Special Contributions in Family Law

Special Contributions - Article by Aysha Miah

Aysha specialises in Financial Remedies within the Matrimonial Causes Act 1973 and has written articles on the issue of prenuptial agreements and ringfencing of assets. Aysha has also developed a practice in financial relief under Schedule 1 of the Children Act 1989. Aysha has experience in all Children Act 1989 matters - including private law and public law applications. 


Introduction:

How often do practitioners have a client insist that they have made a “greater” or a “special” contribution to the family’s finances? This is a regular occurrence in conference rooms up and down the country. This instruction from a lay client is often followed by a request to “ring fence” certain assets.  What advice should be given to these adamant lay clients? Invariably, a lay client must be advised that it is extremely difficult to convince a court and that one party has made a “special contribution”. The court’s reluctance is rooted in the need to end discrimination between the breadwinner and a homemaker. Special contribution arguments are made by the breadwinners, usually in high net-worth cases and these arguments often lead nowhere.

Guidelines:

In Gray v Work [2015] EWHC 834 (Fam), Holman J, simply summarised the ingredients/requirements for special contributions [paragraph 15]:

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,

Exceptional earnings are to be regarded as a factor pointing away from equality of division when, but only when, it would 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 (Court of Appeal, Charman, paragraph 79-80).

A special contribution requires a contribution by one unmatched by the other (Court of Appeal in Charman at paragraph 79).

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. A windfall is not enough. (Court of Appeal, Charman, paragraph 79-80).

There is no identified threshold for such a claim to succeed. (Charman paragraph 88).

Special contribution argument successful:

There are a few reported cases, wherein, the court has decided that a “special contribution” is established on the facts and therefore a departure from equality is warranted. Each case turns on its facts, there appears to be no discernible “golden thread” running in through these cases which would permit identification of the features of a “special contribution”. The court was able to find a special/exceptional contribution in the following cases:

Charman v Charman No.4 [2007] 1 FLR 1246, the net assets were in the region of £131 million.

The main judicial comment, Sir Mark Potter:

[79] It was inevitable, so it seems to us, that the notion of a special contribution should have “survived” the decision in Miller. The statutory requirement in every case to consider the contributions which each party has made to the welfare of the family, as well as those which each is likely to make to it, would be inconsistent with a blanket rule that their past contributions to its welfare must be afforded equal weight. Nevertheless the difficulty attendant upon a comparison of their different contributions and the danger of its infection by discrimination against the home-maker led the House of Lords in Miller heavily to circumscribe the situations in which it would be appropriate to find that one party had made a special contribution, in the sense of a contribution by one unmatched by the other, which, for the purpose of the sharing principle, should lead to departure from equality”

Cowan v Cowan [2001] 2 FLR 192, the net assets were in the region of £11 million.

The main judicial comment, Mance LJ:

[161]…The underlying idea is that a spouse exercising special skill and care has gone beyond what would ordinarily be expected and beyond what the other spouse could ordinarily have hoped to do for himself or herself, had the parties arranged their family lives and activities differently. The first spouse’s special skill and effort is special to him or her, and the individual’s right to the fruits of an inherent quality of this nature survives as a material consideration despite the partnership or pooling aspect of marriage. For my part, I think that this consideration is a material one to which weight can and should be given in appropriate cases.

IX v IY [2018] EWHC 3053 (Fam), the het assets were approximately £40 million. The issue of whether or not the husband had made a special contribution was, remarkably, not contested and actually agreed between the parties. Notwithstanding this, the following extracts of the judgment make interesting reading.

The main judicial comment, Mr Justice Williams:

[60] The speeches of the House of Lords in White and Miller make clear that contributions come in all shapes and sizes. In some marriages, contributions may be very clearly delineated between the money earner and the homemaker but they are treated equally. In many the dividing lines will be far more blurred with each party contributing to the various needs of the family in a wide variety of different ways … Where that marriage is atypical it seems to me that the court must approach it in that way. To do otherwise would be to risk discrimination. It is a regrettable feature of the husband’s presentation of this case that, at least in opening he asserted that the wife had made no contributions to the marriage. The motivation for making such an assertion probably finds its roots in the husband’s post separation re-evaluation of the wife’s attributes and his unfair conclusion that she is and always was a gold-digger”.

Special contribution argument unsuccessful:

The instances of unsuccessful arguments outnumber the successful arguments. The court’s reluctance is demonstrated in the raft of cases, where judges have provided a consistent rejection of “special contributions”, the desire to prevent discrimination against the “homemaker” is a strong one. The court was unable to find a special/exceptional contribution in the following cases:

Miller; McFarlane [2006] UKHL 24, the matrimonial pot in Miller was approximately £17.5 million and  approximately £2.2 million in the McFarlane case.

The main judicial comment, Baroness Hale of Richmond:

[146] In my view, the question of contributions should be approached in much the same way as conduct. Following White v White the search was on for some reason to stop short of equal sharing, especially in “big money” cases where the capital had largely been generated by the breadwinner’s efforts and enterprise. There were references to “exceptional” and “stellar” contributions … a domestic goddess self-evidently makes a “stellar” contribution, but that was not what these debates were about…It had already been made clear in White v White that domestic and financial contributions should be treated equally.

SK v TK [2013] EWHC 834 (Fam), the net assets were approximately £18 million.

The main judicial comment, Mr Justice Moor:

[43] It is clear to me that the Husband is a very able businessman. He has a number of important skills that have enabled him to create two very successful businesses in the field of cutting edge technology. He has excellent computer skills. He is a very good salesman. He is clearly good administratively. He is able to lead a team and motivate his staff. He has deserved all his success.

[44] Nevertheless, I am quite satisfied that, applying the authorities, this does not amount to a “special contribution” such as to amounf to a good reason for departure from equality. It would not be accurate to describe him as a “genius”. Equally, whilst the extent of his business success is rare and something to be applauded, it cannot be said to be “exceptional”. I did not in any way get the impression that it was something that it would be inequitable for me to disregard.

XW v XH (Financial Remedy: Non-matrimonial Assets) [2019] EWCA Civ 2262, net assets were in the region of £530 million.

The main judicial comment,

[155] I would add that the issue of special contribution is context specific…

[164] The second issue is whether there should be other than an equal division because the husband made a special contribution … It requires a broad assessment of the parties respective contributions rather than an analysis of the “minutiae”…Although I acknowledge that the husband’s contributions have clearly been very significant, the necessary disparity is not present in this case”.

Conclusion:

These arguments are successful in high net worth cases, however, given the courts have not demarcated an income/asset threshold beneath or above which such an argument can be raised – in theory it is open to any litigant to raise this argument, in practice is another story.

A special contribution is very context specific. It is observed that it is harder to make a successful argument in longer marriages. The court often considers special contribution arguments as unattractive due to the possibility of discrimination against the non-breadwinner.  Indeed the possibility of success is extremely remote where the parties immediate “needs” cannot be met by the matrimonial assets.

The tide seems to be turning, there are a number of recent reported decisions in the lower courts that seem to resurrecting  the “stellar”, “special” and “exceptional” contributions.