Case analysis: wife seeks post-settlement share of husband’s future profits

A landmark case began at the Court of Appeal last month, concerning an ex-wife who, after being awarded almost £10 million in a 2012 divorce settlement, is now seeking a portion of her former husband’s future earnings. Kim Waggott says her ex-husband, William Waggott, should pay her 35% of all his bonuses earned between 2014 and 2019 on top of the earlier settlement.

The challenge will have wide-ranging ramifications in matrimonial law but Mrs Waggott may face an uphill battle. Her claim was rejected in the first instance by a family court judge.

Lawyers for Mr Waggott maintain that the original judge was correct “in law and in overall fairness” to dismiss the claim.

Mrs Waggott’s argument is that her former husband only finds himself in a position to earn “massive post separation” because of the support she provided in his early career.

The legal position on the division of property in divorce proceedings is vexed. Put simply, both parties to a divorce usually have a claim to equally share all matrimonial property built up during the marriage. They will have a far weaker claim to a share in non-matrimonial property, particularly that which is the product of one party’s sole endeavour, as appears to be the case here. There are, however, caveats to this. Notably, the court is required to address the parties’ needs and those needs will have priority over other factors.

Applying this highlights some hurdles for Mrs Waggott and her legal team to surmount.

Higher courts have examined post-separation assets many times, but only where the assets were accrued after the couples separated, but before the divorce was finalised. In these instances, assets were deemed matrimonial property, meaning the courts seldom departed from the default 50-50 split between parties. This still applied in one case when the vast majority of property was built up by one party after separation – on the basis that the husband used the wife’s unascertained share to produce the wealth. As her share was risked, she was entitled to half of the proceeds. The judge reiterated that the time to assess the value of the divisible matrimonial pot was not at separation, but at final hearing or trial.

It seems significant, then, that Mr Waggott’s bonuses were not accrued using any of his ex-wife’s share of the matrimonial pot (split in 2012) and occurred after the divorce was finalised.
Second, Mrs Waggott’s argument is not based on her financial needs, which were met by the 2012 divorce settlement. Rather, she argues, she is entitled to a share of his post-divorce bonuses because of the instrumental support she provided to him during their marriage, without which his career would have had a very different trajectory.

A previous Supreme Court decision lends support to her argument, where it was held that maintenance could be awarded in excess of that required to meet a party’s needs, if the economically weaker spouse could make the case that they had sacrificed a high-paying career to care for the children of the marriage. Mrs Waggott had worked for UCI Cinemas for more than five years, but stopped work in 2002.

How the court will interpret the case is unclear. What is clear is that the consequences of a decision in Mrs Waggott’s favour will be far-reaching. The case continues.

Written by Robert Hepburn, Trainee Lawyer in the Family Department.

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