Special Contribution – what is it and who makes it?
England and Wales is known to be one of the most generous jurisdictions in the world; London in particular has developed a headline-grabbing reputation as the "divorce capital of world".
This arose from the landmark case of White v White, which brought in the principle that where each party’s financial needs can be met by the assets available, the starting point for division is 50:50.
The court has a wide discretion when making financial orders and must consider a range of factors. One is the contribution both the husband and wife have made. The “yardstick of equality” was introduced to highlight the need to avoid discrimination in the weight given to the parties’ respective contributions. Staying at home to care for the children is as important as generating millions in the City.
Family lawyers will be acutely aware, however, that when you explain this to the breadwinning spouse, their reaction is not usually to commend the law for its fair-mindedness. They are usually at best disgruntled and, at worst, outraged that their “nanny-assisted other half” is considered to have made as important a contribution as they have and, moreover, likely to be entitled to a healthy slice of it.
This focuses the mind back to a line from the wedding service vows most couples married in the Church of England still make: “All that I am I give to you, and all that I have I share with you.” Unsurprisingly, this is often overlooked when the relationship breaks down.
Some individuals (and, as reflected by the case law in this area, it is almost universally the husband) seek to argue that the financial award made to their spouse ought to be lower due to their own “special contribution” to the marriage.
On marriage, you enter into a partnership; you share responsibilities and make joint decisions about how and where you will live, whether you want children and how they should be raised. The sad truth is that during litigation it often feels like every man or woman for themselves and the “he said, she said” of the past becomes evidence used to bolster the barristers’ submissions.
It was accepted in White that equality could be departed from for good reason. Over the years, various arguments have developed enabling parties to try to convince the court that the award to their spouse ought to be less than 50 per cent. A favourite of (usually) very wealthy parties is what is known as “special contribution”, which involves arguing that their contribution is so significant that the award should be increased in their favour.
While there is no specific monetary threshold for when the principle will apply, it is widely accepted that it is unlikely to be relevant except in big-money to very-big-money cases. In a case known as Lambert a threshold of £10m was suggested and in another, Charman, £30–50m. Judges have subsequently indicated that applying a monetary threshold is unhelpful.
The principle has been successfully argued in the following cases:
- Cowan (2001): 42-year marriage with assets in excess of £11m. The husband invented bin liners and built up his own successful company.
- Sorrel (2005): 32-year marriage with assets in excess of £100m. Readers will be aware of Sir Martin Sorrell’s success in advertising.
- Charman (2007): 27-year marriage with assets in excess of £160m. The husband established a global insurance business.
- Cooper-Hohn v Hohn (2014): 17-year marriage with assets between US$1.35bn and US$1.6bn built up by the husband who started as a hedge fund manager and set up his own investment fund.
The sums accrued by the husbands in these cases are clearly large though varied, but amassing millions or indeed billions is not necessarily enough. In Lambert, the judge noted that: “There may be cases where the product alone justifies a conclusion of a special contribution, but absent some exceptional and individual quality in the generator of the fortune a case for special contribution must be hard to establish.”
What makes a special contributor?
When the founder of fashion site ASOS sought to be deemed special in 2016 (the case of Robertson), the judge considered that while he was hard-working, talented and astute, he was not innovative, revolutionary or extraordinary. Further, the wife had been an excellent home-maker and to treat special contribution as “unmatched” would be “highly discriminatory”.
In the 2017 case of Work v Gray, the husband had amassed about £144m during his career working for the private equity fund, Lone Star. He was unsuccessful in his argument that he had made a special contribution. His wife, who had been responsible for caring for the parties’ two children and supporting her husband in her role as “home-maker”, was awarded 50 per cent of the assets. It was determined that 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 work extremely hard at every level of society and employment. However, the judges confirmed that it was not helpful to consider the word “genius” (previously a guiding term), as it is too subjective; it is sufficient to determine whether the contribution is “wholly exceptional”. The decision clarifies that in such cases, the focus is to be on whether there is a disparity of contribution and whether there is a sufficient disparity to make it unfair to disregard; it is not whether the contribution is “unmatched” as previously considered.
The same year, members of the family team at Boodle Hatfield acted for the wife in the case of WM v HM. The court made an award of over £72m to the wife, representing half of the assets in this case. The court rejected the husband’s contention that there ought to be an unequal division, on the basis that while making £145m over the course of a long marriage was a highly credible achievement, it was not one of the rare cases that justified an unequal division of the product of the matrimonial partnership.
More recently, the Court of Appeal in the 2019 case of XW v XH (in which the husband had accrued some £490m on the sale of shares in a company he had set up prior to the marriage) found that while the husband had of course made a significant contribution, there was not the necessary disparity between this and the contributions made by his wife for him to be successful in his bid to join the special contributors hall of fame.
The principle of special contribution raises interesting questions about how the role each spouse has played during the marriage should be considered in financial disputes during divorce.
Who wants to be a millionaire?
Many family law practitioners do not like the concept because it requires often distasteful consideration of the details of the parties’ marriage and appears to be discriminatory. While parties seem to be facing an increasingly steep uphill struggle to persuade the court of their unique contributions, the principle remains alive until such time as it is tested in the Supreme Court.
We suspect it will become increasingly difficult for the breadwinning spouse to succeed in proving that a contribution has been wholly exceptional. Wealthy people seeking to protect their own wealth on marriage may wish to consider entering into a pre-nuptial agreement, which might assist in preventing unpleasant disputes. However unromantic it may seem, if the wealthier party’s overriding consideration is to preserve their own assets, the only sure way of doing so is not to get married for as long as family law remains as it is.