Lucinda Connell, North East’s Best Leading Female Specialist Family Lawyer of Major Family Law, specialist divorce and children solicitors comments the recent divorce and financial case of Gray v Work [2015] EWHC 834 (Fam) is one where the Court had cause to deal with issues of financial contributions and fairness.

In Gray v Work, the husband sought to rely on both a post-nuptial agreement and his special contribution to the assets to regulate the amount payable to his wife. The matter was heard in the Family Division by Mr Justice Holman on 6th March 2015 who held that fairness and an overall appraisal of the factors in section 25 of the Matrimonial Causes Act 1973 required an equal division of the assets and the final outcome had to achieve that effect.

The Facts of the Case

The parties’ relationship and marriage lasted 20 years prior to ending in divorce. At its outset both the husband and wife were in their early to mid twenties. They had similar modest incomes and no capital. By the time of the divorce, the parties were in their mid to late forties. Entirely during the marriage, the husband earned considerable wealth. His net wealth was around US $225,000,000, or about £144,000,000. During the 20 years, the wife played the role of home maker and mother. She was a good mother to the two children of the family. She loyally moved with the husband to live in Japan where he was to generate the wealth over a period of eight years.

In October 2000, the parties both signed post-nuptial agreement(s). The agreement was negotiated between Texan lawyers, and the wife flew to Texas to sign it. One clear purpose and effect was to ‘partition’ the parties’ separate property, that was, to terminate any community of property under Texan or American law, and to provide that the property, including future earnings, of each of them was kept separate and distinct and was the property respectively of him or her alone. That was done in anticipation of implementing the husband’s decision to ‘expatriate’, ie. to renounce his American citizenship, which he did purely to avoid or save tax.

In early 2013, the wife formed an emotional, and shortly thereafter a sexual, attachment with a man – “Mr H”- who was the parties’ personal physiotherapist. The husband was very shocked and hurt by his wife’s infidelity and affair. In May 2013 the husband petitioned for divorce. The wife applied to the court of England and Wales for financial remedies pursuant to the Matrimonial Causes Act 1973. The husband put an offer on the table, for about six months, a proposal to pay $71,000,000, (total sum payable) but by instalments of about $11,500,000 per annum. The wife did not accept it, as essentially she considered that in fairness she was entitled to half. The application came before the court.

The issues were: (i) the meaning and impact of the post-nuptial agreements which both parties had signed about five years after the marriage; (ii) whether or not the husband had made a ‘special contribution’ such that the amount payable to the wife should be less than it otherwise might have been. Paragraph (f) of s 25(2) of the 1973 Act required the court to have regard to ‘the contribution which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family’. The husband’s case was that he had made a particular contribution by earning and amassing so much wealth, and by the acumen and drive with which he had done so, which, it was submitted was unmatched or not balanced by the contributions which the wife made to the welfare of the family. The husband claimed that that should be reflected by his retaining more and her receiving less of the overall wealth.

The court ruled:

(1) It was established principle that effect should be given to a nuptial agreement ‘unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.’ The circumstances of the parties often changed over time in ways or to an extent which either cannot be or simply was not envisaged. The longer the marriage has lasted, the more likely it is that this will be the case.

(2) On the facts under the agreement, the wife was free to make a clear and unambiguous election whether to accept the total sum payable or to seek alternative relief. It was common ground that the Form A (application for financial remedies) issued by the wife, which was served upon the husband in January 2014, amounted to her express affirmative election to seek alternative relief from the court. The wife was fully entitled, under the terms of the agreement, to elect not to accept the total sum payable but to pursue a real, and not an illusory, claim for a range of statutory remedies against all of the husband’s assets, and the agreements had not in any way limited or impacted upon the powers and discretion of the court. For those reasons, the agreements had not in any way limited or impacted upon the wife’s right to seek, and the court’s unfettered power (and indeed duty) to make, a discretionary award.

(3) A successful claim to a special contribution required some exceptional and individual quality in the spouse concerned. Being in the right place at the right time, or benefiting from a period of boom was not enough. Hard work alone was not enough. Many people worked extremely hard at every level of society and employment. Hard work alone lacked the necessary quality of exceptionality. Further, to attach special weight to hard work in employment risked undervaluing in a highly discriminatory way the hard work involved in running a home and rearing children.

On considered reflection, the court was not satisfied that the husband had established an unmatched special contribution of the kind and to the extent required. For 20 years the wife was a good wife, a good home-maker and a good mother. Mr Justice Holman was further not persuaded that the husband displayed the exceptional and individual quality that the authorities required. He was very good at his job but he played no part in attracting the funds from investors, which were vital to the whole enterprise. His role in the Japanese sector of the business was very important, but it was not unique, and there was no evidence that it could not have been performed by another.

Fairness and an overall appraisal of the s 25 factors required, in the case, an equal division of the assets and the final outcome had to achieve that effect.