Cordle -v- Cordle
White -v- White
North -v- North
Cordle -v- Cordle
The Facts
Mr and Mrs Cordle were in their early forties and had been married for 20 years. They had three children aged 12, 15 and 16.
Both parents had equivalent earning capacities of approximately £25,000. Their assets, which totalled £199,000, included a property with an estimated net equity of £180,000, a joint life policy and bank account valued at £19,000.
There were three stages in the litigation:
1. The hearing before the District Judge
After hearing evidence the District Judge made an Order providing for a capital and income clean break on the basis that:
1.1 Mrs Cordle would receive £125,000 from the net proceeds of the sale of their property. Her husband would receive the balance on the terms that any surplus would be divided equally.
1.2 The life policies and bank account would be divided equally.
The effect of this was to allocate £134,500 to Mrs Cordle and £64,500 to Mr Cordle (a 68/32% split in favour of the wife).
2. The Circuit Judge
Mrs Cordle appealed against the Order because she did not think that sufficient funds had been made available to her. As a result the Circuit Judge increased her share in the proceeds of the sale of the property to £160,000 on the basis that Mr Cordle should receive the building society monies and the life policy. This increased the disproportionate split of capital to 80% for the wife and 20% for the husband.
3. The Court of Appeal
This time the husband appealed against what he regarded as a punitive order. The court of appeal discharged the Circuit Judge's Order and restored the Order of the District Judge and in so doing expressed the following views:
- There was no rule that there had to be equality between partners unless there were good reasons to justify otherwise. Equality of outcome was important in certain circumstances but in a typical case would often lead to injustice.
- The court's first duty was to apply Section 25 of the Matrimonial Causes Act in achieving a fair solution.
- The court's first concern would be to provide for the primary carer and the children but it should also consider the needs of the absent parent.
- In many cases the satisfaction of that need may absorb all that is immediately available but if not the court would be anxious to provide the means for the absent parent to re-house.
- The court should also consider supporting the ability of one or other of the parties to work. They may need capital provision to enable him or her to get back into the labour market, re-train etc.
Comment
Cordle is a fairly typical case. It illustrates the manner in which the court will re-distribute capital wealth bearing in mind its primary duty to consider the accommodation needs of the children and their custodial parent. The different decisions made by the courts involved in this case illustrate the uncertainty of litigation.
White - v - White
The Facts
Martin and Pamela White married in September 1961 and had three children. The marriage broke down in 1994 and a Decree Absolute was issued in May 1997.
Both parties applied to the court for financial provision. When the matter came before the court their overall net worth was approximately £4.64 million, which comprised:
- Pamela's savings £193,000
- Pamela's share of the jointly owned property £1,334,000
- Martin's property £1,783.000
- Martin's share of the jointly owned property £1,334,000
Amongst other things Mr and Mrs White owned two farms which operated as a partnership.
In the High Court an Order was made for a clean break settlement upon terms that Mrs White should retain her sole assets and receive an additional £800,000. This amounted to slightly over 20% of the total assets.
Mrs White successfully appealed against this decision on the basis that insufficient assets had been awarded to her. As a result, the court of appeal increased the award to £1.5 million or approximately 40% of the assets after deduction of £300,000 for both parties' costs.
There was then a further Appeal to the House of Lords which was dismissed. In so doing the court made the following observations:
1. The court should do its best to achieve a fair outcome. This requires it to take into account all the circumstances of the case.
2. In seeking to achieve a fair outcome there is no place for discrimination between husband and wife and their respective roles. 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.
3. The general rule of equality should always be followed unless there is good reason for not doing so BUT this was not to introduce a presumption of equal division. The court should continue to exercise its discretion after having considered the Section 25 factors.
In exercising such powers the court has to consider whether or not a clean break should be imposed. In addition the court has to consider the welfare of any child under eighteen. In this particular case there were no children under eighteen years of age.
4. Equality should be used as a form of check rather than being treated as a legal presumption of equal division.
5. It was previously wrong of the court to have regarded a party's reasonable requirements as determinative of the Order to be made. In the underlying objective of securing fair financial arrangements there is nothing to suggest that the assets of a party are irrelevant once the claimant's needs have been satisfied. Where resources exceed needs, the Judge should consider all the facts of the case and the overall requirements of fairness. In doing so he is entitled to bear in mind that any award should not be restricted to living accommodation and capital that is earmarked for living expenses, which would leave nothing when that party dies.
6. The Judge should take into consideration property acquired by one party before marriage and property inherited during marriage as these represent contributions made for the welfare of the family. He should decide how important it is, bearing in mind the value of the property and the time and the circumstances in which it was acquired. In most cases this will carry little weight where a party's needs cannot be met other than by using this property.
Comment
Both Cordle and White illustrate that there is uncertainty in litigation and that different Judges will reach different conclusions in exercising their discretionary power under the Matrimonial Causes Act. Always factor the uncertainty of litigation into any negotiations about finances following the breakdown of your marriage.
There have been a number of high profile cases since the case of Mr and Mrs White (to include Miller, McFarlane and Charman) but the basic principles have not changed and continue to be applied by the courts.
Indeed when giving Judgment in the case of Charman the Court of Appeal re-affirmed what it regarded as the correct approach to be applied in the distribution of family assets. The process must be as follows:-
3.1 Need
The case of North – v – North provides interesting guidance for the approach that the Court ought to adopt when considering a very belated application to vary a nominal periodical payments Order. Notwithstanding its outcome it does illustrate the advantage to a spouse of having the benefit of nominal maintenance rather than having such claims dismissed.
The Facts
In 2004 Mrs North applied to vary a nominal periodical payments Order made in her favour as long ago as 1981.
The original Order provided her with a mortgage-free home, income from ground rents of £6,000 and nominal periodical payments.
Mr North voluntarily made further contributions to her income and capital in excess of that provided for in the Court Order. His wife chose not to work and in 1998 emigrated to Australia, having sold all her assets. Over there she did not purchase a home but invested most of her assets, sadly making substantial losses notwithstanding the fact that the investments had been made on advice.
Mr North agreed that although now retired he was sufficiently wealthy to meet any Order that the Court might now make. There were three stages in the litigation:-
a) The hearing before the District Judge
He decided that the situation was entirely of Mrs North’s own making. She had remained unemployed out of choice. Nevertheless she had reasonable needs of £23,500 per annum which could in part be offset by her reduced income from her remaining assets. Her husband had acted generously and honourably. The District Judge ordered Mr North to pay her £16,000 per annum but capitalized this into a lump sum payment of £202,000.
b) The hearing before the High Court Judge
The High Court Judge upheld the Order made by the District Judge although he expressed the view that he would have made a different Order had he been trying the case himself. Unsurprisingly Mr North appealed to the Court of Appeal.
c) The hearing before the Court of Appeal
The Court of Appeal accepted that the District Judge was wrong in making the Order that he did when he concluded that Mr North should not be responsible for the fact that his former wife had lost most of her money.
However one of the reasons for Mrs North’s predicament was that she had incurred substantial losses by selling her investments on professional advice. That was not her fault and in such circumstances she ought to have the benefit of a modest income stream in view of the difficulty in which she found herself. Mr North was ordered to pay her £3,000 per annum.
