Jersey International Family Law Conference October 2023. ‘International Divorce: The Where, the Why and the How?’

Introduction

1. ’To the injured spouses of the world’s billionaires, if you want to take him to the cleaners... take him to the cleaners in London. Because London cleaners will be grateful for your business.’ So said the then Mayor of London, later Prime Minister, in 2012.

2. This caption neatly sets the context for this speech in which I will consider why London came to be known as the ‘Divorce Capital of the World’ in the mid-noughties; whether it deserved that nickname; whether financial remedy law since the mid-noughties has done anything to enhance or diminish this dubious reputation; and whether the calls for reform of the law in relation to matrimonial finance (and the small steps which have now been taken by Government) will have an impact on the reputation,

3. I propose to start this speech as I will conclude it, with a spotlight on the legislation which currently governs post-divorce financial awards in England and Wales, which marks its milestone 50th birthday this year, the Matrimonial Causes Act 1973.1 In Part II, the 1973 Act provided, and continues to provide, the court with the power to order a wide range of financial relief on divorce and judicial separation, and gives the court – through section 25 – an all-embracing checklist of potentially relevant factors (under the mandate to have regard ‘to all the circumstances of the case’ and subject to the predominance of welfare of any minor child) to steer the exercise of its discretion.

4. I shall seek to persuade you that this legislation has played an unwitting role in attracting for London the nickname of ‘Divorce Capital of the World’; I will invite you to consider whether the nickname is, or may well be, no more than a contrivance of the media, stoked by lawyers with an undoubted self-interest in generating business; that ‘divorce tourism’ is not a ‘thing’; and that the possible reform – might one contemplate repeal – of the 1973 Act (with the objective to increase predictability of outcome, and thus diminishing the ‘have I won the lottery?’ sensationalism of this allegedly uncertain world) may see an end to this short and I suggest unattractive notion that the English family judges bend over backwards to offer some kind of bonanza for wives – deserving or undeserving. Unlike many speeches of the moment, I do not propose here – time does not permit – to contemplate how, with the advancement of technology, it is becoming increasingly possible to utilize Artificial Intelligence (‘AI’) as a substitute or ‘co-pilot’ for judicial decision-making in this field. It is reasonable to assume that AI could address many of the criticisms of the current system by promoting increased consistency and (dare one suggest) accuracy in decision-making. However, AI systems are only as unbiased as the data on which they have been trained, and there is a risk that historical biases could be perpetuated if not addressed.

1973

5. You won’t need persuading how much life has changed since 1973. Then, we lived simpler lives; only 48% of our households had a landline telephone – compared to the 95-99% of all households with a mobile phone in 2023. Only 67% of us then had a washing machine and not many more of us had a fridge; the price of a pint (although I was only 11 years old at the time, so wasn’t too worried about this) was 18p. The average house price was £9,000.

6. We rang in the New Year in 1973 with a toast to entente cordiale as, at the stroke of midnight, we joined the EEC (European Economic Community) or the ‘Common Market’ of Europe, later subsumed into the European Union; now of course an entity which, some 47 years later, we have ungraciously left. Our membership of the EU of course plays, or played, an important part in regulating jurisdiction in this area.

7. Of course, there was then no minimum wage; this only came in to being in the UK in 1999. Our male manual workers in 1973 were being paid £38.10 pw – double the wage for female manual workers (at £19.70). Society still expected that it was a man’s job to earn money and a woman’s to look after the home and family. Barbara Castle’s Equal Pay Act 1970 (subsequently repealed by and replaced with the Equality Act 2010) only came into force at the very end of 1975, and even then, it took many years truly to show any impact. In 1973, just over 50% of the adult female population was in employment, and that has materially risen to 72% in 2023. This was a different world in which the family judges were exercising their wide statutory discretion compared with the world of today.

White v White

8. Let me, for a moment, continue with what may be for many of you a lesson in ancient history. Looking back, it seems incredible that it was not until the mid-20th century that the family courts had any powers at all in regard to the capital assets on divorce. They could determine the property rights of the parties; they could vary any ante-nuptial or post-nuptial settlements. But they could not order a transfer of property from one to the other. They could not even award a lump sum until 1963. The way in which the courts made financial provision was by way of maintenance to the wife and this they often did by way of the ‘one-third’ rule; indeed, the one-third rule (which found its origins in the Ecclesiastical courts) underpinned many important matrimonial finance decisions from the end of the nineteenth century through to Wachtel v Wachtel2 in 1973.

9. Milestones in matrimonial law in the period immediately following the 1973 Act are to a large extent now consigned to the academic texts. Section 25 was interpreted by the court in such a way as to try and place the parties in the financial positions in which they would have been had the marriage not broken down, and had each discharged their financial obligations towards the other. The wife (as it generally would be) would be likely to recover only her ‘reasonable requirements’, preferably capitalised, and the husband would get the rest.3 This made perfect sense when the assumption was that the financial obligations undertaken, mainly by the husband, at marriage endured for life even if the marital consortium came to an end.4 The assumption of life long-obligation was repealed by the Matrimonial and Family Proceedings Act 1984.5

10. I suggest that the real turning point in the law relating to the division of matrimonial assets came in 2000, with the ‘momentous’6 decision of the House of Lords in White v White. This seminal decision has had, in my view, the most significant impact of all cases in the last 50 years in the field of post-divorce family finance. It changed the notion that cases would be resolved solely by reference to the ‘reasonable requirements’ of the claimant (generally the wife) and declared that the court exercising its matrimonial jurisdiction would apply a more liberal (if I may use that word) criterion of ‘fairness’7 applying the yardstick of equality as a check against the possibility of discrimination.8 Lord Nicholls opened his speech with an unimpeachably sound statement of principle which firmly advanced the objective of achieving fairness in all decisions. Fairness he recognised is a subjective concept: Like beauty fairness ‘lies in the eye of the beholder’.

11. What the Law Lords were trying to do in White, I suggest, was to eradicate discrimination between a husband and wife and their respective roles; ‘discrimination’9 was indeed later described as ‘the antithesis of fairness’10 (emphasis added). This decision flung wide the doors for the exercise of judicial discretion, and turned on its head the previous approach to matrimonial finance cases.

12. To set a context, many of the ‘big money’ cases before White involved fortunes created by previous generations. But the removal of exchange control restrictions in 1979, a policy that offered a favourable tax regime to very rich foreigners domiciled elsewhere, and a new financial era dominated by hedge-funds, private equity funds, derivative traders and sophisticated off-shore structures meant that very large fortunes were being made very quickly, and in this country.11 Gender roles also become more flexible within the marriage, with bread-winning and home-making responsibilities being shared and changing over time.12 This changed the complexion of family finances generally, and its susceptibility to apportionment and distribution on divorce.

13. What is interesting, and I may add notable, is that while White v White created a fresh approach in the English courts, it did not in fact of itself set us apart from other jurisdictions; indeed, it brought us in many ways in line with others. Just as we were almost the last country in Europe to allow secular divorce, so we were Johnny-Come-Lately when it came to a progressive non-discriminatory metric for dividing up matrimonial finances on divorce. In this regard, Scotland, our closest geographic neighbour (while adopting a different regime for maintenance provision) had as its default position an arrangement by which matrimonial assets would be split equally.13 The vast majority of European countries operated, and continue to operate, marital property regimes; that division is and was equal unless a couple have made it otherwise by contract.14 In White itself, Lord Cooke (one of New Zealand’s most influential jurists and as it happens the only New Zealand judge to have sat in the House of Lords) – having referenced the position in the New Zealand and Australian courts – pointed out15 that the Commonwealth jurisdictions at that time would also appear to accept that equality should be departed from only if, and to the extent that, there is good reason for doing so.

14. As the Court of Appeal later reflected in Charman16 ‘in very big money cases, the effect of the decision in White was to raise the aspirations of the claimant wife hugely. In big money cases the White factor more than doubled the levels of award’. But in truth, to think that the English court was doing something revolutionary or pioneering on the global stage is or was, I suggest, in fact completely wrong.

15. White v White was followed within a few years by some other landmark decisions: Parlour,17 Miller, McFarlane, and, as I have just mentioned, Charman.18 The law developed and was tweaked.

Miller & ‘Compensation’

16. Indeed, it was not until the decision of the House of Lords in Miller v Miller, McFarlane v McFarlane [2006] 2 AC 618 that the concept of ‘sharing’ as an element or strand of the requirement of fairness emerged. Three elements – sharing, needs and compensation – constituted compendiously the fairness requirement. ‘Sharing’ and ‘needs’ are easy to understand, but what of this ‘compensation’ element? This has its provenance, it now appears, as a makeweight argument in the respondent wife’s case in Miller which was seized upon by the Law Lords. Lord Nicholls19 saw it as a claim for redressing any significant prospective economic disparity between the parties arising from the way they had conducted their marriage – i.e. those who may have arranged their affairs in a way which had greatly advantaged the husband in terms of his earning capacity but left the wife severely handicapped so far as her own earning capacity is concerned.20 This would arise where when one of the spouses had given up a career, and the other spouse, if a ‘high earner’, had been ‘the beneficiary of the choices made during the marriage’.21 Lady Hale agreed, referring again to the ‘disadvantages [for the non-worker] for which compensation is warranted’22 and described compensation as being to put the wife (as it usually was) in ‘the comparable position which she might have been in had she not compromised her own career for the sake of them all’.23

17. All of that is extremely interesting when one now considers what Mostyn J said in a recent interview.24 As Nicholas Mostyn QC he had argued the case for Mrs Miller. He has now gone on record saying that he felt ‘slightly guilty’ for the emphasis in the speeches in Miller on ‘compensation’ because he had only put it into argument to ‘win’ the case. When he saw it in the opinions, he says:

‘I wanted to write and say, “we didn’t really mean that!” So that’s why one of the first things I did when I got on the bench was to try and put the lid on compensation as fast as I could.25 We’d only introduced that as a makeweight, having dug up some idiotic American academic analysis about how it should all be seen through the eyes of recompense, without acknowledging the fact that you don’t normally get compensated for something you’ve done voluntarily.’

18.  So perhaps unsurprisingly, compensation has not played such a major part in the post-Miller jurisprudence relevant to the distribution of matrimonial property26 – which has been much more focused on sharing and (yet more commonly) need.

The ‘divorce capital’…?

19.  I have set this out reasonably fully to set the context for what followed the Miller appeal decision, for it was about then that the media latched on to the notion that the English family courts had indeed adopted a new way of considering these cases. And just as Paris has enjoyed the reputation as the City of Love, New York ‘the city that never sleeps’, and Rome ‘the Eternal City’, so London with its shiny new approach to matrimonial law acquired the questionable label of ‘Divorce Capital of the World’. The notion was I suggest incited and encouraged by some well-known Magic Circle solicitors who were keen to capitalise (forgive the terrible pun) on the post-White, post-Miller ‘bang’, and, as I said at the outset, by the then Mayor of London.

20.  Did it deserve the title or not? Many will argue that this was no more than a canard for at least three main reasons:

• First, as I have said, actually White v White was bringing the English Courts into line with other jurisdictions; we were joining almost every European nation (as well as Scotland and almost all of the United States) in having as the main metric a (judicially created) deferred community of property regime.
• Secondly, even the largest financial awards in this jurisdiction then and now were ‘pocket money’ compared with the billions which have been reportedly27 distributed in the USA in the ‘big money’ divorces there; consider for a moment the awards payable by Bill Gates ($76bn to Melinda) and Jeff Bezos ($38bn to McKenzie Scott), not to overlook Alec Wildenstein ($3.8bn to Jocelyn), and Ye West ($2.7bn to Kim Kardashian) – all far outstripping awards here.
• Thirdly, the inference may wrongly be drawn from the nickname acquired that London could be a free choice for parties to obtain financial relief. Media reports even referred to ‘divorce tourists’ arriving in the UK hoping to cash-in on what they were led to believe were our favourable divorce laws. But of course, it was not possible for a litigant to pack his or her (realistically her) bags and come to London to get her financial remedy order. The notion of London as the global divorce capital ignored jurisdictional obstacles to seeking a divorce here.

21.  Until we left the European Union on 31 January 2020 jurisdiction was governed by mandatory rules under Brussels II Revised.28 A divorce petition could only be validly filed here if one of the six specific grounds had been established.29 So, the scope for an EU spouse engaging in divorce tourism was limited.

22.  The same applied to an application for a divorce from a non-EU citizen. Such an applicant had to be able to establish jurisdiction under BIIR or domicile. Even if the applicant could, she might still face a forum conveniens/stay application.

23.  ’Divorce tourism’ to some extent lies at the heart of the case currently before the Supreme Court; the case of Potanin v Potanina,30 a claim brought under Part III of the Matrimonial and Family Proceedings Act 1984. This is a case in which Cohen J expressly flagged his concern about ‘divorce tourism’ and ruled that:

‘it is not the job of the English courts to correct what might be thought to be the deficiencies of the legal systems of another country in the circumstances which are shown when the section 16(2) matters are analysed. It would be arrogant for this court to assume that England and Wales is the sole arbiter of fairness.’

24. Although Cohen J’s decision was overturned by the Court of Appeal31 permission to appeal has been given by the Supreme Court, and the appeal is to be heard later this month (31 October 2023). I return to this later.

25. On the other side of the debate, there are those who would argue that London utterly deserves the sobriquet ‘Global Divorce Capital’ and would point to four separate factors:

• First, the (at least) historical willingness of the courts to consider extended and joint-lives maintenance provision for the more vulnerable party in addition to a capital award; in this regard, the English courts have generally offered a more advantageous jurisdiction than European and Scottish courts for example where a post-divorce ‘periodical allowance’ is rare, and one which lasts beyond 3 years post-divorce rarer still;
• Secondly, the very broad (it may be thought in some quarters, overly broad and generous) interpretation of the word ‘needs’ in section 25(2)(b) where the exercise of discretion has become almost uncontrolled, and where the asserted ‘needs’ awards bear virtually no relationship to ‘needs’ in the normal sense of that word. Mostyn J called out the fiction in the 2017 case of FF v KF [2017] EWHC 1093 (Fam) when stating that ‘plainly “needs” does not mean needs. It is a term of art’; he added ‘Like equity in the old days, the result seems to depend on the length of the judge’s foot’. He rightly pointed out – by reference to the awards under this head of ‘needs’ in Mills-McCartney,32 Juffali33 and others34 – that no-one actually needs £25m, £62m, or £224m (respectively) for accommodation and sustenance. As he went on to point out,35 the main drivers in the discretionary exercise are the scale of the payer’s wealth, the length of the marriage, the applicant’s age and health, and to some extent the standard of living of the parties;
• Thirdly, the judicial willingness to exercise an unusually flexible and wide (or as Mostyn J would say ‘woolly’) discretion more generally having regard to the matters listed in section 25, in order achieve ‘fairness’. But as I have already observed fairness, like beauty, lies in the eye of the beholder, and it is – as the cartoon on my slides attests – a very subjective view. While there are muted (and not so muted) calls from certain quarters of the judiciary and the legal profession for clarity, guidance and firm principles to determine claims for financial relief, recent pronouncements from the English Courts would appear to confirm the view that fairness is still assessed across ‘a broad horizon’36 and that judges need ‘flexibility’ in its deployment of section 25 ‘to achieve, a fair outcome’;
• Fourthly, its specialist, incorruptible, and apolitical judiciary. On that I need say no more. Though it could be noted that no defender of the ‘divorce capital’ title would be able to point to any judicial endorsement or defence of the reputation of London as the ‘Divorce Capital’. Judges have barely acknowledged, let alone widely broadcast, this notion – rightly sensitive to any suggestion that bias is offered towards one party or another. I can find only two references in the caselaw. The first from the Court of Appeal decision in 2007 in Charman v Charman37 and the second by Ward LJ in the Court of Appeal in Agbaje v Agbaje.38 In the latter case, Ward LJ was very keen to discourage the notion that disaffected wives may flee the less generous jurisdiction, and set up home here in order to embrace our notions of fair distribution of resources on divorce.

Meanwhile back in the courts…

26. The decision of the nine-judge Supreme Court in Radmacher v Granatino in 2010 operated to some extent to peg back the territory of financial remedy claims. Up to that point, the approach of English law to nuptial agreements differed significantly from the law of Scotland, and more significantly from the rest of Europe and most other jurisdictions, which have for some time accorded, and continue to accord, contractual status to such agreements and hold the parties to them, subject in some cases to specified safeguards or exceptions. By this decision, the Supreme Court declared that the family court could and should give ‘decisive weight’39 to a nuptial agreement which is freely entered into by each party with a full appreciation of its implications, unless in the circumstances prevailing it would not be fair to hold the parties to their agreement. This again brought us closer (although not completely) into line with European legal systems. Last year (2022), Moor J reinforced the willingness of the English Courts to uphold these contracts;40 in considering a nuptial agreement signed in France, he ruled that the wife had a full appreciation of the agreement and opined:41

‘Those who sign marriage contracts must understand that it is a significant step with very important consequences. These contracts will be enforced in France and will not simply be torn up in this jurisdiction.’

27. Quite separately the tone has changed in relation to open-ended joint lives maintenance, which has altogether become less and less common. This trend was marked by a number of cases including Wright v Wright [2015] EWCA Civ 20142 and Waggott v Waggott [2018] EWCA Civ 727.43 The view of Mostyn J (as he expressed it to a meeting at the House of Lords earlier this summer: June 2023) was that there now ‘should only be an award of spousal maintenance to meet grave financial hardship’.

28. These cases don’t appear much to have dinted the reputation of London as the global divorce capital. The recent award of £554 million ($679 million) payable by Sheikh Mohammed Al Makhtoum of Dubai to Princess Haya might be thought to have enhanced it. But is that about to change?

And in Parliament…

29. Statutory reform in this area might have been on the cards nearly 10 or more years ago.44 In 2014 the Law Commission looked at this area and published a report on limited aspects of matrimonial finance reform, specifically on ‘financial needs’ on divorce or dissolution of a civil partnership. They proposed the use of a formula to calculate needs. That led to the Family Justice Council reports – now in their second edition – prepared by a distinguished committee chaired by the equally distinguished and specialist money judge, Mrs Justice Roberts.45

30. More public and emphatic were the efforts of Baroness Deech to achieve this through law reform. She was inspired or perhaps fortified by the report of the Law Commission to which I have just referred when in 2017 she presented for the first time in Parliament her Divorce (Financial Provision) Bill.46 By this bill she made a number of proposals radically to alter the shape of financial settlement on divorce including (I summarise):

• Binding pre-nuptial and post-nuptial agreements (cl.3(4));
• A default position of equal division of matrimonial property (Cl. 4(2)) and
• A 5-year limit on spousal maintenance absent serious financial hardship (Cl 5).

31. This Bill, she says, is ‘very closely modelled’ on the equivalent law in Scotland. While there is a question over whether the Bill sufficiently mirrors the Scottish law as to reflect (importantly) the complete package of financial relief, the Scottish law is not without its critics too – in this regard, see what the Scottish Law Lord, Lord Hope, said in Miller.47 The Bill reached its second reading in the House of Lords before failing to proceed as a consequence of the dissolution of Parliament on 6 November 2019. The Bill was re-introduced in 2021.

32. Has this Bill attracted support? Yes, it has. And from some influential voices including Baroness Butler Sloss, Baroness Shackleton, Lord McKay of Clashfern, Sir Paul Coleridge, and Sir Nicholas Mostyn.

33. Has it attracted dissenters? Yes, it has. Baroness Hale referred to it some years ago48 as a ‘threat’ to the support system of the family, and criticised its ‘one size fits all’ approach to matrimonial finance; this to some extent mirrored what she had said in Miller.49 Lord Wilson spoke of the potential for ‘grotesque consequences’50 if it were implemented. Whether those remain their views I cannot say. I may add that when first introduced in 2017, it was reported that the professions did not like it either, which prompted the response from Baroness Deech: ‘As Mandy Rice-Davies so famously said, “They would, wouldn’t they?”‘

34. And Mostyn J – may I call him the architect of much of the current financial remedy law? – has recently told the meeting at the House of Lords that ‘Reform is necessary now. For as long as the present system keeps overlaying simple rules with woolly discretion, it will never be predictable, transparent, economical or consistent.’

Conclusion

35. So here we are. Half a century after the passage of the 1973 Act, the Government has now asked the Law Commission to review whether the current law is working effectively, and delivering fair and consistent outcomes for divorcing couples. The Commission has stated that it will focus on that wide set of discretionary powers given to judges over the division of financial assets, and whether there is a need for a clear set of principles, enshrined in law, to give more certainty to divorcing couples, and separately how maintenance payments for an ex-spouse or civil partner should work. What they may have in mind is a form of fairness ‘fairness constrained within tramlines’. The project will expressly consider the law in other countries where the tramlines are firmly in place and operational. The challenge is likely to be, or will certainly include, formulating a set of principles which are grounded in the social and moral values of today, and which are durable for the next generation. The Law Commission will conclude its work in a year from now by publishing a scoping report; this could provide the basis for a full review and future financial remedies reform.

36. If the law relating to the distribution of assets and other forms of matrimonial relief is indeed to be reformed, this may call into question whether London will lose its title (whether it was ever rightly attributed or not) as the ‘Divorce Capital of the World’. Whatever the reforms, the jurisdictional requirement for a firm and evidenced link with this country is in my view unlikely to change; this will continue to thwart any attempts at ‘divorce tourism’ as it does now. While an exodus of foreign nationals is unlikely, the aspirations of the jackpot-seeking wives may however be tempered; ironically it may be husbands who will start to hammer on the English Court’s doors seeking to enforce pre-nuptial agreements. The ‘Divorce Capital’ label may remain secure, but for other reasons.

37. As I have indicated a moment ago, the answers posed above about statutory law reform will take months (more likely years) to come… In the meantime, we can look forward to considering whether the Supreme Court’s view on the dispute of Mr Potanin and Mrs Potanina adds to or detracts from London’s status as the ‘Divorce Capital of the World’.