The Issue of Rights to the Family Home - Essay Example

When the case White v White was decided by the House of Lords many academics and legal commentators saw this as marking a revolutionary change in thelaw relating to matrimonial property and financial provision upon divorce. In light of the subsequent developments can this case still be seen as revolutionary? The changing dynamic the family nucleus coupled with socio-economic variances shaping property ownership can be problematic on the breakdown of a family relationship whether in the context of marriage or cohabitation. The focus of this paper is to critically evaluate the impact of the decision by the House of Lords in White v White1 in relation to division of assets and financial provisions on divorce. In particular, this paper critically reviews the White decision and considers the extent to which the decision has actually culminated in a revolutionary change in the law relating to matrimonial property and financial provision on divorce. Moreover, I shall comparatively analyse the UK legal position with the approach in other jurisdictions where appropriate. From a family law perspective, the issue of rights to the family home have continued to be problematic and decisions in ancillary relief proceedings were addressed by the House of Lords’ decision in White v White2. This decision changed the approach to assessing financial settlements on divorce and introduced the “yardstick of equality” principle as a means to ensure fairness in the division of assets between divorcing couples. Whilst heralded as a welcome decision in introducing some much needed clarity to the division of assets on divorce3, it has been argued that such an approach is inherently dogmatic in failing to specifically address the division of rights to the family home particularly where children are involved4. Although the reasoning in White v White specified that there was no presumption of equality on divorce, if the court intended to depart drastically from an equal splitting of assets they should have satisfactory justification for doing so. Furthermore, the governing legislative provision in this area of law is the Matrimonial Causes Act 1973 (MCA) and section 25 of the MCA provides the court with a very wide discretion of factors to take into account on division of assets, with the welfare of a child being paramount5. As such, it is submitted that the overriding statutory requirement to consider the interests of the child inherently limits the application of White v White to cases where children are not involved as the “yardstick of equality” is not appropriate to address delicate situations of relationship breakdown involving children. Moreover, when a court is making decisions with regard to property and financial claims, section 25 of the MCA provides a detailed checklist of factors to be taken into account to assist the court in making its decision. However, as highlighted in the case of Cordle v Cordle6, section 25 of the Act applies to all the circumstances of the case subject to the rights and welfare of the child in order to achieve a “fair result”. However, section 25 does not express any other obvious objective and the range of “all circumstances” which the court is required to consider does not give clear guidance, compounded by the uncertainty as to what is amounts to a “fair result7”. Furthermore with regard to children, the courts address more weight to the interests of a child the younger they are and this in itself highlights the difficulty of legislating for social and emotional issues in an effective and inclusive manner8. The impact of divorce on any child is subjective however legal certainty dictates that some form of logical approach is applied. Due to the section 25(1) requirement placing a child’s interests first, the usual approach regarding rights to the family home is to make a property adjustment order transferring the family home to the primary care giver until the children has reached majority9. However a degree of discretion is permitted in order to ensure that a “fair result” is achieved10. Additionally, under section 24(1) (a) of the MCA the courts can order a complete transfer or a partial transfer (in any proportion) under section 24(1) (d). They can also make an order for sale under section 24A (1), which is intended to release the equity tied up in the property and turn it into capital divided between the parties. However, this can be delayed until the youngest child is 16 and it is questionable whether such uncertainty meets to objectives of section 25 in aiming to preserve stability for dependant children11. Whilst the MCA expressly acknowledges the different purposes of the family home the problem is that the length of the orders that can be imposed and the potentially long delay in realising the value of the asset contradicts the underlying objective of the law in assisting a “clean break” on divorce12. Additionally, the powers under section 24 are quite wide and the courts can made an order a transfer of the property even if the other party has been paying the mortgage, which again can perpetuate bitterness and bad feeling between the couple13. Furthermore, in achieving “fairness” the property adjustment order can inadvertently create undesirable results. For example, if a property is transferred to the primary caregiver and the property is subject to a mortgage, the courts have the power to transfer the debt of the mortgage on the basis that the other party is relinquishing their rights to the home14. This could effectively result in the primary caregiver being forced to sell the home contradicting the primary purpose of the order in preserving stability for the immediate needs of the minor child, leaving the courts with a difficult balance to address15. Conversely, the court does not have such wide ranging powers in relation to cohabitees and a sole owner will continue to own the property notwithstanding a relationship breakdown16. If a partner has made contributions to the property under cohabitation they currently have to rely on the complex principles of constructive and resulting trust with no equivalent statutory right of occupation as is applicable to marital relationships17. A cohabitee’s position may be strengthened if a dependant child is involved, as a court order can be obtained to prevent sale18. Again it is questionable whether such an order is really in the best interest of the child where a relationship has broken down and a selective approach to protection of children based on whether they are a product of marriage or cohabitation is undesirable. Outside the realms of marital relationships where children are involved, the absence of a definitive aim of section 25 has led to a width of discretion regarding rights to the family home. Lord Scarman asserted ion the case of Trippass v Tripass that “the complete flexibility of approach that the act….emphasises all the circumstances of the case19”. Therefore, it has been argued that the judicial formulation of section 25 implies a fair outcome and non-discrimination between husband and wife in evaluating their contributions to the family home, welfare in their respective roles. However, Lord Nicholls in White asserted the contradiction that “fairness like beauty is in the eyes of the beholder20”. Prior to the White case, courts had applied the “reasonable requirements” approach in ancillary relief proceedings, whereby a spouse should recover more than the bare minimum but not more than their “reasonable requirements”. However this approach ignored the wealth of a spouse and in the case of F v F21 for example, a wife who had been married to a man with an estimated worth of £150-200 million received only £9 million. This led to strong criticism of the “reasonable requirements” approach for resulting in injustice and inherently devaluing non-monetary contributions to a marriage, which invariably resulted in discrimination against women22. If we further consider the factual circumstances of White v White23, the case involved the breakdown of a marriage of thirty-four years with combined assets of approximately 4.5million in farms that they had run together. At first instance, the “reasonable requirements” test was applied and Mrs White was awarded £1 million, which was increased by the Court of Appeal to £1.5 million. The case then went to the House of Lords where Lord Nicholls posed the following question: “Why should the assets built up during a marriage become immaterial once the reasonable requirements of the wife are assessed, and the surplus remains with the husband?” The House of Lords went on to emphasise the width of the section 25 discretion, asserting a principle of non-discrimination and equal value in respect of different contributions to the welfare of the family. Translating the concept of non-discrimination in this way culminated in the formulation of the yardstick of equal division of assets against which an award or rights to the family home should be considered. The decision resulted in academic and professional debate and was welcomed as a step towards recognition of marriage as an equal partnership24. It further signalled the end of the “reasonable requirements” ceiling on a wife’s award involving big money25. Whilst clearly a welcome approach to the changing shift of the balance within modern marriage of equality and further acknowledging the broader concepts of “contribution” within a marriage; the White principle appears to be selective in applying to cases where big money is involved26. This begs the question as to whether White has actually clarified the approach regarding the division of assets on divorce. Herein lies the problem; every case involving relationship breakdown will intrinsically be unique and require a balance of complex and competing interests. This in itself lends itself to a discretionary approach and it is arguably impossible to adequately legislate for the wide range of circumstances covered by family breakdown. Nevertheless it is submitted that a review should take place specifically to address division of rights to the family home where children are involved with the aim of equal applicability to children of marriage or cohabitation. Indeed, Eekelaar refers to refers to Professor Bailey Harris’ note on the decision in White, which suggests that the law’s approach to division of assets and ancillary relief on divorce presses the need to consider legislative reform27. In considering this argument, Eekelaar refers to the dicta in Cowan v Cowan, 28where the judiciary intimated that legislative action in this area could implement much needed guidance and certainty to the area. However, on the other hand, Eekelaar also suggests that notwithstanding the continuing ambiguities in this area post-White, perhaps legal commentators and academics have been “too dismissive of judicial direction in this area”. To this end, Eekelaar argues that to a degree the judicial discretion enables the law to remain flexible and address continuing evolution in familial relationships. In contextually considering the White decision within this argument, Eekelaar comments that the Cowan decision attempted to clarify White by arguing that White was not simply a big money case formula29. Notwithstanding Eekelaar acknowledges the problems with the Cowan rationale as in this case, it was suggested that the central factor in ancillary relief proceedings post White was to consider the extent to which contributions were made to the marriage. However, this unwittingly lends itself to a trust law approach. Arguably, the White decision was attempting to implement a lateral approach to the “yardstick of equality” model by considering contribution outside the proprietary trust law principles to avoid denigrating the value of contributions that are not financial in nature. However, it is clearly difficult to assess contributions outside trust law area, which again perpetuates legal uncertainty in this area. Eekelaar highlights this problem by asserting that “the problem is that, even though Lord Nichols’ evaluation of each party’s contribution to start at the same equally with earning in the marketplace, it is still necessary to evaluate each other and the degree of effort or skill each spouse has put in these activities”30. Additionally, in terms of the practical result of White, whilst attempting to introduce a contribution based approach that was applicable irrespective of the length of marriage; Eekelaar highlights how in practice this results in the “Duxbury paradox31”. Therefore, whilst Eekelaar suggests that the objectives of the White decision were meritorious, in practice the judicial adherence to the Duxbury32 formula to calculate lump sum payments on divorce, have resulted in a paradox in practice33. Moreover, in Foster v Foster34the Court of Appeal addressed the question of the appropriate approach post White in short, childless marriages. In considering this issue, Hale L.J submitted that: “Duration of marriage will obviously be relevant in cases where one party’s earning capacity may have been seriously affected by a long period devoted to home making and child bearing, but where a substantial surplus has been generated by their joint efforts, it should not matter whether they had taken a short or long time to do so”35. This would suggest that regardless of the House of Lords’ rationale in White, the existence of a marital relationship will not result in a presumption of equality per se. Therefore, in considering the appropriate approach to the White formula, Eekelaar posits that akin to the approach in certain US territories, the focus should be on asset allocation and then extent to which spouses earn a share of each other’s property during course of life36. It is further argued that this approach moves in favour of “equality” in terms of the contributions spouses have made to the marriage as per the White rationale as opposed to any sort of presumption of a 50/50 split. To this end, Eekelaar suggests that the White decision and comparison with the US approach to “equal contribution” further exposes the flawed Duxbury approach to financial calculations. Furthermore, Miles37highlights the point made by Eekelaar that the revolutionary aspect of the White decision was the welcome approach of acknowledging the “equal value of home-makers contributions” to financial contributions in marital relationships. However, similar to Eekelaar the fundamental stumbling block in the practical impact of White has been the judicial adherence to the section 25 MCA checklist, which does not enforce the White presumptions. As a result, Miles questions the extent to which the White concept of “equality” is really implemented into the English legal system in financial applications on divorce38. Miles further presses the need to consider legislative reform through comparative analysis with alternative jurisdictions. For example, if we consider Australian law39, both parties can agree on how the property can be divided with mediation without any court involvement, which can then be formalised by a court order seeking consent by the Family Court40. If an application to the court is made, the relevant provisions are sections 79(4) and 75(2) of the Family Law Act 1975 which sets out the general principles that a court considers when deciding financial disputes after marriage breakdown: 1) Working out what the parties have got and what is owed, assets and debts and what they are worth; 2) Direct financial contributions; 3) Indirect financial contributions; 4) Caring and home making; and 5) Age health, care of children and ability to earn. All evidence is heard and there is no applicable formula used to divide the assets and each cased is decided on the unique facts of each case41. Whilst similar to the MCA considerations, the ability of the parties to agree to a formal agreement of division is a sensible approach. Although under UK law, both parties can enter into voluntary financial disclosure, a court is not bound by any such agreement and can override it with its far reaching powers under the MCA42. Alternatively, Canadian law regarding divorce43 is governed by the constitutional Divorce Act, 1985 which does not deal with the division of property and each province or territory has its own rules for dividing assets44. However, the most common way of dealing with rights to property is through a formal agreement. It is common practice for lawyers to recommend and negotiate separation agreements which are written, involve full disclosure and are legally binding45. Whilst not necessarily appropriate for every case, an approach towards the formalisation of such negotiated agreements would be welcome as it would prevent further costs being incurred and go further towards ensuring a clean break. As such, it is more likely that the welfare and stability of any dependant child will be met by such an approach. In conclusion, it is submitted that the above analysis demonstrates that whilst the decision in White was a landmark turning point for ancillary relief cases, in practice the adherence to the MCA checklist has enabled the judiciary to depart from the White rationale. Moreover, in practice, whilst the White decision was specifically determined not to be restricted to big money cases, in practice this is precisely the case. Moreover, the difficulty of the White decision is the definition of contribution outside a proprietary context. Additionally, the concept of “equal contribution” may not always be practically appropriate in cases where individual resources are restricted and the children’s housing needs are paramount. Accordingly, the reality of the impact of White is inherently dependent on the circumstances and the nature of the marital relationship. Bibliography Barlow., Duncan., & James., (2005)Cohabitation, Marriage and the Law. Hart Publishing. Cretney’s Family Law., 6th Revised Edition (2006) Sweet & Maxwell Eekelaar, J. (2001). Asset distribution on divorce. Law Quarterly Review 552. Belinda Fehlberg., (2007) Australian Family Law. Oxford University Press. M. Kronby., (2006) Canadian Family Law. 9th Edition John Wiley & Sons. Lowe., & Douglas., (2006). Bromley’s Family Law. 10th Revised Edition LexisNexis UK. McGlynn, C. (2006). Families and the European Union. Cambridge University Press. Miles, J (2001). Case Comment: Equality on divorce? Cambridge Law Journal 46. Mykituik, Roxanne (2006). Family Law: Cases and Materials, Osgoode Hall Law School. Bird, R. (2007). Ancillary Relief Handbook. 6th Edition Jordan Publishing. Legislation Matrimonial Causes Act 1973 Statutes available at www.opsi.gov.uk Read More