Banker's Ex-Wife Loses Bid for Part of Future Bonuses

 (Update1)
By Caroline Byrne
April 13 (Bloomberg) -- A banker who must split half of a 27 million-pound ($53 million) fortune with his ex-wife doesn't have to share future bonuses, a London High Court judge ruled in the first ``big money'' divorce case to tackle the issue.
Justice William Charles awarded the wife, an ex-school teacher identified only as Mrs. H, half of the assets built up during her 20-year marriage. She gets 1.4 million pounds from her 44-year-old banker husband's bonuses in 2005 to 2007 for ``intangible'' contributions to his earning capacity. Future bonuses are all his, the April 4 ruling says.
The case, H v H 2007, is the latest in a series of complex and conflicting U.K. judgments in multimillion-pound divorce cases. Lawyers are divided on whether the ruling clarifies or diverges from last year's Rossi v Rossi case, which said bonuses earned at least 12 months after separation may be split 50-50.
``H v H is a rejection of Rossi,'' said Frances Hughes, senior partner at London-based Hughes, Fowler, Carruthers who represented the husband in H v H. ``It restricts entitlement to income post-separation and secondly makes it very hard to seek compensation.''
Jeremy Levison, a partner at London-based Levison Meltzer Pigott who represented Deloitte Touche Tohmatsu partner Kenneth McFarlane in his divorce, disagreed. Rossi hasn't been rejected, Levison argued, adding that bankers with few marital assets and a substantial income and bonus are at an even greater risk following H v H.
``His bonus is going to be more open to attack as a result of this judgment, although nothing indicates that he may be on the line for 50 percent or anything like that,'' said Levinson, who wasn't involved in H v H. ``Each case will depend on its own facts.''
House of Lords
H v H, described in the ruling as a ``big money case'' involving ``substantial wealth built up during the course of a long marriage,'' comes almost a year after the House of Lords, Britain's highest court, ruled in the divorces of McFarlane and hedge fund manager Alan Miller. While both decisions in May 2006 favored the wives, bonuses weren't central to the disputes.
``The guidance from the House of Lords demonstrates that the wife in her independent life is not entitled to an income equivalent to half of the husband's income during the latter years of the marriage,'' Justice Charles ruled.
Mrs. H's personal needs, which included four, full-time household staff for the rest of her life and 6,000 pounds a year for ``replacement of arboreal failures'' -- to replant trees -- are to be paid from her settlement, the judge ruled.
Richard Parry, head of family law at Mrs. H's solicitor Farrer & Co., didn't return phone calls April 10 and 11.
`Earner's Talents'
James Pirrie, a partner at London-based Family Law in Partnership who represented Julia McFarlane in the House of Lords case, said bankers should be pleased.
``Bankers are better off because this judgment gives more weight to the earner's talents and energy rather than the partnership,'' Pirrie said.
Britain's highest court ordered McFarlane to pay his ex- wife 250,000 pounds a year for life after the breakup of their 16-year marriage. A lower court had limited maintenance payments to five years. Julia McFarlane's lawyers argued for a greater sum in recognition of her role in raising the couple's children and other domestic contributions.
Separately, the court ordered Alan Miller, then a hedge- fund manager at London's New Star Asset Management Ltd., to pay 5 million pounds to Melissa Miller after a childless marriage of less than three years.
`Statutory Intervention'
Because both Rossi and H v H were decided at the High Court level, judges have the discretion of either following the precedents or devising their own system to reward wives with a share of future bonuses. That could lead to further confusion, lawyers said. Britain's latest legislation on divorces is the Matrimonial Causes Act 1973.
``We need desperately some kind of statutory intervention because every case is another judicial gloss,'' said Emma Hatley, a partner at London-based Withers LLP. ``Each case creates uncertainty because there is no statute that everyone can turn to.''
The lawsuit is H v. H, No. FD 05D 02849, High Court, Family Division (London).

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