England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
FAMILY DIVISION
(MR JUSTICE HOLMAN)

		Royal Courts of Justice Strand London WC2A 2LL
		20 January 2016

1. LADY JUSTICE KING: This is a renewed application for permission to appeal made by the husband, William Randall Work, against an order of Holman J sitting in the Family Division at the High Court on 10 March 2015.
2. By his order the judge ordered:
3. that the husband pay to the wife a series of lump sum payments amounting to a total of 50 per cent of the net value of the parties' assets as of 31 December 2014. The first lump sum of approximately $60 million was payable on or before 3 April 2015, the second lump sum of circa $50 million on or before 2 August 2015, and any balance (needed to make up 50%) to be determined by the court at a further hearing.
4. until payment in full of the lump sums, the husband was ordered to continue to pay to the wife maintenance pending suit, at the rate of £130,000 per month pursuant to an earlier order of Coleridge J dated 15 March 2014.
5. Finally the order went on to make provision for a clean break upon payment in full of the lump sums and provided for payment in relation to costs.
6. If granted permission to appeal, the husband would invite the court to substitute the order of Holman J with one which departs from equality in his favour so that he retains 63.5% of the assets with 36.5% payable to the wife, in addition, the husband seeks a variation of the maintenance order so as to terminate his obligation to pay maintenance pending suit after payment of the first lump sum of $60 million.
7. The matter came to me on paper on 30 July 2015; I refused permission to appeal on the basis that the applicant, having accepted that the judge had correctly summarised the law, had no reasonable prospect of succeeding in appealing the exercise of the judge's discretion. So far as the appeal against maintenance was concerned, I refused permission, indicating that the sums involved were de minimis in the overall context of the order as a whole, and taking into account the overriding objective of the need to allocate to each claim an appropriate share of the court's resources. Permission to appeal the continuing order for maintenance was refused.
8. The court has today had the benefit of oral submissions from Mr Cusworth QC on behalf of the husband supplementing the skeleton argument which was before me in July 2015.
9. The brief background is that the husband is 48 and the wife is 46. They met in 1992 when they were in their early 20s. They married in March 1995 in Los Angeles. At that time they had good but modest jobs and no appreciable capital. This is not a case where there has been family or inherited wealth.
10. In July 1997, the husband began working for a private equity firm called Lone Star in Texas. Later the same year, the husband was offered a role in Tokyo in Japan. The couple decided that the husband would accept that role and he worked full time in Japan from about November 1997, being joined there by his wife in 1998. Both the parties' children were born whilst they were living in Japan. Holman J described the husband's role in this way: "running the Lone Star office;" he spoke of him investing in distressed assets following the downturn in the Japanese economy and his having generated "vast profits" for Lone Star and considerable earnings and wealth for himself.
11. The family lived in Tokyo until 2005 when they moved to Hong Kong, and then from Hong Kong on to London in 2008. The husband was still under 40 by the time they came to London, and he left Lone Star shortly thereafter. It was said that he had accumulated actual personal wealth of $300 million, with further paper wealth in Lone Star which he was unable subsequently to realise of a further $150 million. His own wealth should be seen against the context of him having earned something in the region of $7 billion for Lone Star.
12. The trial dealt with a number of issues, and particularly an issue regarding post nuptial agreements. The husband does not seek to appeal that aspect of the judge's judgment. The second significant issue for consideration for the judge, and with which this court is now concerned, is the issue of so-called "special contributions" said to have been made by the husband. Consideration of this arises from Section 25(2)(f) of the Matrimonial Causes Act 1973, which requires the court to have regard to the contribution which each of the parties has made, or is likely in the foreseeable future to make, to the welfare of the family. This has to be read together with section 25(2)(g), requiring the court to have regard to the conduct of each of the parties, if the conduct is such that it would in the opinion of the court be inequitable to disregard it.
13. The husband's claim was that he, by virtue of the accumulation of this vast wealth in a short period of time, made a special contribution, earned and amassed by acumen and drive, and it was submitted on his behalf, this "special contribution" was "unmatched" by contributions which the wife had made to the welfare of the family. As a consequence, it was submitted by Mr Howard QC, who then represented the husband, this inequality of contribution should be reflected by an uneven distribution of the family wealth.
14. Holman J in his judgment concluded after consideration of the application of the law that on the facts of this case there had been no special contribution by the husband. In particular, he said, at paragraph 152, that he was not satisfied that the husband had established an unmatched special contribution of the kind and to the extent that the authorities require. The judge said that for 20 years the wife had been a good wife, a good homemaker and a good mother, and that it was only because of her willingness to move and live in Japan that the husband had been able to both work there and amass the wealth, whilst enjoying a home life, and "the procreation of his adored children".
15. The husband, now seeks to appeal that decision made by Holman J. The grounds of appeal are somewhat discursive, but the heart of the grounds are found in paragraph 2 of the grounds currently drafted, namely that:
16. the judge had applied the test wrongly in failing to consider whether the quantum of the appellant's generation of wealth alone was sufficient to render his contribution special, and thus inequitable to be disregarded;
17. that the judge had appeared to conclude that "genius" in the form of a exceptional quality which deserves special treatment was a prerequisite for a finding of special contribution;
18. that the judge had wrongly considered that there was more than one kind of special contribution and had therefore led himself into error when he held that the husband had not made the kind of special contribution required by the authorities and;
19. that the authorities require that the party seeking recognition of a special contribution must have an exceptional individual quality irrespective of the quantum, and that that had led him to reject the appellant's case.
20. The judge carefully considered the well known authorities that relate to this difficult area. The Court of Appeal had, as Mr Cusworth reminds me today, declined in the case of Charman to identify a threshold of wealth below which a court would be unlikely to conclude that that wealth was a product of a special contribution. Counsel in Charman, had suggested a range of £30 to £50 million. The court declined to identify such a threshold for fear that it would lead to a presumption either one way or other in relation to special contribution. The sum amassed here is vast in comparison to the sort of figures that were in contemplation by the court in Charman.
21. The learned judge had carefully quoted the well known paragraph 80 from Charman, which in turn incorporates the quote from Thorpe LJ in Lambert, which said:

i. "There may be cases where the product alone justifies a conclusion of a special contribution but absent some exceptional and individual quality in the generator of the fortune a case for special contribution must be hard to establish."

22. The Court of Appeal went on to say:

i. "In such cases, therefore, the court will no doubt have regard to the amount of the wealth; and in some cases, perhaps including the present, its amount will be so extraordinary as to make it easy for the party who generated it to claim an exceptional and individual quality which deserves special treatment. Often, however, he or she will need independently to establish such a quality, whether by genius in business or in some other field. Sometimes, by contrast, it will immediately be obvious that substantial wealth generated during the marriage is a windfall -- the proceeds, for example, of an unanticipated sale of land for development or of a embattled takeover of a party's ailing company -- which is not the product of a special contribution."

23. It has become clear from the submissions made by Mr Cusworth this morning that the difficulties which he says the profession is finding in applying a consideration as to whether or not a case is or is not one for special contribution and advising as to precisely how that passage, which is the paradigm passage in relation to special contributions, is to be interpreted, particularly absent a threshold.
24. In the present case, the judge did not say in terms that the product, that is to say the quantum alone, may justify a special contribution, but rather said that, absent some exceptional individual quality in the generation of the wealth, a special contribution would be hard to establish. It is arguable, therefore, Mr Cusworth says, that the judge did not consider whether the sheer quantum of wealth accrued by the husband, in this case, in itself amounted to a special contribution. Mr Cusworth says it must be arguable that $300 million 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.
25. It is argued, therefore, that the judge erred in largely ignoring the quantum in this case and comparing it with other cases in a way which does not bear close scrutiny. It is argued, therefore, that the judge failed to consider whether this was a case where the fact of the magnitude the product should have made it easy for this judge, on the factors which he found in paragraph 147 of the judgment, to show an exceptional or individual quality on his part.
26. I have considered this matter with great care and I have been assisted by the submissions of Mr Cusworth today; I challenged him 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, who is a senior and experienced specialist counsel, assures me that this is an issue which arises, routinely in cases of substantial wealth, of which there are a considerable number before the courts, by which he means assets in excess of £50 million.
27. I, therefore, notwithstanding my initial view as expressed on paper, have been persuaded that permission to appeal should be given in this case and that it is 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 that he had found in paragraph 157, to have concluded that this husband's contribution had been exceptional prior to moving on to consider whether or not that was (or was not) an unmatched contribution and whether it would (or would not) be inequitable to disregard it in all the circumstances of the case.
28. Mr Cusworth accepts that in order for the matter properly to be considered, the grounds of appeal as drafted need to be reframed, and I will ask Mr Cusworth in a moment about timings for that, but I give permission to appeal on that basis.