Family law update

The House of Lords has delivered verdicts on two family cases which has turned the principles applied to the division of family assets upon divorce on their heads.

The courts were asked to consider how best to achieve a fair division of property following a divorce.  The law currently lays down a list of matters which must be considered when quantifying a fair division of assets.  This guidance is extremely limited.  The courts are obliged to consider a number of factors and are then left to their own devises for the calculation of settlement.   The courts have considered the fairness which must be levied between husband and wife irrespective of their roles within the family.   The courts have indicated that there should be no discrimination when assessing the contribution each party has made irrespective of whether one party is the sole earner and the other party has contribution as been as home-maker and child care provider. 

The primary consideration of the court must be the welfare of any children to the marriage. 

The Millers married in July 2000.  The parties had not lived together prior to the marriage.  No children had been born to the family.  Mr and Mrs Miller separated in April 2003 following Mr Miller admitting to Mrs Miller that he had formed a new relationship and there marriage was therefore at an end.  At the first hearing of this matter the husband’s assets had been valued as £17.5 million plus the value of 200,000 shares in New Star.  The husband’s wealth at the time of his marriage to Mrs Miller had been £16.7million.  The husband earned a basic salary of £181,000 per annum and had received bonuses through the course of his employment of £3million in 2003 and £1.4 million in 2004. 

The wife was significantly poorer than her husband and she had assets of £100,000 of which over half was unobtainable in the form of a pension fund.  She also had debts of £300,000.

At the hearing the Judge awarded the wife the sum of £5million made up as follows:-

• The former matrimonial home in London worth £2.3million
• A Lump Sum of £2.7 million
• Goods worth in the region of £150,000

The Judge did consider when making his award that the wife had not sought to end the marriage.  This is a stark contrast to the “no blame” way in which courts had previously considered the assessment of an equitable financial arrangement between parties upon divorce. 

The husband appealed this decision and the Court of Appeal supported the award made by the previous Judge.

This award has today been considered by the House of Lords and they have ruled that the award has been fair. 

The other case considered today the House of Lords is the case of McFarlane and McFarlane.  The McFarlane’s have been married for a period of 18 years. 

Mrs McFarlane gave up her high earning carer to be homemaker and the carer for the parties children. 

Prior to the ruling today the court has considered the issue of maintenance for ‘stay at home mums’ to be based purely of their financial needs and expenses require to live.  The courts now must consider contribution as well as compensation.  The wife should not be expected to just “manage” while the husband if left with a considerable amount of surplus income. 

The House of Lords has considered the situation and recognised the sacrifice and contribution to the marriage made by Mrs McFarlane and awarded her the sum of £250,000 per annum from her husband.  The House of Lords has overturned the Court of Appeals decision that this maintenance should only be paid for a five year period and have awarded Mrs McFarlane the sum of £250,000 per annum for life. 

Whilst these judgments involve extremely high money cases they will have a substantial effect on all financial provision cases following a divorce.   Not only will the courts consider contribution of the parties being equal irrespective of whether one party is the only wage earner but will also consider amounts for compensation and maintenance amounts being awarded in excess of need.  The courts will also now consider the reason for the break down of the marriage and unfortunately it may be the case where financial proceedings become more acrimonious. 

It is to be assumed that the one person who may have taken particular interest in today’s Judgements is Sir Paul McCartney following his separation from Heather Mills.  Sir Paul is reported to be worth approximately £825 million and it has been speculated that Heather Mills could claim in the region of £200 million.

It would appear that there has been a complete turnaround for financial matters within divorce cases in the future.  It is envisaged that there will be a substantial knock on effect.  The cases decided today show that the courts have moved away from any settlement being decided on the basis of the needs of the parties and much greater sums may be achieved in the future, particularly in relation to wives who choose to stay at home and care for their children while their husbands work.  Ultimately, it would appear that the House of Lords is hoping that an equitable settlement can be achieved for all and that fairness prevails.

For more information on this subject or other family law issues, please contact
Emma Holmes on 01642 623 411.

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