HomepageCommercial LawPrivate LawPublic Law & Human RightsCriminal LawEU & International LawCareers

Accessibility

Have Irlen Syndrome, or need different contrast? Click the button below for options.

Background Colours

Subscribe

Enter you email address below to subscribe to free customisable article notifications.

Alternatively, click the button below for our various RSS Feeds (available journal wide, or per section).

Matrimonial Finance Law: Not Tough Enough?

Article Cover Image

About The Author

Manprabh Basi (Writer)

Manprabh (Mani) is a recent Bar Professional Training Course Graduate from Nottingham Law School and is currently on the hunt for pupillage. In 2012 he successfully achieved a First Class LLB and also went on to undertake a Joint LLM in Sports and Employment Law in which he achieved a First Class Distinction.

Within the broad spectrum of family law, there is one particular area that regularly makes the headlines, attracts media attention and becomes a topic for discussion amongst the public: cases that deal with finances upon divorce.

This is because the cases that are commonly reported in the media deal with ridiculously huge amounts of money and often involve celebrities or highly successful business individuals, including examples ranging from an agreement involving £1.7 billion in the case of the divorced couple of Rupert and Anna Murdoch, to a £100 million pound agreement between Steven Spielberg and Amy Irving. These high-profile examples involve the parties agreeing to a particular sum; however this article will assess the circumstances where an agreement cannot be reached and the current approach of the courts in such circumstances, particularly within the United Kingdom. The negativity that some have voiced over the impact of large payouts to spouses, and the potential of solving this problem through binding pre-nuptial agreements will also be explored.

The Law

The law relating to matrimonial finances is found within the Matrimonial Causes Act 1973 and because cases involving divorces always vary upon their particular facts, the courts have a key role to play in applying the law.  Essentially, the court will have regard ‘to all the circumstances of the case’, the ‘first consideration being given to the welfare while a minor of any children of the family who has not attained the age of eighteen’ (Section 25 (1)). From this point forward, the statute provides a list of factors the court will have regards to. This list is often referred to as the ‘Section 25 list’ and provides many considerations for the courts to take into account when exercising their discretion, including:

  • the standard of living enjoyed by the family before the marriage broke down;
  • the age of each party;
  • the duration of the marriage and the conduct of each party; and
  • the financial needs, obligations and responsibilities of each party.

Although previous cases can be helpful in providing interpretation and guidance, they cannot necessarily be relied upon as direct precedents, particularly in this area of family law. This is because not all cases involve the same type of assets, not all couples have children, have the same work history, have the same background, are of the same age, own the same types of business as others, and so on. Each case is therefore extremely fact specific which provides the court with flexibility and ultimate discretion in deciding how finances should be split. As such, it can perhaps be difficult for those reading sensationalist articles such as reports in December 2014 that a High Court judge ordered Sir Chris Hohn to provide his ex-wife a quarter of his wealth, being £337 million, to understand how such figures are calculated.

In the case of Jamie Anne Cooper-Hohn v Christopher Anthony Hohn [2014] EWHC 4122 the parties were married for 15 years and upon divorcing could not reach an agreement regarding the division of property and assets, hence the case reaching the Family Division of the High Court. It was suggested that the Respondent had assets worth £1 billion and submissions were based on the Applicant being entitled to half of these assets. In delivering the judgment, the Honourable Mrs. Justice Roberts made reference to Mr. Hohn being a ‘financial genius’ and that he was a ‘driving force’ behind the financial success of the couple,  which justified an unequal distribution of the assets. Therefore, the level of contribution that both parties provided to the financial success that was made apparent during the litigation process was assessed and the court found that given Mr. Hohn’s particular success and ability, there were justified reasons to depart from the Applicants submissions that there should be an equal split of the assets.

Another notable judgment is found within Miller v Miller; McFarlane v McFarlane [2006] UKHL 24. This judgment attracted a lot of attention and the outcome was predicted to potentially ‘strengthen women’s financial case’.

Both cases related to appeals and both were factually different. In Miller, the marriage was regarded as a short one, lasting only three years, and the couple had no children during this marriage. The husband was an extremely high earner and the wealth he acquired grew substantially during the marriage, totaling around £32 million, whereas the value of the wife’s assets was much less in comparison to her legal costs. McFarlane, on the other hand, focused on a marriage which had lasted 16 years and involved three children of varying ages, and in which both parties were regarded as successful professionals, one being a solicitor and the other a chartered accountant. The wife earned £750,000 a year but the couple had agreed for her to give up her job so she could raise their three children.

Miller was entitled to £5 million, and McFarlane was given maintenance of £250,000 a year for life to reflect her contributions throughout the marriage. Such cases created the opinion that these rulings ‘reinforce England and Wales' reputation as one of the most generous jurisdictions in Europe for ex-wives’.

A tougher stance needed?

Given the reputation that the United Kingdom has gained for some of the biggest financial divorce payouts, concerns have been raised. In the aftermath of years of high profile cases which involved, more often than not, ex-wives receiving a substantial payout as mentioned earlier, Baroness Deech argued for reform to the current law. She told the Financial Times that divorce settlements that regularly appear in the media are sending a ‘bad message to young women’ and that some may think ‘never mind about A-Levels, or a degree or taking the Bar course – come out and find a footballer’.

Baroness Deech has long been voicing concerns regarding the current state of the law. Back in 2009, she most notably asked this question in the Guardian:

Imagine three sisters. One is very pretty and marries a top footballer; they have no children and it is a short marriage before she leaves him for an international celebrity. The second sister marries a clergyman and has several children; the marriage ends after 30 years as he is moving into retirement. The third sister never marries; she stays at home and nurses first their mother, who has a disability, and then their father, who has Alzheimer's, and dies without making a will. Which of the three sisters will get the windfall, an amount sufficient to keep her in luxury for the rest of her days, when her relationship with a man comes to an end?

It is the first example above that seems to trouble many commentators. However, Baroness Deech has been subject to some criticism in her views; for example, it has been asked by some critics: ‘if a man chooses to promise to his life partner a full commitment of sharing everything, how then can he complain when a Court expects him to deliver on it?’. Therefore, using Baroness Deech’s example, if an individual marries a footballer, and the footballer promises the partner half of everything informally in everyday discussion, then could this be a divorce settlement be fair if half of everything runs into millions of pounds? This is difficult to assess. During marriages, emotions may influence people’s words and decisions, and if divorce proceedings are ever initiated, it comes as no surprise that people may not feel the way they once did when they made many promises.

Reform

In proposing reform to the current law, Baroness Deech has made reference to European jurisdictions, stating ‘what is needed is an end to discretion and the recognition of autonomy in contracts, with the aim of reducing costs and promoting negotiation in a better spirit’. A practical answer for the division of property could be found when Baroness Deech suggested that if there was no agreement made by the couple, ‘postmarital assets could be divided equally’. But in much shorter marriages, ‘say three years or less, there could be no division at all’ and instead ‘the parties should go back to the position they were in before’ marriage. If there are children however ‘and the home is too small for sensible division, then it should… be retained for the occupation of the carer, with eventual sale and division when the children reach 18’.

Therefore, Baroness Deech suggests different rules for different factual scenarios. On the face of it, these suggestions would ensure that there would be a clear set of rules for assets that are acquired after the marriage if there was no agreement made. In contrast, less protection would be available for an individual who had nothing before marriage if the marriage lasted for a short duration, say two years. However, if there was ‘no division at all’ in these circumstances then it must be questioned whether the law would operate in an unfair manner for the most vulnerable who may be left with nothing but who relied upon the support of their spouse during the marriage.

The ultimate suggestion that Baroness Deech is advocating is the possibility of both prenuptial and postnuptial agreements becoming binding, something which the Law Commission have previously suggested. 

However, there are criticisms surrounding the possibility of prenuptial agreements becoming universally binding within the United Kingdom. Bishop Mark Davies of Shrewsbury voiced concerns that prenuptial agreements could undermine marriage, as Baroness Hale in the Supreme Court emphasised in her dissenting judgment in the case of Radmacher v Granatino [2010] UKSC 42 which most notably stated that:

the court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement

In elaborating further on the issue of undermining marriage, Bishop Davies, speaking on Radio 4 stated: ‘my concern… is the message that this is likely to be sending to a diminishing number of couples who are seeking the lifelong commitment to marriage when we are asking them to prepare their divorce settlement before they have even married’ and that ‘we need to be preparing couples for the beautiful vision of marriage rather than preparing them for divorce’.

Conclusion

In consideration of the number of high profile cases that have materialised over the years, it comes as no surprise that London has been described by one lawyer, Philippa Dolan, as ‘the divorce capital of the world’. She also stated that in some of the most recognised cases, men ‘get a raw deal from the courts here’. It is important to appreciate however, notwithstanding the view that the media often focus on females in big money cases, the same outcomes would equally apply to men if they were in the same shoes as the women in these cases, as demonstrated by speculation that Guy Richie received the largest ever settlement for a male in a £50 million agreement when he split up with from Madonna.

The media may not always know the ins and outs of every case, or be able to understand and appreciate the true goings-on of marriages. It is understandably hard for anybody who does not live the lifestyles that some celebrities and successful multimillionaire business individuals do to fully grasp their intricacies. All that is clear is that in big money cases, matters are by no means simple as they can involve many important financial considerations.

It must be emphasised that the majority of day-to-day cases in this area of the law focus on people like me and the rest of the population, people who are not millionaires and people who may have few assets but who still require the law to offer assistance. As such, it could be argued that more research needs to be carried out to establish whether the law is operating in a fair manner to those who are involved in cases which are by no means ‘big money cases’ that regularly appear in the media.

Equally, for those who are on average incomes with hardly any assets, it is questionable whether they will see the need to pay for legal advice and enter into prenuptial agreements. This is because prenuptial agreements are often regarded as ‘a means of protecting the wealth of the economically stronger spouse’. Unfortunately, not all are blessed with ‘wealth’. It must also be noted that the biggest problem for couples would be whether they even see the need to enter into prenuptial agreements. The suggestion of entering into a prenuptial agreement to a partner may not be to everyone’s taste and a disagreement about one before marriage would not start things off in a great way.

Nonetheless, in ‘big money’ cases that often involve highly complex financial matters I do see that prenuptial agreements could serve a useful purpose in some circumstances. The hope would be to save costs, time and distress, by agreeing before marriage how assets should be split and thereby avoiding a bitter dispute sometime in the future if the marriage breaks down. The question would be however, whether the public in the United Kingdom would be as open and accepting towards the concept of prenuptial agreements and whether reform would tackle the complexity of disputes within this area of the law.  

For the latest articles straight to your inbox, you can subscribe for free. Alternatively, follow @KeepCalmTalkLaw on Twitter or Like us on Facebook.

Tagged: Family Law

Comment / Show Comments (0)

You May Also Be Interested In...

The Sanctity of Life? An Update on Abortion Law in Northern Ireland

14th Dec 2015 by Francesca Norris

Is it time to allow enforcement of surrogacy agreements?

24th Jun 2015 by Manprabh Basi

Free DNA Testing In Family Courts

27th May 2015 by Manprabh Basi

The Benefit Cap: Disregarding a Child’s Best Interests

16th Apr 2015 by Sophie Cole-Hamilton

The Inadequacies of Family Law: Resolution’s Resolutions

11th Mar 2015 by Alexander Barbour

Should Contract Law be used to Enforce Surrogacy Arrangements?

5th Dec 2013 by Yasmin Daswani

Section Pick February

Routier v HMRC: Redefining 'Charitable Purposes' For Inheritance Tax

Editors' Pick Image

View More

KCTL News

Keep Calm Talk Law: Moving Forward

3rd Sep 2019

Changing of the Guard: Moving Keep Calm Talk Law Forward

12th Aug 2018

An Anniversary or Two: Four Years of Keep Calm Talk Law

11th Nov 2017

Rising from the Ashes: The Return of Keep Calm Talk Law

18th Nov 2016

Two Years On, Keep Calm Talk Law’s Legacy is Expanding

11th Nov 2015

Twitter

Javascript must be enabled for the Twitter plugin to function. Click below to visit us on Twitter.

Free Email Subscription

Subscribe to Keep Calm Talk Law for email updates, and/or weekly roundups. You can tailor your subscription on activation. Both fields are required.

Your occupation / Career stage is used to tailor your subscription and for readership monitoring.

Uncheck this box if you do not want to receive our monthly newsletter.

By clicking the Subscribe button, you agree to our privacy policy and terms of service. Please ensure you read these in full.

Free Subscription