First, Holman J considered Mrs Robertson’s argument that the active growth of the shares represented matrimonial property which should be divided equally, relying on the approach in Jones. The effect of this approach was that Mrs Robertson would receive £107mn (49%) and Mr Robertson would receive £112 m (51%). Holman J rejected the formulaic approach as the outcome was ‘so unfair to the husband on the facts and in the circumstances of the case, and so overgenerous to the wife’. Holman J noted that the methodology in Jones was merely ‘a tool and note a rule’ and that he would consider the case by reference to all the s 25 factors.
In response to Mr Robertson’s argument that the ASOS shares were acquired in 1996, some 8 years before the marriage, Holman J did not accept this but did not go into detail as to why save for stating that he considered the debate as ‘ultimately sterile’. The court's overarching duty was to apply the s 25 factors and its wide discretionary powers in a way that was fair to both parties given the facts and circumstances.
So we turn to special contributions. Was Mr Robertson a genius? Holman J accepted that ASOS was a highly successful company, having been confirmed as the best performing share in the 20 year life of the AIM of the London Stock Exchange. Mr Robertson has been honoured by Her Majesty the Queen with the award of an OBE, and has won a long list of awards including ‘Entrepreneur of the Year’ and was apparently described by the Daily Telegraph as ‘one of the greatest entrepreneurs of the 20th century’.
So did Mr Robertson’s make a special contribution? The court held that whilst there was no doubting what he had achieved with his company, ‘Mr Robertson was not, with respect to him, a genius’, and he had not demonstrated the exceptional and individual quality that the authorities required for a finding of special contribution.
Holman J also confirmed that it was also fundamental that a special contribution be unmatched, and that the court had to avoid discriminating against the homemaker. The court noted that Mrs Robertson had been an excellent homemaker and mother and that the parties had contributed equally to the welfare of the family. His conclusion was therefore that there should be no adjustment to the award to reflect an imbalance in the contributions of the kind contemplated by s 25(2)(f). Mr Robertson’s special contribution argument was rejected.
So what is needed for one to qualify as a genius and justify a departure based on special contribution? Consider also the rhetorical question Holman J asks in his judgment – what more could the wife have done to contribute to the welfare of the family? This highlights the need for any special contribution to be unmatched and perhaps suggests the judiciary are closing the door on special contribution arguments. It seems, in theory at least, the only way one might get over the hurdle of their special contribution being unmatched would be to successfully pursue the rather distasteful argument that the weaker financial party was a bad homemaker who could have done more.
So are special contribution arguments dead ... or do they live on, perhaps in disguise?
In Robertson, having dealt with those factors considered above, it was still necessary under s 25(1) for Holman J to consider all the circumstances of the case. Mr Robertson had already owned the shares before the cohabitation. At the time of the marriage they were worth £1.2m but their value had greatly increased during the marriage. The court noted that Mr Robertson had tapped into the potential of online shopping very early on and made many key company decisions before he met Mrs Robertson. Accordingly, Holman J opined that a much greater allowance than the £4.8m suggested by Mrs Robertson was necessary to fairly reflect that.
On the other hand, Holman J does not leave the ASOS shares out altogether. They had been part of the family economy that Mr Robertson had been happy to draw on to invest in assets and spend for the family as a whole.
Holman J concludes that the fair solution was to give half the value of the ASOS shares to the husband as being personal, non-matrimonial property. The other half was to be treated as matrimonial property to be evenly shared, thereby giving Mrs Robertson a quarter of the ASOS shares’ value. All other marital assets were divided equally. Accordingly, the overall division was 31.6% to the wife and 68.4% to the husband. Mr Robertson therefore received more than two thirds of the overall assets when the court had rejected his arguments that the shares were non matrimonial and/or accrued by his special contribution.
The central issue the court had to determine was how and to what extent Mrs Robertson should share in the value of Mr Robertson’s shares. Having rejected special contribution arguments in their normal form, the court concluded that an adjustment should be made to account for Mr Robertson’s business endeavours before the marriage. The value of the shares at the start of the marriage was £1.2m, and Mrs Robertson had actually conceded more on the grounds of passive growth and offered to carve out £4.8m as being Mr Robertson’s premarital property. The court was not content with that and believed Mr Robertson deserved considerably more.
What is apparent is that Mr Robertson was rewarded for his business endeavours and the financial provision he brought to the table. The court did not label its reasons for doing so as being down to non-matrimonial property or indeed any special contribution by Mr Robertson, but nevertheless a significant departure from equality was ordered by the court. What is also notable is that the award sits very close to the upper limit of the range suggested in Charman as to the outcome a court might award in cases involving special contributions.
The conclusion practitioners should draw is that they should not be put off from raising special contribution arguments where the case permits. It seems that such cases are still the sole preserve of the ultra-wealthy. Whilst a court might not accept that one party has made an unmatched special contribution as prescribed by s 25(2)(f) owing to the extremely high bar that has been set by case law, contributions will in any event be in the judge’s mind when they determine a case having regard to all the circumstances.
It seems that special contribution lives to fight another day, but perhaps its days are numbered.
Work v Gray
Or perhaps they are not. Mr Work’s recent application for permission to appeal against Holman J’s order which rejected his claim that he had made a special contribution was successful and permission was granted by King LJ. By way of reminder, Mr Work had generated a wealth of $300m from scratch in just 8 years but his special contribution argument was rejected.
At first instance, Holman J had said in his judgment that, ‘absent some exceptional individual quality in the generation of the wealth, a special contribution would be hard to establish’. In doing so, Mr Work argued, the judge had not considered whether the sheer quantum of wealth accrued by him in itself amounted to a special contribution. He argued that $300m is an extraordinary amount for one man to generate, through his energy and skill, so that it must be easier for the party which generates it to claim exceptional and individual qualities deserving special treatment.
King LJ accepted that it was arguable that the judge erred in his approach to the test, in particular in not sufficiently considering the sheer quantum of the product and whether that should have made it easier on the facts to have concluded that this husband's contribution had been exceptional.
What is interesting to note is that, when hearing the application, King LJ challenged Mr Cusworth QC, who appeared on behalf of Mr Work, as to whether the issue of special contributions really is a problem in the ‘real’ world as opposed to in a vanishingly small number of cases which come before the court. Mr Cusworth QC responded that the matter arises routinely in cases where the assets exceed £50m.
So, will we soon see the introduction of a quantum threshold in respect of special contributions? Doing so would bring more certainty to the issue and go some way to defining a ‘genius’ in the matrimonial finance context, but does it raise some difficult moral dilemmas? For instance, would we then be in danger of pre-White discrimination between the breadwinner and the homemaker if the price is right? Or, is it right that the successful banker who owns more than £’X’ million is a genius, but the professor who finds a cure to a disease and owns less than £’X’ million is not?
The appeal hearing of Work v Gray is eagerly anticipated.