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The law lords lay down guidelines for big-money divorce settlements







If a wife walks out on her wealthy husband after a short marriage, should the courts penalise her when dividing the spoils? If a rich husband leaves his long-suffering wife for a young bimbo, should the wife be awarded a bigger share of their joint wealth on divorce? No, said the House of Lords, Britain's highest court, this week in a firm rejection of the notion of blame being re-introduced into divorce proceedings. Straying spouses around the country breathed a sigh of relief.

In 2000, the House of Lords ruled that assets should be divided according to a " yardstick of equality", and not simply on the basis of the claimant's-usually the wife's—financial need. Since then, judges have struggled to decide when they might depart from that broad principle of equal shares. The law lords have now tried to lay down some guidelines.

Their first case concerned Alan Miller, a fund manager with an income of over £ 1m a year, and his American wife, Melissa, who, on marrying, gave up her £ 85, ooo-a-year job. The union ended less than three years later when he went off with another woman. At the outset of the marriage, Mr Miller's wealth was estimated at nearly £ 17m. By its end, he had also acquired shares worth between £ 13m and £ 18m.

In awarding Mrs Miller a £ 5m lump sum last year, a lower court said that it had taken into account the husband's responsibility for the breakdown of the marriage along with the wife's " legitimate expectation" of a higher standard of living. To widespread astonishment, this was later upheld by the Court of Appeal. Under the 1973 Matrimonial Causes Act, judges are supposed to take the parties' conduct into account only if it was so egregious that it would " be inequitable to disregard it". Adultery and desertion had never been thought to fall into that category. Did this mean the end of no-fault divorces?

No, Lord Nicholls ruled this week. Judges could not, and should not, seek to discern the truth about a marriage from the recriminations that followed a breakup. But in view of Mrs Miller's expectations and the huge increase in Mr Miller's wealth during the marriage, he nonetheless felt the size of the award was fair.

In America and most other European countries, divorce settlements take into account only those assets acquired during a marriage. But in England and Wales (though not Scotland) all assets are traditionally up for grabs. Lord Nicholls has now ruled that the " yardstick of equality" should not necessarily be applied to " non-matrimonial" assets acquired before the wedding. The ruling should cheer the likes of Sir Paul McCartney, the former Beatle, who amassed most of his estimated £ 8oom fortune before his four-year marriage to Heather Mills, which publicly broke down last week.

The second case before the Lords concerned Kenneth and Julia McFarlane—he a senior tax partner at Deloitte Touche Toh-matsu, she a well-paid solicitor before she gave up her job to look after their three children. The marriage lasted 16 years. At their divorce, the couple agreed to share their capital assets, which were valued at £ 3m. But on the basis of her husband's anticipated future earnings, Mrs McFar-lane demanded an extra £ 250, 000 a year for life. The law lords decided in her favour. While agreeing that the sum far exceeded her needs, they argued that she was entitled to compensation for having given up her own career.

The rulings should help make divorce more predictable for those at the top of the earning scale—something that may also be achieved by the growing use of pre-nuptial agreements. But they will change little for ordinary folk, who will continue to scrabble for what they can get, with both sides invariably ending up worse off.







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