L v L (financial provision: contributions)
| Jurisdiction | England & Wales |
| Judgment Date | 22 October 2001 |
| Court | Family Division |
Divorce – Financial provision – Lump sum order – Parties realising substantial assets on sale of company founded by husband – Extent of wife’s contribution to company – Whether circumstances justifying equal division of assets – Matrimonial Causes Act 1973, s 25.
The parties married in 1974 and had accumulated a significant amount of wealth due to the sale in 1999 of shares in a company founded by the husband before the marriage. The company had produced and distributed a free local newspaper funded by advertising revenue, and it had expanded dramatically over the course of the marriage until it was sold. The wife had become a director of the company in 1981 and had been a director and company secretary of some of its subsidiaries before that date. The husband had received £19,726,000 from the sale, the wife £500,000, and a trust for their children (who were financially independent) received £6m. When the marriage came to an end, the wife sought a lump sum payment from the husband of some £6m, whereas the husband offered her a payment of £1·6m. The husband claimed that the company had already been on a successful path by the date of the marriage, had continued to flourish thanks to his drive and initiative, and was eventually sold at an outstanding price due to his negotiating skills. It was the husband’s case that the wife’s role in company affairs was minimal and superficial, involving her accompanying him to various social or promotional occasions, and latterly attending board meetings. The wife, however, described her own role in the company as ‘pivotal’, and she argued that when her contribution was added to her accepted contribution in raising the family and running the family home throughout the marriage, her claim to an equal share of the assets was made out. It was common ground that the matrimonial home should be transferred from the joint names of the parties to the wife.
Held – Upon exercising its discretion as to the quantum of a lump sum payment, it was the court’s fundamental duty to apply s 25 of the Matrimonial Causes Act 1973 to all the circumstances of the case in its attempt to arrive at a fair outcome. The issue of the parties’ contributions to the welfare of the family could not claim statutory priority in the discretionary exercise. Regard must be had to each of the eight matters specified in s 25(2) against the background of all the circumstances of the case. In the circumstances of the instant case, the wife had made a full contribution to the welfare of the family by looking after the home and caring for the family, which was supplemented when the need arose by her willingness to support the husband in his efforts to develop the business. However, in accordance with
established authority, the court was satisfied that the contribution made by the husband could be described as ‘really special’ or ‘exceptional’; he was not merely a successful businessman but an exceptionally active, determined and innovative one. In a case, as here, where the issue of contribution was central to the outcome, an award which left the wife with approximately 37·5% of the assets, amounting to £7,500,000, was a fair outcome, which departed from the yardstick of equality in deference to the really special contribution of the husband. It also recognised in full the contribution of the wife, thanks to whose help and support the husband was free to pursue those skills. Accordingly, and taking into account that the wife had other assets of approximately £2·8m, the court would make an order that the matrimonial home, worth £1·6m, should be transferred to the wife and that a lump sum payment of 3.1m should be made in full and final satisfaction of all her claims.
White v White[2000] 3 FCR 555 and Cowan v Cowan[2001] 2 FCR 331 applied.
Cases referred to in judgmentCowan v Cowan[2001] EWCA Civ 679, [2001] 2 FCR 331, [2001] 3 WLR 684, [2001] 2 FLR 192.
Dart v Dart[1997] 1 FCR 21, [1996] 2 FLR 286, CA.
Duxbury v Duxbury [1992] Fam 62, [1990] 2 All ER 77, [1991] 3 WLR 639n, [1987] 1 FLR 7, CA.
Gojkovic v Gojkovic [1990] FCR 119, [1992] Fam 40, [1990] 2 All ER 84, [1991] 3 WLR 621, [1990] 1 FLR 140, CA.
White v White[2000] 3 FCR 555, [2001] 1 All ER 1, [2000] 3 WLR 1571, [2000] 2 FLR 981, HL.
ApplicationFollowing divorce proccedings, the wife sought a lump sum payment from the husband of £6m, in the light of the House of Lords’ decision in White v White[2000] 3 FCR 555. The husband had made an offer to the wife of a payment of £1·6m. The facts are set out in the judgment.
Nicholas Mostyn QC and Richard Todd (instructed by Schilling & Lom and Partners) for the petitioner.
Martin Pointer QC and Nigel Dyer (instructed by Manches & Co) for the respondent.
CONNELL J.[1] The wife, SL, aged 49, seeks a lump sum payment from the husband, HL, aged 57, of (round figures) £6,000,000; whereas the husband offers her a payment of £1·6m. That is the core issue which the court must decide. As a result in significant part of dispositions already made the wife at present has assets of £3·4m inclusive of her interest in the former matrimonial home, and it is common ground between the parties that the matrimonial home of 18 years in which the wife still lives should be transferred from the joint names of the parties to the wife. The manor with its adjacent swimming pool
complex and cottage, including the grounds of some 30 acres and the lodge at the entrance to the drive, is worth somewhere between £1,425,000 and £1·8m. If the wife is successful in her claim she will leave the court with assets of £10,220,000 or 50% of the total family assets. This claim to 50% is advanced firmly by Mr Mostyn QC on behalf of the wife on the basis that this is the division of assets which is appropriate in the light of the House of Lords decision in White v White[2000] 3 FCR 555, [2001] 1 All ER 1. The succinct submission is that any division which avoids equality in this case would be unfair.
[2] The marriage lasted 23 years. There are two children, a son aged 20 and a daughter aged nearly 19. Both are at university and are wealthy as a result of a trust which was created for them by their parents in 1985 and which is based in Guernsey. The value of the trust assets is now £7·3m and both children in reality are financially independent.
[3] The parties’ significant wealth arises from the sale of the shares in the company A Ltd in September 1999 for £75m. Of this sum the husband received £19,726,000, the wife received £500,000, and the children’s trust received £6m. This company had been floated on the stock exchange in 1987, and the quoted share price at the time of the sale was 155p. However the price paid for the shares after negotiation conducted by the husband and the board of directors was 263p. The company was founded by the husband in March 1973, nine months before he met the wife and 15 months before he married her [in] June 1974. The company produced and distributed a free local newspaper funded by advertising revenue, and it expanded dramatically over the course of the marriage until it was sold as described.
[4] The principal dispute in this case relates to the contributions made by the parties to the financial success of the company. The husband says that it was his company, founded before the marriage and already on a successful path by the date of the marriage, which continued to flourish thanks to his drive and initiative; and which was eventually sold at an outstanding price due to his special negotiating skills. Whilst agreeing that the wife became a director of the company in 1981 and had been a director and company secretary of some of its subsidiaries before that date, he asserts that she had no connection whatsoever with the company between 1973 and 1981; and that thereafter her role in company affairs was minimal and superficial; involving accompanying him to various social or promotional occasions, and latterly attending some board meetings. On the other hand the wife describes her own role in the company as ‘pivotal’; arguing that when this contribution is added to her accepted contribution in raising the family and running the family home throughout the marriage, her claim to an equal share of the assets is made out. She agrees that the husband worked long and hard in the business, of which he was the leading light or ‘rainmaker’; but at the same time she asserts that she also worked very hard visiting the print works, helping in typesetting in the early days, discussing strategy with the husband and helping in the expansion of the business, organising exhibitions, attending conferences, and attending
at and making meaningful contributions towards board meetings post 1981 and in particular after the breakdown of the marriage in August 1997.
[5] In arguing against equal division of assets the husband relies in particular upon the agreed fact that the company was up and running before the marriage. Thereafter he says that it was his business which flourished through his exceptional industry...
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