The stuff of life

The divorce case of White has brought the concepts of fairness and equality into contention. David Ruck and Kathryn Peat look at the arguments used to gain the lion's share

Although the impact of White v White in October 2000 reverberates more strongly where there are substantial assets, the case casts a shadow across many areas of family law. It is only now, as further cases come to the courts, that its impact becomes clearer.

Two key words in the judgment have provoked discussion – 'fairness' and 'equality'.

White requires the courts to approach the financial issues arising from divorce on the basis of fairness. This is scarcely groundbreaking and, contrary to public conjecture, the concept of fairness must inform judicial thinking.

Where the concept of fairness becomes difficult is in its nexus with equality. Lord Nicholls' following comments have probably caused the most debate post-White: “A judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general rule, 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.”

The House of Lords was emphatic that this should not result in a “presumption” of equal division and rejected the concept of a “starting point” of equality. The difference between a presumption, a starting point and a check against a yardstick is probably more a matter of semantics than substance. The effect of this appears to be that the court should consider dividing assets equally, but can depart from equality if circumstances make an unequal division “fair”.

As all family lawyers know, parties often feel that they have been treated unfairly in any division. A stereotypical scenario involves a wife who believes that her sacrifice of a career to homemaking and child-rearing (which she considers has enabled her husband to build his own successful career) is not fairly recognised. The husband may feel that his financial contribution so outweighs her domestic contribution that he should have a disproportionately larger share of the spoils.

These stereotypical positions can produce great conflict and have resulted in a number of the decided cases post-White. They are beginning to show how the White judgment has been refined, with lawyers raising sophisticated arguments to try to drag the court away from equality. These arguments revolve around valuing 'contribution'.

Pre-White, the now discredited 'reasonable needs and requirements' test, which limited potential claims against very rich men to the level of assets considered necessary to meet the reasonable needs and requirements of their wives, meant that the very rich could feel relatively safe from a substantial attack on their fortunes. As the test was frequently the determining and limiting factor, the very rich husband did not need to justify a disproportionate share of the assets in his favour. Post-White, this is no longer the case, and inevitably the first few cases to have been decided, notably Cowan v Cowan (2001) and L v L (2002), involved families with assets of between £10m and £20m.

In both Cowan and L v L, the husband's desperation to minimise the amount that his wife should receive resulted in the argument that his contribution was 'stellar' or 'special'; in other words, his financial contribution was such a significant factor in the accumulation of the family wealth that it outweighed his wife's contribution, either financially or domestically.

In both cases this resulted in the husband receiving a greater proportion of the family assets (approximately 62 per cent). In Cowan, this 'stellar' contribution revolved around the husband's significant business idea, the invention of the bin liner, which had formed the basis of his financial success and which was deemed to display a spark of genius. In L v L, the financial contribution, while not in the league of a genius, was, in the mind of the judge, “special”, and again resulted in a disproportionate division.

The movement towards equality has resulted in an unhealthy obsession with the percentages received by each party. This has not necessarily been helped by the fact that both Cowan and L v L produced similar percentage splits.

It is only in H-J v H-J (2002) that a judgment appears to have resulted in equality of division. It is not coincidental that there were smaller assets than in Cowan and L v L and the wife received an equal share, which provided an amount closer to her reasonable needs and requirements. In this case, Mr Justice Coleridge indicated that he was unimpressed by oversophisticated arguments as to the relative worth of contributions by the parties, and that it “would be repugnant if the court were required to draw up a merit table in which the graduation of contribution gave rise to a marginally increased or decreased share of the financial spoils of the marriage”.

In the unreported case of H v H, the husband was a successful London solicitor who argued that his financial contribution to the marriage was not stellar but was certainly special, and outweighed his wife's domestic contribution. The court indicated that, while in Cowan and L v L the lives of the parties had followed a course that no one had ever contemplated, in this case the accumulation of wealth through the husband's career had been anticipated, and somehow this meant that the husband could not claim a special contribution.

The arguments arising from White may only have a strict relevance where there are significant assets; however, they strike to the heart of what is fair in a divorce and the extent to which the relative contributions of the parties can or should be equated to each other.

The laudable words of Lord Donaldson, requiring the court to be non-discriminatory, are relevant: “Whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering their contribution… There should be no bias in favour of the money-earner and against the homemaker and the child-carer.”

The question remains as to whether, in virtually every case, and in particular where the assets are significant, there should be a consideration of the relative contributions of the parties, which might result in a disproportionate division of assets.

L v L came before the Court of Appeal on 14 October and judgment is expected shortly. The argument being raised is whether it was appropriate to give more weight to the contribution of the husband in that case, insofar as it resulted in the accumulation of assets worth approximately £20m. Many argue that the whole stellar/special contribution argument is deeply flawed, while others will argue that, under discretionary jurisdiction under Section 25 of the Matrimonial Causes Act, the court is required to consider “the contribution that each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family”.

It remains to be seen whether this consideration of relative contribution will apply to virtually every divorce case, and if so whether it will result in increased animosity and difficulty in reaching compromises.

David Ruck and Kathryn Peat are partners at Gordon Dadds. Peat is also a recorder on the South Eastern Circuit