband’s financial dealings.

 

Taylor v Taylor

Mr Taylor is widely accepted as the greatest darts player of all time and arguably one of the nation’s greatest ever sportsmen. A 16-time world champion (second on the list has 5 titles), he dominated his sport for a generation. In a wider sporting context, his achievements are compared to those of the likes of Usain Bolt or Sir A.P. McCoy, namely that his success and ability is more than merely natural gifts, hard work and the “rub of the green”. It might be argued that his abilities are so extreme that he is touched with sporting “genius”, with this spark being the primary reason for the parties generating substantial wealth from humble beginnings.

In contrast, Mrs Taylor had never worked since the parties were married in 1988, divided her time between the former family home, a holiday home in Tenerife and devoted herself to the parties for children, grandchildren and wider family.

Nevertheless, the court stated that the parties had assets measured in multi-millions but the contributions to welfare of the family in this case were equal.

Giggs v Giggs

Although this case continues, Mr Giggs, the former Manchester United and Wales footballer, has indicated his intention to make submissions seeking a departure from equality based on his special contributions to the marriage.

Mr and Mrs Giggs have been together since 2002, marrying some 5 years later and have two children. The parties have an estimated asset total of around £40 million, generated mainly through Mr Giggs’ career as one of the pre-eminent footballers of his generation.

In comparison to those cases that have successfully demonstrated special contribution, the Giggs’ wealth is relatively modest. Although living an extremely comfortable lifestyle financially, the asset pot would not appear to be so “gross and obvious” as to justify an immediate departure from equality.

Arguably, if Mr Taylor cannot demonstrate a degree of “genius” justifying a departure from equality, then Mr Giggs’ prospects of success appear limited. It would be anticipated that Mr Giggs might seek to ringfence pre-marital assets, although at the start of his career, before the birth of the Premier League, such sums might be comparatively modest in any event.

Conclusion

In G v G, Coleridge J ruminated, “Is there such a concept as an exceptional/special domestic contribution or can only the wealth creator earn the bonus? It is much the same as comparing apples with pears and the debate is about as sterile or useful.”

In the recent ruling in Work v Gray[3], the Court of Appeal have clarified their view, which is that the Miller and Charman provides “authoritative and clear” guidance as to the circumstances and way special contribution is to be applied.

Arguably, the guidance is clear, but the application appears unclear at best and inconsistent at worst. There are cases of parties with vast individual wealth accumulated during a marriage that are unsuccessful. The courts have made it abundantly clear, there will not be a threshold of “gross and obvious” wealth accumulation that justifies a special contribution award.

Instead, the courts’ focus is on achieving fairness and the application of such subjective assessments on a case by case basis, makes future determination and guidance to clients a particularly tricky process.

In practice, claims for special contribution tend only to arise in cases of great wealth generated by a party’s success, usually in business, during the marriage. The obvious reason for this, is that in such cases, the sums under consideration make it worthwhile to argue over. However, focusing on issues other than pure monetary wealth e.g. genius or exceptional skill in sport, may make it less obvious as to whether that substantial wealth generated during the marriage is not the product of a special contribution.

[1] Miller v Miller [2006] UKHL 24 para 68

[2] G v G (Financial Provision: Equal Division) [2002] EWHC 1339

[3] [2017] EWCA Civ 270

 

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