Will the divorce court treat a successful business owner's contributions as special?

Special Contributions

Divorcing business owners often, and quite naturally, want their greater financial contribution to the family pot to be taken into account when it comes to sharing matrimonial capital.  It can be very difficult to succeed in such an argument without showing special contributions.

The courts' approach – equal division?

The divorce courts will want to achieve fairness between the parties and what they see as  fairness and equality are often the same thing.  White v White [2000] UKHL 54

The court retains discretion to deviate from an equal division of matrimonial wealth provided that there is good reason to do so. Those reasons are to be found in the eight criteria found at Matrimonial Causes Act 1973, s25.

One of those criteria refers to contributions.

The business owner's contribution to the family wealth

Therefore, you can argue that a divorcing owner of a successful, valuable company, has made a particular contribution to the wealth generated within the marriage.

The problem for the business owner is that the courts have made it clear that there is to be no discrimination between the relative contributions of each party.

"What is unacceptable is discrimination in the division of labour within the family, in particular between the party who earns the income and the party whose works is in the home, unpaid."   K v L [2012] 1 WLR 306

There has been a sequence of cases since the turn of the century where the courts have wrestled with the question of whether commercial success represents a special contribution, sometimes more colourfully referred to as 'stellar 'contributions, and whether this should be taken into account to justify a deviation from an equal division.

Recent case law on special contributions

The recently decided case of DR v UG [2023] EWFC 68 confirms that a special contribution can still be argued but it is far from straightforward.

You will need to convince a court that your situation follows these three tests in order to get a judge to deviate from an equal division.

1. Wholly exceptional nature

Firstly, the special characteristics would have to be of "a wholly exceptional nature such that it would very obviously be inconsistent with the objective of achieving fairness" if the circumstances were to be ignored.  This sounds like a subjective test, fairness often being in the eyes of the beholder (or the payer) and perhaps does little to discourage speculative attempts to argue that one's own contribution is special.

2. The special contribution must be evaluated against the other party's own contributions

Secondly, any special contribution by one party then has to be weighed against the other spouse's own contributions, whether of a fiscal or homebuilding nature.  The warnings above against discrimination between the respective nature of work can be very hard to get beyond.

3. Does the extent of the special contribution matter?

The wealth generated by one spouse over the other can be so substantial that it will make it easier for the entrepreneur "to claim an exceptional and individual quality which deserves special treatment" but that is not the end of the matter either.

A mere disparity in respective contributions, even a large or very large disparity, is not enough.

They will still need to demonstrate, independently if possible, that the generated wealth was the result of a particular quality, characteristic or circumstance found in the entrepreneur.  That quality might be that they are a "genius in business" but genius itself does not need to be proved. 

The quality being relied upon might fall short of true genius but will still need to be "wholly exceptional". 

In the words of the judgment in Work v Gray [2017] 2 FLR 1297 from which this three part test is taken "A windfall is not enough", no matter how large.

In summary

Neil Denny, family law partner with Chattertons in Lincoln concludes that "It remains possible to successfully argue special contributions to justify an order that deviates from an equal division but the bar is set very high and every case will turn on its particular facts."

" While a larger capital contribution may make a finding of special contribution marginally more likely, no guidance was offered as to how large it needs to be or whether there is a minimum amount.  The reality is that litigation in these matters is often expensive but the potential results to be gained in moving several percentage points away from a 50% share may not justify that expense."

"As always, legal costs need to be carefully evaluated against the potential benefit to be gained and also with a full consideration of the likelihood of a successful outcome."

CONTACT OUR DIVORCE SOLICITORS TODAY

If you would like any further advice regarding this, or any other family law matter, please contact
Neil Denny on 01522 551177 or neil.denny@chattertons.com

Neil s a partner in the family law team at Chattertons Legal Services in Lincoln.

He is the author of "The Collaborative Law Companion" and frequently delivers workshops on conflict resolution and family law matters to other professionals across the country.