During recent months the newspapers have been full of reports of ‘big money’ divorce settlements. A common theme has been the widely held belief that wives fare better under English law than in any other country. If the Press is to be believed, wives are flooding to this country to ensure that they receive a bigger share of the assets on divorce while husbands are doing their level best to avoid the jurisdiction of the English courts. Chelsea FC owner Roman Abramovich, for instance, chose to divorce in the Russian courts – the outcome allegedly being that his wife received a rather smaller share of his £11 billion fortune than she may have achieved in this country.
At the heart of the matter is the way in which English law treats finances on divorce. The law is set out in the Matrimonial Causes Act 1973, which gives the courts a very wide discretion when it comes to deciding how assets should be divided between divorcing couples. The first consideration is the welfare of the children and the law then provides a checklist of factors to be taken into consideration including the ages of the spouses, the length of the marriage, the income and earning capacity and the needs and resources of the couple. The checklist is not exhaustive and is not set out in any order of priority.
The courts have exercised their discretion in making a series of wide-ranging and seemingly inconsistent decisions.
The trouble began with the landmark case of White –v- White in 2000 which gave us the ‘yardstick of equality’ whereby an equal division of the assets of the marriage was deemed to be the starting point for the court. Cases following White have involved ever more imaginative attempts by husbands and wives to escape from the yardstick of equality and gain for themselves a greater than 50% share of the assets.
For example, in the case of Cowan –v- Cowan in 2001, the court acknowledged that the husband’s exceptional contribution should be taken into account in dividing the assets unequally in his favour. However, in the later case of Lambert –v- Lambert, the court took the view that the husband should not be entitled to more than 50% of the assets despite what he believed to be his exceptional contribution.
Mr Charman is currently disputing the award of £48 million made to his wife, reportedly the largest lump sum award made in divorce proceedings in the UK.
On April 13 this year in the High Court, inthe case of H –v- H, the pendulum appeared to swing in the opposite direction. This case represents a ray of hope for wealthy husbands, or a return to the old inequality for wives, depending on your standpoint. The judge ruled that anyone given an adequate lump sum could not expect a share of future earnings. There were enough assets to meet the wife’s future needs, he said, without providing her with a share of the husband’s future bonuses. He also added that a line should be drawn at a point when the mutual support given by the spouses to each other ceased for the purpose of defining the matrimonial property.
It is unlikely that we have heard the last of this case, or indeed of the debate concerning the sums awarded to wives on divorce.
What is clear is that couples facing divorce or separation should seek expert legal advice and that those contemplating marriage should think about seeing a solicitor to draw up a Pre-Nuptial Agreement to give them at least some control over their financial situation, should their relationship break down in the future.