Cambridge Family Law Practice

A successful Danish businessman has failed to persuade the divorce court of England and Wales that he made an exceptional contribution to his family’s wealth.

The couple met and married in Denmark in 2004, and went on to have three children together, including twins, all now teenagers. The husband held a prominent position in an international biotech company. Then, in 2017, he took part in the management buy-out of a subsidiary firm based in England. The husband had initially been tasked with selling the business but it was losing money at the time and he was unable to find a buyer. He raised more than £300,000 after borrowing against the family home, using these funds to become a majority shareholder in the newly acquired medical products company.

The husband took on the role of CEO and his family followed him to England. By 2018 the company was valued at £41 million. But the following year, the couple separated. As the family was now living in the UK, the wife applied for divorce and ‘financial remedies’ (a financial settlement) in the English family courts.

Subsequently, explained family court judge Mr Justice Moor:

“On 14 April 2020, the Wife applied to the court for permission to relocate permanently to Denmark with the children. This litigation was clearly hard fought and stressful for both parties. On 2 October 2020, after a three-day hearing, an agreement was finally reached by which the Wife was given permission to relocate to Denmark with the children in July 2021. There was to be a shared care agreement whereby the children would spend nine days per fortnight with her and five with the Husband.”

The husband stepped back from his full-time CEO role, after long-standing mental health problems returned. Despite him assuming a part-time role, the overall value of the company increased dramatically as development of its medical product was completed. Manufacturing issues caused major problems, and the company came close to bankruptcy, but once the technical issues were resolved, the company was sold and the husband received a hefty £280 million.

As the ongoing financial remedy negotiations with his estranged wife continued, the husband then offered a settlement of £83 million, arguing that this unequal division was justified on the basis of him having made a special contribution to the family’s wealth. Also known as a ‘stellar contribution’, this is the claim that one party in a marriage has played such a crucial or outstanding role in the accumulation of the family’s money that they should keep more than 50 per cent in the event of a divorce. An equal division of the assets is the standard starting point in England and Wales, and judges are only rarely persuaded by the stellar contribution argument.

In addition, the husband in this case also argued that the overall increase in the company’s value had been a “post-separation [business] endeavour”, and so the additional value was not a marital asset subject to sharing.

But Mr Justice Moor was unpersuaded, saying that his alleged special contribution was:

“…not a reason for departure from equality in this case.”

Quoting from principles set out in the precedent-setting 2017 case of Work v Gray, he continued:

“I do not find the work of the Husband in this case to be of such a ‘wholly exceptional nature such that it would be obviously inconsistent with the objective of achieving fairness for (his work) to be ignored’.”

The Judge acknowledged the husband’s business talents but did not believe his actions and insights had been sufficiently original and creative to justify an unequal division.

In addition, the increase in the company’s value after the separation had been achieved, Mr Justice Moor noted, by risking the wife’s share of the family’s assets – and the company almost failed during the process. She had also been a full participant in the risks associated with the management buyout, and the successful sale was a direct continuation of events that took place during the marriage. Consequently:

“The business, as sold, was not a new venture. It remained first and foremost a producer of the [medical] product. It follows that the assets of the parties are to be divided equally.”

Gail Marchant-Daisley, one of the partners here at Cambridge Family Law Practice, noted:

“This case is a useful reminder of the importance placed on equality of contributions to a marriage – be those financial contributions or otherwise, reaffirming that no matter how much money one party is able to generate during the marriage, judges are not easily persuaded to depart from an equal division of that wealth.”

The full judgement is available here.