Judgment of Mr Justice Francis D Murphy delivered the 14th day of October , 2002
By order dated the 6th December, 2001, Mr. Justice Lavan granted a decree of divorce in respect of the marriage solemnised between the applicant and the respondent herein on the 29th March, 1980. In addition to ordering the payment of maintenance for the benefit of the two children of the marriage the order provided as follows:-
1 that the applicant should pay to the respondent a lump sum of £5,000,000 by instalments over a period of three years;
2 that the respondent should have the right to occupy for life the family home to the exclusion of the applicant;
3 that 55% of the benefits accrued under certain life insurance policies therein mentioned should be paid to the respondent;
4 that neither spouse should be entitled on the death of the other of them to apply for an order under s. 18(10) of the Family Law (Divorce) Act 1996;
5 that the applicant should pay to the respondent her costs of the proceedings when taxed and ascertained.
The reasons for the order aforesaid were set out in the judgment of the learned trial judge delivered on the 28th November, 2001. By notice of appeal dated the 8th February, 2002, the applicant has appealed to this Court against so much of the judgment and order aforesaid as:-
1 directed the applicant/appellant to pay to the respondent the sum of £5,000,000 by way of lump sum payment;
2 directed the making of the pension adjustment order in favour of the respondent;
3 awarded the costs of the proceedings to the respondent.
The applicant is 53 years of age. The respondent is four years his junior. They have three children only one of whom is dependent on them. The applicant is and has been a very successful solicitor and the respondent is a medical doctor. She has worked as a general practitioner but her commitment to the family has prevented her from exercising her professional qualifications to the full or expanding her practice to its probable potential. The applicant has - particularly in recent years - invested very substantially and successfully in property.
The applicant left the family home in August, 1994. The parties have lived apart since that time. The applicant is currently in a relationship with a new partner. It is agreed that there is no reasonable prospect of a reconciliation between the parties. It was in relation to the provision to be made for the respondent that the parties disagreed.
As at the date of the hearing in the High Court the combined wealth of the parties was very substantial indeed. It would appear from the documents exhibited in evidence that the total value of the assets of the applicant was not less than £15 million and that his income (before tax) from his practice as a solicitor in that year was £334,335. The assets of the respondent were valued at something under £1.25 million and her income from her profession as a doctor was in the order of £25,000 (again before tax). No precise analysis appears to have been made of the income and assets of the parties as of August, 1994 but it must have been very substantially less than it was to become six years later. Almost certainly the assets of the applicant were less than £2 million and his professional gross income under £150,000. I infer that the assets and income of the respondent, at that stage, were not such as would have materially affected the standard of living of the parties even if the recommencement in 1991 by the respondent of her professional practice did give her a measure of independence and possible future security.
If great wealth can solve some problems, it can create others. If there is validity in the distinction between routine divorce cases and what has been described as “big money” cases the present matter undoubtedly falls into the latter category. However, even within that category it might have been expected that the legal and constitutional rights of the parties could be met by the type of analysis of fact and finance such as was undertaken by McCracken J. in Mc A .v. Mc A [2001] 1 I.R. 457. In that case, however, McCracken J. was not called upon to decide any significant point of law in relation to the financial provisions which he was required to make or approve. The judgment – what I think may be described as the revolutionary judgment – of the House of Lords in White .v. White [2001] 1 A.C. 596 was not delivered until some nine months after the decision in the Mc A .v. Mc A case. It might be said that the issue in the present appeal concerns the extent, if any, to which the principles laid down by the House of Lords in White .v. White for the interpretation of the UK Matrimonial Causes Act, 1973 (as amended) should be applied in the interpretation in this jurisdiction of the Family Law (Divorce) Act, 1996, which, in its detail is “uncannily similar” to the provisions of the UK legislation (see: Conor Power “Equality in Ancillary Relief” (2001) IFLJ 24).
The basic facts of White .v. White were relatively simple, if somewhat tragic. Both husband and wife were dedicated farmers who, after their marriage in 1961, farmed substantial holdings together under the terms of a written partnership agreement. By the time they separated in 1994 their combined assets amounted to £4.6 million of which, as Holman J. held, £1.52 million belonged to the wife. The High Court Judge then went on to express the view that the reasonable requirements of the wife would entail the buying and equipping of a suitable house which he estimated would cost £425,000 and an income which he capitalised at £555,000. From the total of £980,000 certain pensions fell to be deducted leaving a lump sum of £795,000 which he rounded up to £800,000. This was a sum he directed to be paid by the husband to the wife on a “clean break” basis. The learned Judge did, however, recognise that in limiting the payment to £800,000 he in fact benefited the husband to the extent of £700,000 from the assets of his wife. The Court of Appeal (consisting of Butler Schloss, Thorpe and Mantel L.JJ.) though applying substantially the same principles as those set out in the judgment of Holman J. required the husband to pay to the wife the sum of £1.52 million being the full amount of the estimated value of the wife’s proprietary share of the total assets. From that decision both parties appealed to the House of Lords: the husband seeking the restoration of the order of the High Court and the wife claiming an equal share with the husband in the combined assets. Both appeals were dismissed. In his speech with which the rest of the Court agreed Lord Nicholls of Birkenhead rejected the principle of equality or the ascertainment of “reasonable requirements” of either spouse as being determinative of the amount to be paid to a spouse under the UK Matrimonial Causes Act, 1973 (as amended) on or after the making of a decree of divorce. The decision in White .v. White by the House of Lords was of enormous importance in the UK. As Lord Nicholls pointed out, that case gave the House of Lords an opportunity to review the legislation in this important area. He expressed his observations in that respect (at p. 600) in the following terms:-
“The powers conferred by the 1973 Act have been in operation now for 30 years. This is the first occasion when broad questions about the application of these powers have been considered by this House…. It goes without saying that these principles [the principles trial judges should apply when hearing applications for financial relief in divorce proceedings] should be identified and spelled out as clearly as possible. This is important, so as to promote consistency in court decisions and in order to assist parties and their advisors and mediators in resolving disputes by agreement as quickly and inexpensively as possible. The present case is an unhappy, if extreme, example of how the parties’ resources can be eroded significantly by legal and other costs.”
Having dealt with the facts of the case Lord Nicholls went on to examine the statutory provisions and how they had evolved from the Matrimonial Causes Act, 1857. He explained how a fresh start was made by the Matrimonial Proceedings and Property Act, 1970, following upon the report of the Law Commission prepared in 1969 under the chairmanship of Scarman J. The Act of 1970 was subsequently re-enacted in substantially the same terms by the Matrimonial Causes Act, 1973. Sections 23 and 24 of the Matrimonial Act 1973 empowered the court, on granting a decree of divorce and in certain other circumstances, to make financial provision orders and property adjustment orders. Section 25 of the Act of 1973 (as substituted by the s.3 of the Matrimonial and Family Proceedings Act, 1984) set out a list of matters which the court is to have regard to in deciding how to exercise those powers. That list is virtually identical with the comparable provisions of s.20 of our Act of 1996. That similarity would encourage any observer to pay particular attention to the speeches in White .v. White in interpreting the Act of 1996. However, notwithstanding the widespread similarities there are fundamental distinctions to be noticed in the legislative provisions in the two jurisdictions.
Again it was Lord Nicholls who pointed out that s.5 (1) of the United Kingdom Act of 1970 having set out a list of factors to be taken into account by the court contained what he described as “the tail piece” which declared what should be the objective of the court when exercising its statutory powers to make financial provision orders and property adjustment orders. The statutory objective was:-
“… to place the parties, so far as is practicable and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other.”
That tail piece was later deleted from the legislation and, as was noted, nothing was inserted in its place. It was that lacuna which the House of Lords filled by ascertaining an implicit objective in the following terms at pp. 604-605:-
“In consequence, the legislation does not state explicitly what is to be the aim of the courts when exercising these wide powers. Implicitly the objective must be to achieve a fair outcome. The purpose of these powers is to enable the court to make fair financial arrangements on or after divorce in the absence of agreement between the former spouses: see Thorpe L.J. in Dart .v. Dart [1996] 2 FLR 286, 294. The powers must always be exercised with this objective in view, giving first consideration to the welfare of the children.”
In accordance with the objective of fairness the House of Lords pointed out that this goal was inconsistent with discrimination against a spouse – traditionally the wife – whose contribution to the marriage was historically made in domestic and social areas the value of which was not reflected in any apparent financial terms. It was emphasised that the division of assets between spouses on a divorce should not be biased in favour of the money earner against the home maker and child carer. The principal speech went on to point out that it would sometimes happen that a judge having carried out the statutory exercise would reach a conclusion involving a more or less equal division of the available assets. However, Lord Nicholls pointed out that this would happen less, rather than more, often. However the decision went on to make the following suggestion at p. 605:-
“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 and division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.”
However, having offered that useful advice, Lord Nicholls went on immediately to issue a warning in the following terms at pp. 605-606:-
“This is not to introduce a presumption of equal division under another guise. Generally accepted standards of fairness in a field such as this change and develop, sometimes quite radically, over comparatively short periods of time. The discretionary powers, conferred by Parliament 30 years ago, enable the courts to recognise and respond to developments of this sort. These wide powers enable the courts to make financial provision orders in tune with current perceptions of fairness. Today there is a greater awareness of the value of non financial contributions to the welfare of the family…. Despite these changes, a presumption of equal division would go beyond the permissible bounds of interpretation of section 25. …. A presumption of equal division would be an impermissible judicial gloss on the statutory provision. That would be so, if though the presumption would be rebuttable. Whether there should be a presumption in England and Wales, and in respect of what assets, is a matter for Parliament.”
On that analysis Lord Nicholls rejected the appeal of the wife to treat the principle of equality as “the starting point” in relation to the division of the assets of the husband and wife. The House of Lords then turned to the argument made on behalf of the husband. Again, Lord Nicholls traced the evolution of what he described as “the alluring phrase of ‘reasonable requirements’”. It was first coined by Ormrod L.J. in O’D .v. O’D [1976] Fam. 83 where he suggested that the position of the wife should be considered “not from the narrow point of ‘needs’ but to ascertain her reasonable requirements”. It was recognised that reasonable requirements were more extensive than reasonable needs. This approach was rejected by Lord Nicholls as being unjustified by the relevant legislation. He said at p. 607:-
“This conclusion, I have to say, seems to me worlds away from any ordinary meaning of financial needs. Moreover, this conclusion gives an artificially strained meaning to reasonable requirements, the more-especially as this phrase was adopted originally as a synonym for financial needs”.
He then went on to say at p. 608:-
“The statutory provisions lend no support to the idea that a claimant’s financial needs, even interpreted generously and called reasonable requirements, are to be regarded as determinative.”
An observation contained in the principal speech which must be of great practical importance in the United Kingdom is set out on p. 608 in the following terms:-
“But I can see nothing, either in the statutory provisions or in the underlying objective of securing fair financial arrangements, to lead me to suppose that the available assets of the respondent became immaterial once the claimant wife’s financial needs are satisfied. Why ever should they? If a husband and wife by their joint efforts over many years, his directly in his business and hers indirectly at home, have built up a valuable business from scratch, why should the claimant wife be confined to the court’s assessment of her reasonable requirements, and the husband left with a much larger share? Or, to put the question differently, in such a case, where the assets exceed the financial needs of both parties, why should the surplus belong solely to the husband? On the facts of a particular case there may be a good reason why the wife should be confined to her needs and the husband left with a much larger balance. But the mere absence of financial need cannot, by itself, be a sufficient reason. If it were, discrimination would be creeping in by the back door. In these cases, it should be remembered, the claimant is usually the wife. Hence the importance of the check against the yardstick of equal division.”
Lord Nicholls urged the abandonment of the expression “reasonable requirements” and the application instead of the language of the relevant statute. Similarly, in K. (M) v. P. (J). (orse. K. (S)) (Unreported, Supreme Court, 6th November, 2001) McGuinness J. stated that the Irish courts should be guided in the exercise of their discretion by the provisions of the statute:
“The provisions of the 1996 Act leave a considerable area of discretion to the Court in making proper financial provision for spouses in divorce cases. This discretion, however, is not to be exercised at large. The statute lays down mandatory guidelines. The Court must have regard to all the factors set out in section 20, measuring their relevance and weight according to the facts of the individual case. In giving the decision of the Court, a judge should give reasons for the way in which his or her discretion has been exercised in the light of the statutory guidelines.”
It may be surprising in the light of the observations of the learned Judge that his conclusion and that of the House of Lords upheld the decision of the Court of Appeal who had reached their conclusion by identifying what that court had described as “the reasonable requirements” of the wife.
It is not surprising that the decision in White .v. White gave rise to considerable discussion and debate in legal and academic circles as well as a flood of literature which continues to debate whether equality is a relevant yardstick in determining the division of property between a husband and wife in “big money” divorce proceedings (see: Brasse, “White v. White – A Return to Orthodoxy?” 31 (2001) Fam. Law 191;
Miles, “Equality on Divorce?” 60 (2001) CLJ 46 and Northover and Peat “Cowan – Departure from Equality of Division” 31 (2001) Fam. Law 510 at p. 512). In his analysis of the judgment of Lord Nicholls, Thorpe L.J. in Cowan v. Cowan [2001] 3 W.L.R. 684 stated that:
“The decision in White v. White [2001] 1 A.C. 596 clearly does not introduce a rule of equality. The yardstick of equality is a cross-check against discrimination. Fairness is the rule and in its pursuit the reasons for departure from equality will inevitably prove to be too legion and too varied to permit of listing or classification. They will range from the substantial to the faint but that range can be reflected in the percentage of departure. However it would seem to me undesirable for judges to be drawn into too much specificity, ascribing precise percentage points to the various and often counter-balancing reasons which the facts of individual cases render relevant.”
Thorpe L.J. then went on to summarise the English position as follows:
“In summary therefore these seem to me to be the consequences of the House of Lords’ recent review of the ancillary relief cases in this court. (i) Approved is the frequent theme of decisions in this court that the trial judge must apply such criteria as are to be found in section 25. (ii) Approved also is the almost inevitable judicial conclusion that the unexpressed objective of the exercise is to arrive at a fair solution. (iii) Disapproved is any discriminatory appraisal of the traditional role of the woman as homemaker and of the man as breadwinner and arbiter of the destination of the family assets amongst the next generation. A calculation of what would be the result of equal division is a necessary cross-check against such discrimination. (iv) Disapproved is any evaluation of outcome solely or even largely by reference to reasonable requirements….”
A fundamental distinction between the United Kingdom legislation and the Irish Act of 1996 is the absence from the United Kingdom legislation, as Lord Nicholls explained, of any clause expressly stating the objective of the financial orders to be made by the court and the presence in the Irish legislation of an express and positive obligation imposed in accordance with the requirements of Article 41.3.2.ii of the Constitution that the court must be satisfied that proper provision has been made for each spouse. As stated by McCracken J. in M.Mc.A. v. X.McA. [2000] 1 I.R. 457, at p. 463:
“It must be borne in mind that the right to a divorce in this country is a constitutional right arising under Article 41.3.2 of the Constitution, and that the Act of 1996, sets out the circumstances under which such constitutional right may be exercised.”
The people in the referendum by approving the fifteenth amendment of the Constitution in the Act of 1995 permitted the abolition of the longstanding constitutional barrier to divorce but only on terms that where legislation empowered the granting of a decree of divorce that “such provision as the court considers proper” would be made for each spouse. Such provision would appear to be a condition precedent to the granting of a decree of divorce. The narrow requirement that a spouse was entitled to a periodic payment to meet his or her – usually her – needs or that each spouse was entitled to such a payment to meet his or her reasonable requirements is not the test in this jurisdiction. The statutory and constitutional test and requirement is that there must be proper provision irrespective of by whom it is provided. What that will amount to in any particular case will depend upon the examination of the factors set out in s. 20 of the Act of 1996 and the exercise by the trial judge of his discretion within the application of those principles.
Apart from the difference in legislation there is a fundamental distinction to be made between the proceedings in the present matter and those in White .v. White. In the English case the court was concerned to ascertain the terms on which the parties could make what is described as “a clean break”. In this jurisdiction the “clean break” is not an available option. This point was highlighted by McGuinness J. in K. (M) v. P. (J). (orse. K. (S)) (Unreported, Supreme Court, 6th November, 2001) when she stated:
“The concept of a single capital payment to the wife to meet her ‘reasonable requirements’ for the remainder of her life has never in fact formed a part of Irish family law. There are two main reasons for this. Firstly, such a capital payment is inevitably a part of a ‘clean break’ settlement in divorce proceedings. In this jurisdiction the legislature has, in the Family Law (Divorce) Act, 1996, laid down a system of law where a ‘clean break’ solution is neither permissible nor possible. Secondly, the approach of the Irish courts, in accordance with both Article 41.2 of the Constitution and the statutory guidelines, has been to give full credit to the wife’s contribution through her work in the home and as a mother to her children. (See, for example, J.D. v. D.D. [1997] 3 I.R. 64. In this jurisdiction the overriding requirement of a fair outcome is governed by section 20(5) of the 1996 Act:-
‘The Court shall not make an order under a provision referred to in sub-section (1) unless it would be in the interests of justice to do so.’”
The combination of the clean break and the objective of achieving fairness has led the courts in England to approaching that sort of case as a division of assets. Lord Nicholls repeatedly refers to the division of assets and has emphasised the necessity of achieving fairness in that context. Indeed it would be difficult to conceive of “fairness” as an object in itself as distinct from a particular standard by which an identified objective was achieved. The Act of 1996 and the constitutional provision pursuant to which it was enacted makes no reference to division. In any divorce proceedings the court in making an order approving or imposing financial dispositions in favour of a spouse is concerned with provision and not division. It is of course obvious that the court does have powers to make adjustment of property orders which, to some extent, might have the appearance of division of property but any such order is ancillary to the periodic payments which would ordinarily be the means by which provision would be made for the disadvantaged spouse. Not only does the Act of 1996 make no provision for a “clean break” between the separating couple but clearly the scheme of this Act is that the continuing provision for what I have described as the disadvantaged spouse should, in accordance with the provisions of s.13 (5)(a) terminate on the remarriage of that spouse. It would seem unwise for the paying spouse to agree to a lump sum order or a property adjustment (and unfair for the court to impose one) which would enable the receiving spouse to continue to enjoy provision notwithstanding his or her remarriage and with it the cesser of his or her statutory entitlement to be provided for.
Counsel on behalf of both parties urged this court to make whatever adjustments it thought fit to resolve the dispute between them without the necessity of the matter being remitted to the High Court for further proceedings which would undoubtedly involve costs and perhaps accentuate differences. Whilst I am fully sympathetic to that course I do not believe it is possible. The proceedings in the High Court in this matter were in fact dominated by the existence of the substantial assets which were acquired by Mr. T. in recent years and the value of which has escalated enormously in that relatively brief period. Very regretfully I believe that the matter must be remitted to the High Court to enable it to determine the “proper provision” to be made for each spouse. Before embarking on that course it is self evident that the parties must agree, or the judge must determine, what the proprietorial rights of each of the parties are. Under our legislation that course is unavoidable. The court must know at least in approximate terms the property and income available to each party before it can proceed to determine what more must be added to ensure that each party has been properly provided for. In that context I have no doubt that the relevant date is the date of the hearing by the court granting the decree of divorce. Counsel in this court understandably, in my view, raised the question whether an outstanding issue as to whether proper provision had been made could cast doubt upon the validity of the decree of divorce notwithstanding the fact that neither party sought to challenge that decree in the appeal proceedings. Undoubtedly proper provision is linked to the divorce decree and accordingly should, in my view, be ascertained as of the date of the decree.
On the other hand, other material factors prescribed in s.20 of the Act of 1996 will fall to be dealt with as of different dates and perhaps different periods. Indeed s.20 (2) (c) expressly provides that in considering the standard of living enjoyed by the family concerned the relevant period is either the period before the proceedings were instituted or before the spouses commenced to live apart from one another. Clearly that factor can only be considered in the present case by reference to a period prior to August, 1994. On the other hand contributions made by each of the spouses to the welfare of the family and calling for consideration under para. (f) of the subs. 2 aforesaid will range back over a long period.
Having established the proprietorial rights – be they legal or equitable: vested or contingent – of each party and their existing and potential future incomes the court will have the difficult task of determining what is required by the constitutional imperative of “proper provision”. Obviously the term itself and the criteria identified in s.20 aforesaid makes it clear that this is far beyond mere “needs” and probably exceeds what is comprised in the alluring term of “reasonable requirements”. Indeed I would have thought that “the tailpiece” originally contained in s.5 of the United Kingdom Matrimonial Proceedings and Property Act, 1970 might provide helpful guidance as to what is sought if it had been incorporated in the Irish legislation but with the words in brackets deleted and so as to read:-
“To place the parties, as far as is practicable [and having regard to their conduct, just to do so] ….in the financial position in which they would have been if the marriage had not broken down and each properly discharged his or her financial obligations and responsibilities towards the other.”
It is unlikely that on the breakdown of a marriage that both parties will continue to enjoy the standard of living which they had achieved together but it would not seem to me proper to invite either party to accept less if that is available. On the other hand, unlike Lord Nicholls, I have no difficulty in accepting that neither party is entitled to more. If there is a surplus beyond making proper provision I see no reason why the party entitled to that surplus should not retain it. This is in no sense discriminatory. If an impoverished man were to marry a wealthy heiress and he – whether through illness or indolence – contributed little or nothing in financial contribution or social commitment to the marriage he would be still entitled under Irish law to have proper provision made for him on the dissolution of the marriage. That having been achieved, and a surplus remaining, I see no reason why it should not be retained by the heiress. The significance of either party to a marriage having substantial assets or significant income is that these are factors which would determine the lifestyle of the married couple and to a large extent dictate the nature of the provision which would properly be made for each of them. Regretfully I can find no formula by which this can be achieved. Clearly in recent years attention has been focused on equality. Previously a view was taken that one third of the combined assets might be an appropriate starting point from which to calculate the share of the wife: Wachtel v Wachtel [1973] 2 W.L.R. 652. In earlier days, when the only relief available in this jurisdiction was a decree of divorce a mensa et thoro, similar fractions were relied on very largely on the basis that an order requiring a husband to pay a larger fraction of his income would discourage him from continuing to work.
It may be little consolation to litigants or their advisors but in the final analysis one can but recognise that our current legislation requires that proper provision be made for each spouse (whether male or female) and that in reaching that objective the court is bound to have regard to the factors set out in s.20 in the Act of 1996 aforesaid. It may be that the wisdom of the parties and the encouragement of their legal advisors may enable them to negotiate a settlement which the court could approve under the provisions of the Act of 1996. If that cannot be done I see no alternative but to remit the matter to the High Court to determine the proper provision to be made for, as it happens in this case, the wife. As a matter of law I would merely add that I believe that the decision in White .v. White and the observations contained therein would be of very little assistance in interpreting the Irish Act of 1996 notwithstanding the many similarities between the United Kingdom and the Irish legislation.