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House of Lords
Session 1999-2000
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Judgments - White White v. White (Conjoined Appeals)


Lord Nicholls of Birkenhead Lord Hoffmann Lord Cooke of Thorndon Lord Hope of Craighead Lord Hutton














ON 26 OCTOBER 2000


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.

Features of the case

    I have already noted that this was a clean break case, where the children were grown up and independent. The available assets substantially exceeded the amounts required by Mr and Mrs White for their financial needs, in terms of a home and income for each of them. The general observations I make later should be read with this in mind.

    Two other features should be noted. First, and importantly, is the equality of contribution made by Mr and Mrs White over their 33 years of married life. The judge found that each party contributed a great deal of effort to the marriage and the welfare of the family. Within the home it was the wife who primarily brought up the children, and she also worked hard in all sorts of ways on the farm. Mr White was a hardworking and active farmer. Holman J said:

    'In truth this was a marital and also a business partnership in which, by their efforts and commitment, each contributed to the full for 33 years, and any attempt to weigh the respective contributions of their effort is idle and unreal.'

Thus, and this is itself a notable aspect of the equality of contribution, in this case the business partnership was a reality.

    A second feature, although of less importance, is that the assets of Mr and Mrs White did not derive wholly from their own efforts. Without the initial loan of £14,000 from Mr White's father, the young couple would not have been able to acquire their own farm when they did. The advantageous terms on which Mr White acquired Rexton Farm stemmed from his father' purchase of the Willett estate.

    Against this background I turn to the statutory provisions.

The statutory provisions

    The court's powers to make financial provision on divorce derive from statute. In 1970 the statutory provisions were outdated and inadequate. They were primarily concerned with income for the maintenance of spouses and children. The property adjustment provisions were limited. They were first enacted in the middle of the 19th century, and so they reflected the values of male-dominated Victorian society. Essentially, the property adjustment provisions comprised power to order property to be settled on the other spouse and the children, and power to vary ante-nuptial and post-nuptial settlements. The power to order a settlement dated back to the Matrimonial Causes Act 1857, the statute which supplanted the jurisdiction of the old ecclesiastical courts and set up the new Court for Divorce and Matrimonial Causes. The power was exercisable against a wife whose adultery, cruelty or desertion had founded the divorce. It was seldom used. There was no power to make a corresponding order against a husband. This power was augmented in 1963 by power to order payment of a lump sum by either spouse. This power also was not much used.

    The power to vary settlements originated in the Matrimonial Causes Act 1859. The courts did their best to stretch this power to accommodate modern needs, but there is a limit to judicial creativity. The courts did not confine 'settlement' to formal trust deeds. The expression was taken to include any property acquired by the husband and wife except property acquired by one of them alone under an out-and-out disposition. This produced the striking anomaly that if the matrimonial home was bought in joint names there was a settlement which could be varied, but not if the house was owned by one of them alone.

    These and other problems were considered in a report of the Law Commission prepared in 1969 under the chairmanship of Scarman J: see Family Law - Report on Financial Provision in Matrimonial Proceedings, Law Com no. 25. An overall rationalisation of the court's powers was needed urgently.

    The Matrimonial Proceedings and Property Act 1970 made a fresh start. The powers of the court were greatly extended. The relevant provisions in the 1970 Act were re-enacted in substantially similar terms in Part II of the Matrimonial Causes Act 1973. Sections 23 and 24 of the Matrimonial Causes Act 1973 empower the court, on granting a decree of divorce and in certain other circumstances, to make financial provision orders and property adjustment orders. Financial provision orders, under section 23, include orders that one party to the marriage shall make payments to the other party. The payments may be periodical, either secured or unsecured, or lump sums. Property adjustment orders, under section 24, include orders that one party to the marriage shall transfer property to the other party. Section 24A empowers the court to make ancillary orders for the sale of property.

    Section 25, as substituted by section 3 of the Matrimonial and Family Proceedings Act 1984, sets out the familiar list of matters to which the court is to have regard in deciding how to exercise these powers. Section 25(1) provides that it is the duty of the court in deciding whether, and how, to exercise these powers to have regard to all the circumstances of the case. First consideration is to be given to the welfare of any child of the family under the age of eighteen. Section 25(2) provides that, as regards the exercise of these powers in relation to a party to the marriage, the court shall in particular have regard to:

      '(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;

      (b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

      (c) the standard of living enjoyed by the family before the breakdown of the marriage;

      (d) the age of each party to the marriage and the duration of the marriage;

      (e) any physical or mental disability of either of the parties to the marriage;

      (f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;

      (g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;

      (h) . . . the value to each of the parties to the marriage of any benefit . . . which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.'

    Section 25A requires the court to consider the appropriateness of a 'clean break'. Sections 25B-D, inserted by the Pensions Act 1995, make provision regarding benefits under pension schemes. They are not material in the present case.

    As originally enacted in 1970, in section 5(1) of the Matrimonial Proceedings Act 1970, the list of factors to be taken into account contained a tailpiece. The tailpiece declared what should be the objective of the court when exercising the statutory powers to make financial provision orders and property adjustment orders.. The court was so to exercise these powers:

    '. . . as to place the parties, so far as it is practicable and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other.'

This tailpiece was later deleted from the legislation, and nothing inserted in its place. In consequence, the legislation does not state explicitly what is to be the aim of the courts when exercising these wide powers. Implicitly, the objective must be to achieve a fair outcome. The purpose of these powers is to enable the court to make fair financial arrangements on or after divorce in the absence of agreement between the former spouses: see Thorpe LJ in Dart v Dart [1996] 2 FLR 286, 294. The powers must always be exercised with this objective in view, giving first consideration to the welfare of the children.


    Self-evidently, fairness requires the court to take into account all the circumstances of the case. Indeed, the statute so provides. It is also self-evident that the circumstances in which the statutory powers have to be exercised vary widely. As Butler-Sloss LJ said in Dart v Dart [1996] 2 FLR 286, 303, the statutory jurisdiction provides for all applications for ancillary financial relief, from the poverty stricken to the multi-millionaire. But there is one principle of universal application which can be stated with confidence. In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles. Typically, a husband and wife share the activities of earning money, running their home and caring for their children. Traditionally, the husband earned the money, and the wife looked after the home and the children. This traditional division of labour is no longer the order of the day. Frequently both parents work. Sometimes it is the wife who is the money-earner, and the husband runs the home and cares for the children during the day. But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering paragraph (f), relating to the parties' contributions. This is implicit in the very language of paragraph (f): '. . . the contribution which each has made or is likely . . . to make to the welfare of the family, including any contribution by looking after the home or caring for the family.' If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the home-maker and the child-carer. There are cases, of which the Court of Appeal decision in Page v Page (1981) 2 FLR 198 is perhaps an instance, where the court may have lost sight of this principle.

    A practical consideration follows from this. Sometimes, having carried out the statutory exercise, the judge's conclusion involves a more or less equal division of the available assets. More often, this is not so. More often, having looked at all the circumstances, the judge's decision means that one party will receive a bigger share than the other. Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.

    This is not to introduce a presumption of equal division under another guise. Generally accepted standards of fairness in a field such as this change and develop, sometimes quite radically, over comparatively short periods of time. The discretionary powers, conferred by Parliament 30 years ago, enable the courts to recognise and respond to developments of this sort. These wide powers enable the courts to make financial provision orders in tune with current perceptions of fairness. Today there is greater awareness of the value of non-financial contributions to the welfare of the family. There is greater awareness of the extent to which one spouse's business success, achieved by much sustained hard work over many years, may have been made possible or enhanced by the family contribution of the other spouse, a contribution which also required much sustained hard work over many years. There is increased recognition that, by being at home and having and looking after young children, a wife may lose for ever the opportunity to acquire and develop her own money-earning qualifications and skills. In Porter v Porter [1969] 3 All ER 640, 643-644, Sachs LJ observed that discretionary powers enable the court to take into account 'the human outlook of the period in which they make their decisions'. In the exercise of these discretions 'the law is a living thing moving with the times and not a creature of dead or moribund ways of thought.'

    Despite these changes, a presumption of equal division would go beyond the permissible bounds of interpretation of section 25. In this regard section 25 differs from the applicable law in Scotland. Section 10 of the Family Law (Scotland) Act 1985 provides that the net value of matrimonial property shall be taken to be shared fairly between the parties to the marriage when it is shared equally or in such other proportions as are justified by special circumstances. Unlike section 10 of the Family Law (Scotland) Act 1985, section 25 of the 1973 Act makes no mention of an equal sharing of the parties' assets, even their marriage-related assets. A presumption of equal division would be an impermissible judicial gloss on the statutory provision. That would be so, even though the presumption would be rebuttable. Whether there should be such a presumption in England and Wales, and in respect of what assets, is a matter for Parliament.

    It is largely for this reason that I do not accept Mr Turner's invitation to enunciate a principle that in every case the 'starting point' in relation to a division of the assets of the husband and wife should be equality. He sought to draw a distinction between a presumption and a starting point. But a starting point principle of general application would carry a risk that in practice it would be treated as a legal presumption, with formal consequences regarding the burden of proof. In contrast, it should be possible to use equality as a form of check for the valuable purpose already described without this being treated as a legal presumption of equal division.

Financial resources and financial needs

    I turn next to a point where the current state of the law is not altogether satisfactory. That this is so emerges clearly from the decision of the Court of Appeal in Dart v Dart [1996] 2 FLR 286. The point concerns the relationship of paragraph (a) and paragraph (b) in big money cases. Paragraph (a) concerns the available financial resources of each of the parties. Paragraph (b) is concerned with the 'financial needs, obligations and responsibilities' of each of the parties. In practice, paragraph (b) seems to have become largely subsumed into a wider, judicially-developed concept of 'reasonable requirements'. This wider concept appears, in turn, to have displaced consideration of the parties' available resources as a factor in its own right.

    This development had its origins in a decision of the Court of Appeal in O'D v O'D [1976] Fam 83 where the alluring phrase 'reasonable requirements' was coined. In that case Ormrod LJ considered the wife's position, 'not from the narrow point of "need", but to ascertain her reasonable requirements.' A similar approach was adopted a few years later, in Page v Page (1981) 2 FLR 198, 201. This was a case where there was enough capital to provide adequately for both husband and wife. Not surprisingly, the court held that when considering the needs and obligations of the parties a broad view could be taken. Ormrod LJ, whose judgments are a valuable source of much of the jurisprudence in this area of the law, said:

    'In a case such as this "needs" can be regarded as equivalent to "reasonable requirements", taking into account the other factors such as age, health, length of marriage and standard of living.'

The third case in this trilogy of cases where resources exceeded financial needs is Preston v Preston [1982] Fam 17. Ormrod LJ set out a list of general propositions. His second proposition was as follows:

    '. . . the word "needs" in section 25(1)(b) in relation to the other provisions in the subsection is equivalent to "reasonable requirements", having regard to the other factors and the objective set by the concluding words of the subsection . . .'

    Rightly or wrongly, these passages have been understood as saying that reasonable requirements is a more extensive concept than financial needs. This seems then to have led to a practice whereby the court's appraisal of a claimant wife's reasonable requirements has been treated as a determinative, and limiting, factor on the amount of the award which should be made in her favour.