A landmark Court of Appeal judgment has stopped the “floodgates opening” for wealthy men holding on to their wealth and wives not getting their fair share after a divorce.
Lawyers described the ruling, which overturned the “grossly unfair” division of marital assets between a husband and wife who cannot be named for legal reasons, as a “critical win for gender equality” in divorce.
The original judgment awarded the wife, who was the sole carer for the couple’s severely disabled child, only 29 per cent of the couple’s combined wealth because of the alleged “special contribution” to the marriage made by the husband, a highly successful businessman.
Lord Justice Moylan overturned the ruling, which was handed down in December 2017, in mid-December last year in the XW v XH Court of Appeal judgment.
He said: “In this case, the wife’s enormous contribution to the welfare and happiness of the family, as the homemaker and principal carer of AB, both during and after the marriage, has been and will be incalculable.
“She has devoted herself to the day-to-day care of a child with special needs and by doing so has freed the husband to a very considerable extent to enable him to pursue the business activities which have generated the enormous wealth now available.”
Debbie Chism, a lawyer who represented the wife and fought to overturn the verdict, said the judge in the initial ruling had not taken into account the wife’s domestic contribution to the marriage and had based his decision on the husband’s earnings.
Ms Chism, who has been working in family law for almost 25 years, told The Independent: “I am absolutely delighted we have reset the law around this. If it had been allowed to stand, it would have set a dangerous precedent.
"The judgment has ensured that financial contributions – earning the income – are not prioritised over domestic contributions – taking care of children and looking after family members.
“Given we are in a society where men are more likely to be in bread-winning roles, women would have missed out in cases where capital is generated by a man’s efforts.”
The case stopped the “floodgates opening” for women losing out on what they are entitled to in divorces, the lawyer said.
Ms Chism, who works with high net-worth clients whose wealth ranges from £10m to £6bn, said one of the key issues is known as “special contribution”, or the so-called “genius argument”, explaining that the term refers to an “exceptional” ability to make money which is unmatched by the other spouse’s input.
The lawyer, who works at Stewarts, said: “It is a highly flammable legal construct that can be deployed in cases where there are high levels of family wealth, and can potentially be very discriminatory – primarily towards women. Rummaging through the attic of marriage to find arguments for ‘special contribution’ is a dangerous thing to do.”
There have not been any cases where a judge has ruled the wife or the mother made a “special contribution” to the family, the lawyer added.
Ms Chism drew attention to White v White in 2000, a landmark ruling that both primary-earner “breadwinner” and “homemaker” roles should be regarded equally in terms of their contribution to a marriage and assets should be divided 50:50. She branded this a “lightning-strike moment” that marked a “great leap forward” for women.
White v White is widely regarded as a watershed moment in British divorce law because it ended the entitlement of husbands to hold on to the lion’s share of the family money.
Martin and Pamela White were independent farmers before getting married and carried on farming in equal partnership afterwards – running a farming business worth around £4.5m. While Pamela White was initially given £800,000 after their 33-year marriage ended, she took the case to the Court of Appeal, which was the House of Lords at that point, and was then awarded £1.5m.
Kaleel Anwar, a senior solicitor who specialises in family law and divorce, said the recent Court of Appeal judgment reconfirms the “main foundation of fairness” within divorce settlements – centred around the idea that a wife who is a homemaker and child carer should not be discriminated against in favour of a husband who is able to go out and earn a wage “as a result of having a strong foundation at home”.
Mr Anwar, who works at Stowe Family Law and supports people working in the legal, financial, public, media, and entertainment sectors, added: “It is about recognising the importance of the contribution that homemakers make to allow the breadwinner to succeed.
“The woman can be managing so many different things. Making sure food is on the table, looking after four children, making sure she is around to pick the kids up and drop them off to the extra-curricular stuff is a full day’s work.
“And all the work the husband doesn’t have time to do because he is in business meetings: if the husband has a property portfolio, the wife might have to manage 15 cleaners in properties around London – making sure they have left and they are paid.
“I have encountered sexist men but I have also had the total opposite. I have had men who say, ‘A woman’s place is at home.’”
Mr Anwar cited the case of one man who was keen not to carry on paying out to his wife after the divorce despite having millions of pounds coming in on an annual basis.
The wife is quite old so it would be difficult for her to go out and get a job, Mr Anwar said.
Nigel Shepherd, lead spokesperson for Resolution – an association that represents over 6,500 solicitors, barristers and other professionals working in the field of family law – said the Court of Appeal judgment signifies “another nail in the coffin” of the so-called “special contribution argument”.
The solicitor, who has specialised in divorce and family law for 40 years, added: “But it doesn’t rule it out. It makes it more difficult to argue. It is more and more difficult in cases now to find that special contribution.
“[The Court of Appeal judgment] bolsters further the White and White recognition of different roles within a marriage being equally valuable. But it does not settle the approach the court takes to how you value the growth in company assets from the date of the marriage to the date of the financial settlement. The law on how you value the growth in company assets during a marriage remains in something of a muddle.”
Mr Shepherd, who is national head of family law at Mills & Reeve, said he has seen divorce law “change dramatically” during his time in the profession and “gender equality” had been recognised via White v White.
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