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How Does The Court Establish Fair Distribution Of Assets In Divorce Cases?

When a couple gets divorced the division of matrimonial property and assets often causes disputes. It can be difficult for the spouse who feels they have contributed more financially to accept that the law in England and Wales sets out that financial and non-financial contributions are to be given equal weight when it comes to working out a fair financial settlement. Two landmark cases, White v White and McFarlane v McFarlane, have been instrumental in shaping the principles and processes that guide the distribution of matrimonial assets in the context of divorce.

Before discussing these cases, it is vital to note that when deciding on division of matrimonial property, the Court must consider the factors provided by section 25 of the Matrimonial Cases Act 1973, namely:

  • The resources available to the parties, both capital and income and extant or reasonably foreseeable.
  • The financial needs of each party, considering the needs of dependent children and any disabilities.
  • The duration of the marriage and the age of the parties.
  • The conduct of the parties (but only in exceptional circumstances).
  • The standard of living enjoyed by the parties.
  • Any benefit either party will lose because of the divorce.
  • The contributions of each party to the marriage (both financial and non-financial).

How did White v White change the law around financial settlements in divorce cases?

White v White [2001] 1 A.C. 596 is a pivotal case that addressed the principle of equality in dividing matrimonial assets. Before White, there was an unstated but common assumption that the primary breadwinner – often the husband – would receive a greater proportion of the shared assets in the event of a divorce. The facts of the case centred on a farming couple who had been married for 33 years, during which the wife made significant contributions towards running the farm and household.

The judges deciding White v White rejected the premise that the monetary provider should receive a larger share. Instead, it established the principle of equality, or 'yardstick of equality', stipulating that the division of assets should not be influenced by the role of each party in the marriage (whether as breadwinner or homemaker), but rather should aim for a fair outcome, which often means an equal division.

Lord Nicholls stated:

“…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.”

The principle of equality, however, does not imply a strict mathematical calculation resulting in a 50/50 split of matrimonial assets. Instead, courts interpret ‘equal division’ as a starting point for the division of assets. They then adjust based on the factors listed under section 25 of the Matrimonial Causes Act 1973. These factors can tilt the balance away from a strict 50/50 split when it is deemed necessary to achieve a fair outcome.

Lord Nicholls again:

“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.

01 August 2023
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What did the case of McFarlane v McFarlane decide?

The joint appeal cases of McFarlane v McFarlane [2006] UKHL 24 further enhanced the legal understanding of the division of assets on divorce. This case, among other things, redefined the concept of 'financial needs'. The wife in this case had given up her career to support her husband's profession and raise their children. Despite the husband's significant income, the wife's earning capacity had become negligible.

In McFarlane v McFarlane, the House of Lords held that the wife was entitled to a share of the husband's substantial income post-divorce as part of her 'financial needs'. This reflected her loss of earnings and future earning capacity because of her decision to support the family instead of her career.

This case emphasised the importance of 'compensation' for relationship-generated disadvantage. If one party has been economically disadvantaged by the marriage – for instance, by giving up their career to raise children – they may be entitled to 'compensation' through the financial settlement.

Wrapping up

The decisions in White v White and McFarlane v McFarlane have profoundly influenced the principles that guide how matrimonial assets are divided upon divorce in England and Wales. The principles developed in these (and other) cases has resulted in many people in high-net-worth divorce matters trying to have the financial settlement proceedings heard in London as compared to many other countries, the Courts in England and Wales are extremely generous to the financially weaker spouse.

Are the division of matrimonial assets under English law fair? In some circumstances, perhaps not. However, the Court will decide cases based on the principles; therefore, it is crucial to instruct an experienced Divorce Law Solicitor to advise and represent you to ensure your best interests and those of your children are protected.

Guillaumes LLP Solicitors is a full-service law firm based in Weybridge, Surrey. We have an experienced family law team who can assist you with all matters relating to divorce proceedings and financial settlements. To make an appointment, please call us on 01932 840 111.