Articles

The Judiciary: Shifting the constitutional boundary and usurping parliament's role?

Release Date:	01 June 2008
Author:	Miles Geffin
Original Publication:	Family Law

The extent to which, in any circumstances, the judiciary has a mandate to shift the constitutional boundary between Parliament and the courts on issues of public policy is a highly controversial question. Where is the line to be drawn between, on the one hand, legitimate judicial interpretation and, on the other, improper judicial legislation? This article considers whether the courts have any legitimate authority to create a principle of equal sharing of assets on divorce and then, reactively, to recognise and enforce the terms of pre-nuptial agreements.

These questions are important because the basis of legal regulation of the family goes to a society’s core values. In a democracy, changes to the basis of that regulation are a matter for elected representatives, not an unaccountable judiciary. Parliamentary debates on important changes in the way in which the law responds to family disputes have tended to provoke savage exchanges, both in the House of Commons and the wider media, seen most recently in the turbulent passage of the Family Law Act 1996 and the subsequent repeal of the majority of its provisions. Conversely, perhaps with the exception of rulings touching on issues of human rights, judicial decisions tend to be far more narrowly debated; so if the judiciary chooses to legislate, it is able to do so far more discretely than Parliament. But even then, a voice can sometimes be heard in the wilderness. In RP v RP [2006] EWHC 3409 (Fam), [2007] 1 FLR 2105 Coleridge J had this to say: ‘Once again a high profile case [namely Miller v Miller; McFarlane v McFarlane [2006] UKHL 24, [2006] 1 FLR 1186] heard at the highest level sends seismic reverberations throughout the whole system; touching every district registry and lawyer’s office in the land …

Pandora can be heard rattling her keys as every line of the decision is subjected to scrutiny by microscope for innovative arguments and approach

… After three decades of silence (1970–2000) when the House of Lords declined to give any guidance, there have now been two momentous decisions in six years. They run to hundreds of paragraphs. In addition they have been subjected to further interpretation in cases in the Court of Appeal and/or below. A new statute could not have had more far reaching social or forensic consequences.’

Stephen Cretney in Family Law in the Twentieth Century (OUP, 2003) tells us that historically, the judiciary deferred to Parliament on issues affecting the family law regime. In 1936, Lord Merrivale, the then President of the Probate, Divorce and Admiralty Division, declared the only principle to be observed is that the court ‘should follow the statute’ (Chichester v Chichester [1936] P 129). A sentiment later echoed by Colerige J when, also in RP, he said:

‘In all humility, may I make a plea for a period of reflective tranquility? I believe that would now be most helpful; to the courts at first instance, the practitioners and the families involved in the litigation. Section 25 says it all, thereafter perhaps for the moment at least, the less said the better.’

This approach is informed by a view that the role of the court is to adjudicate upon, rather than to determine, issues of policy. Senior judges have always recognised that a successful judiciary must be independent from the other apparatus of the state; thereby ensuring clarity as to which are its decisions and which are those of the executive or the legislature. Recently, however, in the wake of apparent disinterest on the part of Parliament and the executive to its calls for reform of matrimonial finance law, the quest for certainty has seen judicial deference abandoned in favour of intervention, despite the, ‘limitation on the resources of even the judges of the House of Lords to conduct wide-ranging comparative studies as a prelude to establishing a new principle, or perhaps to abandoning an existing principle in what is essentially a social policy field’ (Charman v Charman (No 4) [2007] EWCA Civ 503, [2007] 1 FLR 1246, at para [122]).

REASONABLE REQUIREMENTS

To understand this implicit criticism of their Lordships by the President, Thorpe and Wilson LLJ, one has to understand the alpha to omega of the principle of reasonable requirements, the demise of which these senior family judges appear to so lament. Cretney observes that the genesis of reasonable requirements predates the Matrimonial Causes Act 1973 by some 70 years and can be found in an earlier statutory incarnation. The Matrimonial Causes Act 1857 enabled the court to order a husband to maintain his wife. The Victorian ethos of preserving capital for future generations was, however, reflected in its divorce laws; the 1857 Act contained no power to make lump sum or other capital orders. In the application of its new powers, the then nascent Divorce Court was guided by its predecessor, the Ecclesiastical Court and generally provided a divorced wife with one third of her and her former spouse’s joint incomes (as was later explained in Wachtel v Wachtel [1973] Fam 72). In high income cases, however, judges began to baulk at the prospect of providing a wife with an income that exceeded her needs. In Sykes v Sykes [1897] P 306, for example, where a Baronet’s annual income was said to be in the region of £70,000 (well over £4 million today), his wife was awarded maintenance of only £3,000 per annum. Positing whether the Registrar had been entitled to hold that £3,000 was amply sufficient, having regard to the wife’s position ‘in life and her necessities’, Ludlow LJ said ‘Test it in this way: would not £3,000 a year be considered, in the case of a settlement, to be an adequate jointure for a widow who had been in the position of the wife of a baronet like the husband in the present case? I think it would’.

The Matrimonial Causes Act 1963 enabled the court, for the first time, to order payment to a wife of a lump sum, unlimited in quantum. That power was supplemented by the provisions of the Matrimonial Proceedings and Property Act 1970 enabling the court to make property adjustment orders, with all these powers later being consolidated in the Matrimonial Causes Act 1973. In an attempt to make sense of their new battery of legislative powers, at first, the courts took a formulaic approach to asset and income redistribution. In Wachtel (above) on appeal from Ormrod J (as he then was) Lord Denning suggested that, unless spousal periodical payments were to be made, an equal division of assets was a reasonable starting point. If periodical payments were to be made, then the wife’s share of the assets should reduce to one-third: and, reviving the old approach to maintenance, the Master of the Rolls suggested that where periodical payments were to be made to a wife, these should be at the rate of one-third of joint annual income (an approach later resurrected in McFarlane, in which the House of Lords approved the district judge’s decision to award the wife £250,000 out of a net income of £750,000 per annum).

However, led by Ormrod LJ (who, with Thorpe LJ after him, set the matrimonial finance agenda for two decades or more), the courts increasingly recoiled from this arithmetic approach once its practical effects had become apparent. In Preston v Preston (1981) 2 FLR 331, the Court of Appeal ruled that the concept of equality had no place under the Matrimonial Causes Act 1973; rather, the division of assets between husband and wife depended in each case on the circumstances. A formulaic approach was no more than a guideline, ‘though it may be a useful check on the tentative figure which emerges from working through the considerations set out in [s 25 of the Act]’: ironically, language which was later to be appropriated by the House of Lords in White v White [2000] 2 FLR 981. And, harking back to Sykes, in a series of ‘big money’ cases (eg Page v Page (1981) 2 FLR 198 and Preston v Preston, above), Ormrod LJ developed the principle by which, irrespective of the extent of the family’s resources a wife’s reasonable requirements in terms of accommodation and lifestyle were to be met, but no more. Thus, a glass ceiling constraining awards was imposed, informing subsequent judicial interpretation until their Lordships’ speeches were delivered in White.

THE TURNING POINT

By the end of the twentieth century, this judicial restraint was beginning to come under attack, in part at least because of the seismic societal changes and wealth generation that had occurred, particularly, during the Thatcher years. The problem faced by the court was that (increasingly wealthy) clients wanted certainty but, as Hollings J had observed in Preston, ‘No doubt in every case there must be a ceiling, but, having regard to the very requirements of s 25, it is not possible for this court to lay down a way of measuring that ceiling’.

Although they were not yet ready, or indeed able, to adopt firm principles offering certainty of outcome, the judiciary nevertheless began to engage in the mental gymnastics required to escape the worst effects of the straight-jacket that the reasonable requirements approach imposed. For example, in Conran v Conran [1997] 2 FLR 615, in addition to the £8 million Lady Conran received to meet her reasonable needs, she was awarded a further, wholly arbitrary, £2 million to reflect the contribution she had made to the development of Sir Terence’s business empire. Had it not been for the later decision in White, Conran may well have seen the judicial development of a principle of ‘stellar’ contribution, albeit by wives seeking to escape the limits of reasonable requirements rather than, as was later to be the case (eg Cowan v Cowan (2001) EWCA Civ 679, [2001] 2 FLR 192, Charman v Charman, above) by husbands seeking to avoid the equal sharing principle. A year after Conran was decided, another pragmatic response to the constraining consequences of reasonable requirements saw Thorpe LJ take the novel decision to import business partnership principles into family cases. In White v White [1998] 2 FLR 310 he held that where a husband and wife had been business partners, the court should first determine what was the financial worth of the parties on the immediate dissolution of the partnership, and then consider whether it should exercise its powers to either increase or reduce the wife’s share. This approach would later be roundly criticised by the House of Lords.

The period following the Court of Appeal’s decision in White, prior to Mrs White’s successful appeal to the Law Lords, saw the Government revisit, as it transpired for the last time, the issue of matrimonial law reform in its 1998 consultation, Supporting Families. The consultation paper sought views on, inter alia, the desirability of having a guiding principle of equality of division of assets in ancillary relief cases. Supplemental to this, the Government proposed allowing couples to make written agreements enabling them to deal with their financial affairs on divorce other than on this proposed, equal sharing, default basis. The Home Office published the responses to the consultation in July 1999. The report made no specific mention of the response that had been made by the judges of the Family Division by way of a submission to the Lord Chancellor’s Ancillary Relief Advisory Group. However, the submission, authored by Wilson J (as he then was), contains views which suggest the Law Lords’ later decision in White came as a total surprise to the judges at the ancillary relief ‘coal face’.

The judges were unanimously opposed to any principle of equal division of assets on divorce. ‘The idea of an equal division of assets’, they said, ‘sounds attractive as a fitting end to a partnership dependent upon different although prima facie equally important contributions’. But this attraction, they observed, was superficial.

‘To leave the parties in a truly equal position is a reasonable objective in many cases; but such an outcome usually requires an unequal division of assets. For the parties exit from the marriage not just with their share of the assets but in the shadow of two other interrelated factors: their respective earning capacities and their responsibilities to others, particularly the children.’

These factors, the judges suggested, ‘usually bear upon the parties in very unequal proportions so a disposal governed by equality in the division of assets bequeaths enduring inequality’.

They were marginally less dismissive of the proposal for full recognition of pre-nuptial agreements. The majority were of the view that ‘slightly, but only slightly, greater prominence might be given to the nuptial agreement in the law of ancillary relief’. However, rather than legislate to give pre-nuptial agreements full legal status, they suggested a halfway house. The judges proposed amending s 25(2) of the Matrimonial Causes Act 1973 by including the terms of any such agreement as a further matter to which the court would have regard. There would be no need, they said, to spell out the elementary requirements (ie, of disclosure, separate advice and of the common law) or the saver for the interests of the child or any general power to make different provision where justice plainly required. This, according to the judges, ‘would all be accommodated in the weight-giving exercise’.

Despite majority support for the recognition of pre-nuptial agreements (80 out of 157 respondents) and overwhelming support for its proposals for ancillary relief reform (50 out of 54 respondents), ‘enthusiasm for reform apparently died after a single season without explanation. Indeed, thereafter the Government showed a marked disinclination to discuss the issue and proponents of reform experienced only frustration’ (Charman v Charman, above at para [113]). One explanation is that the House of Lords decision in White saw the more popular of the Government’s two proposals implemented de facto, without the need for any potentially corrosive parliamentary debate. The tribulations suffered by John Major’s Government during the passage of the Family Law Act 1996 would have been fresh in the mind of New Labour’s architects. Furthermore, Tony Blair had himself had first hand experience of the divisive nature of family law reform, having sat in at the Committee stages of the Bill leading to the Matrimonial and Family Proceedings Act 1984. At that early stage of its administration, the Blair Government barely permitted any dissent by members of the parliamentary Labour party; given the choice it was hardly likely to permit the possibility of an unseemly backbench revolt, which had done for its predecessor. Unsurprising then, if behind closed doors in Whitehall the Law Lords’ decision would have been warmly welcomed; the decision meant unpredictable parliamentary debate could be avoided and the thorny issue of law reform kicked into the long grass.

PRE-NUPTIAL AGREEMENTS

Thus (with, it is suggested, the Government’s consent) the Law Lords usurped Parliament’s legislative function with their decision in White, later finessed by their speeches in the conjoined appeals in Miller/McFarlane. But despite the apparently consensual nature of this shift in the constitutional boundary, it has led to adverse consequences. Usually, Parliament legislates, the House of Lords interpret and the lower courts apply the law employing the Law Lords’ guidance. But here a tier in the process was removed, to the detriment of the lower courts. As Coleridge J later bemoaned: ‘From the summit of the mountain, the House of Lords has pronounced some of the principles which underlie the ‘special contribution’ issue. They are silent on how to apply them’ (Charman v Charman (No 2) [2006] EWHC 1879 (Fam), [2007] 1 FLR 593, at para [120]).

Much as it had in the late nineteenth century and the 1970s, the unfettered application of an arithmetic approach to ancillary relief began to cause much judicial hand-wringing and eventually the complaint made by the Court of Appeal in Charman (No 4) (above, at para [116]) that: ‘In big money cases the White factor has more than doubled the levels of award and it has been said by many that London has become the divorce capital of the world for aspiring wives’. In their judgment, the Court of Appeal judges noted that civilian and common law jurisdictions whose default position provided for equal division of assets on divorce tended to provide for this via a community of property matrimonial regime. And those jurisdictions tended to recognise the individual’s right to contract out of the default position through pre-nuptial agreements. English law, by contrast, affords no legal status to such agreements.

No wonder, then, that London had become the battleground of choice for many litigants. In the face of this, it appears that the Court of Appeal and judges of the Family Division perceived the judicial recognition of pre-nuptial agreements to be the only means to hold back the tide of ever increasing awards (see, eg Crossley v Crossley [2007] EWCA Civ 1491, [2008] FLR (forthcoming)). Pre-White and its decommissioning of reasonable requirements, the attitude of the English courts to pre-nuptial contracts had, however, been rather less positive. In F v F (Ancillary Relief: Substantial Assets) [1995] 2 FLR 45, at 66, Thorpe J (as he then was) said: ‘In this jurisdiction ante-nuptial contracts must be of very limited significance. The rights and responsibilities of those whose financial affairs are regulated by statute cannot be much influenced by contractual terms which were devised for the control and limitation of standards that are intended to be of universal application throughout our society’. But, despite Thorpe LJ’s subsequent volte-face as to their significance, pre-nuptial agreements are currently only enforceable to the extent a judge so decides in the exercise of his discretion. The certainty offered by the full recognition of pre-nuptial agreements (enabling a departure from a de facto default position of equal division of de facto community assets) only becomes possible once two pre-conditions are met:

• first, the overall judicial discretion to attach such weight as the court thinks fit to the terms of any such agreement (to which the judges referred in their 1998 submission) has to be removed; and

• secondly, the elementary requirements for enforceability and the extent of the courts’ residual ‘interests of justice’ discretion must be defined.

Neither of these pre-conditions fall within the realm of judicial law making, not least because the former necessarily involves an erosion of the jurisdiction of the court. Furthermore, the perception remains that pre-nuptial agreements countenance the break-up of a marriage before the marriage contract has been entered into. The recognition of pre-nuptial agreements, therefore, raises a fundamental question affecting the institution of marriage itself. This is a matter for Parliament, not judges, to decide upon. According to Stephen Cretney (above), at p 442, the decision in White (and Miller/McFarlane), ‘may come close to the imposition by the judiciary of the community of property neither Parliament nor any official advisory body had ever accepted as the basis of English matrimonial law’. If this is the case, had not someone better inform the electorate?

Copyright Jordan Publishing Ltd