Discrimination and special contributions
By:8 commentsApril 12, 2017
For the second time in under a week, senior judges have considered whether one person’s contribution to a marriage was so significant that it should be labelled “special”, thereby entitling that person to a greater share of the family’s wealth.
In the most recent case involving Randy Work and his wife, Mandy Gray, the Court of Appeal decided yesterday that there was no reason why the capital which they had built up during their marriage should not be divided equally.
Both parties were born in America and began living together in 1992, marrying in 1995. Their relationship came to in an end in 2013.
Mr Work was employed by a private equity firm, Lone Star, initially in Texas then Japan and Hong Kong, before the family eventually settled in England.
At the date of the initial hearing in 2015 the family wealth was approximately US $225 million, and the High Court Judge decided that it should be divided equally.
Whilst the High Court Judge acknowledged that Mr Work had been very successful, he decided that there was an element of Mr Work having found himself in the right place at the right time and that there was nothing to suggest that what he did for Lone Star could not have been done by somebody else.
What was clear that was all of the family wealth had been built up during the marriage.
The Judge also decided that Ms Gray had made a significant contribution to the marriage as well.
Mr Work appealed to The Court of Appeal suggesting that he should receive 61 per cent of the total assets. The Court of Appeal disagreed.
This decision comes just a few days after a High Court decision in the case of Mrs. Pauline Chai and her husband, Mr. Khoo Kay Peng, Mrs. Chai was suggesting that the family wealth of approximately £205 million should be divided equally between her and her husband.
Her husband suggested that his wife needed no more than £9 million while the High Court decided Mrs Chan should receive no less than £64 million.
In its judgment yesterday the Court of Appeal tried to provide some guidance as to when a contribution was likely to be classified as “special”.
That guidance is:
- Only in the rarest of cases will a contribution be so special as to entitle one person to significantly more of the assets than the other.
- That contribution must be “wholly exceptional” so that it would be completely unfair to disregard it.
- A “windfall” is not going to be enough. The party claiming that they have made a contribution which should be treated as special has to have done something quite remarkable themselves to have built up the capital which is to be divided.
- It is impossible to suggest that if the family’s total worth falls below a certain figure, there is no possibility of a contribution being “special”. Simply, no one can predict what is exceptional in any case and what is not.
Putting aside the exceptional wealth which Mr Work and Ms Gray had built up and the very substantial legal fees which they have both incurred ($3 million by just 2015), the Court of Appeal’s decision has much wider implications.
Firstly, the Court of Appeal emphasised that the starting point in every case is an equal sharing of the assets built up during the marriage.
The thinking behind this is that a marriage is a partnership of equals and equality of sharing produces fairness.
There are bound to be exceptions to this general rule. For example, if the wife and the children cannot be rehoused unless she receives more than half the assets. Another example is where there has been a very short marriage and another, of course, is the “special contribution”.
The second point which the Court of Appeal emphasised time and again was that there must be no discrimination whenever decisions are made about the division of capital, income and pensions following the breakdown of a marriage.
The Court recognised that setting financial contributions against non-financial contributions (e.g.. in the domestic sphere, home-making) is ‘comparing apples and pears’.
Each party should be seen as doing their best in their own sphere and only if there is a marked disparity in their respective contributions towards the welfare of the family would it ever be right to value one contribution more than another.
Whether this decision will deter those who have significant wealth from trying to achieve more than 50 per cent of the net assets remains to be seen. What is clear is that success will be very difficult to achieve indeed.
Image by Dean Hochman via Flickr under a Creative Commons licence
April 12, 2017
Categories: Finances and Divorce