Miller (Appellant) v. Miller (Respondent) McFarlane (Appellant) v. McFarlane (Respondent)

Fair financial provision on divorce is guided by three distinct but overlapping strands: needs generated by the relationship, compensation for relationship-generated economic disadvantage, and sharing of the fruits of the matrimonial partnership. Double recovery must be avoided.

Equality is a yardstick, not an inflexible rule. The source and nature of assets, the duration of the marriage and the parties’ financial arrangements may justify departure, but domestic and financial contributions receive equal respect. Conduct counts only where it would be inequitable to disregard it.

Periodical payments may provide compensation beyond maintenance. The clean-break objective must not deprive a spouse of fair compensation where sufficient capital is unavailable.

These conjoined appeals concerned financial provision following divorce. In Miller v Miller, a childless marriage had lasted less than three years. Singer J awarded the wife £5 million from the husband’s substantial wealth. The Court of Appeal dismissed his appeal: [2005] EWCA Civ 984.

In McFarlane v McFarlane, the wife had abandoned a successful legal career by agreement to care for three children while the husband developed a highly remunerative career. District Judge Redgrave ordered periodical payments of £250,000 annually during joint lives. Bennett J reduced the amount to £180,000. The Court of Appeal restored £250,000 but imposed an extendable five-year term: [2004] EWCA Civ 872.

The central questions were how needs, compensation and sharing operate under the Matrimonial Causes Act 1973; how asset source, marriage duration, conduct and contributions affect division; and whether periodical payments may compensate for lasting economic disadvantage despite the clean-break objective.

1. Disposition. The House unanimously dismissed the husband’s appeal in Miller v Miller and allowed the wife’s appeal in McFarlane v McFarlane. District Judge Redgrave’s joint-lives order was restored. Lord Nicholls and Baroness Hale gave complementary leading speeches. Lord Hope agreed with both on every point relevant to disposal; Lord Hoffmann agreed with Baroness Hale; and Lord Mance agreed with the outcomes and the substantial common ground.

2. Principles of fairness. Per Lord Nicholls and Baroness Hale, the discretion under the Matrimonial Causes Act 1973 is guided by needs, compensation and sharing. Needs include those generated by children and the parties’ marital choices. Compensation addresses significant prospective economic disparity caused by the way the marriage was conducted. Sharing reflects marriage as a partnership of equals. The concepts overlap, so double counting must be avoided.

3. Equality and asset source. The equal-sharing principle applies to short as well as long marriages, but equality remains a yardstick rather than a rule. The source and nature of assets, the duration of the marriage and the way the parties organised their finances may justify departure. Property brought into the marriage or received by gift or inheritance may carry different weight from the product of marital endeavour. Courts may distinguish categories and value assets with the degree of particularity appropriate to the case.

4. Conduct and contributions. Conduct below the threshold in section 25(2)(g) cannot be reintroduced through the general discretion. The lower courts therefore erred by considering responsibility for the breakdown of the Miller marriage. Financial and domestic contributions must receive equal respect. A special contribution warrants departure only where the disparity is so exceptional that disregarding it would be inequitable.

5. Periodical payments and clean break. Per Lord Nicholls and Baroness Hale, section 23(1)(a) permits periodical payments for compensation as well as maintenance. Sections 25A(1) and (2) encourage termination of financial dependence as soon as just and reasonable, but a clean break cannot be purchased at the cost of an unfair result. Where capital is insufficient and continuing compensation is due, a premature term order is inappropriate.

6. Application. In Miller, the £5 million award remained fair because substantial wealth accrued during the short marriage and the wife was entitled to a share and a transition from the marital standard of living. In McFarlane, the agreed career sacrifice produced a paradigm claim for compensation above needs. The wife should not bear the burden of seeking an extension after five years; the husband could seek variation or capitalisation when circumstances permitted.

• House of Lords: In Miller v Miller, dismissed the husband’s appeal. In McFarlane v McFarlane, allowed the wife’s appeal and restored District Judge Redgrave’s joint-lives order: [2006] UKHL 24.
• Court of Appeal — Miller: Dismissed the husband’s appeal from Singer J’s £5 million award: [2005] EWCA Civ 984.
• Court of Appeal — McFarlane: Restored annual periodical payments of £250,000 but substituted an extendable five-year term for the joint-lives order: [2004] EWCA Civ 872.
• High Court — McFarlane: Bennett J had reduced the wife’s annual payments from £250,000 to £180,000.
• First instance: Singer J awarded Mrs Miller £5 million. District Judge Redgrave awarded Mrs McFarlane £250,000 annually during joint lives or until remarriage or further order.