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Cowan v Cowan [2001] EWCA Civ 679

stress-after-divorce

Divorce – Financial provision – Discretion – Fairness – Factors justifying departure from equality – Reasonable requirements not to be used as ceiling on award

EWCA Civ 679

[2001] 2 FLR 192

Court of Appeal

Thorpe, Robert Walker and Mance LJJ

14 May 2001

The husband and wife were married for over 35 years, and had two children. The considerable assets of the family, about £11.5m, had been built up entirely during the marriage, following the launch of a series of family companies concerned with polythene and high density plastic. The wife sought an equal share of the assets, relying on her contributions as wife and mother, and upon what she claimed had been an outstanding contribution to the success of the companies. The judge made an order which gave the wife about £3.2m, noting that her contribution to the business, while not insignificant, had not been particularly important by comparison with the husband’s entrepreneurial flair and drive. The award to the wife included the family home, worth about £1.1m, net income needs of £100,000 pa, capitalised using Duxbury at £1.58m, the second home in Florida, plus £200,000 to clear the Florida mortgage. The wife appealed, and after the House of Lords’ judgment in White v White, argued that she was entitled to equality and an increase in the lump sum award from £2.7m to £4.6m. The husband argued that the objective in all cases remained fairness, not equality, and that there were sufficient considerations in this case to justify a departure from equality, in particular the ‘stellar’ quality of the husband’s contribution, the finding that a proportion of the shares in the family company were held by the husband on trust for his brother, the fact that much of the husband’s wealth had been generated since the separation, and the different character of the different assets retained by the parties.

Held – allowing the appeal and increasing the lump sum award to £3m –

(1) The case for statutory reform of ancillary relief law had been strengthened by White. In the meantime, the court had to apply the principles to be found in White on a case-by-case basis, bearing in mind that White had been directed at the ‘big money’ case.

(2) The ratio of the judgments in White was that the judge’s objective in ancillary relief was not equality, but fairness. Fairness was the rule; the new yardstick of equality was a cross-check against discrimination, not a rule. Following the Lords’ review of ancillary relief cases:

(i)the trial judge must apply the statutory criteria in s 25. The Lords had commended the courts to return to the language of the statute, and to apply the checklist in s 25(2) in deciding what would be a fair outcome;

(ii)the aim of the courts was to reach a fair solution. The Lords had recognised that although the fair outcome would sometimes be a more or less equal division of the assets, more often it would not. The reasons justifying a departure from equality would inevitably prove too many and too varied to permit of listing or classification, but did include acquisition of wealth by more than special skill and care;

(iii)in evaluating contributions the traditional role of women was not be valued lower than the role of breadwinner; there was to be no discrimination on that basis;

(iv)the size of an award could not be limited by reference to ‘reasonable requirements’;

(v)there was a heightened need for legislation, because the loss of the judicial tool of ‘reasonable requirements’ which had introduced an element of predictability to the process had extended judicial discretion at a time when government, and academic, preferences seemed to be moving in the other direction.

(3) The judge had limited the wife’s claim to her reasonable needs. Post-White, the judge’s order could not stand, and the division of assets must be re-addressed by applying the s 25(2) criteria to the facts, to achieve a fair outcome. It was not appropriate to re-try the case, and the Court of Appeal had sufficient information to conduct the review. The factors in favour of increasing the wife’s award were: the need to discard the use of ‘reasonable requirements’ to establish a ceiling to the wife’s award; to discard the discriminatory bias in favour of the wealth-creator; and to recognise the wife’s legitimate aspiration to devise a substantial estate at the end of her life. However, counter-balancing factors were the current inequality of housing provision, the husband’s continuing need to exercise his business talents, which might require investment of capital, recognition of the husband’s creative genius, the possibility that some of the husband’s shares were held for the benefit of others, and the special characteristics of pension funds, versus cash funds. The overall division was about 38% of the assets to the wife, and 62% to the husband, who would retain about £7.1m.

(4) The assessment of assets must be at date of trial or appeal. Exceptions to that rule were rare, and probably confined to cases where one party had deliberately or recklessly wasted assets in anticipation of trial.


Statutory provisions considered

Matrimonial Proceedings and Property Act 1970

Matrimonial Causes Act 1973, s 25(2)

Family Law Act 1975 (Australia), ss 75, 79

Matrimonial and Family Proceedings Act 1984, s 3

Civil Procedure Rules 1998 (SI 1998/3132), r 52.5

European Convention for the Protection of Human Rights and Fundamental Freedoms 1950, Protocol 1, Art 1, Protocol 7, Arts 5, 7

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