Miller v Miller: McFarlane v McFarlane

Legal Case Summary

Miller v Miller: McFarlane v McFarlane [2006] UKHL 24

Legal History

Miller v Miller: McFarlane v McFarlane¹ is a conjoined appeal case regarding financial provision offered in circumstances of divorce. The law with regards to financial provision has undergone extensive developments in order to accommodate cultural changes. In the pre-1970s era the courts’ powers were limited to only cash payments orders to non-property owning wives. The women were seen as the bearers of the children and the minders of home thereby freeing their husband for his economic activities hence, entitled in justice to share in its fruits.² In line with societal changes and moving towards gender equality came the courts’ powers to make property orders following the introduction of Matrimonial Proceedings and Property Act 1970.³

By 1973 and, with the enforcement of Matrimonial Causes Act,⁴ which is the current law, the orders the court can make have extended from maintenance pending suit to periodical payments to lump sum orders, property orders and pension orders.⁵ Along with these orders though, the court has several factors it needs to consider in deciding what financial orders to make in the context to the particular circumstances of the case. These are to be found in section 25⁶ and, include factors like, for example, the ‘income, earning capacity, property and other financial resources of each party’⁷, the ‘financial needs, obligations and responsibilities of each party’⁸, the ‘standard of living enjoyed by the family before the marriage broke down’⁹ and, the ‘age of each party and the length of marriage’¹⁰. Nonetheless, first and foremost the ‘welfare of the child’¹¹ is the first consideration that the court has to make.

The judges have interpreted section 25 quite broadly¹² and hence it can be assumed that they have a wide discretion when looking at the financial arrangements between the divorcing couple. However, they still have not found one overreaching objective or even consensus so there is not hard and fast rule. White v White¹³ seems to have ‘put an end to reasonable requirements as a yardstick, and lean more to equality unless there is good reason, whatever that may be, for departing from it’.¹⁴ What the HL did in White was to introduce the sharing principle according to which when both parties’ financial needs had been med, the starting point for the division of any surplus would be an equal division between the two parties. Miller; McFarland moved that rule a little further by suggesting that the court is likely to ignore claims that one spouse made a special contribution towards the matrimonial assets and ‘some of the assets might not be regarded as matrimonial and therefore not to be divided’.¹⁵

Issue

As such, the issue of the case relates to the statutory factors the court has to take into account with regards to financial provision and ultimately, the principles the court has to consider in order to achieve fairness in the division of property following a divorce.¹⁶ More specifically, the case of White v White changed the direction of English law in considering Financial Relief Applications in big money cases by moving from a position of only providing for wife’s reasonable needs, like for example in Conran v Conran,¹⁷ toward applying a yardstick of equality. According to this “there is no place for discrimination between husband and wife and their respective roles”.¹⁸

Nonetheless, this was applied to a long marriage where the wife/mother was presumed to have contributed as much as her husband hence, it left open the question of what to do with capital in short and medium-term marriages, that is less than 12-15 years, and the vexed question of whether the wife has a share in the husband’s high income, as well as his assets, on an equality basis, notwithstanding that any share would be beyond her reasonable needs. Both of these questions were answered in Miller; Mcfarlane. Miller’s concern was with the former and McFarlane’s concern was with the latter.

Facts

Miller’s¹⁹ factual situation was a short, childless marriage of only less than three years. The husband ended the marriage and subsequently formed a new relationship. Mr Miller’s capital was approximately around £17m and Mrs Miller’s assets was around £100,000, 50% of which was locked into a pension. The Court of Appeal emphasized the fact that the husband had caused the breakdown of the marriage (by running off with another woman)²⁰ and that he had caused the wife reasonable to expect a generous provision in the event of a divorce so the wife was awarded with £5m.²¹ The House of Lords rejected both these arguments as irrelevant.²² However, it held that even though it was a short marriage she was entitled to an equal share the assets acquired during the marriage, the husband’s wealth had increased significantly during their short marriage and the £5 million could be said to be a fair share of that money.²³

In McFarlane,²⁴ at the time of the marriage, both parties had been in successful careers. However, the wife, Julia McFarlane had given up a successful career in law to raise the three children of the family. The marriage ended after 16 years. The couple had assets of around £3 million which they agreed to share but they could not agree n the periodic payments.

Decision / Outcome

With regards to Miller, in Miller; McFarlane, Lord Nicholls held that in a short marriage it may be fair only to divide marital property that is the property acquired during the marriage.²⁵ In Miller this meant that the wife was awarded £5 million after a marriage of under three years: the couple generated about £15 million during the short marriage and she was entitled to a fair share of that.

With regards to McFarlane, the HL ordered payments of £250,000 per year so that these would ensure that the wife was compensated fairly for the losses created during the marriage particularly to her earning potential. This decision was based on the fact that equal division would not have produced fairness.²⁶ The couple had assets worth around £3 million, the husband was earning about £1 million a year. If the £3 million were divided equally, within a few years the husband would be many times wealthier than the wife. The wife had lost significant earning potential as a result of the marriage. The periodic payments were necessary to compensate her.²⁷

Impact

The House of Lords in Miller; McFarlane has clarified the law following the decision in White,²⁸ in relation to the provision of assets of short and medium-term marriages, and the Court’s approach to dealing with high earners generally. The significance of the case lies in the reasoning of the court which stressed again that the overriding objective remains that of achieving a fair outcome and that the three elements that are considered that is, needs, compensation and, entitlement to sharing of assets, are simply tools to achieve that end. More specifically, Baroness Hale in Miller; McFarlane suggested that “the ultimate objective is to give each party an equal start on the road to independent living”.²⁹

As mentioned above, in short marriage cases, the House of Lords considered there were three element as to how to construct a settlement which was fair to both parties: needs, compensation for economic disparity arising from the marriage and entitlement to sharing the assets/fruits of the marriage. What happened after Miller; McFarlane is that in short marriages, family assets and “non-business partnership-non-family assets”³⁰ will need to be identified. As such, the former are shared equally while the latter, may not be. For example, in a subsequent case, Rossi v Rossi,³¹ the judge claimed that “non-matrimonial property represents an unmatched contribution made by the party who brings it to the marriage justifying, particularly where the marriage is short, the denial of an entitlement to share equally in it by the other party…”.³² On the other hand, in a long marriage such non-matrimonial assets will likely to be considered to have been part of the matrimonial assets. For instance in B v B,³³ the court attempted to determine the extent to which it would be fair to include a husband’s pre-marital wealth in the division of property. The parties had been married for 15 years and there were no children. Although a sum of £820,000 was excluded, the wife still got hold of some of the pre-marital property.

Consequently, what is also of immense significance is that following Miller; McFarlane, the law ‘has moved away from the needs-based approach and has become more complicated within an analysis requiring consideration of the assets available for division, what principles do apply as to how to achieve fairness in the division of those assets, and how to deal with excess income of one of the parties over the family’s needs’.³⁴ Eekelaar agrees with this in that by focusing on contributions rather than needs, there has been a shift in the approach of the courts that is a shift from a welfare-based approach (meeting the needs of the parties) to an entitlement-based approach (what the spouse has ‘earned’ through the marriage).³⁵

In other words, it is no longer a case of the money-earner having to give the child-carer/ homemaker some of ‘his’ money; rather it is the court dividing the couple’s joint assets.³⁶ It is suggested that ‘the complexity that has been introduced has largely resulted from a reluctance to accept the principle of equality that was at the heart of the decision of the HL in White v White’.³⁷ Arguably, much of the subsequent case law can be seen as an attempt to diminish the significance of that decision. The concepts of marital and non-marital property have been developed by the lower courts in order to diminish the principle of equality. What this means is that, post-White, the money-earner gets to keep much more than half of the assets, to the disadvantage of the homemaker and child-carer.³⁸

Footnotes

^{1 2006} UKHL 2 (Miller; McFarlane)

² Sir Jocelyn Simon PC in a Law Society address (1965)

³ Matrimonial Proceedings and Property Act 1970

⁴ Matrimonial Causes Act 1973

⁵ Ibid, Part II

⁶ Ibid s 25

⁷ Ibid s 25(2)(a)

⁸ Ibid s 25(2)(b)

⁹ Ibid s 25(2)(c)

¹⁰ Ibid s 25(2)(d)

¹¹ Ibid s 25(1)

¹² White v White ²⁰⁰¹ 1 A.C. 596

¹³ Ibid

¹⁴ The Baroness Deech of Cumnor DBE, ‘What’s a woman worth? The maintenance law’ (13 October 2009) lecture at Gresham College

¹⁵ Ibid

¹⁶ Miller; McFarlane (n 1) ¹ (Lord Nicholls)

^{17 1997} 2 FLR 615

¹⁸ White v White (n 12) ⁶⁰⁵ (Lord Nicholls)

¹⁹ Miller v Miller ²⁰⁰⁵ EWCA 984

²⁰ Ibid ¹³ (Thorpe LJ)

²¹ Ibid ³³ (Thorpe LJ)

²² Miller; McFarlane (n 1) ⁵⁶– ⁶⁵ and ⁹⁵ (Lord Nicholls)

²³ Ibid ⁹ (Lord Nicholls)

²⁴ McFarlane v McFarlane: Parlour v Parlour ²⁰⁰⁴ EWCA (Civ) 872

²⁵ Miller; McFarlane (n 1) ⁹ (Lord Nicholls)

²⁶ Ibid ¹⁵⁴–¹⁵⁶ (Baroness Hale)

²⁷ Ibid

²⁸ White v White (n 12)

²⁹ Miller; McFarlane (n 1) ¹⁴⁴ (Baroness Hale)

³⁰ Ibid ¹⁵⁰ (Baroness Hale)

^{31 2006} EWHC 1482 (Fam)

³² Ibid ¹⁰ (Nicholas Mostyn QC)

^{33 2012} EWHC 314 (Fam)

³⁴ Jeffrey Green Russell Ltd, ‘Miller and McFarlane (2006 UKHL 24) What does it all mean?’ (4^th December 2006) here accessed 19^th July 2015

³⁵ John Eekelaar, ‘Miller v Miller: the descent into chaos’ ²⁰⁰⁵ Fam Law 870

³⁶ Jonathan Herring, Family Law (6^th edn, Pearson 2013) 278

³⁷ Ibid

³⁸ K v L ²⁰¹¹ EWCA Civ 550 and Robson v Robson ²⁰¹⁰ EWCA Civ 1171