Judgments - White White v. White (Conjoined Appeals)

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    The soundness of this approach was considered by the Court of Appeal in Dart v Dart [1996] 2 FLR 286. Thorpe LJ, who has much experience in this field, gave the leading judgment. He sought to reconcile the existing practice with the statutory provisions: see page 296f-h. Reasonable requirements are more extensive than needs. What a person requires is likely to be greater than what that person needs. The objective appraisal of what the applicant requires must have regard to the other criteria of the section, including what is available, the parties' accustomed standard of living, their age and state of health and 'perhaps less obviously' the duration of the marriage, contributions and pension rights. Thorpe LJ said:

    'Used thus the consideration of needs ceases to be paramount or determinative but an elastic consideration that does not exclude the influence of any of the others. . . . in a big money case where the wife has played an equal part in creating the family fortune it would not be unreasonable for her to require what might be even an equal share.' (My emphasis)

This conclusion, I have to say, seems to me worlds away from any ordinary meaning of financial needs. Moreover, this conclusion gives an artificially strained meaning to reasonable requirements, the more especially as this phrase was adopted originally as a synonym for financial needs.

    The other two members of the Court of Appeal were more doubtful. Peter Gibson LJ, at page 302, questioned the correctness of an approach which determines the quantum of an award by reference only to the reasonable requirements of the applicant. Butler-Sloss LJ, with her immense experience of family work, shared Peter Gibson LJ's doubts: see page 305. She wondered whether the courts may not have imposed too restrictive an interpretation upon the words of section 25 and given too great weight to reasonable requirements over other criteria set out in the section. She considered that if spouses are in business together, the traditional 'reasonable requirements' approach to a wife's application for ancillary relief is not the most appropriate method to arrive at the post-divorce adjustment of family finances.

    Subsequently this question arose again, in Conran v Conran [1997] 2 FLR 615. Wilson J was of the view that, notwithstanding the observations of Thorpe LJ in the Dart case, one could not sensibly fit an allowance for contribution into an analysis of a wife's needs. That would do violence to language and to section 25(2), where contribution and needs are set out as different matters to which the court is required to have regard: see pages 623-4.

    Thus, as matters stand, there is a degree of confusion. I venture to think this has arisen because the courts have departed from the statutory provisions. The statutory provisions lend no support to the idea that a claimant's financial needs, even interpreted generously and called reasonable requirements, are to be regarded as determinative. Another factor to which the court is bidden to have particular regard is the available resources of each party. As my noble and learned friend Lord Hoffmann observed in Piglowska v Pigslowski [1999] 1 WLR 1360, 1379, section 25(2) does not rank the matters listed in that subsection in any kind of hierarchy. The weight, or importance, to be attached to these matters depends upon the facts of the particular case. But I can see nothing, either in the statutory provisions or in the underlying objective of securing fair financial arrangements, to lead me to suppose that the available assets of the respondent become immaterial once the claimant wife's financial needs are satisfied. Why ever should they? If a husband and wife by their joint efforts over many years, his directly in his business and hers indirectly at home, have built up a valuable business from scratch, why should the claimant wife be confined to the court's assessment of her reasonable requirements, and the husband left with a much larger share? Or, to put the question differently, in such a case, where the assets exceed the financial needs of both parties, why should the surplus belong solely to the husband? On the facts of a particular case there may be a good reason why the wife should be confined to her needs and the husband left with the much larger balance. But the mere absence of financial need cannot, by itself, be a sufficient reason. If it were, discrimination would be creeping in by the back door. In these cases, it should be remembered, the claimant is usually the wife. Hence the importance of the check against the yardstick of equal division.

    There is much to be said for returning to the language of the statute. Confusion might be avoided if courts were to stop using the expression 'reasonable requirements' in these cases, burdened as it is now with the difficulties mentioned above. This would not deprive the court of the necessary degree of flexibility. Financial needs are relative. Standards of living vary. In assessing financial needs, a court will have regard to a person's age, health and accustomed standard of living. The court may also have regard to the available pool of resources. Clearly, and this is well recognised, there is some overlap between the factors listed in section 25(2). In a particular case there may be other matters to be taken into account as well. But the end product of this assessment of financial needs should be seen, and treated by the court, for what it is: only one of the several factors to which the court is to have particular regard. This is so, whether the end product is labelled financial needs or reasonable requirements. In deciding what would be a fair outcome the court must also have regard to other factors such as the available resources and the parties' contributions. In following this approach the court will be doing no more than giving effect to the statutory scheme.

The Duxbury paradox

    This approach also furnishes a solution to the so-called Duxbury paradox in this type of case. In the present case Holman J referred to 'the well known paradox that the longer the marriage and hence the older the wife, the less the capital sum required for a Duxbury type fund.' A Duxbury calculation is, no doubt, useful as a guide in assessing the amount of money required to provide for a person's financial needs. It is a means of capitalising an income requirement. But that is all. As I have been at pains to emphasise, financial needs are only one of the factors to be taken into account in arriving at the amount of an award. The amount of capital required to provide for an older wife's financial needs may well be less than the amount required to provide for a younger wife's financial needs. It by no means follows that, in a case where resources exceed the parties' financial needs, the older wife's award will be less than the younger wife's. Indeed, the older wife's award may be substantially larger.

The next generation

    I must mention a further matter on which, through her counsel, Mrs White advanced submissions. It arises out of observations made in Page v Page (1981) 2 FLR 198. Ormrod LJ, at page 201, expressed the view that when assessing the amount of a lump sum provision under section 25 it is not legitimate to take into account the wife's wish to be in a position to make provision by will for her adult children. Dunn LJ, at page 203, made a similar statement. Ormrod LJ repeated this in his third general proposition in Preston v Preston [1982] Fam 17, 25. Brandon LJ was of the same view: see page 36.

    I agree with this proposition to a strictly limited extent. I agree that a parent's wish to be in a position to leave money to his or her children would not normally fall within paragraph (b) as a financial need, either of the husband or of the wife. But this does not mean that this natural parental wish is wholly irrelevant to the section 25 exercise in a case where resources exceed the parties' financial needs. In principle, a wife's wish to have money so that she can pass some on to her children at her discretion is every bit as weighty as a similar wish by a husband. A Duxbury type fund is intended to provide money for living expenses but not more. The amount of the Duxbury fund is calculated on the basis that the capital as well as the income will be used. The calculation assumes that nothing will be left when the wife dies. This was put graphically by Peter Singer QC in a challenging paper presented to the Family Law Bar Association in May 1992. The Duxbury fund calculation involves using income and ultimately exhausting the capital at the theoretical point when the wife would down her last glass of champagne and expire as predicted by the life tables.

    In my view, in a case where resources exceed needs, the correct approach is as follows. The judge has regard to all the facts of the case and to the overall requirements of fairness. When doing so, the judge is entitled to have in mind the wish of a claimant wife that her award should not be confined to living accommodation and a vanishing fund of capital earmarked for living expenses which would leave nothing for her to pass on. The judge will give to that factor whatever weight, be it much or little or none at all, he considers appropriate in the circumstances of the particular case.

Inherited money and property

    I must also mention briefly another problem which has arisen in the present case. It concerns property acquired during the marriage by one spouse by gift or succession or as a beneficiary under a trust. For convenience I will refer to such property as inherited property. Typically, in countries where a detailed statutory code is in place, the legislation distinguishes between two classes of property: inherited property, and property owned before the marriage, on the one hand, and 'matrimonial property' on the other hand. A distinction along these lines exists, for example, in the Family Law (Scotland) Act 1985 and the (New Zealand) Matrimonial Property Act 1976.

    This distinction is a recognition of the view, widely but not universally held, that property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property. According to this view, on a breakdown of the marriage these two classes of property should not necessarily be treated in the same way. Property acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it. Conversely, the other spouse has a weaker claim to such property than he or she may have regarding matrimonial property.

    Plainly, when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered. However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant's financial needs cannot be met without recourse to this property.

The decision of Holman J

    I turn now to the decision of Holman J. In a careful and lucid judgment, he faithfully followed the approach of Thorpe LJ in Dart v Dart [1996] 2 FLR 286. He assessed the parties' reasonable requirements and on that basis made his award. That was the determinative factor. For reasons already given, I consider that, through no fault on his part, he was mistaken in taking this course.

    Indeed, the present case is a good illustration of the unsatisfactory results which can flow from the reasonable requirements approach. Even if Rexton were excluded, Mr and Mrs White's financial resources exceeded their financial needs. But Mrs White's award was confined to her financial needs, while Mr White, whose financial needs were no greater, scooped the entirety of the rest of the pool of resources. Even if Rexton were wholly left out of account, Mr White still received roughly two-thirds of their assets. The initial cash contribution made by Mr White's father in the early days cannot carry much weight 33 years later.

The decision of the Court of Appeal

    In my view, therefore, the judge misdirected himself. Accordingly, the Court of Appeal was entitled to exercise afresh the statutory discretionary powers. Both parties criticised the manner in which the Court of Appeal did so. Mr White's primary complaint was that the Court of Appeal wrongly departed from the reasonable requirements approach prescribed in Dart v Dart. For reasons already given, I do not accept this criticism.

    His next criticism was that the members of the Court of Appeal placed undue emphasis on the financial worth of each party on the dissolution of the partnership. This was a wrong approach, as was the view that the court should not exercise its statutory powers unless there was a 'manifest case for intervention'. I agree that both Thorpe LJ and Butler-Sloss LJ did attach considerable importance to the wife's entitlement under the partnership. There are observations, particularly in the judgment of Thorpe LJ, which, read by themselves, might suggest that in this regard the clock was being turned back to the pre-1970 position. Then courts often had to attempt to unravel years of matrimonial finances and reach firm conclusions on who owned precisely what and in what shares. The need for this type of investigation was swept away in 1970 when the new legislation gave the court its panoply of wide discretionary powers. Since then, the courts have not countenanced parties incurring costs which would be disproportionate to the assistance the expenditure would give in carrying out the section 25 exercise.

    All this is well established. So much so, that I cannot believe that either Thorpe LJ or Butler-Sloss LJ intended to gainsay this approach. Indeed, Butler-Sloss LJ stated expressly that what she had in mind, where parties were in business together, was a broad assessment of the financial position and not a detailed partnership account. She rightly noted that, even in such a case, the parties' proprietorial interests should not be allowed to dominate the picture: see [1999] 2 WLR 1213, 1227. If Thorpe LJ went further than this, he went too far.

    The wisdom of this approach is confirmed by the substantial body of additional evidence produced for the first time in your Lordships' House. The new material included the Whites' partnership agreement. From this evidence it emerged that, if a strict valuation of the parties' shares on a dissolution of the partnership were needed, several disputes would have to be resolved: disputes about the assets and liabilities of the partnership, a dispute about the value of the milk quota, and a dispute over the proper interpretation of the somewhat obscure retirement provisions in the partnership agreement. I do not think any of these differences need be resolved. The House can, and should, proceed on the basis of the factual findings of Holman J.

    A further contention advanced for Mr White was that there was no basis on which the court could increase Mrs White's award to an amount substantially in excess of her share of their joint assets. Here again, I am unable to agree. As one would expect, both Thorpe LJ and Butler-Sloss LJ had in mind all the available assets. They had in mind that the contribution made by Mr White's father was significant. Both of them referred to Mrs White's dual role as business partner and as wife and mother. They also had in mind the overall goal of fairness, a consideration specifically mentioned by Thorpe LJ. The amount of their award was well within the ambit of the discretion which the Court of Appeal was exercising afresh.

    For the same reason, I cannot accept Mrs White's contrary contention that the assets should have been divided equally.

    Mrs White advanced the further argument that if proprietorial interests were to be looked at, the court should have conducted a full and detailed investigation. I have already stated that such an investigation was not called for. Her next submission was that the Court of Appeal should not have adopted a selective re-valuation of only one of the assets, the milk quota, and then without proper evidence. This criticism lacks substance. The Court of Appeal was understandably anxious to make any necessary major adjustments in the figures but without putting the parties to further expense. As matters have since turned out, the judge's figures have to be adjusted downwards, by a substantial amount, in any event. The parties' untaxed costs of their appeals to this House are estimated at the appalling sum of £530,000. This exceeds Thorpe LJ's estimate of the reduction in value of milk quota since the decision of Holman J. Whatever may be the rights and wrongs of the amount of the milk quota revaluation, the course taken by Court of Appeal did not prejudice Mrs White.

    Finally, Mrs White criticised the use of net values, arrived at after deducting estimates of the costs and capital gains tax likely to be incurred if the farms were sold. Mr White still owns and uses the farms. The farms have not been sold. Counsel submitted that the use of net values in this situation should be discontinued. I do not agree. As with so much else in this field, there can be no hard and fast rule, either way. When making a comparison it is important to compare like with like, so far as this may be possible in the particular case. In the present case a comparison based on net values is fairer than would be a comparison of Mrs White' cash award and the gross value of the farms. Under her award Mrs White will have money. She can invest or use it as she pleases. Mr White's equivalent, as a cash sum, is the net value of the farms. The farms have to be sold before he can have money to invest or use in other ways. What will be his financial position if he is able to retain the farms or parts of them? Will he better off financially? Dairy farming is currently languishing in the doldrums. On the evidence there is no reason to suppose that the farms are likely to yield a better financial return at present than the investment return to be expected if Mr White sold up and invested the net proceeds.

    My conclusion is that, applying the principles expounded in Piglowska v Pigslowski [1999] 1 WLR 1360, there is no ground entitling this House to interfere with the Court of Appeal's exercise of discretion. I would dismiss the appeals of both Mr and Mrs White.


My Lords,

    I have had the advantage of reading in draft the speech which has been prepared by my noble and learned friend Lord Nicholls of Birkenhead. I agree with it, and for the reasons which he has given I too would dismiss both appeals.


My Lords,

Having had the advantage of reading in draft the speech of my noble and learned friend Lord Nicholls of Birkenhead, I am in full accord with its tenor and believe that it will do much to enable English matrimonial property law to meet the requirements of contemporary society. What little I have to add is mainly by way of emphasis and supplement.

    Lord Nicholls mentions the detailed statutory regime prescribed in New Zealand by the Matrimonial Property Act 1976 as a contrast with the more broadly-textured discretionary jurisdiction conferred in England and Wales by sections 23, 24 and 25 of the Matrimonial Causes Act 1973 as amended. One of the reasons that I think led the New Zealand Parliament into so much detail was disappointment with the performance of the courts in exercising jurisdiction under previous more generally-expressed legislation. In particular it was thought that too often the non-monetary contributions of a wife and mother were undervalued. If the spirit of my noble and learned friend's speech is followed by the English courts, there should not be solid ground for such criticism here. This may be shown by a comparison.

    In outline the scheme of the New Zealand Act of 1976 is that after a marriage of more than three years, the values of the matrimonial home (whenever acquired) and the family chattels are shared equally unless there are extraordinary circumstances rendering equality repugnant to justice. Other matrimonial property is shared equally unless one party's contribution to the marriage partnership has clearly been greater; the bringing into the matrimonial partnership of separate property acquired by one spouse by inheritance or gift may rank as a contribution. If the New Zealand regime had applied to the facts of the present case, I would expect an award to the wife of certainly no less than 40 per cent of the total available property, which is approximately what the Court of Appeal have ordered.

    While a fairly broad discretionary jurisdiction does have the merit of flexibility, it will not be satisfactory unless exercised with a reasonable degree of consistency. On this aspect attention was focussed in argument on Mallet v Mallet (1984) 156 C.L.R. 605, since the Australian statutory regime is similar in pattern to the English one. But not long after that decision a somewhat differently constituted High Court of Australia took a somewhat different approach in Norbis v Norbis (1986) 161 C.L.R. 513. The story is told by Dr Richard Ingleby of the Victorian Bar in a contribution to Family Law Towards the Millennium: Essays for P.M. Bromley, edited by Caroline Bridge (Butterworths, London, 1997) at pp. 404-405. In reproducing an extensive passage, I omit the footnotes.

"During the first 20 years of its existence the Family Court of Australia has been engaged in a struggle between the Full Court and first instance trial judges. The appellate court has sought to establish techniques to control the exercise of discretion by first instance judges. The first of these techniques was the creation of presumptions or guidelines for the exercise of judicial discretion. The main battleground in the 1980s was s 79 of the Family Law Act 1975, which establishes a regime for the exercise of judicial discretion in relation to the division of property in the names of parties to a marriage equivalent to that in s 25 of the English Matrimonial Causes Act 1973. Initially the High Court of Australia (being the highest court in the land and the court to which appeals lie from the Full Court of the Family Court) set itself against the Full Court. In Mallett Bell J at first instance awarded Mrs Mallett 50% of the equity in the former matrimonial home, and 20% of the value of Mr Mallett's business assets. On appeal by the wife the Full Court essentially held that Bell J had paid insufficient attention to the method by which the business assets had been accumulated, and substituted an order for all assets to be divided evenly. The High Court rejected the Full Court's approach because, according to the majority, it was based on 'an erroneous understanding of the operation of s 79(4) of the [Family Law] Act expressed in the [Full C]ourt's proposition that 'equality ... is a convenient starting point where the matter at issue involves a long marriage'. The High Court held that a presumption of equality as between the contributions of a homemaker and an income earner was an unacceptable fetter 'on the discretionary power which Parliament has left largely unfettered'. Deane J (as he then was) gave the sole dissenting judgment in the Mallett High Court, and the importance of the dissent was that it became the majority view when the High Court had the opportunity to reconsider the question two years later. First, Deane J took care to point out that the Full Court had not sought to fetter the exercise of discretion by trial judges and had indeed confined the application of the standard to a particular category of marriage: 'there is no "principle" in family law that equality is equity ... where the court is given a discretion it cannot lay down principles for to do so would be to fetter its own discretion ... the cases which refer to equality do not lay it down as a principle but merely as a convenient starting point where the matter at issue involves a long marriage'. Deane J saw the 'standard' as, 'the enunciation not of a legal principle or presumption but of a general counsel of experience on the subject of what constitutes, in some types of case, an appropriate starting point for the determination of the particular order which should be made in the particular circumstances of the individual case. Two years later, in Norbis, the question of guidelines arose again, this time in the context of whether the courts should assess contributions to property on a global or asset-by-asset basis. In Norbis, Deane J's repetition of his suggestion of a norm which provided a guide to first instance judges without the same binding nature of a precedent received support from Mason J (who had been in the majority in Mallett), and Brennan J (as he then was), who was not a member of the Mallett High Court. This meant that Wilson and Dawson JJ were now in the minority. The High Court was now supportive of the Full Court's attempts to uphold 'consistency in judicial adjudication ... the antithesis of arbitrary and capricious decision-making ... an important countervailing consideration supporting the giving of guidance by appellate courts.' As Brennan J put it, 'The only compromise between idiosyncracy in the exercise of discretion and an impermissible limitation of the scope of the discretion is to be found in the development of guidelines from which a judge may depart when it is just and equitable to do so - guidelines which are not rules of universal application, but which are generally productive of just and equitable orders. Since the High Court's decision in Norbis, an increasingly assertive Full Court has arguably increased the status of guidelines. This has been done, not by holding that it is an appellable error to depart from a guideline, but by holding that a trial judge has a duty to give adequate reasons for such a departure..."

    I agree with the majority in Norbis. In this and other fields it is part of the function of a court of final appeal to lay down from time to time, after considering the experience and opinions of more specialised courts, guidelines assisting judges, legal advisers and parties to resolve disputes. There may be and is in the English Act no statutory presumption or prima facie rule, but there is no reason to suppose that in prescribing relevant considerations the legislature had any intention of excluding the development of general judicial practice. I doubt whether the labels "yardstick" or "check" will produce any result different from "guidelines" or "starting point".

    An incidental advantage of such an approach is that it may save costs. The magnitude of the costs reported in this case (evidently counsel's fees were not the major items) is a very bad advertisement for the legal system.

    The most important point, in my opinion, in the speech of my noble and learned friend Lord Nicholls is his proposition that, as a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so. I would gratefully adopt and underline it. Widespread opinion within the Commonwealth would appear to accept that this approach is almost inevitable, whether the regime be broad or detailed in its statutory provisions.

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