Compensation for relationship-generated disadvantage

The principles of needs and sharing are routinely applied and I and my colleagues in the Family team will likely advise clients in relation to these principles on a daily basis. Compensation for relationship-generated disadvantage is, however, a lot more rare.

This is why the recent case of TM v KM [2022] EWFC 155 determined by HHJ Hess is of such interest. Here, the parties met in 2003 and married in New York in 2006. They moved to London shortly after the marriage and then relocated to the Middle East, before returning to London a few years before they commenced their divorce proceedings. The parties had two children and at the start of the relationship and early years of the marriage the couple both had successful careers in finance.

Having earned $800,000 in 2003, then earning, $505,000 at the time of the marriage the wife then earned £325,000 upon moving to London, which was a relocation as a result of the marriage. She was on maternity leave and made redundant in 2008 and did not work in finance again after this point.

When considering the financial division, part of the award for the wife allowed for generous maintenance capitalised to £500,000 for seven years, although this was less than the £1.4m sought by the wife.

However, this case serves as a reminder that the compensation principle provides a means of partly redressing the balance for the party who has given up a lucrative career for the benefit of the family. This might sound appealing, as a receiving party’s generously interpreted needs can be met in maintenance in cases with high levels of income but that income cannot simply be shared. Compensation adds to the award made.

There are criticisms of this approach though. Compensation is very rare and even then it only seems to have been applicable in cases where there are exceptionally high levels of wealth. This provides a financial top up to a party in addition to their claims under the principles of needs and sharing. However, this would not be available to the majority of parties seeking financial remedies due to the family’s financial resources. Spouses who have made non-financial sacrifices or who have sacrificed more modest careers are not realistically able to rely on being compensated, it seems.