Divorce: the new vintage

The UK has enjoyed drinking wine for centuries. However, it is only in recent years e-commerce, supermarkets and even the tobacco shop next door have stocked varieties formerly the preserve of specialist merchants. From mass-produced chardonnay to first growth bordeaux, wine has become more accessible, palates have refined and markets diversified as a result. Interests now surpass the ‘merely casual’ – and can set a toxic backdrop to financial disputes – in extreme cases, triggering divorce itself. Back in 2013, a romantic tasting tour derailed into an exasperated wife’s petition based on her husband’s hapless Burgundian map-reading (Howell v Howell [2013] EWCA Civ 268).

Why battle over booze?

Wine serves an array of drinkers’ needs – pleasure, stress-relief and entertainment inter alia – but its investment potential is gunpowder for family disputes. Champagne investments, for example, spark(l)ed an almost 50 per cent growth trend in 2021, as the broader fine wine market surged by 25 per cent. UK property prices, on the other hand, grew by a mere 9.7 per cent (IHS Markit, February 2022; K Souter, ‘Wine investments are building better returns than bricks & mortar in 2022’, Vin-x, 8 February 2022). Moreover, having outperformed major equities in times of economic slowdown, wine represents a stable alternative investment for a winter of inflation and uncertainty (‘The fine wine outlook in a troubled economy’, Cult Wine Investment, 26 August 2022).

Secondly, as crypto-currency creeps its way into (and out of – for partners too slow to react) the marital pot, so too has it redefined wine investing with solutions to storage, authenticity and geographical barriers. Investors are increasingly turning to wine as a ‘non-fungible asset’ capable of being traded and redeemed in physical form at a later date, with a traceable chain of ownership throughout. Wine can therefore appear on an asset schedule in a plethora of forms – as a chattel, digital token, or long-term investment in bond. Beyond its economic value, however, a wine cellar carries great sentimental value, as a product of time, passion and patient joint investment. Contents represent relationship milestones, from Valentine’s Day valpolicella to anniversary Armand de Brignac, and ransacking the cellar may be a wronged party’s first act of revenge.

Such was the case for Roger Yaseen, the New York epicure whose $500,000 collection was held hostage by his ex-wife upon discovering his intention to re-marry (‘In Divorce, Wine Cellars Yield to Grapes of Wrath’, Los Angeles Times, 5 March 2006). Another notable divorce hangover was Angeline’s Jolie’s application to lift a freezing order to dispose of her stake in Château Miraval, bought with husband Brad Pitt in riper times. Pitt’s headache is still raging; he remains embroiled in lawsuits after suing Jolie for flogging the Provence winery, into which he ‘poured money and sweat equity’ and made a $164m roséfuelled success (‘Brad Pitt Sues Ex-Wife Angelina Jolie Over French Vineyard Sale to Oligarch’, Bloomberg UK, 18 February 2022; ‘Angelina Jolie Files $250 Million Lawsuit Against Brad Pitt Over Château Miraval Winery’, Vinepair, 9 September 2022).

The terroir of dispute

While debates over family wineries remain rarities, the growing appreciation of fine wine makes arguments of non-matrimonial property and special contribution worthy of consideration in many high value settlements. An aficionado whose booming portfolio was crafted well before marriage would claim its ‘wholly exceptional’ increase in value should be reflected on his/her side of the asset schedule – but is unlikely to retain a share greater than two thirds (Gray v Work [2015] EWHC 834 (Fam); Charman v Charman [2007] EWCA Civ 503.). Another cellar in the depths of the family home may contain a blend of inherited, gifted and jointly purchased bottles, all laid down for conjugal enjoyment. Such intermingling may well entitle the court to call equal shares, and ‘rummaging in the attic’ to show unmatched contribution in forgotten vintages will be frowned upon by even the most forgiving judge (G v G (Financial Provision: Equal Division) [2002] EWHC 1339 (Fam)). The recent case of WX v HX, NX and LX [2021] EWFC 14 considered an investment portfolio built up solely from the wife’s inheritances and gifts from her family, but which the husband managed and liberalised. 

Notwithstanding his efforts, the portfolio had not been ‘matrimonialised’ – but kept separate from wider family finances throughout the marriage. A clear contrast was made to the husband’s assets, which had been used to benefit the family as a whole and constituted matrimonial property as a result. The case reinforces the significance of how couples manage their finances – and the need to think carefully before ‘liberalising’ the contents of a wine collection when uncorking valuable bottles for sharing.

Valuing vintages and adding back the alcohol

Attributing value to a wine collection brought into a marriage may, like many businesses, prove an ongoing challenge for the court; wine’s esoteric nature and the emergence of new styles and varieties makes a fixed figure far from representative of reality. Value (like palate) is subjective – and connoisseurs and auctioneers may become increasingly sought-after SJEs in years to come – but must note their duty of impartiality prohibits taking sides on the boozy battlefield (Gallagher v Gallagher (No 2) (Financial Remedies) [2022] EWFC 53). Importantly, while cases of bubbly may have lain untouched during the marriage, it may be argued passive growth (likely in line with the champagne 50 sub-index) inflates their value when quantifying assets to exclude from the sharing pot. Moreover, if profit has sprung from one party’s pre-marital investing endeavours, an uplift in value is required to capture the latent potential of those bottles when the parties tied the knot (Jones v Jones [2011] 1 FLR 1723). Whether an arithmetic approach (as adopted by in Mostyn J in WM v HM (Financial Remedies: Sharing Principle: Special Contribution) [2017] EWFC 25.) or ‘broad-brush’ (preferred by Moylan J in XW v XH (Financial Remedy: Non-matrimonial Assets) [2019] EWCA Civ 2262) will be applied to this ‘non-matrimonial’ element remains unclear (IX v IY [2018] EWHC 3053 (Fam) [59]) – although the latter approach’s appreciation of reality appears to support the ‘broad horizon’ of fairness (Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 [2006] 2 AC 618 [26] (Lord Nicholls); Jones v Jones [2011] 1 FLR 1723 [2012] Fam 1 [60] (Arden LJ)).

Such an approach appears preferable where quality stems from the fruits of unpredictable harvests. In any event, even if valuation can be agreed, issues of liquidity and a fast-moving industry make asset division far from clearcut. For the party retaining ownership, a year plagued by Burgundian frosts and rising sea levels informs proposals for a greater share of the marital acquest in exchange for ‘riskladen’ property. For the other, a rocketing fine wine index and wave of vineyard innovations point to an era of premiumisation entitling them to the lion’s share of remaining assets in compromise. And when it comes to housing needs, family practitioners should be warned of the risk even the most generous property particulars fail to make the grade: exemplars lacking a temperature-controlled cellar would not suffice for a well-oiled wife. A final consideration is the relevance of ‘add-back’ claims where a (once) generouslystocked collection comes before the court. Would one spouse’s impatient unbottlings constitute “wanton dissipation” inequitable for the court to disregard (N v F (Financial Orders: Pre-Acquired Wealth) [2011] EWHC 586 (Fam); MAP v MFP [2015] EWHC 627 (Fam)), or would addiction quenched by a basement of bottles suffice for flawed character and excuse “gross and obvious” personal misconduct? The bar for arguing re-attribution in the wake of heinous behaviour remains searingly high, yet a hasty sale of undervalued Châteauneuf-du-Pape could reasonably entitle an unknowing partner to compensation. Whatever the outcome, it can be assumed the estranged wife who breaks into her husband’s office and absconds with 3,500 bottles would fall foul of financial misconduct (‘In Divorce, Wine Cellars Yield to Grapes of Wrath’, Los Angeles Times, 5 March 2006).

Conclusion

The need to preserve wealth locked up in sought-after collections is an important consideration at the outset of a relationship. Simply saving receipts to prove ownership is an easy step to do so; enlisting private management companies to store ageing bottles off-site is another, and even sealing domestic cellars with a combination lock may suffice. However, to protect your portfolio most powerfully, consider entering into a nuptial agreement demarcating its treasures as non-matrimonial – as used by the sobered Mr Haseen to conserve the few bottles surrendered before his second marriage. Provided your partner is not left in a “predicament of real need”, the court may well find it fair in all the circumstances to set those distinguished cases aside (Radmacher v Granatino [2010] UKSC 42).

Phoebe Pexton is a graduate trainee in Vardags’ family and finances department. She has a WSET Level 3 Distinction in wine: vardags.com