K v L [2012] WTLR 153

Analysis

On H’s ancillary relief claim, Bodey J awarded him a sum of £5m pursuant to an open offer made by W. W had assets worth approximately £57m and H had assets of approximately £300,000, represented by the former matrimonial home which was transferred to him by W in the course of the divorce. The couple began cohabiting in Israel in 1986, and underwent a ceremony of marriage that was not valid under Israeli law. They married legally in England in 1991, where they have lived ever since. The length of the relationship was 21 years and there are children from the marriage. Substantially the whole of W’s wealth derived from shares in an Israeli company that she inherited, and that have since significantly increased in value. This provided the income for the family throughout the marriage, and meant that neither H nor W was required to work, but each made an equal and valuable contribution to the marriage in the home. The family led an extraordinarily modest lifestyle in the circumstances. In the latter years of the marriage, their annual expenditure was approximately £79,000.

H appealed on the basis that, although on any footing the award made by Bodey J was sufficient to meet his needs, the decision was wrong because it failed properly to apply the sharing principle. He claimed Bodey J’s decision was erroneous on four grounds:

1. 1. it was based on unjustified discrimination;
2. 2. it failed to recognise that the sources of assets would diminish over time;
3. 3. it failed to take into account that W had made a special contribution and thus the guidance in Charman v Charman (No 4) [2007] 1 FLR 1246 should apply, with the result that the departure from equality should not be greater than 66.6% to 33.3%; and
4. 4. it was, in the circumstances, disproportionate.

Held

1. 1. Bodey J’s award was not discriminatory, although in White v White [2001] 1 AC 596 Lord Nicholls makes clear that, in the context of ancillary relief awards, it is unacceptable to discriminate on the basis that the couple have chosen a traditional division of labour with one party earning and the other party caring for the children. In this case neither party worked and both contributed equally in the home. Moreover the law does not abjure all discrimination: it is the essence of the judicial function to discriminate between different sets of facts and thus between different claims. What is prohibited is discrimination on the grounds of superficial differences that on analysis do not reflect substantive differences. To find that, on top of efforts of equal value made by each party in the home, W made a financial contribution to the marriage of great importance was not discriminating between the parties in an unacceptable manner; it correctly recognised a substantive difference.
2. 2. The importance of the source of assets may diminish over time. That was the case in White v White, where an interest-free loan of £100,000 made in 1963 and later released enabled the purchase of a farm on which both the husband and the wife worked, and that was very valuable by the time of the divorce. There was nothing in this case to suggest that there should be a diminution in the importance of the source of the parties’ entire wealth, which was at all times ring-fenced and in W’s name.
3. 3. The phrase ‘a special contribution’ was a term of art and was used to describe a contribution entirely different from that of non-matrimonial property. Generally it arose in cases of substantial wealth generated by a party’s success in business during the marriage and therefore applied to the extraordinary creation of matrimonial property. Although non-matrimonial property also falls within the sharing principle, equal division is not the ordinary consequence of the application of this principle, which can range from 100% to 0% (after of course having taken account of need and compensation).
4. 4. There was no case H could point to in which the relevant assets were entirely non-matrimonial and in which (by reference to the sharing principle) the applicant secured an award in excess of his or her needs.

JUDGMENT LORD JUSTICE WILSON: Introduction [1] The husband (as it will be convenient to call him notwithstanding the recent grant of a decree absolute of divorce) appeals against an order made by Bodey J in the High Court, Family Division, on 13 May 2010 that the wife (as it will be convenient to call her) …

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