UK: What Price Divorce?

Last Updated: 14 January 2008
Article by Jacqui Skelton

Marriages, unfortunately, sometimes go wrong and the cost is counted in more than broken hearts. A number of high-profile divorce cases over the past year or two have 'changed the rules' when it comes to divorce settlements, particularly for the wealthy.

Bridge McFarland partner and family lawyer Jacqui Skelton explains those changes and discusses their implications for our clients.

It was only about five years ago that the Family Court decided to look at the issue of equality.

That may surprise people who believe that, if there is equality in the financial arrangements of divorces, the equality has always been in favour of the wife!

In fact, that has not really been the case in most circumstances although, where houses and young children are involved, it was and remains the case that the wife seems to get more because she has greater needs and probably a much lower earning capacity.

In higher-valued cases, husbands (for it was generally they!) used to be able to plead the "millionaires' defence", where they would say that their financial situation was irrelevant because they would be able to settle any order the Judge made. In such cases, they did not have to disclose full financial details.

That defence has now gone and both parties have to disclose all, with high costs penalties if they do not.

So what changed? Mrs White, for starters, took her husband to the House of Lords.

This was a long marriage of farmers who had been operating several farms in equal partnership.

Mrs White was given only a modest share of those assets in the lower courts and eventually got her share up to about 40 per cent.

Ironically, had she pursued Mr White in partnership law, she would have been looking at a 50/50 split!

The House of Lords in this case referred to all cases needing to be tested against the yardstick of equality - but they did not say that man and wife must be equal.

In Mrs White's case, she received less than 50 per cent because the husband had inherited one of the farms.

Do not, however, assume that this applies to all inheritances, which are looked at according to the circumstances of the individual case.

After Mrs White, there were a number of other wives who pursued their husbands for an equal share of the assets.

Mrs Cowan, whose husband designed black bin bags with handles, famously sought 50 per cent but failed on the basis that the husband had made a "stellar contribution" to the marriage and the assets by his innovation.

However, Mrs H got 50 per cent merely for sitting around all day as she gave her husband the "emotional support" at home to enable him to build an empire worth £23m. The stellar contribution argument was short lived.

Recent Cases

One of the most notable recent divorce cases was that of Ray Parlour, a footballer famous for letting his wife stop him drinking and gambling.

The couple were only married for a short time but there were small children and the wife had given up everything to support her husband.

When courts grant maintenance orders for wives as well as children, there is an obligation on them to consider when and if the parties should be encouraged to be independent.

Mrs Parlour had little chance of generating anything like her husband's income and it was recognised that the income stream would be limited by his fitness and prospects.

The court decided that Mrs Parlour should receive maintenance of £400,000 a year -significantly more than necessary to give her and the children a good standard of living in the short term.

However, the claim was time-limited and there was a clear indication that she should accumulate about £250,000 a year to provide capital for her future.

This was not a typical case because it was foreseeable that the husband's income would lessen as his football career declined – as I believe has happened.

In 2006, there was a big commotion about two very different cases heard together by the House of Lords.

Mr and Mrs McFarlane had been married for 17 years. She had three youngish children and had given up a promising career as a lawyer, while he was a high-flying accountant earning about £750,000 a year.

The limited family assets were divided and the question was then the extent of the maintenance for the wife. There was never any argument that she had a lifetime claim, subject to her not remarrying.

The House of Lords eventually decided that she should receive £250,000 for life, subject to either party seeking to vary it. The income was to cover not just her reasonable needs but to "compensate" her for the loss of the future income she would have enjoyed with the husband.

This was a big income case and the capital assets were not large enough to pay off the wife's claims so it remains to be seen how many other cases might fit this category.

The case of the Millers was different altogether. The couple's marriage lasted less than three years before the husband had an affair and left. The wife had an established career earning around £80,000 per annum; the husband was worth about £30m.

In short marriage cases, the courts normally start by putting the parties back where they came from financially and then adjusting.

In this case, Mrs Miller sought compensation for the loss of the marriage and, extraordinarily, also argued that the husband's behaviour should be taken into account. Since the 1970s, it has been accepted that adultery does not generally affect a financial settlement.

Mrs Miller succeeded in getting a lump sum payment of £5m - or about £2m for every year of marriage pro rata! - after the Lords said she entitled to be compensated for the loss of the marriage.

While most family lawyers have little argument with the Parlour and McFarlane cases, many feel that the Miller decision was at odds with previous good law and Mrs Miller was very lucky to get such a big settlement.

Nevertheless, the House of Lords has spoken and, until we see the case being commented on elsewhere, it is difficult to know whether it will be generally applied and, indeed, whether the loss of a future through adultery is going to give one party more money than they might otherwise expect.

The other recent high-profile case is that of the Charmans where the husband appealed a High Court decision to award his wife £48m on the basis that his offer of £20m was plenty.

The Court of Appeal decided that the wife was entitled to the larger sum, which in itself was less than half the husband's wealth accumulated during a long marriage. The case is likely to go to the House of Lords but it seems unlikely that the husband will succeed.

The moral of these stories is that, if you have concerns about your marriage and you want to consider your options, do not panic but do seek early legal advice to help you understand your position and plan accordingly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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