In all the years I was practising I don’t remember any case having such an impact as White v White, decided by the House of Lords in October 2000. Many cases are heralded for the profound effect that they will have on the way we conduct cases in future, only to have little or no great effect in reality. White, on the other hand, truly did change things and, unlike most financial remedy judgments, not just in relation to cases involving couples with substantial means.
A great deal has been written about White over the years, and I could certainly write a considerable amount myself. However, here I just want to concentrate on the essentials and, in particular, the most important principle to arise from the judgment of the House of Lords: what became known as the ‘sharing principle’.
As mentioned, White concerned financial remedy proceedings following divorce (or, as they were then known, ‘ancillary relief proceedings’). At first instance Mrs White was awarded just over one-fifth of the total assets. She appealed against this award and the Court of Appeal allowed her appeal, increasing her share of the total assets to about two-fifths.
Mr White appealed against this order, and Mrs White cross-appealed, seeking an equal share in all the assets.
Now, as we all know there is no formula that the court should use when deciding financial remedy cases. There are no hard and fast rules. Instead, the court has a wide discretion as to what order it should make. All the statute law states is that the court should have regard to all the circumstances of the case, in particular those listed in section 25(2) of the Matrimonial Causes Act 1973. However, as Lord Nicholls pointed out in the course of his leading judgment in White, the legislation does not state explicitly what is to be the aim of the courts when exercising its powers. Implicitly, he said, the objective must be to achieve a fair outcome.
Lord Nicholls went on:
“…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) [of section 25(2)], relating to the parties’ contributions … 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.”
He then set out the ‘sharing principle’ (my highlighting):
“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.”
Lord Nicholls was quick to point out that he was not introducing a presumption of equal division under another guise, and nor was he saying that in every case the ‘starting point’ should be that the assets should be divided equally. Nevertheless, a starting point is effectively what the principle has become: as a starting point, and provided there is no good reason for doing otherwise, it is fair to divide the assets equally.
And what is a good reason to depart from equality? There is no definitive list of possible good reasons, but by far the most common is where the needs of one of the parties demand that they have more than half. For example, the party looking after the children will need sufficient to (re-)house themselves and the children, and they may require more than half of the assets to do this.
What of Mr and Mrs White? Well, I have specifically not gone into the detail here of why the judge at first instance felt that Mrs White was only entitled to one-fifth, or why the Court of Appeal felt she was entitled to two-fifths. In a sense, none of that matters so far as the importance of the case is concerned. Suffice to say that the House of Lords did not consider that there were grounds to interfere with the Court of Appeal’s exercise of discretion. Accordingly, both appeals were dismissed.
The effect of White was immediate. I recall going before district judges in the months that followed, and they were all making it clear that if your client wanted more than half, then they had to have good reasons. Gone were the days when a greater share could be achieved for the most spurious of reasons, for example just because one party was the breadwinner and the other was not, or just because one party earned more than the other. In fact, many cases that would previously have been argued were quickly settled on the basis of equal division.
The words of Lord Nicholls in White have been elaborated upon over the years (including by himself), but the sharing principle remains the basis of all financial remedy decisions, at least in respect of the division of capital assets.
With regards to the court of first instance, the ratio decidendi: A big sum of money initially came directly from the husbands father where in which was bought jointly together between the couple. The second farm was in the husbands sole name which he inherited from the fathers death. Nevertheless, the couple were married for many years(30 years or so) and their business vastly grew majorly due to their efforts as joint. Thank you, your articles are so easy to read and understand.
Facts
1. Mrs White (then Miss Greenslade) started her own farming business.
2. She married Mr White and formed a business partnership.
3. There was a business partnership agreement.
4. The first farm, Blagroves, was purchased by the partners.
5. Mrs White’s mother loaned the partners more capital than Mr White’s father.
6. The second farm, Rexton, was not inherited or registered in Mr White’s name.
7. The purchase mortgage for Rexton was funded by the partnership: it was a partnership asset.
8. All the assets were jointly-funded and owned in equal shares.
Ref: Forensic Analysis by Chartered Accountants ‘DG&C’ in October 1997.
In [Lord Justice Thorpe]’s judgment, this was a case which should never have been litigated.
Ref: Times Law Report 13 July 1998: ‘Dissolving business along with marriage’.