Family Law

Divorce Cases

White v White [2001] 1 AC 596

Key Points

This is a landmark case concerning the making of financial provision after divorce under section 25 of the Matrimonial Causes Act 1973:

• This case established the principle of equal sharing of assets as a general principle, not just in high net worth divorce cases where the parties’ resources exceed their needs.
• Financial needs of the parties are not to be treated as a determinative factor.
• Courts will take into account whether assets are non-matrimonial (inheritances and property acquired prior to marriage) or matrimonial – in relation to the former category the claim of the spouse who had received or owned such property is stronger, although this will carry little weight if the needs of the claimant cannot be met without recourse to this property.

Facts

• The parties married in 1961 and ran a successful dairy farm. Entering the marriage the parties contributed roughly equal capital.
• At the time of divorce the parties had additionally acquired in their assets Farm A (held jointly) and Farm B (held in the Appellant’s sole name). The reason for this was that it was a loan from the Appellant husband (Mr White)’s father, as well as other financial circumstances, that enabled the acquisition of the two farms.
• The parties were granted a decree nisi in 1995 and a decree absolute in 1997.
• Both the parties sough ancillary relief on a clean break basis, with the first instance judge valuing the matrimonial assets at £4.6 million.

Previous Proceedings

• The first instance judge awarded the Respondent (Mrs White) £800,000 plus her separate assets as it met her “reasonable requirements”.
• The Court of Appeal allowed the Respondent’s appeal and increased her award to £1.5 million, having regard to the parties’ contributions and the goal of overall fairness.
• Mr White appealed to your Lordships’ House, seeking the restoration of Holman J’s order, arguing inter-alia that the “reasoable requirements” approach was wrongly deviated from by the Court of Appeal.
• Mrs White cross-appealed. She seeks an order giving her an equal share in all the assets.

Issues

• How should the courts exercise their very broad discretionary powers under the Matrimonial Causes Act 1973 in “big money” cases where assets exceed the parties’ needs.
• How to view the statutory factors “financial resources” (section 25(2)(a)) and “financial needs” (s.25(2)(b)) and whether the concept of “reasonable requirements” remains determinative.
• How much should an equal divide be considered as a “yardstick” to guide decisions.
• How should inherited or non-matrimonial property be treated.

Held (House of Lords)

• Appeals dismissed. The Court of Appeal’s award of £1.5 million was accurate.
• The reasonable requirements approach was rejected and an equality based approach was endorsed by the Supreme Court.

Lord Nicholls

Equality-based approach to division of assets

Equal division of assets is to be treated as a yardstick to be checked against when the judge deviates from it, but it is not a presumption or starting point.

• “A practical consideration follows from this. Sometimes, having carried out the statutory exercise, the judge’s conclusion involves a more or less equal division of the available assets. More often, this is not so. More often, having looked at all the circumstances, the judge’s decision means that one party will receive a bigger share than the other. Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.” [25]
• However, “This is not to introduce a presumption of equal division under another guise…A presumption of equal division would be an impermissible judicial gloss on the statutory provision. That would be so, even though the presumption would be rebuttable. Whether there should be such a presumption in England and Wales, and in respect of what assets, is a matter for Parliament.” [26] – [27]
• The respondent’s counsel proposed that equal division be treated as a “starting point” however, “a starting point principle of general application would carry a risk that in practice it would be treated as a legal presumption, with formal consequences regarding the burden of proof. In contrast, it should be possible to use equality as a form of check for the valuable purpose already described without this being treated as a legal presumption of equal division.” [28]

On financial resources and financial needs

• “The statutory provisions lend no support to the idea that a claimant’s financial needs, even interpreted generously and called reasonable requirements, are to be regarded as determinative. Another factor to which the court is bidden to have particular regard is the available resources of each party. As my noble and learned friend Lord Hoffmann observed in Piglowska v Pigslowski [1999] 1 WLR 1360, 1379, section 25(2) does not rank the matters listed in that subsection in any kind of hierarchy. The weight, or importance, to be attached to these matters depends upon the facts of the particular case.” [35]
• “But I can see nothing, either in the statutory provisions or in the underlying objective of securing fair financial arrangements, to lead me to suppose that the available assets of the respondent become immaterial once the claimant wife’s financial needs are satisfied. Why ever should they? If a husband and wife by their joint efforts over many years, his directly in his business and hers indirectly at home, have built up a valuable business from scratch, why should the claimant wife be confined to the court’s assessment of her reasonable requirements, and the husband left with a much larger share? Or, to put the question differently, in such a case, where the assets exceed the financial needs of both parties, why should the surplus belong solely to the husband? On the facts of a particular case there may be a good reason why the wife should be confined to her needs and the husband left with the much larger balance. But the mere absence of financial need cannot, by itself, be a sufficient reason. If it were, discrimination would be creeping in by the back door. In these cases, it should be remembered, the claimant is usually the wife. Hence the importance of the check against the yardstick of equal division.” [35]
• “The amount of capital required to provide for an older wife’s financial needs may well be less than the amount required to provide for a younger wife’s financial needs. It by no means follows that, in a case where resources exceed the parties’ financial needs, the older wife’s award will be less than the younger wife’s. Indeed, the older wife’s award may be substantially larger.” [37]

Inherited money and property

• In certain countries, “legislation distinguishes between two classes of property: inherited property, and property owned before the marriage, on the one hand, and ‘matrimonial property’ on the other hand”. This comes from the view that “[p]roperty acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it. Conversely, the other spouse has a weaker claim to such property than he or she may have regarding matrimonial property.” [41] – [42]
• The position in the UK is that “[inherited money and property acquired before the marriage] represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered. However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant’s financial needs cannot be met without recourse to this property.”