As we bid farewell to the Noughties, I pose the question: which case of the past decade has had the greatest implications for family law and its practitioners?
For me it is White v White: the decision of the House of Lords, delivered in 2000. This was when the concept of equal sharing became the accepted starting point (and usually the finishing point) for financial settlements between a wealthy divorcing couple, irrespective of one party’s role as the bread winner and the other party’s role as the homemaker. Gone was the entitlement of the breadwinner (usually the husband) to retain the lion’s share of the family wealth. The court made it clear that no distinction was to be made.
That decision is now ten years old. With the benefit of hindsight, has White v White unwittingly accelerated the decline of marriage in English society? In short, was it the right decision for our society as a whole? It is not a simple question to answer.
Until White v White, wives of wealthy men could not hope to argue successfully for parity or anything approaching it. They usually had to make do with the Duxbury tables to calculate their “reasonable needs” for life. The Duxbury tables, which are still used in some cases, give the wife a capital sum based on an income need determined by the court if the parties fail to agree. The lump sum is arrived at on the basis that every year the wife will spend some of the capital and some of the interest earned, so that when she reaches the actuarial age at which it is assumed she would die, there will be no capital left. It is therefore a cheaper option than a lifetime annuity. However it leaves recipients stuck to a rigid lifestyle from which they cannot depart, and in many cases unable to leave a penny to their children from their estate. In some cases a wife’s “reasonable needs”, as calculated prior to White, bore little resemblance to the lifestyle that she had enjoyed during her marriage. Since White, reasonable needs have been more generously interpreted.
Dart v Dart
The family law case of the 1990s adjudicated by the court was Dart v Dart (1996), which demonstrated the need for a new approach. The Dart family originated from Kentucky, USA, but was living in England when the husband began divorce proceedings. The wife tried in vain to have the case heard in the USA. She pursued every avenue to avoid the relatively derisory settlement that would be forthcoming at the hands of the English courts. The couple was spectacularly wealthy – the husband’s fortune was calculated at about £400 million – and had enjoyed a spectacular standard of living during the marriage. The wife sought in the region of £100 million for her settlement. However her legal team suffered a pasting at the High Court and subsequently the Court of Appeal. The wife was awarded £8.5 million and was ordered to pay her husband’s costs.
Dart v Dart was a watershed case for wealthy husbands – and had it been heard several years later, the result undoubtedly would have been different. Once again, hIndsight is a wonderful thing. When White v White came to court in 2000, it was welcomed by family lawyers who had been waiting for it on behalf of their female clients.
The judgments of the House of Lords, particularly of Lord Justice Nicholls in White v White, have now become the norm. If a couple begins married life with little, gathering wealth during the course of their marriage, the wife can reasonably expect to receive half of that wealth. She can do this even if she has never or rarely worked outside the home.
Charman v Charman
This was the argument opposed by Mr Charman, when Charman v Charman came to court in 2007. The couple had started married life with very little, had two children and were married for the best part of 30 years. By the time they divorced, Mr Charman had secured a place on The Sunday Times Rich List and the couple’s assets were assessed at £131 million. Mr Charman insisted that his wife should be satisfied with his proposed settlement of £20 million. He described her as “a housewife” and contended that his contribution to the couple’s wealth entitled him to the larger share.
The court rejected his argument. In the full glare of publicity Mr Charman was ordered to pay his wife some £48 million, with a discount on a 50:50 split only achieved because the court accepted that he had made a “stellar” contribution to the family fortune.
Most high earning husbands cannot secure such discounts. The 50/50 split is more often than not a given. The husbands concerned often believe that they deserve extra credit, having earned fortunes with blood, toil, tears and sweat. However the courts, following the case of White v White, usually disagree. Their fortunes are split 50:50. It is not just high earning men who find their fortunes divided in this way; the rule applies equally to high earning women.
Is it fair?
Miller v Miller and McFarlane v McFarlane
Almost ten years later, many high earners have found themselves on the “wrong end” of these decisions. Some have attempted to use the provisions of section 25 of the Matrimonial Causes Act 1973 (which is still in force) to escape the rigours of a 50:50 division. We have had variations on the White v White theme, some of which have been ingenious. In addition to the cases about stellar contributions, there have been arguments about illiquidity impacting upon a 50:50 split, the valuations of assets, the impact of premarital wealth on wealth acquired during the marriage, the impact of a short marriage on assets acquired during the marriage, assets placed into trusts before and after the marriage, the impact of post-separation wealth on equal distribution, and cases about sharing income and bonuses, when a clean break between the parties was not possible. Then there have been arguments about the validity of the deal after the agreement has been signed and court orders made. All of these cases have been determined in the shadow of White v White, and in a desire to achieve post-White “fairness”.
Some individuals have turned to the media. Headlines have told of angry husbands who have publicly berated the system. It is true that “the system” has its flaws. I have sympathy for fund manager Alan Miller, whose multi million pound payout to his wife – after a very short, childless marriage – seemed to me to be harsh because the approach followed the sharing principle of White v White. I also sympathise with accountant Kenneth McFarlane, who did not seek publicity but whose case was very public, because it took the arguments in White to even more esoteric levels. In his admittedly “paradigm” (i.e. rare) case, the wife had given up her career as a lawyer to raise the couple’s children. Her settlement was calculated to reflect the loss of earnings she had sustained by becoming a homemaker. As a result she now receives substantial slugs of annual income each year until her former husband retires, which are substantially in excess of her reasonable needs.
More seriously, it also appears that the numbers who marry have steadily declined over the decade; instead, many couples are choosing to cohabit. A coincidence? I think not. Many high achieving clients of mine decline to marry at all, knowing full well that their liability if the relationship breaks down will be peanuts compared to a divorce settlement. Others are exploring the possibilities presented by prenuptial and postnuptial agreements.
Politicians and judges are quick to lament the decline of family values, arguing that marriage should be the gold standard. Ten years ago these arguments did not exist. Ten years is clearly a long time.
We now have many prominent lawyers, academics and judges, all practitioners in the field, agitating for a change in the law. Some look to European models, which have no room for flexibility and no maintenance at all for wives, who are now perceived to have far too much.
There are now regular arguments about the rights and wrongs of divorce settlements. The media coverage appears to have polarised the public, but often it highlights uncommon cases and ignores the rest.
However that is all we are in fact discussing: a tiny fraction of cases, featuring wealth sufficiently substantial to attract media attention. The vast majority of cases – hundreds of thousands of them, every year – pass under the radar with nary a sound.
So in the wake of what appears to have become a vigorous campaign for change in financial divorce settlements, given what has happened to our society, was White v White correctly decided? Or do we need change?
From my perspective as a practitioner, as someone who sees ordinary people day in day out, we still need discretion coupled with flexibility in order to achieve fair maintenance and capital settlements. The 50:50 split of assets simply does not apply to most couples because it usually will not meet the parties’ needs. We need the flexibility that our law gives us, to allow for the individual circumstances of every couple’s case. We don’t need a change in the law.
What we do need, in my opinion, for the more high flying cases, is just one thing.
It is common sense.
We need to “temper justice with mercy”, so that the outcome reflects a practical, common sense approach to the case such that the ordinary man or woman in the street would think it fair. Many cases do deserve a 50:50 split, but many simply do not. I would not have awarded the 30 something Mrs Miller £5 million for her very short marriage. I would not have treated Mrs Macfarlane as exceptional. I would have awarded Mrs Charman £48million, as a fair sum that reflected Mr Charman’s “stellar” contribution but recognised also the vastness of the family assets and the contribution she made to the family.
And what of the next decade? What will we see happening? Ambitious legislation? Fresh approaches to divorce and financial settlements? The legalisation of prenuptial and postnuptial agreements?
If we have learned anything from the application of White v White during the Noughties, it is this. Innovation is not the catch all answer. Sought after reforms may solve a very few problems – but can create many new ones.
Hindsight is a wonderful thing. But usually by then the damage has been done.
As a student in the field, I think I subscribe to the opinion the article seems to potray about the legal situation in this area. It is always the case that a response will always only go deeper than the attack.
I think White v White came about as a result of remedying a perceived analogy that wives have in the past been treated as less than equals in the institution of marriage, especially when one looks at the history of what women had to endure in this area for a very long time untill about the 19th century.
A lot of changes having come to exist in more women friendly working environments means that women can now undertake certain jobs which they couldn’t have before the industrial revolution. There has clearly been a move towards women enpowerment which inevitably brings with it the consequences of seeking equality for all everywhere including the marriage home.
I personately believe the law in this area as it currently stands will continue to face challenges untill the rule of natural justice is brought home to all. I still believe the need based assessment have a strong argument but a common ground between that and the current 50:50 model will be the endgame of this whole debate. Keep contributing for the good of justice, James
I am a Law student currently studying Ancillary Relief and i would just like to thank you for a wonderuflly concise blog. Your insight on the principles used in Ancillary Relief have been fantastically helpful. White for me demonstrates the shift in thinking of the contribution a wife makes to a marriage by running the household, looking after the children and what she herslef brings in to the marriage.
For too long women had the rug literally “Pulled out” from underneath them. Men were confident in retaining their accrued personal wealth when pursuing a divorce, knowing their long suffering wives would not have an equal share of the marital assets.
Hooray for Lord Nichols and his “Yardstick of equality!”
Thank you Aisha! I have no doubt that now that women are receiving a fair share of the assets, cohabitation is viewed as much more popular by the financially stronger party who would prefer not to share assets if a relationship breaks down.
Although cohabitation is viewed as “modern” in my opinion it is a return to the Victorian age to try and pin women back down without recourse to the fairness which is requisite in ancillary relief.
Aisha’s comment does indicate why marriage is declinining in popularity. Where one person is regarded as equal for doing lunch coffee mornings and jeremy kyle as the other who may be bringing home the income from a demanding job, then that is not fair.
It’s like footballers, they have unique skills and are paid accordingly. Housekeeping is not equal to being a managing director. So, that’s the problem. Not sure if I know the answer.
I quite like the idea of future generations not getting married. Didn’t enjoy mine much, was to worried about it being a con for the divorce, which it was.
[…] and there is a mixture of matrimonial and non-matrimonial assets. He referred to the cases of both White v White and Miller v Miller in his judgment. The latter is the leading case on big money – short marriage […]
[…] As family lawyers we have developed a White v White reflex action. It takes the form of a certain legal response to cases involving long marriages, brought about by the landmark case of White v White [2000]. […]
[…] 2000, the case of White v White brought the concept of sharing assets sharply into focus. Until then, there had been no equality […]
[…] necessity for the law to require spousal support is the question: why should needs be met at all post-White? If the spouses get to share the marital property, why should either have any additional claim on […]
“the rule applies equally to high earning women.”
Oh really? I note you have not included a single example, and in all my time of following this area of law, I have not read of a single example of a woman losing 50% of her hard-earned wealth. Can you provide one?
Look at Radmacher vs Granatino. For years men had been told their prenups were not legally binding. Then along comes a rich heiress and the courts completely change their tune! The husband gets a tiny fraction of her colossal wealth.
The rules simply do not apply equally to men and women. If you have an example of a wealthy woman losing 50% of the assets SHE created, please do enlighten me! I have not heard of a single one, and I very much doubt the press would have missed it!
Yes, Malcolm, there was one – White v White. Though not reported as such, Mrs White was the farming entrepreneur and mainstay of the business, and also the home-maker and carer. As a formal business partner, she was entitled to her half share but was deprived of all assets, including the second farm, Rexton, which was purchased with partnership money. Instead, she was ‘awarded’ a divorce settlement which amounted to less than a quarter of the total value of the assets. This is verified by the professional analysis of the accounts which – had this document been presented as evidence – would have resulted in the sharing of the two farms, without the need to litigate.
Did she not appeal – and win 50%?
I think that’s what happened. And since her husband also contributed, and the first farm was his, this case certainly doesn’t fit the bill!
You may be right that it’s as close as we’ll get though!
Dear Malcolm
She was awarded 40% in the Court of Appeal and it stayed at 40% in the House of Lords (now the Supreme Court)because of the pre marital contribution of the husband’s father.The significance of the case is in the judgement of Lord Nicholls in the House of Lords.
Regards
Marilyn
Re: White v White
There is considerable confusion about this ‘divorce’ case in which Mrs White sought to wind up her business partnership with Mr White and keep one of their two farms. One wonders why it was heard in the family court – or at all.
Firstly, the partners had half shares in all the properties (mainly Blagroves and Rexton Farms) as they were purchased with partnership monies. That is evident from the balance sheet of the yearly accounts. Secondly, the loan (‘contribution’) by Mr White’s father was considerably less than the loan by Mrs White’s mother: both were repaid. These facts were overlooked by the family court. The eventual dissolution account drawn up by the High Court included Blagroves as a partnership asset but wrongly omitted Rexton.
The Schedule of Assets compiled by chartered accountants for Mrs White in the Court of Appeal show that all the assets were partnership assets and both parties held, and were entitled to, half shares. Therefore why litigate? That was the question implied by Lord Justice Thorpe at the Court of Appeal: “His Lordship found it difficult to understand why in the court below the wife’s advisers presented her proprietary entitlement in the way that they did.” (Times Law Report, July 13, 1998).
An answer was provided by Baroness Hale: “In hindsight, White v White should have been a simple case … Both were farmers. There were two farms. Both wanted to carry on farming. One solution might have been to give one farm to one and one to the other; at all events, the resources were such that each could have been enabled to farm independently. But by that time practice had become entrenched …” (Miller v Miller: McFarlane v McFarlane [2006] UKHL 24, para 135).
In fact, there was no remedy to enable Mrs White to retain either of their two farms, due to this “entrenched” family court practice and the denial of access to the chancery court. As Lord Chancellor Irvine informed her: “It is generally possible, if a couple are not divorcing, for a husband or wife to apply to the Chancery Division to seek relief by way of winding up of the partnership or the taking of accounts …” (Letter dated 14 January 2007).
In land cases, marriage is intended to benefit the husband. The advice to women farmers is: do not marry, as not even partnership contracts can protect you.
To clarify the amount paid to Mrs White as a percentage of the value of the assets: this was 40% of the value of the assets shown on the dissolution accounts drawn up by the Court. Not all assets were included as partnership assets in those accounts: Rexton had been wrongly omitted, therefore Mrs White received 40% of the value of half, not the whole, of the assets.
It will be interesting to see if anybody will rise to your challenge Malcolm!
The yardstick of equality should apply to all couples, poor as well as rich, regardless of “needs” (which are a very subjective notion) – subject where necessary to Mesher protection during the minority of children. Divide up the assets equally; including pension rights but not future inheritances.
Unless of course there was a prenup – in writing, with such legal advice as the parties chose to seek and after such disclosure as the parties chose to ask for; in which case that prenup should be conclusive, again subject where necessary to Mesher protection during the minority of children.
And if individuals choose to cohabit that’s their affair, if you’ll pardon the pun. For every male cohabitee who prefers to avoid marriage there is a female cohabitee who also prefers to avoid marriage; and if it ends in tears, she should not be allowed to turn the clock back and pretend there was a wedding.
I want to put us out of business, Marilyn, by setting rules which treat the parties equally and as independent adults and make it so near certain what the court would do that nobody finds it necessary even to try.
So Andrew – you feel Heather Mills should have got 50% of Paul McCartneys’ assets generated from his time with the Beatles? That would have been about £400 million if I recall?
Can you explain what it is you feel Heather Mills did that would have entitled her to that?
Dear All
Could I refer you to my book on the side bar and for 99p you will be able to read the real law, and how it is actually applied in big money cases? You will be donating your 99p to
The Children’s Society charity thus helping the most needy children in the country and you will also be able to make much more well informed accurate comments which I look forward to reading….
Regards
Marilyn
Marylin – I did not make any statement as to how the law works. I was only asking this gentleman IF he felt it should work a particular way. How can that be ‘uninformed’?
I will read your book with interest. But I have followed this area of law closely since White v White so I know very well how the law has been applied in practice.
Still – I’m sure your book will be useful in helping me put across just how great a risk marriage is, particularly to men. I note you believe (wrongly, I think) that cohabitation will be a backward step for women, but as men increasingly see what divorce does to their male friends and family, cohabitation is inevitably what we’ll get. And what we’re getting.
A more forward-looking way of viewing it is that women should not be financially dependent on men anyway. That is a fundamental feminist principle. The decline of marriage makes that dependence less common. The declining prospect of relying on a man financially means more women will have to commit to work for life, just as most men have to. That means more women in positions of power, wealth and influence, and an ever smaller gender pay gap. That’s hardly a return to the 19th century! Bigger divorce payouts for women are not a sign of progress. They are a sign of continuing financial dependence on men. THAT is far closer to the 19th century model!
So, changes in divorce law may have made marriage increasingly risky and unattractive, with no compensating benefit unavailable outside it – but an unintended benefit will hopefully be that marriage becomes ever more rare – meaning fewer life-wrecking divorces, more women in influential positions in society, and far less hard-earned and scarce family assets ending up in the pockets of divorce lawyers. That’s what I’d call progress.
Malcolm: he chose to share his life with her, so yes. But in all honesty it’s not the big money cases that trouble me, it’s the modest assets cases where in the name of “need” the wife often takes all. When all there is is house and pension rights the pensions should be equalised and the equity in the house split, if necessary after a Mesher order. The wife, of course, to indemnify the husband against the mortgage.
Dear All
Again I would refer you to my book where you can read what the law actually is and how it is actually applied to middle money assets too.
Regards
Marilyn
[…] similar principle applied in the later case of Charman v Charman. By the time this three-decade marriage came to an end, the couple had a fortune totalling £131 […]
Just a quick question about the passage
‘In his admittedly “paradigm” (i.e. rare) case’ about MacFarlane, is this to be taken ironically? Only paradigm actually means ‘a typical example or pattern’?
[…] since White v White, courts have adopted the position that it is difficult to consider the fairness of a case in the […]
For the majority of men marriage has become literally a stupid move in the UK, it gives you heavy disadvantages and no advantages – even a prenuptial agreement may not protect you.
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The current law infantilizes women and often financially shafts men, men have been sloooow on the uptake in avoiding marriage because the social pressures to marry are so strong and because our feminist media is largely silent on these issues – but it’s happening…