Reforming BIG money divorces

Sir Nicholas Mostyn grapples with the Standish v Standish judgment

Today’s column was written by Sir Nicholas Mostyn.

Welcome to our very first edition of the Law & Disorder newsletter. Here we pick over the issues thrown up by the episode on matrimonial finance released on 20 July 2024. You can listen to the episode below, if you’re curious.

In that episode we looked at the very interesting recent decision of  Standish v Standish [2024] EWCA Civ 567 (23 May 2024) where the wife, having been awarded £45 million, appealed. The husband apparently said that if she appealed, he would cross-appeal -  but if she didn't, he wouldn't.

It was the most luckless call by the wife as her appeal was dismissed and the husband's cross-appeal allowed, and her award was reduced to £25 million.

There is a thoughtful commentary on the case by  Calum Smith: Source not Title: Some First Reflections on Standish  at [2024] FRJ 114

We had as our guest Tim Bishop KC who represented the successful husband.

The key point in that case was whether the award should reflect the fact that during the marriage the husband placed a vast sum of money made by him before the marriage, and therefore not in principle shareable, in the wife’s name. Did that act “matrimonialise” that money making it shareable in whole or in part?

It would have been surprising if it did, as a very long-standing principle of the law, formulated soon after it was first enacted in 1969, is that  title is irrelevant: see for example Fielding v. Fielding [1977] 1 WLR 1146 where Lord Justice Ormrod said

“It seems a great pity that all the complications of trying to ascertain the parties' property rights should have been undertaken and pursued when the Matrimonial Causes Act 1973 provides an elastic method of deciding what is a fair order, in all the circumstances, and of adjusting property rights, if need be, under the wide powers of the court. It is nearly always a purely theoretical exercise to try to determine the strict property rights of each spouse.”

The relevance of the case of Standish is not confined to the divorces of the Ultra-High-Net-Worth. It is in fact relevant across the board as it raises the question whether we really need this whole area shaken up as Baronesses Deech and Shackleton argue and as the Law Commission is pondering.

Their report in the autumn will be  a “scoping paper”. The purpose of a scoping paper is to inform public debate, develop a broad understanding of potential options for reform and  to develop a consensus about issues to be addressed in the future.

So it is not as formally recommendary as a final report but it is certainly pointing in that direction.

Should there be statutory reform?

The case FOR

The advocates for reform, who include Nicholas Mostyn in their number, argue that the statute needs amendment at the very least (a) to make pre-nups contractually binding (i.e. they should only be capable of being set aside on the same common-law or statutory grounds that a contract can be set aside) and that (b) any post-divorce alimony should be awarded strictly and solely for  the alleviation of serious hardship.

They point out that the statute was passed in 1969, 55 years ago. It was substantively amended in 1984, 40 years ago. Its terms are banal statements of the obvious. The only prescriptive elements are the 1984 amendments on limiting spousal maintenance and promoting the clean break, but these have been studiously ignored since their enactment.

The existing rules are entirely judge made – there is virtually no democratic input. Fixed rules are therefore needed to legitimise the process and to make It transparent, accessible and predictable, so that cases can be settled or tried with minimum costs.

They say that Baroness Ruth Deech puts the case persuasively in her latest piece: Reform of Financial Provision on Divorce [2024] FRJ 107  Deech FRJ July 2024.

They point out that it is inconceivable that a claim for lifelong maintenance, whether paid periodically or whether paid singularly, would be entertained, let alone granted, in any European country, or in Scotland, or in Australia or New Zealand save in a situation of very serious financial hardship were such an award not to be made.

That legal principle would be well known and understood when a couple enter marriage in those countries. As a result, choices and agreements will be made during the marriage by the spouses which seeks to ensure that the earning capacity of the wife (normally) is not imperilled by motherhood should the marriage later come to an end.

Such a cultural model is entirely consistent with principles of feminism in that the female partner is treated as a fully autonomous adult making her own life choices rather than as a semi-incapacitated dependent.

By contrast there is no knowledge or understanding of such a legal rule or principle when a marriage is entered into in England and Wales. As a result, a spouse, usually the wife, will often make life choices which reduce her to the status of a semi-incapacitated dependent. These choices and their consequences are characterised as generating a “relationship generated disadvantage” giving rise to an entitlement to “needs” or “compensation” which is expressed as a payment of money either periodically or singularly to provide for lifelong support.

The advocates for reform say that this cultural model is entirely inconsistent with principles of feminism. It mandates completely unequal treatment and conduct by the spouses. It fatally undermines the independence and autonomy of the wife. It is a resonance of the Victorian characterisation of a wife as the weaker vessel (see Pretty v Pretty [1911] P 83 where Bargrave Deane J said that it should

“…ever be remembered that the woman is the weaker vessel: that her habits of thought and feminine weaknesses are different from those of the man: and that what may perhaps be excusable in the case of the woman would not be excusable in the case of the man.”  

Such an attitude Is entirely at odds with the otherwise complete emancipation of women. It harks back to Simone de Beauvoir, le Deuxième Sexe (1949), that ‘One is not born, but rather becomes, a woman’

Baroness Deech rightly put it this way

“If there is one thing that stops women getting back on their feet and being treated seriously and equally at work, it is the assumption throughout the legal system that once a woman is married she is somehow disabled and incapable ever of managing on her own for the rest of her life. It is a very serious impediment to equality.”

The case AGAINST

A persuasive piece in favour of the present system is “A Reply to Baroness Deech’s Argument for Reform” [2024] FRJ 111 by Samantha Hillas KC (Hillas FRJ July 2024)

On the podcast, Tim Bishop very ably argued against statutory reform of the present system and, it is fair to say, persuaded Charlie and Helena.

He pointed to the aphorism that every statutory reform generates a decade of litigation; that the present system is accessible, transparent and predictable; and that there is absolutely no need for further parliamentary intervention. He relied on his interview in the Times on 13 June 2024:  “ Fixed rules for division of matrimonial assets a formula for disaster” TBKC Times 13 Jun 24.pdf. He argued that the statutory reform proposed by Baroness Deech would not lead to a mere 10 years of litigation but was so impenetrably complex that it would be litigated over for the better part of half a century.

He completely rejected the suggestion that retention of the present system was adversative to  modern feminist thinking as regards the role of women in marriage. On the contrary he maintained that were women who made career sacrifices in favour of motherhood not to be compensated for their loss then that would be a blatant act of discrimination favouring the moneymaker against the homemaker. He also argued against the very principle of pre-nups on the basis that if you do not want to be exposed to the current laws of matrimony then just don't get married. In that regard he was frank enough to recognise that general opinion was against him on that.

Attention now turns to the Law Commission and its scooping paper in the autumn.

Watch this space!