Hamburger

The Concept of ‘Special Contribution’ in Divorce…

The latest ‘celebrity’ divorce to hit the newspapers is that of footballer Ryan Giggs and his wife, Stacey.  The millions of pounds amassed during parties’ relationship on account of Giggs’ successful footballing career place this divorce into the very high net worth category.

At 10 years’ duration (plus pre-marital cohabitation) with two young children resulting from it, the Giggs’ marriage is not a short one.  As such it is not going to be open to Ryan – in pursuit of an unequal division of the wealth in his favour – to argue that the length of the marriage is a factor which should prevent the ‘sharing principle’ ordinarily being applied (see our article ‘The treatment of short marriages: how long is a piece of string..?’).  At the first stage of the financial remedy proceedings earlier this year, lawyers representing Ryan instead indicated he seeks to establish that he has made a ‘special contribution’ to the marriage such that there should be a departure from equality in his favour.

The working definition of when ‘special contribution’ arises was set out by Lord Justice Wilson (as he then was) in the 2011 case of K v L:

‘in circumstances in which a spouse’s contribution, direct or indirect, to the creation of matrimonial property has been so extraordinary as to dictate a departure within the sharing principle from the ordinary consequence of its equal division’.

Whilst the lay perception of special contribution has led many a divorcing person to test the waters of legal advice as to whether their efforts might meet the necessary threshold (overwhelmingly: no), unsurprisingly there are very few reported cases in which the issue has arisen over the years since the ‘sharing principle’ was established by the House of Lords in the 2001 case of White.  Moreover, until recently there had not been a reported case in which the Courts had been tasked with considering whether there had actually been a special contribution in the first place; concessions had already been made by the other parties in each case, which essentially left the Courts to grapple ‘only’ with deciding how great the departure from equality should be.  In the 2002 case of Lambert and the 2005 case of Sorrell, the wives were awarded 40%; in the long-running case of Charman, the Court of Appeal upheld the earlier award to the wife of 36.5% noting that there was unlikely ever to be a departure greater than 33.3%.

The case of Mr and Mrs Cooper-Hohn came before Mrs Justice Roberts in 2014.

The sheer scale of the wealth amassed – billions of pounds, rather than the several hundred millions of pounds under consideration in the earlier cases – was extraordinary.  Both parties had humble beginnings and the Court accepted that the overwhelming majority of the wealth had been generated by Mr Cooper-Hohn’s efforts during the marriage, predominantly as a hedge fund manager.  Ultimately Mrs Cooper-Hohn was awarded 36.12% of the overall ‘pot’.  Partly this was with reference to the extent of wealth generated by Mr Cooper-Hohn after the parties had separated (‘post-separation accrual’) but more significantly for this article, also was on account of Mr Cooper-Hohn being found to have made the elusive ‘special contribution’.  Mrs Justice Roberts was at pains to note that Mrs Cooper-Hohn, who not only was the homemaker and primary carer of the couple’s four children but also was the leading light in the charitable trusts established by the couple, could not conceivably have made a greater domestic contribution.   Nonetheless, largely by reference to the sheer scale of wealth accumulated, Mr Cooper-Hohn was found to have made the special contribution.  As the Judge observed, ‘I take the view that he qualifies as a financial genius in his particular field of financial investment.  If he does not, who could?’ 

In the wake of Cooper-Hohn, in 2015 another successful financier, Lone Star private equity fund manager William Work, argued that his wife, Mandy Gray, should receive less than a 50% share (he sought a 63/37% split) on account of his own special contribution to the wealth of USD 230 million which had been accumulated by the end of their marriage.  This, he argued, should be determined by reference to sheer scale of the wealth itself.  Ultimately Mr Work’s argument did not find favour with the Courts.  Summarising the earlier cases, Mr Justice Holman found that in order for a special contribution to be made out, the circumstances would have to be wholly exceptional in nature. Reference to the sheer scale of wealth alone is not enough; the ‘special contributor’ ‘independently would need to establish some exceptional and individual quality which deserves special treatment, whether by genius in business or some other field’ and there is not a level of wealth above which would be determinative of a special contribution having been made.  The Judge was careful to note that it is important to avoid discrimination against the homemaker.  Mr Work sought to appeal the 50% award to his wife, by challenging Mr Justice Holman’s criteria that an exceptional and unique quality had to be made out rather than considering whether by reference to scale of wealth alone he had made a special contribution.

His appeal was dismissed by the Court of Appeal purely on the facts of the case.  This meant that it did not fall to the Court of Appeal to determine the wife’s position which she had filed separately, asserting that the first instance decision should be upheld on different grounds – namely that special contribution was an invalid concept which should be abolished on the basis that it is inherently discriminatory in favour of the ‘money maker’ as against the ‘homemaker’.  Amidst growing unease amongst sections of the judiciary and lawyers alike, it would seem that the concerns surrounding inherent discrimination are not going to easy ones to address.  How would a homemaker even start trying to establish that special contribution in the first place?   A special contribution case with the stereotypical gender roles reversed would provide opportunity for some judicial light to be shed on the matter, but that case might be a long time coming.

In the meantime, the footballing prowess of Ryan Giggs remains to be benchmarked against the ‘exceptional and individual’ threshold.  As Mr Justice Holman observed during the course of his Judgment in the case of Work v Gray:

It may one day fall for consideration whether a very highly paid footballer, who is very good at his job but may be no more skilful than past greats, such as Stanley Matthews or Bobby Charlton, makes a special contribution or is merely the lucky beneficiary of the colossal payments now made possible by the sale of television rights.’

It remains to be seen whether Ryan will be successful, but on the strength of Work v Gray it seems unlikely.  Manchester United fans may beg to differ, but it would seem likely that he will be condemned to the ranks of ‘lucky beneficiary’ rather than establishing himself as a footballing genius.

books
Our clients say it all