RC v JC

In an exceptional financial-remedy case, compensation for relationship-generated disadvantage may be awarded where a spouse gave up a promising career for the benefit of the marriage and children. The claim is loss-related, rather than needs-based, but the award must still be assessed within the statutory framework and the parties’ available resources.

An earning capacity is not itself a matrimonial asset capable of future sharing. Where compensation can fairly be reflected in capital, the court should consider a clean break under the Matrimonial Causes Act 1973. Such compensation claims remain rare, particularly where the parties’ assets already meet needs.

The parties, both solicitors, applied for financial provision following the breakdown of their marriage. The Wife had left a promising legal career, moved to in-house employment, later worked part-time, and ultimately stopped working after redundancy and the birth of the parties’ children. She claimed compensation for relationship-generated disadvantage, together with housing and income provision.

The court considered the Wife’s health and future earning capacity, the Husband’s substantial income and anticipated retirement, the parties’ housing and income needs, the sharing of matrimonial assets, and whether continuing periodical payments would cause undue hardship or future litigation.

1. Statutory framework and fairness. The court applied sections 23, 24, 25 and 25A of the Matrimonial Causes Act 1973. Fairness required consideration of sharing, needs and compensation, with first consideration given to the welfare of the children.
2. Relationship-generated disadvantage. The Wife had given up the chance, though not the certainty, of a highly remunerated legal career. The Husband had supported the decision that her career should take precedence to enable her to care for the children. This constituted relationship-generated disadvantage. The court stressed that such findings will be exceptional and that earning capacity is not itself a matrimonial asset capable of future sharing.
3. Needs and earning capacity. The Wife’s continuing ill-health meant that no earning capacity was attributed to her. The court assessed housing needs at £2.5 million and income needs at £100,000 per annum for the Wife and £50,000 per annum for the children, with school fees separately provided. The marital standard of living was relevant but not decisive, and budgets required realistic evaluation.
4. Clean break. Section 25A required consideration of terminating financial obligations as soon as just and reasonable, and of avoiding undue hardship. The court concluded that continuing dependence would probably generate further, costly and stressful litigation, particularly when the Husband retired. A clean break was therefore appropriate.
5. Orders. The matrimonial assets were divided broadly equally, with a pension share of 20.7 per cent of the Husband’s SIPP. The Wife received an additional £400,000 for relationship-generated disadvantage, producing an overall division of 65.65 per cent to her and 34.35 per cent to the Husband. Pending sale of the former matrimonial home, the Husband was to pay £8,333 per month. Child periodical payments were fixed at £25,000 per annum per child, index-linked, together with school fees. The usual order was made as to costs.