News and Insights
28 September 2016
Does divorce favour women more than men in particular for high earners?
In the month in which we read that for every 100 couples who got married in Jersey two years ago, nearly 50 other couples asked for a divorce, we have had from the House of Lords (the highest appeal court in England and Wales), the highly significant judgments in the McFarlane and Miller cases.
These decisions have potentially huge implications for all high earning men (and under the rule against discrimination, it is assumed high earning women too) in Jersey who are in the process of, or contemplating, divorce. These judgments are probably the most important rulings in divorce law for two decades.
It appears that these cases pave the way for women in Jersey who give up work to support their husbands to obtain bigger divorce settlements. The court decreed that a wife deserves an ‘equal share’ of the family’s wealth, irrespective of the length of the marriage or how much money she contributed. The decisions clearly show that women who sacrifice careers to care for children are entitled to compensation for what they have lost. In future, all marriages must be treated as a partnership of equals.
The two cases involved very different marriages. In the first case, the law lords ruled that Melissa Miller can keep the £5 million she was awarded out of the £17.5 million fortune of the fund-manager husband after a marriage that lasted for less than three years.
In the second, the House of Lords ruled that Julia McFarlane was entitled to £250,000 a year from her high earning husband, who was earning in excess of £750,000 per year, for an indefinite period. The Court of Appeal had previously capped this entitlement to five years.
These cases clearly state that there must be no bias in favour of the money-earner and against the homemaker and the child-carer. This is a universal principle that is applicable to all marriages. This restates what has been the situation for some years now in divorce cases, but these examples break new ground, go further than existing case law and provide a new model for settling financial disputes in all future cases.
The decisions are extremely controversial for a number of reasons. They were made against a background of concern that even before these judgments, wives of high earning husbands got a better deal from the English courts than probably anywhere else in the world. These decisions have only heightened that concern.
The Miller case is seen as the more extraordinary of the two judgments as not only did the case involve a childless couple but also the marriage lasted such a short period of time. The marriage broke up when Mr Miller committed adultery and at the Court of Appeal level it was held that Mrs Miller was entitled to more money because of this adultery. This was one of the aspects of the case that the law lords had to make a decision on. They ruled that the adultery of Mr Miller was irrelevant to the financial settlement.
This case is seen by some as unfair to Mrs Miller and to others as unfair to Mr Miller. Many will believe that it is unfair that Mrs Miller should receive such a large slice of capital after such a short period of marriage. In addition, Mr Miller had already created his high professional value prior to the marriage. It has been said that her settlement seems more like a lottery win than a fair allocation. However, there are those who argue that ‘blame’ should be taken into account even in short marriages. The Court of Appeal took the view that Mr Miller was responsible for the break-up in the marriage; it also thought that Mrs Miller had been given an expectation that she would enjoy a high standard of living. Many may feel that this is the correct decision and that adultery or conduct generally should be taken into account. This goes against the grain of many years of ‘no fault’ divorce in the English jurisdiction and it had long been recognised up to the Court of Appeal decision in Miller that conduct was irrelevant to splitting matrimonial assets except in cases of extreme bad behaviour.
The McFarlane case breaks new ground in that it awarded the wife maintenance for her life or until circumstances change in which case Mr McFarlane will have to return to court to vary the award. For the first time, the court has included in the maintenance award compensation for losses. The court said that the husband’s high level of earnings “was the result of the parties’ joint endeavours at the earlier stages of his professional career”. The wife gave up her potentially high earning career in order to devote herself to making a home and caring for the children and the husband was able to reap the benefits.
We now potentially have a situation where divorce settlements in the Island will have reflect these decisions. The main elements to bear in mind when considering these cases are as follows:
You no longer have to be married for as long as fifteen to twenty years in order to earn 50% of the assets. In particular circumstances any length of marriage can justify a 50/50 split at least of the wealth arising during the marriage. The longer the marriage, the less relevant it is when and how that wealth was acquired.
Women (or indeed men) who put their career prospects on hold can be expected to be compensated for that sacrifice. This is probably the most worrying aspect of these cases for the high wage earner.
Conduct is irrelevant in the vast majority of cases to how assets are split. The mere fact of adultery will not be sufficient to push the division in favour of the ‘innocent’ party.
What might be the effect of these judgments on the institution of marriage? It has been argued that rich men will be getting more worried about getting married than ever before and that there will be a surge in prenuptial agreements. Advice must surely now be heeded that anyone with wealth at the time of the marriage should enter into such an agreement. This is particularly true for anyone marrying for the second time.
It is now clearly the case that these decisions will have an effect in Jersey and that impact may well go beyond the instances of divorcing couples to the very institution of marriage itself. The judgments may indeed turn out to be a very sad day for marriage.