White v White
| Jurisdiction | UK Non-devolved |
| Judge | LORD NICHOLLS OF BIRKENHEAD,LORD HOFFMANN,LORD COOKE OF THORNDON,LORD HOPE OFCRAIGHEAD,LORD HUTTON |
| Judgment Date | 26 October 2000 |
| Judgment citation (vLex) | [2000] UKHL J1026-3 |
| Date | 26 October 2000 |
| Court | House of Lords |
[2000] UKHL J1026-3
Lord Nicholls of Birkenhead
Lord Hoffmann
Lord Cooke of Thorndon
Lord Hope of Craighead
Lord Hutton
HOUSE OF LORDS
My Lords,
Divorce creates many problems. One question always arises. It concerns how the property of the husband and wife should be divided and whether one of them should continue to support the other. Stated in the most general terms, the answer is obvious. Everyone would accept that the outcome on these matters, whether by agreement or court order, should be fair. More realistically, the outcome ought to be as fair as is possible in all the circumstances. But everyone's life is different. Features which are important when assessing fairness differ in each case. And, sometimes, different minds can reach different conclusions on what fairness requires. Then fairness, like beauty, lies in the eye of the beholder.
So what is the best method of seeking to achieve a generally accepted standard of fairness? Different countries have adopted different solutions. Each solution has its own advantages and disadvantages. One approach is for the legislature to prescribe in detail how property shall be divided, with scope for the exercise of judicial discretion added on. A system along these lines has been preferred by the New Zealand legislature, in the Matrimonial Property Act 1976. Another approach is for the legislature to leave it all to the judges. The courts are given a wide discretion, largely unrestricted by statutory provisions. That is the route followed in this country. The Matrimonial Causes Act 1973 confers wide discretionary powers on the courts over all the property of the husband and the wife. This appeal raises questions about how the courts should to exercise these powers in so-called 'big money' cases, where the assets available exceed the parties' financial needs for housing and income.
The powers conferred by the 1973 Act have been in operation now for 30 years. This is the first occasion when broad questions about the application of these powers have been considered by this House. The House considered the statutory provisions recently, in Piglowska v. Pigslowski [1999] 1 WLR 1360. But there the main issue concerned how appellate courts should approach appeals from trial judges' decisions, rather than the principles trial judges should apply when hearing applications for financial relief in this type of case. It goes without saying that these principles should be identified and spelled out as clearly as possible. This is important, so as to promote consistency in court decisions and in order to assist parties and their advisers and mediators in resolving disputes by agreement as quickly and inexpensively as possible. The present case is an unhappy, if extreme, example of how the parties' resources can be eroded significantly by legal and other costs.
Mr and Mrs White
Martin and Pamela White were married in September 1961. She was 26 years old, he was almost 24. They had three children. Tragically, their eldest child, Katherine, was killed in the Kathmandu air crash in 1992. Philip is now 30, and Hilary is 29. The marriage broke down in 1994. A divorce decree nisi was granted in December 1995, and this was made absolute in May 1997. Mr and Mrs White both filed applications for ancillary financial relief. The appeals before your Lordships' House are appeals in the ancillary relief proceedings.
Throughout their marriage Mr and Mrs White carried on a dairy farming business in partnership. Farming was in their blood. They both came from farming families. The business was successful. At the outset each of them contributed, in cash or in kind, a more or less equal amount of capital, of about £2,000. A year after their marriage they bought a farm of their own, set in beautiful countryside in Somerset. Blagroves Farm comprised 160 acres of land. Blagroves itself, in which they made their home together, was a fine Jacobean house. The price was £32,000. Of this, £21,000 was borrowed on mortgage. Mr White's father made them an interest-free loan of £11,000, together with a further £3,000 used as working capital. Over time, they bought further land, substantially increasing the size of the farm. Eventually the farm comprised 337 acres. Throughout, Blagroves Farm and all the land were held by the two of them jointly. The whole was treated as property of the farming partnership. In 1974 Mr White's father released his loan. Initially this was reflected in an increase in Mr White's partnership capital account. Ten years later Mr and Mrs White's capital accounts were merged into a single joint capital account.
Blagroves Farm, with its live and dead stock and machinery, together with milk quota, were Mr and Mrs White's principal assets. At the end of 1996, when the applications came before Holman J, these items were worth, in round figures, £3.5 million.
Mr and Mrs White also farmed Rexton Farm as part of their partnership business. This farm also comprised over 300 acres. Rexton Farm was ten miles from Blagroves Farm, but the two were run as a single unit. Rexton was part of the Willett estate. Mr White's father bought this estate in 1971 at an advantageous price, mainly with the assistance of borrowings. Later he transferred the estate into the joint names of himself and his three sons. The four of them held the estate in equal shares. Mr White's share of the cost of borrowing, in the form of interest and endowment premiums, was met, through a tenancy agreement, by the Whites' farming partnership. In 1993 Mr White acquired Rexton Farm, subject to a mortgage debt of £137,000, as his partitioned share of the Willett estate. Rexton Farm, as distinct from the farming business carried on at the farm, was held in Mr White's sole name. Unlike Blagroves Farm, it was not in joint names, nor was it treated as belonging to the Whites' partnership. Rexton Farm was worth £1.25 million.
Mr and Mrs White had also made pension provision for themselves. A substantial mortgage was outstanding on both farms. After deduction of estimated liabilities for capital gains tax and costs of sale, the overall net worth of Mr and Mrs White's assets was, in round figures, £4.6 million. This comprised, on the figures found and used by the judge: Mrs White's sole property: £193,300 (mostly pension provision); her share of property owned jointly, either directly or through the partnership: £1,334,000; Mr White's share of jointly-owned property: £1,334,000; and Mr White's sole property: £1,783,500 (mostly Rexton Farm).
The proceedings
The applications proceeded at all stages on a 'clean break' basis. Holman J decided that Mrs White reasonably required £980,000. This was to be satisfied by payment of £800,000 and by her keeping her sole assets. On being paid this amount, Mrs White was to transfer all the jointly owned assets to Mr White. Thus, under this order, Mrs White was to receive slightly over one-fifth of their total assets.
Holman J's reasoning can be summarised as follows. Neither party had any earning capacity outside farming. Mrs White's wish to have enough money to enable her to buy a farm of her own was not a reasonable requirement. It was unwise and unjustifiable to break up the existing, established farming enterprise so that she could embark, much more speculatively, on another. Her housing and financial needs were a farmhouse type of home, with stabling and 25 acres of land for her horses, costing £425,000. She needed a net annual spendable income of £40,000. Capitalised, having due regard to her age, a net income of this amount called for a 'Duxbury' fund of £550,000. The Duxbury label is derived from the decision of the Court of Appeal, Duxbury v Duxbury [1992] Fam 62, where this type of fund was first described. This provision for Mrs White would leave Mr White with an amount exceeding his reasonable requirements simply in terms of a home and income. But, additionally, he reasonably required to be able to continue farming in a worthwhile way. The financial contributions from his family made this reasonable.
Mrs White appealed to the Court of Appeal. Her appeal was successful. The Court of Appeal (Butler-Sloss, Thorpe and Mantell L JJ) increased the amount of her payment from £800,000 to £1.5 million. On the judge's figures, and after deducting £310,000, representing the parties' costs in both courts, this meant that Mrs White's share of the total assets would be increased to about two-fifths. Thorpe LJ regarded the farming partnership as the dominant feature in the case. Mrs White was entitled to use her share as she thought fit. Only in so far as she sought additional capital from Mr White was the judge entitled to evaluate critically the use to which such additional capital was proposed to be put. There was no fairness in an outcome which involved a transfer of property order in favour of Mr White. The court did not have the material to assess how much Mrs White would have been entitled to receive on dissolution of the partnership. But, having regard to the parties' contributions and the goal of overall fairness, the provision for Mrs White should be increased by a further £700,000. Mantell LJ agreed. Butler-Sloss LJ considered that Mrs White was entitled to more than her partnership share, to recognise the contribution she made to the family as wife and mother over and above her partnership role in the farming business. Mr White would still be able to continue to farm, even if on a reduced scale.
Mr White appealed to your Lordships' House, seeking the restoration of Holman J's order. Mrs White cross-appealed. She seeks an order giving her an equal share in all the assets.
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