Fairness, like beauty, lies in the eyes of the beholder. This is how Lord Nicholls of Birkenhead introduced an appeal in the House of Lords that forever changed how the family courts distributed marital wealth on divorce and reflected how the concepts of breadwinner and homemaker had evolved in societal consciousness.
When a farmer’s wife petitioned for divorce in 1994, there was little indication that course of English legal history would be altered.
This was the demise of a long marriage – Pamela and Martin White had tied the knot in 1961. One year later, they purchased Blagroves farm, a picturesque Jacobean house accompanied by 160 acres of land. Having both come from farming stock, the Whites made Blagroves their home and formed a dairy farming enterprise there in partnership. The couple went on to have three children, who were primarily cared for by the mother while their father worked on the farm. However, the courts also accepted that Mrs White carried out a variety of tasks which contributed towards the success of the farm.
By the time the marriage broke down, the children had grown up. Decree nisi was pronounced in 1995, and in 1996 both Mr and Mrs White brought applications for ancillary relief (now known as financial remedy proceedings) before Mr Justice Holman. At this point, the principle marital assets were worth £3.5 million and the size of the farm had more than doubled.
The applications proceeded on a ‘clean break’ basis, meaning that the settlement would end all financial obligations to each other. Prior to White v White, the family courts generally made financial orders based on what was then termed ‘reasonable needs and requirements’. According to this model, the financially weaker spouse would be awarded a settlement based on what they needed to satisfy their capital needs, predominantly their need for housing. Their income requirements would also be focused on meeting their reasonable requirements and would often be around one third of the husband’s income, based on the formulaic guideline made a precedent in Wachtel v Wachtel, regardless of the standard of living enjoyed during the marriage. Mr Justice Holman determined that Mrs White reasonably required £980,000, just over one-fifth of the total marital pot.
Under this order, Mrs White was to receive a payment of £800,000, with the rest of the award being satisfied by her own assets. She was also required to transfer all jointly-owned assets to Mr White.
Mrs White was not content with this settlement, having hoped to receive enough assets to enable her to buy a new farm. However, Mr Justice Holman ruled that this was not a reasonable requirement, as it would entail breaking up the existing farm and impinge on Mr White’s reasonable requirement to continue farming.
She took her case to the Court of Appeal, where it was argued that, had she been a business partner, she would have been entitled to a much larger share, due to her considerable contributions towards the farm. The Court of Appeal ruled that there was no fairness in ordering a transfer of property in favour of Mr White, due to Mrs White’s partnership role. The court awarded Mrs White a further £700,000, bringing her total award to £1.5 million.
Neither party were satisfied with this outcome. Mr White sought restoration of the original order, and appealed to the House of Lords in 2000. Mrs White cross-appealed, seeking an equal share in all the matrimonial assets. At the appeal, Lord Nicholls stressed the equality of contribution made by both parties throughout the duration of the marriage. He stated that, for this reason, Mr Justice Holman had been mistaken in taking a needs-based approach.
Part II of the Matrimonial Causes Act gave the courts considerable judicial discretion as to making financial provision orders and property adjustment orders. Section 25 of the Act sets out a list of factors that the court is required to regard in making such orders. These include, but are not limited to, financial resources and earning capacity, financial needs, the duration of the marriage and age of each party, the standard of living enjoyed prior to the marital breakdown, and the contributions of each party to the welfare of the family.
In his judgment, Lord Nicholls stressed that Section 25 gives no indication that a claimant’s financial needs should, above all else, determine the division of assets. This is particularly pertinent in the case of White v White, where the assets outstripped the parties’ needs.
In exercising these powers, the implicit objective must be to achieve a fair outcome, although, as Lord Nicholls calls attention to, this is not explicitly stated in the legislation.
Fairness, he stated, dictates that “there should be no bias in favour of the money-earner and against the home-maker and child-carer”. There was therefore no reason why, in the case of White v White, the surplus assets should be awarded solely to the husband.
It was a landmark judgment, and its impact on family law was swiftly felt. Nicholls had cautioned that equality should only be departed from if there was a good reason for doing so, and this approach was widely adopted. Equality had become the consensus, and discrepancies had to be justified.
Lord Nicholls assured that he did not intend to introduce a legal presumption of equal division of the available assets, or even introduce the idea of a 50:50 split as a starting point. To do so would be “impermissible judicial gloss on the statutory provision”. Instead family court judges, having made carried out the statutory exercise laid out in Section 25, should check their tentative views “against the yardstick of equality”. Most of the House agreed with his caveat, that equality ought not be presumed from the outset in all cases. However in practice, as Lord Cooke predicted, the impact of the judgment went beyond this.
In the 2007 case of Charman v Charman, the Court of Appeal upheld a High Court financial order citing the sharing principle established in White v White whereby the parties’ contributions to the welfare of the family should generally lead to an equal division of assets unless there is a good reason for the division to be unequal. The judgment specified that the consensus in English courts since White v White had shifted and that it was not even necessary to postpone the consideration of the sharing principle.
After White v White, the judiciary finally saw which way the wind was blowing. Just as socially, we have moved towards equality in marriage, in marital distribution we have moved towards equality in law.