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Stars in their Eyes: Stellar Performers and How they may be Judged in the Future

Beverley Donald, a solicitor with Pannone & Partners, considers the future of 'stellar contributions' following the decision in Sorrell v Sorrell

Beverley Donald, Pannone & Partners

Sorrell v Sorrell [2005] EWHC 1717(Fam); [2005] All ER (D) 104 October is the latest in a line of cases which began with Cowan v Cowan [2001] 2 FLR 192 which counter the 'yardstick of equality' established in White v White [2000] 2 FLR 981. In Cowan Thorpe LJ suggested that there would be very few cases where contribution would be so special that it could not be ignored.

In 2002 along came three further cases – Lambert v Lambert [2002] EWCA Civ 1685; [2003] 4 ALL ER 342, G v G (Financial Provision; Equal Division) [2002] 2 FLR 1143 and H v H (Financial Provision – Special Contribution) [2002] 2 FLR 1021. In G v G Mr Justice Coleridge was anxious that spouses should not run special contribution arguments in every case where assets exceeded the parties' needs. In H v H Peter Hughes QC (sitting as a Deputy High Court Judge) commented that it is not easy to define what may amount to a "stellar or any special contribution, but rather like the elephant, it is not difficult to spot when you come across it". In H v H the husband failed to establish a sufficiently special contribution.

In Lambert v Lambert Thorpe LJ confessed to being more wary of the issue of special contribution than when he delivered his judgment in Cowan. He commented, 'I propose to mark time on a cautious acknowledgment that special contribution remains a legitimate possibility, but only in exceptional circumstances'. After Lambert it would probably be fair to say that most of us regarded the 'stellar' contributor to be a very rare creature indeed, the likes of which would seldom be seen.

Then, in 2005 along came Sir Martin Sorrell. The crux of Sorrell v Sorrell was summarised by Mr Justice Bennett in the first paragraph of his judgment:

'The substantial issue in this ancillary relief application is whether the assets, said to be of the order of £100 million (gross) or £75 million (net of tax) should be divided equally between Sir Martin and Lady Sorrell or whether the yardstick of equality should be departed from, and if so, to what extent, on the ground that, notwithstanding that the wife has made as full a contribution as possible, the husband's contribution was exceptional.'

The facts of the case and background
The husband was 60 years old and the wife 59. The marriage had lasted over 32 years and there were three adult sons. The husband's career success was meteoric. His father ran a chain of electrical retailers. He studied at Cambridge University and Harvard Business School and was Financial Director at Saatchi and Saatchi from the late seventies until 1985. In 1985 he invested in his own business making supermarket shopping trolleys. The business was WPP Group Plc which over the next 20 years acquired many prestigious companies. Despite suffering severe setbacks during the 1987 stock market crash and the 1989/1990 recession, by 2004 WPP's Profits were £546 million and the business was worth £7 billion and employed 85,000 people. At the time of the divorce the husband had been the CEO of the WPP Group for 20 years and the family's assets were found by Mr Justice Bennett to be worth over £73 million net. The wife had not worked during the marriage nor had she been expected to and it was accepted that she had no possibility of obtaining meaningful employment in the future. The husband, on the other hand, had a very high earning capacity and it was established that he intended to continue to work. The wife acknowledged that she could have pursued a claim for a share of her husband's future income, but she chose not to do so and sought instead a broadly equal share of the assets of the marriage. Both parties sought a clean break.

Contribution argument
The court spent very little time dealing with most of the Section 25 (2) MCA 1973 factors. There was no need to consider means, obligations and responsibilities. The family's standard of living was good and increased over the years in line with the family's wealth. The marriage was clearly a very long one, a total of 32½ years. Neither party suffered from any form of disability and neither sought to rely on issues of conduct. There had been no loss of benefits. The central issue of the case was Section 25 (2) (f) relating to contributions.

The wife accepted that the husband had generated a significant majority of the assets. She believed her contribution as homemaker and mother was no less valuable and that the court should not make any attempt to quantify her contribution in financial terms. It was argued on the wife's behalf that in Lambert the court went further than it had in Cowan and established a principle that in a long marriage, where the spouses' contributions were intrinsically different and incommensurable, each should be regarded as no less valuable than the other, such that different contributions should henceforth be deemed to be of equal value. It was suggested further on the wife's behalf that if the husband was to receive more than half the assets, this could be done only at the expense of the wife's share and that that would be unfair if she was fully entitled and she argued she was. The husband argued that the creation of the family's considerable wealth was exceptional. It was not a fluke but the combination of extraordinary hard work, business acumen, drive, bravery and initiative on his part.

The husband acknowledged that his wife had made a full contribution in her role as a homemaker and mother. It was argued on the husband's behalf that Section 25 (2) (f) requires the court to evaluate contributions and that where one of the parties has a "seed of genius", the court cannot ignore this. Mr Justice Bennett addressed the wording of the statute. By reference to Section 25 (2) (f) the Court must have regard to 'the contributions which each of the parties have 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'. Mr Justice Bennett did not carry out 'a detailed, in-depth analysis' of each party's particular contribution but instead took a 'broad-brush appraisal of the evidence'.

Mr Justice Bennett commented that the preservation of special contributions by the Court of Appeal in Lambert was a way of acknowledging that not all spouses are equal. He went on to say that it was a 'comparatively simple concept that one of the parties has within him/her a seed of genius which will be recognised when seen'. Mr Justice Bennett found the husband to be 'exceptionally talented' and to have 'extraordinary acumen and drive'. He commented that the husband 'was one of the most exceptional and talented businessmen' of his era and was the 'driving force in developing WPP'. He believed that the reason for the husband's extraordinary success was that there were 'within the husband exceptional and individual qualities as the generator of the fortune in that he possessed the "spark" "force" or "seed" of genius'.

The wife had made as full a contribution as she could, but the husband had made a special contribution in exceptional circumstances and this deserved recognition as described in Cowan and that it would be unfair not to acknowledge it. Mr Justice Bennett therefore awarded the husband 60% of the assets and the wife 40%, some £29 million, including the parties' Knightsbridge property, half of the husband's pension and two underground car parking spaces at Harrods.

Mr Justice Bennett accepted that Lambert did not establish any new principle or test, but rather made it clear that the court would now look at the argument of special contribution with great care or a sceptical eye. While the Court of Appeal in Lambert had tightened up the criteria, the message to practitioners was that one could not expect routinely to run a case of special contribution successfully. However, there was still a legitimate possibility that this argument could be successfully run. If it were not possible to argue that Lambert had left open the possibility of serious arguments on contribution in the future, it was, Mr Justice Bennett commented, 'highly likely that no "special contributor" at least in the field of businessmen and women, could ever bring him or herself within such concept'.

"Big Money" only?
In his judgment, Mr Justice Bennett recognised that the only reason for departure from the principle of equality was the husband's special contribution. Towards the end of his judgment, he noted what was said by Thorpe LJ in Lambert, namely that the size of the family fortune did not alone justify a conclusion of special contribution. Arguably therefore special contribution arguments could be run in cases with much less wealth. Having said this however, how stellar or "exceptional" can a party's contribution have been if there are not substantial assets in issue? It remains to be seen whether practitioners will be able to convince District Judges to accept the applicability of Sorrell in dealing with cases that do not involve substantial wealth.

The badly behaved stellar contributor
In Sorrell, the wife's counsel sought to denigrate the husband's role as a father and to criticise his behaviour as a husband, particularly after separation. Mr Justice Bennett criticised the wife's attempt to downplay the husband's role as father, finding it to have 'no basis'. He did however acknowledge that the husband had not behaved as a "good" husband and that the wife's attack on the husband had been brought about by him trying to portray himself as the "good" husband. Mr Justice Bennett decided to ignore the husband's bad behaviour as it was not relevant to the case and the wife had not sought to rely on conduct. However, at the time he did not have available to him the judgment of the Court of Appeal in Miller v Miller [2005] EWCA 1984 where it was found that the wife had a legitimate entitlement to a long term future were it not for the breakdown of the marriage which was due to the husband's actions. Only time will tell whether Mr Justice Bennett may have reached a different conclusion regarding the relevance of the husband's misbehaviour had he delivered his judgment after Miller. The appeals of both Mr Miller and Mrs McFarlane will be heard together by the House of Lords on 30th January 2006. Depending on the outcome of those appeals, it may be a possibility in the future that where a husband is likely to argue that his "stellar" contribution has produced a family's substantial wealth and that he should therefore receive a greater proportion of the assets, a wife may be more inclined to argue more forcefully that her husband's behaviour or neglect of the family's home life should be taken into account as conduct.

Gender discrimination
In his judgment Mr Justice Bennett was mindful of the Court of Appeal's stand in Lambert that it was unacceptable to place greater weight on the contribution of the breadwinner rather than homemaker to justify a division of the assets in the breadwinner's favour. Thorpe LJ was very wary of the gender discrimination issue in Lambert, hence in part, his greater wariness of the issue of special contribution than in Cowan. He noted, 'if all that is to be regarded is the scale of the breadwinner's success then discrimination is almost bound to follow, since there is no equal opportunity for the home-maker to demonstrate the scale of her comparable success'.

In practice, it is highly unlikely to encounter a fully contributing house-husband father with a wife whose special contribution has been the main generator of a family's substantial wealth. It follows therefore, that the special contributor who receives the greater proportion of the asset base is almost always going to be male. Is it only an interesting academic exercise that this may fly in the face of the anti-discrimination legislation and Human Rights Act 1998? Article 14 of Schedule1 to the Human Rights Act prohibits any discrimination in the following terms:

'The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or origin, association with a national minority, property, birth or other status.'

According to former Law Society President Martin Mears' claims in a report recently published by Civitas, judges, especially in the family courts, have developed the law by promoting concepts including "equality" and "non-discrimination". Might this further limit the application of the "special contribution" argument in future?

Community of property
Whilst the wife's counsel argued in Sorrell that in a long marriage, the different contributions of the parties should be deemed to be of equal value, counsel stopped short of asserting an argument of "community of property". Mr Justice Bennett referred in his judgment to an article by Dr. Stephen Cretney QC [2003] 119 LQR 349, in which Dr. Cretney argued that Lambert had gone much further than White v White in creating a 'community of property system imposed by judicial decision'. Mr Justice Bennett's view was that such an argument was inconsistent with White v White in which decision Lord Nicholls of Birkenhead had pointed out that a presumption of equal division of assets would go beyond the boundaries of interpretation of Section 25 MCA.

Conclusion
Lady Sorrell will not now be proceeding with an appeal. In the absence of such appeal, it would appear that the law is unchanged. Sorrell is not the starting pistol for husbands to run special contribution arguments in every case where the assets exceed the parties' needs. The yardstick of equality principle established in White v White remains supreme. Mr Justice Bennett accepted in Sorrell that the effect of Lambert meant that arguments of special contribution will now be viewed by a court with 'great care, if not a sceptical eye'. He accepted also that Lambert has tightened the test for special contribution but did not seek to elucidate a date for the boundaries of what would be regarded as "exceptional". Sorrell may only be relevant in "big money" cases but the case demonstrates that it remains possible and fair in an appropriate case for a genius or star who has made a "stellar" or "special" contribution to dazzle the courts so as to depart from equality.