Fairness on Division of Family Capital
The House faced the question of how to achieve fairness in the division of property following a divorce. In the one case there were substantial assets but a short marriage, and in the other a high income, but low capital.
Held: The 1973 Act gives only limited guidance on how courts should exercise their discretion; giving priority first to any children, and then to a clean break. The three elements of needs, compensation and sharing are to be separately considered and the order of their determination will vary from case to case. The rationale underlying the sharing principle is as much applicable to ‘business and investment’ assets as to ‘family’ assets, but that does not exclude allowance for the fact that assets may have been acquired after the separation. In MacFarlane, the wife had given up her career, and it was appropriate to restore the periodical payments order of andpound;250,000 a year until further order. It would be wrong to place a time limit on the order requiring her to apply again on the term expiring.
Lord Nicholls of Birkenhead said: ‘In the search for a fair outcome it is pertinent to have in mind that fairness generates obligations as well as rights. The financial provision made on divorce by one party for the other, still typically the wife, is not in the nature of largesse. It is not a case of ‘taking away’ from one party and ‘giving’ to the other property which ‘belongs’ to the former. The claimant is not a supplicant. Each party to a marriage is entitled to a fair share of the available property. The search is always for what are the requirements of fairness in the particular case. ‘ To the extent that the Court of Appeal had taken note of behaviour which was not gross and obvious it had erred: ‘Parliament has drawn the line. It is not for the courts to re-draw the line elsewhere under the guise of having regard to all the circumstances of the case. It is not as though the statutory boundary line gives rise to injustice. In most cases fairness does not require consideration of the parties’ conduct. This is because in most cases misconduct is not relevant to the bases on which financial ancillary relief is ordered today. Where, exceptionally, the position is otherwise, so that it would be inequitable to disregard one party’s conduct, the statute permits that conduct to be taken into account.’ and ‘Parties should not seek to promote a case of ‘special contribution’ unless the contribution is so marked that to disregard it would be inequitable. A good reason for departing from equality is not to be found in the minutiae of married life. ‘
Baroness Hale of Richmond said: ‘English law starts from the principle of separate property during marriage. Each spouse is legally in control of his or her own property while the marriage lasts. But in real life most couples’ finances become ever-more inter-linked and inter-dependent.’ and ‘the checklist in section 25(2) is not simply concerned with totting up the present assets and dividing them in whatever way seems fair at that time. Despite the repeal of the statutory objective, the court is still concerned with the foreseeable (and on occasions more distant) future as well as with the past and the present. The court has to consider, not only the parties’ present resources, but also those that they will have in the foreseeable future.’ and
‘There is obviously a relationship between capital sharing and future income provision. If capital has been equally shared and is enough to provide for need and compensate for disadvantage, then there should be no continuing financial provision. In McFarlane, there has been an equal division of property, but this largely consisted of homes which can be characterised as family assets. This was not enough to provide for needs or compensate for disadvantage. The main family asset is the husband’s very substantial earning power, generated over a lengthy marriage in which the couple deliberately chose that the wife should devote herself to home and family and the husband to work and career. The wife is undoubtedly entitled to generous income provision for herself and for the sake of their children, including sums which will enable her to provide for her own old age and insure the husband’s life. She is also entitled to a share in the very large surplus, on the principles both of sharing the fruits of the matrimonial partnership and of compensation for the comparable position which she might have been in had she not compromised her own career for the sake of them all. The fact that she might have wanted to do this is neither here nor there. Most breadwinners want to go on breadwinning. The fact that they enjoy their work does not disentitle them to a proper share in the fruits of their labours.’
Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Hope of Craighead, Baroness Hale of Richmond, Lord Mance
[2006] UKHL 24, Times 25-May-2006, [2006] 2 AC 618, [2006] 1 FLR 1186, Gazette 08-Jun-2006, [2006] 3 All ER 1, [2006] 2 FCR 213, [2006] 2 WLR 1283
Bailii
Matrimonial Causes Act 1973 25 25A
England and Wales
Citing:
Cited – White v White HL 26-Oct-2000
The couple going through the divorce each had substantial farms and wished to continue farming. It had been a long marriage.
Held: Where a division of the assets of a family would satisfy the reasonable needs of either party on an ancillary . .
Cited – SRJ v DWJ (Financial Provision) CA 20-Oct-1999
There is no presumption in favour of a clean break provision in an ancillary relief claim. A nominal award of maintenance was appropriate where the wife’s long dependency and continued responsibility for children made future earning capacity . .
Mentioned – Regina v R HL 23-Oct-1991
H has no right to sexual intercourse with W – rape
The defendant appealed against his conviction for having raped his wife, saying that intercourse with his wife was necessarily lawful, and therefore outside the statutory definition of rape. Due to the matrimonial difficulties, the wife had left . .
Not followed – M v M (Financial Relief: Substantial Earning Capacity) FD 29-Mar-2004
The parties had been married for 12 years, there were three children, one with special needs, and assets of over 12 million pounds. The court considered the application for ancillary relief. It was substantially agreed that the wife should receive . .
Not followed – GW v RW (Financial Provision: Departure from Equality) FD 18-Mar-2003
An entitlement to an equal division must reflect not only the parties’ respective contributions ‘but also an accrual over time’, and it would be ‘fundamentally unfair’ that a party who has made domestic contributions during a marriage of 12 years . .
Cited – Foster v Foster CA 16-Apr-2003
The marriage had been short, there were no children, both parties were working, and each could support themselves providing themselves with accomodation. The wife had successfully appealed a finding of the district judge for an equal distribution. . .
Cited – Leslie v Leslie 1911
The courts power to order periodic payments to a wife derives from the fact that the husband typically owns the entirety of the family property. . .
Cited – P v P (Inherited Property) FD 2005
The court considered an application for ancillary relief where one party had inherited a family farm.
Held: The nature and source of the parties’ property are matter to be taken into account when determining the requirements of fairness. . .
Appeal from – McFarlane v McFarlane; Parlour v Parlour CA 7-Jul-2004
Appeals were made against orders for periodical payments made against high earning husbands. The argument was that if the case of White had decided that capital should be distributed equally, the same should apply also to income.
Held: The . .
Appeal from – Cornick v Cornick (No 3) FD 2001
The court considered its powers when being asked to vary a lump sum provision at the same time as a variation of maintenance.
Held: ‘section 31(7B) clearly introduces a wide discretionary power to be exercised by applying the words of the . .
Mentioned – S v S 1976
Ancillary relief in marriage of short duration. . .
Cited – Minton v Minton HL 1979
Establishing Clean Break on Divorce
The House set out the principles for establishing a ‘clean break’ financial settlement on a divorce. Once a capital claim in a divorce has been given effect in a court order, the court does not have jurisdiction to vary it. Lord Scarman said: ‘Once . .
Appeal from – Miller v Miller; M v M (Short Marriage: Clean Break) CA 29-Jul-2005
The parties contested ancillary relief where there had been only a short marriage, but where here were considerable family assets available for division. The wife sought to rely upn the husband’s behaviour to counter any argument as to the shortness . .
mentioned – Robertson v Robertson FD 1982
The parties had married in 1973, separated in 1976, and divorce proceedings begun in 1977. W suffered bad health and did not work. H had a position as a senior editor of a newspaper.
Held: The periodical payments order should provide support . .
Mentioned – Hedges v Hedges CA 1991
The parties were middle aged, without children and the marriage was of short duration. W had worked throughout. H lived in tied accomodation, but had purchased a property as an investment and safeguard if he should lose the tied accomodation. W . .
Mentioned – Attar v Attar (No 2) 1985
. .
Cited – Wachtel v Wachtel CA 8-Feb-1973
The court described the 1969 and 1970 Acts as ‘a reforming statute designed to facilitate the granting of ancillary relief in cases where marriages have been dissolved . . We regard the provisions of sections 2,3, 4 and 5 of the Act of 1970 as . .
Cited – G v G (Financial Provision: Separation Agreement) CA 28-Jun-2000
The parties had been married before and had signed a prenuptial agreement.
Held: Thorpe LJ set out the duties of a judge in ancillary relief applications: ‘A judge has to do fairness between the parties, having regard to all the circumstances. . .
Cited – Lambert v Lambert CA 14-Nov-2002
The parties appealed an order for the division of the family’s 20 million pound fortune on divorce. The husband argued that his special contribution to the creation of the wealth meant that he should receive a greater share.
Held: The Act gave . .
Cited – Latter v Latter SCS 1990
The court considered an application for financial provision on a divorce. Much of the family wealth was created within a farming company, but the shares in that company were either inherited by the husband or acquired before the marriage.
Cited – Fleming v Fleming CA 17-Nov-2003
An application for extension of a periodical payments order made for a finite period the applicant must surmount a high threshold. . .
Cited – G v G (Financial Provision Equal Division) FD 2-Jul-2002
The family assets were in the region of andpound;8.5M. The wife sought a half share. The husband proposed that she should have 40%. The husband had built the family fortune through exceptional hard work and astute business acumen in the field of . .
Cited – Little v Little IHCS 1990
The court considered the risk in divorce ancillary relief proceedings that treating each step in the process as raising an issue of law and not of discretion would open up decisions by the court of first instance for reconsideration on appeal. The . .
Cited – Lightbody (Or Jacques) v Jacques HL 28-Nov-1996
On an applicatin for ancillary relief on divorce, the sherriff thought that the spouses could share equally in the increase in the value of the matrimonial property after the date when they separated. That could not be done under the rules laid down . .
Cited – Wallis v Wallis HL 5-Aug-1993
(Scotland) The valuation of the matrimonial home was to be taken as at the date of the couple’s separation. The House affirmed the decision of the Court of Session. . .
Mentioned – Preston v Preston CA 1982
The court set out a series of principles applicable in ancillary relief cases where the resources exceeded the strict needs of the parties, including that the court should not make allowance for a spouse’s desire to be able to leave a sum to her . .
Cited – Wallis v Wallis SCS 1992
The effect of section 10(3)(b) of the 1985 Act was that the whole of the wife’s share of the increase in its value after the date of separation which passed to the husband as a result of the sheriff’s order had to be left out of account in the . .
Mentioned – O’D v O’D CA 1976
When considering an application for ancillary relief by a wife, the court should consider the wife’s position, ‘not from the narrow point of ‘need’, but to ascertain her reasonable requirements.’ . .
Mentioned – Dipper v Dipper CA 1980
The court has no power to dismiss an applicant’s claim for periodical payments against her will. . .
Cited – Page v Page CA 1981
In an ancillary relief application, there was enough capital to provide adequately for both husband and wife.
Held: When considering the needs and obligations of the parties a broad view could be taken: (Ormrod LJ) ‘In a case such as this . .
Cited – Cowan v Cowan CA 14-May-2001
When considering the division of matrimonial assets following a divorce, the court’s duty was, within the context of the rules set down by the Act, to impose a fair settlement according to the circumstances. Courts should be careful not to make . .
Cited – B v B (Mesher Order) FD 2002
A breadwinner’s unimpaired and unimpeded earning capacity is a powerful resource which can frequently repair any loss of capital after an unequal distribution. . .
Cited – N v N (Financial Provision: Sale of Company) FD 2001
The nature of the family assets may be taken into account when considering how they are to be divided in ancillary relief proceedings on divorce, where these are businesses which will be crippled or lose much of their value, if disposed of . .
Cited – Barwell v Anne Brooks 4-Feb-1784
This was an action for victuals, drink, and other necessaries furnished to the defendant. The declaration also contained a count for goods sold and delivered, and the other common counts. The defendants pleaded her coverture in law. Replication that . .
Cited by:
Cited – Moore v Moore CA 20-Apr-2007
The family were wealthy, and had lived for some time in Spain. On the breakdown of the marriage, the wife returned to the UK, and sought ancillary relief here, though the divorce had been in Spain. The husband argued that this should be dealt with . .
Cited – Haines v Hill and Another CA 5-Dec-2007
On the divorce, the husband was ordered to transfer his share in the house to the wife. On his bankruptcy shortly after, the order was confirmed. After the wife sold the property at a profit, the trustee in bankruptcy applied to set the transfer . .
Cited – S v S FD 19-Mar-2008
The husband appealed against an ancillary relief order, and particularly as to an order that he should continue to pay maintenance for the joint lives of the parties rater than for five years. He was earning a substantial income but anticipated that . .
Cited – B v B (Ancillary relief: Distribution of assets) CA 19-Mar-2008
The wife appealed an ancillary relief order for equal division on the basis that the judge had failed to allow for the fact that most of the assets had been brought to the marriage by her.
Held: Her appeal succeeded. All the assets at the . .
Cited – Agbaje v Akinnoye-Agbaje SC 10-Mar-2010
The parties had divorced in Nigeria, but the former wife now sought relief in the UK under section 10 of the 194 Act. The wife said that she lived here, but the order made in Nigeria was severely detrimental requiring her either to live here in . .
See Also – Mcfarlane v Mcfarlane FD 18-Jun-2009
. .
Cited – Tchenguiz and Others v Imerman CA 29-Jul-2010
Anticipating a refusal by H to disclose assets in ancillary relief proceedings, W’s brothers wrongfully accessed H’s computers to gather information. The court was asked whether the rule in Hildebrand remained correct. W appealed against an order . .
Cited – S v S FD 22-Sep-2006
The court heard an application for ancillary relief. The judgment had been delayed pending the decision in McFarlane. . .
Cited – Radmacher (Formerly Granatino) v Granatino SC 20-Oct-2010
The parties, from Germany and France married and lived at first in England. They had signed a pre-nuptial agreement in Germany which would have been valid in either country of origin. H now appealed against a judgment which bound him to it, . .
Cited – Rossi v Rossi FD 26-Jun-2006
W sought to challenge transactions entered into by H anticipating ancillary relief proceedings on their divorce. Nicholas Mostyn QC J said: ‘While of course no rigid rule can be expressed for the infinite variety of facts that arise in ancillary . .
Cited – S v AG (Financial Remedy: Lottery Prize) FD 14-Oct-2011
The court considered how to treat a lottery win of andpound;500,000 in the context of an ancillary relief application on a divorce.
Held: The answers in such cases must be fact specific. ‘In the application of the sharing principle (as opposed . .
Cited – Birch v Birch SC 26-Jul-2017
The parties, on divorcing had a greed, under court order that W should obtain the release of H from his covenants under the mortgage of the family home. She had been unable to do so, and sought that order to be varied to allow postponement of her . .
Cited – Owens v Owens SC 25-Jul-2018
W petitioned for divorce alleging that he ‘has behaved in such a way that [she] cannot reasonably be expected to live with [him]’. H defended, and the petition was rejected as inadequate in the behaviour alleged. She said that the section should be . .
Lists of cited by and citing cases may be incomplete.
Family
Leading Case
Updated: 02 November 2021; Ref: scu.242158
