What’s more important; business or home? An update….

We last discussed this issue in April 2015 following the case of Cooper-Hohn (2014) where one spouse, persuaded the Court of Appeal in England and Wales that their contribution to the finances of the marriage amounted to a “special contribution” so as to justify the Court making an order giving that spouse 64% of the matrimonial assets on divorce.  The other spouse had sought an equal division on following a long marriage and that the homemaker’s contribution was just as important as the breadwinner’s.

The issue of special contribution is one that can only be raised in what are known as “big money” cases where there are substantial excess funds over and above those required to meet both parties’ needs. In practice it is rarely argued, because such cases are few and far between and it is difficult to satisfy the Court that one party’s contribution is a “special” one.  Generally the party seeking to raise special contribution is the main breadwinner, usually the husband as opposed to the homemaker, usually the wife.  While there is no reported Jersey case where special contribution has been considered, it is likely the Court will look to the decisions of the Courts of England and Wales, although it is of course not bound by them.

There is no clear definition of a special contribution. In the case of Lambert (2002) the basis on which the court could justify a departure from equality was set out as; “characteristics or circumstances clearly … of a wholly exceptional nature, such that it would very obviously be inconsistent with the objective of achieving fairness…for them to be ignored”.    Concern was raised about the need to protect against gender discrimination against the homemaker, often the wife.

Since Lambert, there have only been three cases where an unequal division has been awarded by the Court on the basis of special contribution.  Other cases in which the argument has been run have been unsuccessful.

The most recent case dealing with this issue is Work v Gray (2015 upheld on appeal 2017).  The parties originally hailed from the US and had been married there in 1995.  Shortly after the marriage the husband was offered a job with a private equity company in Texas.  The wife gave up her job in California and moved to Texas to join the husband. Shortly afterwards, the husband was asked to move to the Tokyo office, and began working there in 1997. The wife joined him in Japan a year later.   The two children of the family were born while the couple were living in Japan.

The husband made a great success of his role whilst head of the Tokyo office. The business grew from nothing to employing over four hundred employees.   In the space of eight years he generated profits for investors of circa $7 billion. His own share of these profits was $300 million.

The family remained living in Japan until 2005, when they moved to Hong Kong. In 2008 they moved to London. The couple separated in early 2013 and divorce proceedings were commenced by the husband later that year.

The husband argued that he had been solely responsible for amassing the family wealth over a relatively short period of time. On that basis he argued that the principle of equal division of assets should be departed from.

The wife on the other hand argued that she had made an equal contribution in bringing up their family and in particular in moving to Japan to enable the husband to take the job opportunity that led to the generation of the family wealth.

While the Court accepted that the wealth had been created by the husband it was not persuaded that his contribution was sufficiently special to justify moving away from an equal division of assets. The Court considered the difference between the husbands in Cooper-Hohn  and Work v Gray lay in the fact that in the latter case although the husband played an important role in Japan it was not such that no other person could do it and it was not unique.  He was in the right place at the right time and could not argue special contribution on the basis of a “windfall” or a “boom period”.  The husband had not created the business in Japan nor did he attract investors to the business and these funds were vital to the whole business.

The Court was persuaded that the wife’s contribution to the marriage was significant and placed great importance on the move to Japan as a significant contribution. The Court concluded that the contributions the husband made were not wholly exceptional and that if they were ignored it would be “very obviously” inconsistent with fairness.  The Court also indicated that it would be gender discriminatory to make an unequal division of the assets in this case.

The obvious question that arises is what will in practice amount to a “special contribution”? In its judgment the Court used the example of a highly paid footballer trying to persuade the Court that their skill is such there should be an unequal division of assets taking into account the “special contribution” they have made.  In such a case the issue will be whether their skill is so much more than any other player or whether they have simply benefitted from the vast sums of money now pumped into football due to television rights together with foreign investment.

The Court’s analogy to football is apposite. There is a footballer currently in the throes of a divorce.  If it cannot be settled, we will have to wait and see whether an argument of “special contribution” is run and whether it hits the back of the net or bounces off the post.

Kirsty Thomas, Senior Associate

kirstythomas@bakerandpartners.com