There was an interesting article in The Times last week, ‘Is there such a thing as a good divorce? (paywall), written by Grania Langdon-Down. It was a bit of a hodge-podge of different concepts, but one bit I did find interesting was the suggestion that courts are moving away from equal division of assets on divorce and towards a situation where divorce settlements are becoming meaner to the party who is less wealthy than the other.
Is this true?
Yes and no. (I know that is a typical lawyer’s answer.) No for the reasons stated in the article. Yes for other reasons.
When is there equal division?
The cases discussed are White v White [2001] 1 AC 596 and a second case which is not named in the article but which I am certain is Hart v Hart [2017] EWCA Civ 1306, which I blogged about for the Transparency Project here. They are used as examples of a move away from equal division, even though White itself was famous for its statement that work done in the home or raising children was just as valuable as earning money and that there should be no discrimination between home-maker and breadwinner on divorce.
Even though financial settlements that start with an equal division of the assets became more common after White v White, as the article points out, White v White itself was a case in which Mrs White did not get an equal share of the assets. Mr White had some non-matrimonial assets and these justified him having more of the assets on divorce, although perhaps not as much as he actually got.
Generally, non-matrimonial assets are those that come into the marriage from outside: an asset owned prior to the marriage, or an inheritance or gift acquired during the marriage. (For a rare case of an asset from inside the marriage that was held to be non-matrimonial, see my blog post on Sharp v Sharp, here.)
In most everyday modest asset cases, whether or not an asset is matrimonial isn’t relevant: if the matrimonial monies are insufficient to meet both parties’ needs after a divorce, then we have to dip into the non-matrimonial assets.
But where the assets exceed what is required to meet the couple’s post-divorce needs, then whether or not some assets are non-matrimonial can be important. It may be appropriate for each party to keep their own non-matrimonial assets while matrimonial assets get divided equally. Judges take different approaches on how to do this and whether certain assets have become matrimonial through the way they are used or through passage of time. One approach is to calculate an exact amount of non-matrimonial money and divide only what is left (as in Hart v Hart, discussed below). Other judges put all the assets into a single pool but divide the whole lot unequally to reflect the fact that some are non-matrimonial. Some judges say that the non-matrimonial assets are not significant enough to justify an unequal division when the marriage is a long one, or it may be that an asset started life as non-matrimonial but due to the length of the marriage or the way the asset has been used it has become matrimonial. Some assets can be both matrimonial and non-matrimonial.
The other case discussed is Hart v Hart, in which the husband and wife each had non-matrimonial assets. The court gave each of them their own non-matrimonial assets and then divided the matrimonial assets equally. It just so happened that the husband had more valuable non-matrimonial assets than the wife.
So is Hart a case justifying the statement that settlements are becoming meaner for the non-financially creating party?
I don’t think so. Contributions made during the marriage, whether financial or non-financial (such as child-raising or home-making) are valued equally. There are exceptions to this where one party has made such an immense contribution that it justifies them having more of the matrimonial assets, but these ‘stellar contribution’ cases are rare precisely because there is a risk that we value financial contributions more than non-financial contributions and this has a gendered impact. What courts look for, therefore, is a contribution that stems from a spark of genius, and that is extremely rare. The leading case involves the chap who invented the black bin liner.
It’s just that in White and in Hart the husbands had assets that came to them from outside the marriage.
Why did you say yes above, then?
There are other reasons to be concerned about the present state of the law, especially when it comes to those who have given up a career to raise children. In this way, the law seems to have recently gone backwards from White v White. But that is a whole other blog post.
Is a prenuptial agreement the answer, as the article suggests?
The starting point is that ‘the court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.’ This principle comes from a case called Radmacher v Granatino [2010] UKSC 42. But this is far from saying all prenups will be followed. There are ways to boost the likelihood of it being followed which relate to the procedure for negotiating the content and the substantive content itself, but there is no cast iron guarantee that it will be followed by a court. In this country, the parties do not have absolute freedom to decide the financial outcome of their divorce. That means we can never be certain of the outcome.
Surely more certainty is a good thing?
Making the law clearer and more predictable will mean that like cases are treated alike, that people know in advance the outcome if they were to divorce (and can plan accordingly) and will help people who cannot afford lawyers. The problem is that what is a fair outcome can be different in different cases and a formula for dividing the assets (for example) could be really unfair in certain cases. Each case is unique and the present system allows us to fit an outcome to what we think is fair in that unique case.
Image courtesy of Flickr – Thanks AaronShumakeron