High net worth divorces and the stellar performer

As a high net worth divorces go, the settlement last year between Ryan Giggs and his partner Stacey Cooke was not so unusual – other than for the fact that in respect of the financial settlement on divorce, Giggs argued that he was a stellar performer – that he made a special contribution to the finances of the marriage and was entitled to more than 50% of the marital assets. Even the best divorce solicitor may have raised an eyebrow at this strategy – it is something a high net worth divorce solicitor may consider, but usually only in truly exceptional circumstances.

Financial settlement on divorce and the yardstick of equality

Since the House of Lords’ judgment in the case of White v White in 2001, subsequently approved in the appeals of Miller v Miller and McFarlane v McFarlane, the principles governing the financial settlement on divorce changed quite dramatically. Previously, the divorcing parties would be allocated capital and income that was appropriate to meet their ‘reasonable needs’. In practice this often left the non-earning (or lower earning) spouse with far less than her former spouse.

The change in approach following the White case now requires the application of the principle of the yardstick of equality. As your high net worth divorce lawyer will advise, this means that all the matrimonial assets are pooled and then divided 50:50 between the couple. While there may be disputes about which assets are allocated to which individual and wrangling over the factors to be taken into account when making these pivotal decisions, the principle of the yardstick of equality should govern the financial settlement on divorce in all but exceptional cases.

The stellar performer - departing from the yardstick of equality

In arguing that he had made a special contribution to the finances of the marriage, Ryan Giggs was seeking to take advantage of one of these exceptional cases and bring himself within the rather ill-defined concept of the stellar performer.

Very occasionally, in a few high net worth divorces, the courts have been asked to depart from the yardstick of equality and recognise that one of the parties has made a special contribution to the finances of the marriage. In such a case, the stellar performer may be entitled to a greater share of the matrimonial assets. So how does an individual prove that he or she has made such a special contribution to the finances that he or she is entitled to more than 50%?

Sine the case of Cowan v Cowan, which pre-dates the White case, the courts have recognised ‘genius’ ‘entrepreneurial flair’ ‘skill’ or ‘spark’ but have been unable or unwilling to set down any principles that help identify this. The courts appear to take the view that it will simply be obvious. As Peter Hughes QC commented in the case of H v H

“It is not easy to define what may amount to a stellar or really special contribution, but rather like the elephant, it is not difficult to spot one when you come across it”

In that case, the argument in respect of the financial settlement on divorce was put forward by a high earning City lawyer. His arguments were rejected by the court. Clearly it is not sufficient to simply look at the size of the contribution made by one partner when considering if there has been a ‘special contribution’. This clearly disadvantages the partner who has either stepped back in their career to care for children or otherwise allow the breadwinner to ‘fly’. As the Court of Appeal commented in Lambert v Lambert:

“…discrimination is inevitable if the courts look merely at the size of the breadwinner’s fortune, as there is no equivalent way for a homemaker to demonstrate their success…”

Body J in the Cowan v Cowan said that it was necessary for the party seeking to demonstrate his or her genius that he or she had:

“…gone beyond what was expected and beyond what the other spouse could ordinarily have hoped to do for himself or herself had the parties arranged their family lives and activities differently”.

Holman J has perhaps come closest to providing assistance in establishing what is required to demonstrate the qualities of the stellar performer. Rejecting the appeal of US banker Randy Work in the Court of Appeal, he suggested that someone wishing to rely on this argument would have to be in the league of Mozart or Leonardo da Vinci in terms of talent and skill. He also made reference to sportspeople and footballers in particular, but with an interesting spin:

“It may one day fall for consideration whether a very highly paid footballer, who is very good at his job but may be no more skilful than past greats, such as Stanley Matthews or Bobby Charlton, makes a special contribution or is merely the lucky beneficiary of the colossal payments now made possible by the sale of television rights.”

The rewards of establishing a special contribution

It is unusual to be able to establish a special contribution to the marital finances to the extent that the courts will depart from the yardstick of equality when determining financial settlement on divorce. Even when this has been successfully argued, the most the individual can expect to gain is 66% (in the case of Charman v Charman).

In the end the Ryan Giggs divorce did not reach court. They reached a financial settlement without the intervention of the court, and so the arguments of Giggs’ genius on the football pitch (or otherwise) did not fall to be considered. However, even without a high profile football divorce to add to the case law on stellar performers, it remains an option to consider in high net worth divorces.

For advice on any aspect of divorce, including financial settlement on divorce and arrangements concerning children, Behzad Sharmin of OTS Solicitors can help. To speak to one of our divorce solicitors in London, call 0203 959 9123.