RC v JC: a landmark case in relationship generated disadvantage

3 minutes reading time

A wife has been awarded £400,000 in compensation for sacrificing her career as a solicitor during her marriage. The judge in the divorce case of RC v JC [2020] EWHC 466 (Fam) found that there was sufficient ‘relationship generated disadvantage’ to justify awarding the wife the compensation. Mr Justice Moor made it clear that this case is not a green light for other spouses to start making claims for compensation, and that compensation claims will only succeed in ‘truly exceptional’ circumstances.

Relationship generated disadvantage

Relationship generated disadvantage is where one spouse gives up or significantly hinders their own career prospects and future earning capacity so that they can provide care to their children. This will leave the other spouse ‘relieved of the day to day responsibility for their children’  (Miller/Macfarlane).

In this case, the couple who are now in their 40s with two children met at a magic circle firm where he was an associate solicitor, and she was a trainee. After she qualified as a solicitor, the relationship commenced, and the husband became an equity partner. They were engaged five years later, and the wife then moved to a bank later in that year to work inhouse.

Future earning capacity

The wife argued that her move inhouse was due to the fact that they wished to have children, and this would enable her to spend more time with them. It would mean she would sacrifice her career and partnership prospects. She asserted that she would have reached partnership at the firm they had originally worked at together. Further, she claimed that her husband had wanted her to give up her career, which he denied and instead claimed it would not be a good idea for them to remain at the same firm after marriage. Unfortunately, the wife’s career did not advance at the bank, and she was eventually made redundant.

The redundancy, coupled with the breakdown of marriage led to the wife suffering from significant health and mental health problems which raised a question as to her future earning capacity.

The judge in the case found that the wife had stood a ‘very good chance’ of becoming a partner where they worked, and she had outstanding appraisals. Although compensation cases are very rare, he held that this case, in fact, was one instance where compensation should be afforded to the wife.

Mr Justice Moor awarded the wife an equal share of the marital assets being £4.85 million. In addition to this, she received a further £400,000 compensation in recognition of her giving up her career to care for the children.

Dividing assets in a divorce

When dividing assets in a divorce, the court will be guided by needs, sharing and compensation. In the cases of Miller and Macfarlane, these three strands were established.  Compensation is a claim which is rarely pursued or supported by the family courts. In Miller and Macfarlane, a compensation claim was described as ‘aimed at redressing any significant economic disparity between the parties arising from the way they conducted their marriage’. On divorce, the spouse who has limited their earning capacity during the marriage (usually the wife) suffers a double loss: diminution of their own earning capacity and loss of the share of their husband’s income. The breadwinning spouse’s income would have been enhanced due to the wife’s own contribution to the marriage.

This recent case has generated a great deal of interest and made headlines when the judgment was handed down; however, it was clearly an exceptional case based on the specific facts – ‘an exception rather than the rule’.  Parties should be careful when launching a similar claim for compensation.

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