Full judgment here: https://publications.parliament.uk/pa/ld200506/ldjudgmt/jd060524/mill-1.htm
Miller;McFarlane is the second of two colossuses (the other being White v White) in whose ample shadows financial remedies disputes continue to be fought to this day.
In White, Lord Nicholls established the “yardstick of equal division”, saying that “As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so.”
Miller;McFarlane sets out to identify and codify what those good reasons are.
White changed the playing field for financial remedy claims. On a day-to-day basis, however, it does not tend to get raised in submissions unless it is necessary to remind the court that there should be no discrimination as between the parties’ respective roles in the marriage, or perhaps to remind the court about the yardstick of equal division.
The principles espoused in Miller;McFarlane, on the other hand, are repeated explicitly or implicitly in almost every financial remedy hearing across the country. This is because the judges identified three overarching principles which were said to justify the redistribution of resources from one party to another following divorce, namely:
- The Needs (generously interpreted) generated by the relationship between the parties;
- Compensation for relationship-generated disadvantage; and
- The Sharing of the fruits of the matrimonial partnership
What was it about?
Miller;McFarlane was a conjoined appeal considering two very different marriages.
The Miller’s marriage had lasted just three years. The husband was a successful fund manager. At the time of the marriage, his net assets were around £17m plus his shares in his employer, New Star, which was a fledgling company. The husband’s quantifiable assets had not changed significantly by the time of separation, but the shares were now thought to be worth anything up to between £12m and £18m. Singer J at first instance ordered the husband to transfer to the wife assets and cash worth £5m.
The Supreme Court rejected Singer J’s reasoning, but retained the figure of £5m, bearing in mind (but not seeking to divide equally) the considerable increase in the family wealth during the marriage and the standard of living the couple had enjoyed.
The McFarlanes, by contrast, had been married for 16 years and had 3 children. At the time of the marriage both were professionals (the wife a solicitor, the husband an accountant) on similar salaries. The wife gave up work to look after the children and the husband’s career blossomed so that by the time of the hearing he was a partner at Deloittes earning £750k net pa. The headache for the court was apparently caused by the fact that the parties’ capital did not reflect this level of wealth, coming in at only(!) £3m, which was not enough to effect an immediate clean break.
In addition to dividing the capital equally, the court ordered the husband to pay the wife maintenance of £250k pa. It recognised this exceeded the wife’s needs, which the High Court had put at £180k. The £70k excess was justified as “compensation” for “the significant future economic disparity, sustained by the wife, arising from the way the parties conducted their marriage” (Lord Nicholl at [93]).
Application to Middle Money Cases
Like White, Miller;McFarlane is not a middle money case. It is the principles set out in the judgment, and particularly the focus on meeting needs, and on the sharing of matrimonial assets (but not the non-matrimonial ones) that has dictated how cases have been argued and decided ever since.
Useful Quotes and Passages
“When the marriage ends fairness requires that the assets of the parties should be divided primarily so as to make provision for the parties’ housing and financial needs, taking into account a wide range of matters such as the parties’ ages, their future earning capacity, the family’s standard of living, and any disability of either party. Most of these needs will have been generated by the marriage, but not all of them. Needs arising from age or disability are instances of the latter.”
Lord Nicholls at [11]
“In most cases the search for fairness largely begins and ends at this stage. In most cases the available assets are insufficient to provide adequately for the needs of two homes. The court seeks to stretch modest finite resources so far as possible to meet the parties’ needs. Especially where children are involved it may be necessary to augment the available assets by having recourse to the future earnings of the money-earner, by way of an order for periodical payments.”
Lord Nicholls at [12]
“Another strand, recognised more explicitly now than formerly, is compensation. This is aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage. For instance, the parties may have arranged their affairs in a way which has greatly advantaged the husband in terms of his earning capacity but left the wife severely handicapped so far as her own earning capacity is concerned. Then the wife suffers a double loss: a diminution in her earning capacity and the loss of a share in her husband’s enhanced income. This is often the case. Although less marked than in the past, women may still suffer a disproportionate financial loss on the breakdown of a marriage because of their traditional role as home-maker and childcarer.”
Lord Nicholls at [13]
“Marriage, it is often said, is a partnership of equals. … This is now recognised widely, if not universally. The parties commit themselves to sharing their lives. They live and work together. When their partnership ends each is entitled to an equal share of the assets of the partnership, unless there is a good reason to the contrary. Fairness requires no less. But I emphasise the qualifying phrase: ‘unless there is good reason to the contrary’. The yardstick of equality is to be applied as an aid, not a rule.”
Lord Nicholls at [16]
“One of the circumstances is that there is a real difference, a difference of source, between: (1) property acquired during the marriage otherwise than by inheritance or gift, sometimes called the marital acquest but more usually the matrimonial property; and (2) other property. The former is the financial product of the parties’ common endeavour, the latter is not. The parties’ matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose. As already noted, in principle the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been.”
Lord Nicholls at [22]
“A good reason for departing from equality is not to be found in the minutiae of married life.”
Lord Nicholls at [67]
“If the assets are not ‘family assets’, or not generated by the joint efforts of the parties, then the duration of the marriage may justify a departure from the yardstick of equality of division. As we are talking here of a departure from that yardstick, I would prefer to put this in terms of a reduction to reflect the period of time over which the domestic contribution has or will continue.”
Lady Hale at [152]
Relevance to the Two Houses Framework
Does the judgment in Miller;McFarlane support or undermine the current version of the framework?
Both cases fall comfortably within the Big Money category. But there are some useful comments that do describe how lower value cases are likely to be considered. In particular, Lady Hale makes a number of comments that reflect the practice of ensuring that the children’s primary carer is housed first, before moving on to consider whether the other parent can afford a home as well:
“This is a clear recognition of the reality that, although the couple may seek to go their separate ways, they are still jointly responsible for the welfare of their children. The invariable practice in English law is to try to maintain a stable home for the children after their parents’ divorce. … Giving priority to the children’s welfare should also involve ensuring that their primary carer is properly provided for, because it is well known that the security and stability of children depends in large part upon the security and stability of their primary carers.”
Lady Hale at [128]
“Too strict an adherence to equal sharing and the clean break can lead to a rapid decrease in the primary carer’s standard of living and a rapid increase in the breadwinner’s. The breadwinner’s unimpaired and unimpeded earning capacity is a powerful resource which can frequently repair any loss of capital after an unequal distribution: see, eg, the observations of Munby J in B v B (Mesher Order)[2002] EWHC 3106 (Fam), [2003] 2 FLR 285. Recognising this is one reason why English law has been so successful in retaining a home for the children.”
Lady Hale at [142]