For richer or poorer…till divorce do us part?

As 2006 saw the McCartney’s, Stein’s and Tarrant’s go their separate ways, in May 2006 the House of Lords delivered two landmark rulings in the cases of McFarlane and Miller. The aim of this article is to look at the important key decisions in those cases and how the decisions are likely to affect future cases.

The Miller Case

This case concerned a childless marriage of only 2 years and 9 months. At the time of the separation the husband was still only 39 years of age but worth £17.5 million. In contrast his wife was 33 years of age earning £85,000 per year as an Associate Partner in a public relations firm. In April 2003, the husband left the marriage to pursue a relationship with another woman whom he subsequently married.

The key decisions from the Miller case

The starting point of equal division of marital assets is to apply equally to a short marriage as to a long marriage;

Mr Miller’s decision to end the marriage would not impact upon the size of the award made as the conduct of the parties would only be relevant in exceptional cases;

Assets amassed during the marriage are to be distinguished from pre-marital assets and inherited or gifted assets.

The McFarlane Case

This case concerned a marriage of 16 years where the parties had three children. Prior to the marriage both parties had equally promising career prospects as the wife was a solicitor, and the husband a chartered accountant. In 1991, before the birth of the parties’ second child, they agreed that the wife should abandon her career to bring up the children. The husband worked on and rose through the ranks to ultimately command a salary of over £750,000 per year net. When the parties separated the key question was how much maintenance should the wife receive and for how long?

The key decisions from the McFarlane case

The amount of maintenance awarded by the courts should not only be limited to amounts needed to maintain the wife. Orders for maintenance could also be made to compensate a party (usually a wife) where they had given up a career to support their spouse and care for the children.

Where a maintenance award is made to compensate for loss or a reduction in earning capacity, it may not be appropriate for those payments to be brought to an end after a set term, if stopping maintenance would result in unfairness.

The effect of these decisions on future case

The importance of these cases cannot be underestimated as they effectively recognize marriage as an equal partnership where spouses are entitled to share both assets and income. In cases of short, childless marriages, the Miller case introduces the possibility that marital assets (including, in most cases the family home) could be vulnerable to equal division regardless of the length of the marriage. The exceptions to this rule are pre-marital assets, inherited assets and gifts which are likely to be considered separately. Early signs that the ruling is beginning to take effect may be found in rumours that Sir Paul McCartney is reportedly to pay estranged wife Heather Mills £120 million in a secret divorce settlement following their 4 year marriage. The Miller ruling is also likely to intensify the pressure for pre-nuptial agreements to become legally binding for those who wish to protect their assets in the event of divorce. In contrast the McFarlane ruling is likely to result in the compensation of spouses (mostly wives) for any economic disadvantage suffered as a result of abandoning promising careers to stay at home and bring up the children. Maintenance is no longer to be calculated on a needs only basis, but on a needs and compensation basis. In essence the rulings confirm that the person who cooks the bacon is entitled to be treated as fairly as the person who brings home the bacon.

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