31 May 2004
Judgment in the divorce of Arsenal footballer Ray Parlour is expected from the Court of Appeal in mid-June. Should the court decide in Karen Parlour’s favour, the decision is likely to have far-reaching consequences for maintenance in high net income divorces, and represent a significant increase in the threshold for maintenance awards.
Ray and Karen Parlour met in 1990, married in 1998 and separated three years later. They have three children. Both parties are appealing an order, under which Karen Parlour received two mortgage-free houses, a lump sum of £250,000 and maintenance of £250,000 per annum. Karen Parlour is applying for an increase in maintenance, while Ray Parlour is applying to reduce the award.
The main principles for debate are: what is the purpose of maintenance and should any part of the maintenance award include an element for the payee to save?; does the payee have an entitlement to share the other’s income or should maintenance be defined to the income needs of the payee?; and if, in relation to capital after a long marriage, there is a 50-50 division of capital, why should income be treated differently?
The House of Lords’ decision in White (2000) changed the approach to assessing financial settlements on divorce. The previous approach of assessing a claim on reasonable requirements was replaced by a ‘yardstick of equality’ to ensure fairness when considering the division of the available assets.
However, the question of the fair division of income has been unexplored since the decision in White. All the ‘big money’ cases delivered since White have been dealt with on a clean-break basis, and the wives have had significantly more years of domestic contribution than Karen Parlour, with marriages ranging from 23 to 35 years.
Karen Parlour argues that her contribution to her husband’s career grants her equal entitlement to his income.
She claims there would be sexual discrimination if she is denied the option to save for the future and that Ray Parlour’s earning capacity is a marital resource to which she has contributed. Conceptually, an earning capacity developed during the course of a relationship is as much a resource as capital. Surely, the principles in White apply equally to all resources? The courts have long recognised that an earning capacity developed during a marriage is a resource, albeit that seeking to place a value on it is not an exercise that can usefully be embarked upon. Nevertheless, the courts should bear in mind the disparity in economic positions where one spouse is left with a capacity to generate considerable income through a successful career or business, and the other spouse is not.
Karen Parlour argues that the yardstick of equality should extend to income and that, through the principles of White, a fair maintenance award should not be constrained by reasonable requirements. The potential injustices of discrimination must be dealt with through a fair approach to capital and maintenance.
In my view, there is a material difference between dividing or sharing capital that has been built up during the marriage and determining the level of maintenance after the marriage has come to an end.
First, capital built up during the marriage is part of a joint enterprise. On divorce, the joint enterprise ends. Second, maintenance is essentially to provide for income needs, and not part of the ‘matrimonial pot’ from which the assets are divided. The Matrimonial Causes Act 1973 confers a duty on the court, when considering maintenance, to have regard to the net incomes and earning capacities of the parties, their respective needs and obligations, and the standard of living enjoyed during the marriage. As such, there can be no rational basis for employing a percentage to ascertain the appropriate level of maintenance. To do so places undue focus on income. Third, the court has an important statutory aim to consider a clean break, given the social desirability of both parties attaining self-sufficiency. An entitlement to a share of future income undermines this statutory aspiration. If the Court of Appeal disagrees, the floodgates for high maintenance claims may well open.