Miller v Miller

The House of Lords considered how to achieve a fair division of assets on divorce in two high‑value cases, focussing on the interaction of the principles of needs, compensation and sharing under section 25 of the Matrimonial Causes Act 1973 and the 'clean break' duties in section 25A. The court reaffirmed the White v White approach: non‑discrimination between breadwinner and homemaker, the 'yardstick of equality' as a starting point, and that departures from equality require good reason.

For short marriages the court held that equal sharing remains applicable but that the source and timing of capital (non‑matrimonial property and business assets generated before or early in the marriage) and the short duration may justify departure from equality. Conduct is relevant only where it would be "inequitable to disregard it" (section 25(2)(g)); the courts below erred in taking into account conduct that did not meet that statutory threshold.

On periodical payments and the clean break, the House held that periodical payments may be ordered for compensation as well as maintenance and section 25A requires the court to consider whether a clean break is appropriate but does not preclude continuing periodical payments where compensation cannot fairly be capitalised. In McFarlane the House restored a joint‑lives periodical payments order because capital was insufficient to compensate the wife for a long‑term, relationship‑generated disparity in earning capacity; in Miller the husband's appeal was dismissed and the judge's lump sum and property award of £5m was not disturbed as fair in the unusual short‑marriage, high‑value circumstances.

The House of Lords heard two consolidated appeals concerning financial relief on divorce involving substantial assets.

• Miller v Miller (short marriage, childless): the marriage lasted under three years. The husband brought substantial pre‑marital wealth and later acquired New Star shares which rose dramatically in value during the marriage. The wife sought ancillary relief; Singer J awarded the wife the former matrimonial home and a lump sum totalling £5 million. The husband appealed contending the judge had given undue weight to conduct and to the wife's 'legitimate expectation'. The Court of Appeal dismissed the appeal; the House of Lords held the lower courts had erred in taking account of conduct which did not meet the statutory threshold but nonetheless dismissed the husband's appeal because, on the facts (substantial accretion to husband's wealth during the marriage and the high standard of living enjoyed), the award was not plainly excessive.
• McFarlane v McFarlane (longer marriage, 16 years): capital was insufficient for an immediate clean break but the husband had very high continuing earnings and the wife had foregone a professional career to care for the family. The district judge ordered joint‑lives periodical payments of £250,000 per annum. The husband appealed and the Court of Appeal substituted a five‑year extendable term. The House of Lords allowed the wife's appeal and restored the district judge's joint‑lives order, holding that periodical payments can be used to provide compensation as well as maintenance and that where capital is insufficient a joint‑lives order may be justified to achieve fairness; the clean break duty in section 25A does not require depriving a claimant of compensatory income simply because a lump sum would be preferable.

Issues framed: (i) the application and reach of the sharing principle and treatment of non‑matrimonial property in short marriages; (ii) the relevance and threshold for conduct under section 25(2)(g); (iii) whether periodical payments may be ordered for compensation; and (iv) how section 25A's clean break duty affects compensatory periodical payments.

Reasoning: the House restated that fairness comprises needs, compensation and sharing. Conduct is only to be considered where it would be inequitable to disregard it. Non‑matrimonial/business assets may justify deviation from equality particularly in short marriages. Periodical payments are not confined to maintenance and may be appropriate to provide compensation where capital is insufficient; the clean break obligation requires consideration of ending obligations promptly but does not mandate a lump sum where that would be unjust.

The House of Lords dismissed the husband's appeal in Miller v Miller and allowed the wife's appeal in McFarlane v McFarlane. Rationale: the court reaffirmed the White v White principles (needs, compensation, sharing), stressed that conduct may be taken into account only where it would be inequitable to disregard it, recognised that unequal sharing can be justified by the source and timing of assets (particularly in a short marriage), and held that periodical payments may be awarded for compensation and that section 25A does not require depriving a claimant of compensatory periodical payments when capital is insufficient to effect a fair clean break.

Appeals to House of Lords from the Court of Appeal: Miller (from [2005] EWCA Civ 984) and McFarlane (from [2004] EWCA Civ 872). Prior hearings at first instance were before Singer J (Miller) and District Judge Redgrave (McFarlane), followed by appeals to the Court of Appeal and then to the House of Lords ([2006] UKHL 24).