Adopting the Needs Based Principle to Settle the Case - Essay Example

?Topic: "The wife's needs (generously interpreted) were not simply one of the factors in the case, but a factor of magnetic importance... fairness required that the wife's needs were the dominant factor in a case such as this" (McCartney v Mills [2008] 1 FLR 1508 FD) Do you agree? There are essentially three broad categories of factors that determine how a court will determine ancillary relief: compensation, needs and equitable sharing of assets and liabilities.1 It has also been consistently held that in determining these three category of factors for awarding ancillary relief, the court has a wide discretion to achieve a result that is fair and are thus informed by and not confined to the three category of factors.2 Therefore it is up to the court seized of the matter, which category of factors will dominate in determining a fair outcome. Thus, the court’s determination in McCartney v Mills3 that the wife’s needs were the dominant factor in awarding ancillary relief in a manner that was fair. To begin with ancillary relief awards commence with the application of Section 25 of the Matrimonial Causes Act 1973. Section 25(1) of the Matrimonial Causes Act 1973 directs the courts to “have regard to all the circumstances of the case”.4 Section 25(2) goes on to provide a list of all the factors that are relevant to the court in the exercise of its discretion on determining ancillary relief awards. These factors include the parties’ income, property, assets, earning capacity, financial needs and resources, “obligations and responsibilities” of the parties, the “standard of living enjoyed” prior to the marriage breakdown, age, marriage duration, physical/mental disabilities, contributions made and conduct of the parties if the court finds that it would “be inequitable to” to ignore the conduct.5 The standard of living enjoyed appeared to be the primary needs’ factor considered by the court in McCartney v Mills. Even so, the court took the position that this need was not be taken as a need to replicate or enhance the lifestyle that the wife had become accustomed to. Claiming an entitlement to the need to replicate or enhance the standard of living enjoyed during the marriage would be entirely unreasonable.6 This was particularly so since, the marriage was relatively short and Mills had not been independently wealthy and therefore it was entirely unrealistic for her to expect that she could duplicate that lifestyle or enhance it following the breakdown of the short marriage. In this regard, the standard of living during the marriage as considered by the court was not a need that the wife could realistically claim. Her actual needs would be assessed and particularly since compensation was not an issue. As Bennett J explained, when the husband’s “enormous fortune” was acquired even before he met his wife there is no need to look at the “compensation principle”.7 Bennet J went on to state: Where the marriage is short and where the standard of living lasted only so long as the marriage; where the wife is now and will be very comfortably housed; and where the child’s needs are fully assured, surely fairness requires that the wife’s needs (generously interpreted) are the dominant factor in the Section 25 exercise. Any other radically different way of looking at this case would be manifestly unfair.8 Mills had requested an award of compensation claiming that she had given up a lucrative modelling career during her relatively short marriage. However, the court found that her income prior to marrying McCartney was not as lucrative as she suggested. Mills’ request for compensation was thus rejected by the court and instead the court determined ancillary relief on the basis of Mills’ needs.9 Based on Mills’ needs in terms of sustaining the lifestyle to which she had enjoyed during the marriage, she was awarded 24 million pounds despite the fact that McCartney’s wealth was an estimated 400 million pounds. Even so, the marital acquest was relatively small since, most the wealth was accumulated prior to the marriage.10 The rationale for this result is that the needs based principle is dominant when the marriage was relatively short and a majority of the assets were accumulated prior to the marriage.11 In such a case, the needs’ principle will prevail over the equitable sharing principle because essentially the sharing principle will not apply. In order to achieve a fair outcome, the court is at liberty to consider the needs of the wife. Ultimately, McCartney v Mills established three parameters in which the needs based principle will prevail in an application for ancillary relief. First, the fact that the wife was not wealthy prior to the marriage, would bar a right to share in the husband’s wealth. Secondly, where the marital acquest is meagre compared to the pre-marital assets, sharing would not be a fair method for assessing ancillary relief. Finally, when there are no grounds for which compensation can arise, such as the wife giving up a lucrative career so that the husband was free to earn, needs may be considered.12 In McCartney v Mills, an equal division or sharing of the property would have produced an unfair result. Therefore, since Mills was not entitled to compensation, the needs’ based approach adopted by the court was fair. In a typical case, regardless of how short a marriage lasted, the matrimonial property is divided equally between the parties.13 In fact Lord Nicholls stated in Miller v Miller, that “a short marriage is no less a partnership of equals than a long marriage”.14 However, in such a case, the equal sharing only applies with respect to the property acquired during the marriage. Miller v Miller can therefore be distinguished from McCartney v Mills because the property in McCartney was primarily accumulated prior to the parties meeting and subsequently marrying. Thus it would have been entirely unfair to divided McCartney’s previously acquired wealth equally. In fact it has been established in Charman v Charman by the Court of Appeal that: Wealth generated by a party during a marriage is the product of a contribution on his or her part to the welfare of the family.15 However, the court must take into account how the wealth was generated. For example if the wealth is generated from a specific talent, it will be regarded as a special contribution and not necessarily considered matrimonial property. In other words, assets such as the family’s home or savings would be considered matrimonial property, whereas assets attributed to the special efforts and or talents of one party without assistance from the other would not be considered matrimonial property or property contributed to the family’s welfare pursuant to Section 25 of the Matrimonial Causes Act 1973. Therefore in the McCartney v Mills case, the assets had been generated purely as a result of McCartney’s genius and efforts and a majority of those assets were accumulated prior to his marriage to Mills. Mills’ needs were assessed and account was taken of the fact that she had already received the family home, another home and a significant allowance in respect of the child of the marriage. It has been suggested that the “durational element” be the main emphasis in deciding how to distribute property following the breakdown of the marriage.16 Specifically it has been suggested that the length of time that parties have been married should be a significant indicator of how the assets should be divided in a hearing for ancillary relief. Where the parties have been married for a significant length of time, the property would be divided equally unless it is shown that one party brought substantially more assets into the marriage than the other. However, in long marriage it should be presumed that the other party has earned a portion of the other party’s assets gradually.17 Even if the law had been such that the durational element was a deciding factor, it would not have applied in the McCartney v Mills case. The parties had not been married for a significant enough period to presume that Mills had gradually acquired a share of McCartney’s assets. The short marriage together with the fact that McCartney came into the marriage already an enormously wealthy man, a share of the assets would not have been gradually accumulated by Mills. It was the short length of the marriage and the fact that McCartney entered the marriage with substantial and independently accumulated wealth that prompted McCartney to contest equal sharing and compensation. McCartney had argued that given these facts, Mills’ ancillary relief claim should be resolved by reference to her needs as opposed to sharing and compensation. Ultimately the court agreed with McCartney and proceeded to assess the needs of Mills. Those needs would not include a desire to replicate and/or enhance the standard of living enjoyed by Mills for the short duration of her marriage to McCartney. Despite the fact that Mills argued that her capacity to earn had been constrained by her marriage with the result that her income during the marriage had been seriously compromised, the court did not agree that she qualified for compensation. In fact, on the contrary it appeared to the court that Mills income during the marriage had been greater than it had been prior to the marriage. Once the marriage broke down, Mills’ income actually increased as a result of media interest in the divorce and she cashed in by making appearances and conducting interviews. It was also found that Mills’ false leg had not impaired her ability to earn income as she appeared on Dancing with the Stars. Moreover, the false leg did not appear to be an issue both before and during the marriage. Thus the court did not factor in the false leg pursuant to Section 25 of the Matrimonial Causes Act 1973. It was therefore determined by the court that Mills’ false leg had not compromised her ability to earn during and before the marriage and would most likely not impair her ability to earn an income after the breakdown of the marriage and in the future. The court found that when the marriage broke down, Mills’s assets were just over 7 million pounds. Thus, it was unreasonable for Mills to expect to maintain the same standard of living that she had enjoyed during her short marriage to McCartney. Mills had argued for a substantial share McCartney’s real property estates. The court ruled however, that all of that property with the exception of one had been accumulated by McCartney prior to his marriage to Mills. The court responded by granting Mills the family home and she was able to keep her own realty in Brighton. Both parties had accused the other of conduct that the court should take into account when granting ancillary relief. However, pursuant to its discretion under Section 25 of the Matrimonial Causes Act 1973, the court disregarded the conduct allegations and stated that those allegations would not have any consequences for the final order. Thus conduct pursuant to Section 25(2) of the Matrimonial Causes Act 1973 would not function to influence the court’s assessment of Mills’ needs. She would walk away from the marriage with a settlement of 16. 5 million pounds and her total assets under the claim for ancillary relief were 24.3 million pounds. In all the circumstances of the case, the court was entitled to adopt the needs’ based principle as a major determinant of how and to what extent to grant ancillary relief to Mills. Given the short duration of the marriage and the fact that McCartney entered the marriage with a vast majority of his wealth equal sharing would have produced an unfair outcome. This was not a case in which the wife was married for a long period of time and during the long duration of the marriage had given up her career for the welfare of the family and thus contributed to the family’s welfare in such a way as to demand compensation. In fact, after giving birth to the child of the marriage, Mills was earning an income by making public appearances. Therefore the case was fairly determined on the needs of Mills alone. This was not a proper case for compensation or sharing. Had the court determined ancillary relief on the basis of equal sharing and/or compensation, the outcome would have been unfair to McCartney. Assessing the needs of Mills produced the fairest possible outcome. Bibliography Charman v Charman [2007] EWCA Civ 503, Para 81. EEkalaar, J. 2001. “Asset Distribution on Divorce – The Durational Element.” Law Quarterly Review, Vol. 117: 552-560. Hatwood, M. 2010. “Compensation Culture: the Latest McFarlane v McFarlane.” Family Law, Vol. 40(1): 52-57. Keehan, M. 2010. “Hey Big Spender! Add Backs and Reckless Spending.” Family Law, Vol. 40: 714-718. Matrimonial Causes Act 1973. McCartney v Mills [2008] 1 FLR 1508. Miles, J. 2008. “Charman v Charman (No. 4) – Making Sense of Need, Compensation and Equal Sharing After Miller/McFarlane.” Child and Family Law Quarterly, Vol. 20 (3): 378-394. Miles, J. November 2003. “Property Law v Family Law: Resolving the Problems of Family Property.” Legal Studies, Vol. 23(4): 624-648. Miller; McFarlane [2006] UKHL 24. Miller v Miller [2006] 2 FCR 213. RP v RP [2006] EWHC 3409. Read More