McFarlane – v – McFarlane; Miller – v – Miller

The House of Lords decides
On 24th May 2006 the House of Lords delivered long-awaited decisions in the two ancillary relief cases of McFarlane and Miller. Although on the face of it these are big money cases of little relevance to the majority of parties or practitioners, the court of Appeal decisions had appeared to go against established practice. In this article I look at the cases and seek to draw out any wider implications.

The facts

McFARLANE/ PARLOUR
McFarlane – Parties aged 44; 18 year marriage; children 15, 13, 8. H was an accountant earning £750K; W was a mother and housewife having given up her career as a solicitor with a leading city firm.
Parlour – H 30, W 33; 3 year marriage preceded by a 9 year relationship including 3 years of cohabitation; children 8, 6 and 4. H was a footballer earning £1.2m but this level of income would be short-lived; W was a mother and housewife.

MILLER
Very short marriage.
Husband owned very substantial assets.
The wife was able to establish that the marriage broke down contrary to her wishes as a result of the husband’s conduct.
This was used by the wife to counter the fact of the shortness of the marriage relied upon by the husband (a factor upheld by the Court of Appeal in G – v – G [2004] 1 FL 1011.
In those circumstances it seemed fair to the judge to award the wife very substantial assets (£5m) although they amounted to only a modest proportion of the husband’s assets.

The cases in the Court of Appeal

McFARLANE/ PARLOUR [2004] 2 FLR 893

The orders

McFarlane – pps at £250000 pa for five years; no s28(1A) bar; at the end of the term the Court would be able to capitalise W’s claim for future maintenance under s31 – see paras 70 and 113
Parlour – pps at £444K pa for four years; no s28(1A) bar; at the end of the term the Court would be able to capitalise W’s claim for future maintenance under s31 – see para 77.

Principles emerging

1. The cases are unusual in that incomes very substantially exceed needs : see paras 55 and 143;
2. Where an immediate clean break is not achievable, it remains the duty of the Court to consider a possible future clean break (para 123);
3. In such cases it may be possible to achieve a clean break by dividing the surplus of income over needs for a limited period to enable the recipient to invest for the purpose of achieving financial independence : para 66;
4. Even substantial earners are obliged to complete the section of the Form E setting out their budget : para 83;
5. As a matter of principle, Lord Nicholls comments in WHITE about discrimination apply to income as well as to capital (paras 104/5); but this does not necessarily result in equality (para 106);
6. The consequence of this is that to restrict W’s pps to her needs leaving H the balance of his income is discriminatory where W has, through her domestic contributions, helped H to develop his earning potential (para 134);
7. PPs exceeding reasonable requirements come with the obligation on W to save towards independence (para 135)

MILLER [2005] 2 FLR 1991

The order

Appeal dismissed

Principles emerging

1. The Court exercised a quasi-inquisitorial role under section 25 and so, even where a party had agreed at the FDR not to pursue an issue (ie conduct), the Court was entitled to consider it where it appeared relevant.
2. The circumstances in which a short marriage come to an end are relevant : is the wife driven to petition by her husband’s unfeeling misconduct or has she exited from the marriage capriciously and for her own advantage.
3. The old cases on short marriages talking in terms of (a) considering the financial impact of the marriage on the parties and (b) putting the parties back in their pre-marriage positions are no longer good law : they are rooted in the old pre-WHITE principle of reasonable requirements.
4. Although the judge’s reasoning was almost incomprehensible (my gloss on the Court of Appeal judgements!!) they could not say he was plainly wrong.

The decisions in the House of Lords

McFARLANE

The outcome

Appeal allowed. District Judge’s order restored, namely £250000 pa for life.

The principles established

1. There is no reason why pps should be confined to meeting a need for maintenance : they may be compensatory (paras 31/2).
2. Surplus of income over expenditure should not be seen simply as a means by which the wife can accumulate a capital reserve (para 95); although the wife will, on a discharge application have to show that she has acted responsibly (para 99).
3. A party wishing to extend a term maintenance order has always had to surmount a high threshold. It was wrong to impose the obligation on this wife of seeking to establish that the five year term should be established (para 96/7).

MILLER

The outcome

Appeal dismissed firstly because of the large increase in the husband’s wealth during the marriage; and secondly because of the high standard of living during the marriage.

The principles established

1. The principle that when a marriage ends the parties are entitled to share equally in the fruits of the marriage, unless there is good reason to the contrary, applies as much to short marriages as to long marriages (para 16/7). The suggestion to the contrary in GW – v – RW was wrong (para 18).
2. The Court may distinguish between property resulting from the parties’ common endeavour and other property. The matrimonial home normally falls into the former category even if brought into the marriage by one party (para 22).
3. It is in relation to non-matrimonial property that the length of the marriage may be relevant (paras 24/5). It may, however, not be proportionate to distinguish between matrimonial and non-matrimonial property (para 26).
4. The source of the property is likely to diminish with the increasing length of the marriage (para 152).
5. Old cases on short marriages focussing on the wife’s needs and on compensating her for financial disadvantage resulting from the breakdown of the marriage did not represent the law although there may be good reason for departing from equality in relation to the non-matrimonial property (para 55).
6. Singer J had referred to the wife’s legitimate expectations : if he was simply referring to the standard of living during the marriage, he was right; if he sought to set up a new principle, he was wrong (paras 56/80.
7. Singer J and the Court of Appeal were wrong to allow the wife to rely on the husband’s conduct as one of the circumstances of the case to be set against the shortness of the marriage (paras 60/5; 145). The issue of conduct was governed by the strict wording of the Act.
8. It is only in exceptional cases that contributions should be regarded as unequal (paras 66/8, 146).

Important principles of general application

1. Lifetime maintenance
   
   The old cases remain good law. Where a wife’s earning capacity has been adversely affected by years as a mother and housewife, a clean break may never be possible : see for example FLAVELL [1997] 1 FLR 353. See also M – v – M [1987] 2 FLR 1 and BARRETT [1988] 2 FLR 516 emphasising the vulnerability of such wives.
   In BARRETT it was held to be wrong to impose term where impossible to predict when, if ever, W would become financially independent.
   In such circumstances the Court on an application to extend will consider the purpose of the original order : see FLEMING [2004] 1 FLR 667 – where parties agreed a term it required something exceptional to extend the term.
   
2. Short marriages
1. Old cases emphasising that the Court should simply put the wife back in the position she was in prior to the marriage, or award a modest lump sum to get her back on her feet, are wrong.
2. The wife is entitled :
1. to share in assets accumulated during the marriage; and
2. to receive an award relative to the standard of living during the marriage.
3. Conduct cannot be introduced by the back door to counter-balance the shortness of the marriage.

CHRISTOPHER NAISH