Big-money divorce leaves ancillary mess

Fairness, not equality, is now the yardstick in divorce - but parliament may not want to leave this to judges, writes District Judge Roger BirdWhite v White [2000] 3 WLR 1571 HL was a landmark in the law of ancillary relief, being the first occasion for 30 years on which the House of Lords had considered the general principles of such applications.

But it raised as many questions as it answered; in particular, was it always to be the case that (any) domestic contributions were to be equated with (any) financial contributions? It was soon the conventional wisdom that practitioners would have to wait for the Court of Appeal to tell us what White actually meant in practice.

Has that moment come with the widely reported case of Cowan v Cowan (2001) The Times, 17 May? In Cowan Lord Justice Thorpe remarks that 'there can be no doubt that the specialist profession is looking to this court to suggest ways and means of applying the principles and guidance in Lord Nicholls' speech to present and future cases..' However, he concludes, this is not the right occasion.

Cowan is even more a big money case than White, it was argued on pre-White principles, and 'any consideration of the application of the principles in White to the sort of case that is decided daily by district judges up and down the country' must wait.

Even so, Cowan is a case of great interest and, it may be thought, some points of general application can certainly be discerned.

Briefly, the total assets of the Cowans were 11.5 million (8.3 million held by the husband and 3.2 million held by the wife).

Mr Justice Singer awarded her a lump sum of 1.775 million and ordered certain property to be transferred, the result of which was that she had a net worth of 3.2 million (about 28%) and the husband had 8.3 million (72%).Mr Justice Singer made many important findings of fact but one particularly significant finding (adopted by the Court of Appeal) was that while the wife had played an active and important role in the early years of the husband's business, she was no Lady Conran, and the major credit for the parties' wealth must be given to the husband.Mr Justice Singer's decision was based on pre-White notions of 'reasonable requirements' which meant that the Court of Appeal had no difficulty in allowing the appeal and exercising its own discretion.

(Applications by both sides for a retrial were rejected).

The judgments are long and complex and are required reading, but only the following important points can be summarised here.Fair outcomeLord Justice Thorpe said that the consistent theme was the search for a fair outcome.

'The decision in White clearly does not introduce a rule of equality.

The yardstick of equality is a cross-check against discrimination.

Fairness is the rule...' He summarised the consequences of White as follows: l The court must apply thesection 25 Matrimonial Causes Act 1973 criteria;l The unexpressed objective of the section 25 exercise is to arrive at a fair solution;l Any discriminatory appraisal of the roles of the woman as home-maker and the man as breadwinner is disapproved.

A calculation of the result of equal division is a necessary cross-check against such discrimination;l Evaluation of outcome by reference to reasonable requirements is not permissible.Plea for legislationLord Justice Thorpe went on to comment that whereas at least the doctrine of reasonable requirements had enabled negotiators and judges to predict and calculate conclusions, the present prohibition on the use of that tool extends judicial discretion (and impliedly causes uncertainty) at a time when government policy and informed opinion seems to be moving in the opposite direction.

'Therein lies the heightened case for legislation', a case which previously his Lordship had resisted.Convention and equalityThree further points of interest arise from Lord Justice Thorpe's judgment.

One of the wife's arguments had been that the government intended to ratify article 5 of protocol 7 to the European Convention for Human Rights with the result that there would be a right to equality of outcome on division of assets on divorce.

That got nowhere; leaving aside the point that article 5 had not yet been ratified, he and the other judges were unanimous that even when it was ratified article 5 would not result in such a right.Then there was an interesting point about the husband's pension fund, valued at 1.9 million.

This was 'no more and no less than a whole life fixed rate income stream' and was not truly comparable with a cash fund of 1.9 million.

Finally, the husband's suggestion that only the values of assets as at separation should be taken into account and that post-separation increases should be ignored was given very short shrift; the language of the statute requires that the assessment of assets must be at the date of trial or appeal.ContributionsIn his judgment Lord Justice Walker said that he did not see the decision in White as 'some sort of cataclysm which has put quarter of a century's family jurisprudence into antediluvian obsolescence.' White had been a genuine case of a partnership, with wealth acquired by hard work and prudence rather than outstanding inventiveness or entrepreneurial skills.

Mr Cowan had been not merely a successful businessman but 'an exceptionally active, determined and innovative businessman'.

The difference from White was that there was here much less equality of proprietary entitlement as between husband and wife and the husband's contribution in terms of entrepreneurial flair, inventiveness and hard work was truly exceptional.Lord Justice Mance reviewed the section 25 factors and considered the parties' financial needs 'in order to maintain the lifestyle to which they have become accustomed'.

He went on to consider how the court should deal with a situation where, after a long marriage, the assets considerably exceeded needs, children were not a consideration and the husband worked while the wife's contribution had been domestic.

How should the court evaluate the relative significance of the husband's special achievement against the parties' long partnership in marriage? His Lordship did not find this easy.

He set out the following possibilities (and answers): (a) Husband's work produced no more than sufficient assets to enable both parties to be housed and continue to live in the manner to which they are accustomed - (divide assets equally);(b) Husband by special skill or effort accumulated wealth surplus to that in case (a) (there is a scale of special skill, etcetera, running from 'ordinary' to 'stellar'.

Over-refined analysis is to be discouraged.

Special skill and effort is a material consideration to which weight can and should be given in appropriate cases);(c) Husband acquires surplus assets without special skill or effort - the mere accumulation of assets may be regarded as a development for the joint benefit;(d) One or other party acquires assets before marriage or by inheritance during marriage and either (i) the assets are no more than in (a), or (ii) are surplus to that amount.

(As to (i), the position would be as in (a).

As to (ii), see White: such property stands on a different footing from what may loosely be called 'matrimonial property').A fine old messIn the event, the Court of Appeal increased the wife's award to3 million, which gave her about 38% of the total assets.

So what can we make of all this? First, as Lord Justice Thorpe pointed out, life for practitioners gets no easier, and outcomes must be more unpredictable.

Secondly, any idea that White means automatic equality is now dispelled; instead, courts must be fair (who would have thought it?).

Third, the evaluation of domestic versus financial contributions can be highly complex.And finally, many will agree with Lord Justice Thorpe that the law is now such a mess that legislation is required to sort it out.District Judge Roger Bird sits at Bristol Combined Court Centre