Authored By: Khadiza Alam
Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 is a landmark conjoined appeal heard by the Appellate Committee of the House of Lords, comprising Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Hope of Craighead, Baroness Hale of Richmond, and Lord Mance.
The appellants, Mr Miller and Mrs McFarlane, each challenged the financial awards made upon divorce and raised significant questions about the principles of fairness and equality under section 25 of the Matrimonial Causes Act 1973.
Delivered on 24 May 2006, the judgment established the modern framework for achieving fairness in ancillary relief, articulated through the interrelated principles of needs, compensation, and sharing.
Factual Background
In this conjoined appeal, both husbands were high earners, while the wives had relinquished their professional careers to undertake domestic and childcare responsibilities.
In Miller v Miller, the parties’ marriage was short and childless marriage, lasting less than three years, and ended following the husband’s adultery with another woman with whom he wished to marry. At the time of divorce, the husband was an asset manager with significant pre-marital wealth of approximately £17 million, while the wife’s assets amounted to around £100,000, with debts of £300,000. The trial judge made awarded the wife a capital sum of £5 million – roughly one-third of the wealth generated during the marriage – comprising the former matrimonial home and a lump sum. The husband appealed this award, but the Court of Appeal dismissed his appeal.
In McFarlane v McFarlane, the parties had been married for sixteen years and had three children. Both were successful professionals, but the wife had given up her career as a solicitor to care for the family, while the husband, a chartered accountant, became a highly-paid partner in a city firm. Although the couple did not possess substantial capital like in Miller, the husband’s income was immense. Upon divorce, the district judge awarded the wife the matrimonial home in London worth £1.5 million, and periodical payments of £250,000 per year for joint lives. The High Court judge reduced this award, but the Court of Appeal restored the annual payment to £250,000 while limiting its duration to five years. The wife then appealed this time limit.
Legal Issues
Both cases raised issues regarding the principles governing a fair division of property and income following divorce under section 25 of the Matrimonial Causes Act 1973. The appeals raised the following questions:
- How should fairness be assessed in the financial division following divorce, particularly where the marriage is either brief with substantial assets, or long with limited capital but significant earning capacity?
- Can periodical payments be awarded to compensate for economic disparity arising from marital roles during the marriage, or are they restricted solely to satisfying maintenance needs?
- To what extent do factors such as conduct, duration of marriage, individual contributions, and the source or nature of assets justify departure from the concept of “yardstick of equality”?
- How should courts balance the “clean break” principle under section 25A of the Matrimonial Causes Act 1973 with ongoing periodical payments designed to provide compensation?
The case built upon principles established in White v White, which introduced the “yardstick of equality” concept to avoid gender-based discrimination between the traditional breadwinner and homemaker roles. However, White involved a long marriage, while Miller and McFarlane concern short and medium-term marriages. These appeals also clarified whether the sharing principle applies to income, in addition to capital accumulated during the marriage.
Arguments of the Parties
Appellants
The appellants in both cases, Mr Miller and Mrs McFarlane respectively, contested the financial awards made following divorce, claiming that the courts failed to consider the specific circumstances of each marriage.
In Miller, the husband appealed against the £5 million lump-sum award to his former wife, arguing that the short duration of the marriage justified a more limited award confined to her reasonable needs. He emphasised that most of the wealth was either premarital or generated solely through his business acumen, making the equal sharing principle inapplicable here. Mr Miller further argued that the lower courts had improperly taken account of his marital conduct, namely adultery, which did not meet the statutory threshold for consideration under section 25(2)(g) of the Matrimonial Causes Act 1973.
In McFarlane, the wife appealed against the Court of Appeal’s decision to limit periodical payments to five years. She argued that this restriction failed to adequately compensate her for the long-term economic disadvantage caused by her career sacrifice, and that continuing periodical payments were required to account for this loss, as supported by SRJ v DWJ. She contended that the principle of fairness encompasses not only the satisfaction of needs but also of sharing and compensation, as established in White v White. Equal sharing should be the starting point regardless of the marriage’s length, and the clean break principle should not defeat the compensatory purpose of ongoing financial support.
Respondents
The respondents in each case defended the lower court’s decisions as fair and consistent with the partnership nature of marriage.
In Miller, the wife asserted that despite the short duration of the marriage, she and her husband were partners of equal standing. She had given up her career to support the relationship, and the wealth accumulated during the marriage constituted matrimonial property that should be shared, reflecting the high standard of living they had enjoyed as supported by Leadbeater v Leadbeater.
In McFarlane, the husband contended that the five-year limit imposed by the Court of Appeal was appropriate to achieve a clean break and encourage the wife to become financially independent. He argued that continuing periodical payments beyond that period would undermine section 25A of the Matrimonial Causes Act 1973 and precedent set by Minton v Minton, which directs the court to promote a clean financial separation where possible.
Judgment
The House of Lords dismissed Miller and allowed McFarlane, establishing a tripartite framework for determining fairness in financial division: needs, compensation, and sharing.
In Miller, the award of £5 million to Mrs Miller was upheld, confirming that even short marriages can justify substantial awards where significant wealth was generated during the relationship. Any distinctions between “family” and “business” assets should be avoided as this risks re-introducing gender discrimination, however identifying the sources of the assets can justify any unequal division of non-marital property.
In McFarlane, the district judge’s joint-lives order of £250,000 per annum was restored, setting aside the Court of Appeal’s five-year limit. The Court acknowledged her ongoing loss of earning capacity due to her being a single mother of three children, the youngest of whom was six years old. It is unreasonable to expect her to seek employment until her youngest child was of secondary school age at least, however her prospects to find a job would depreciate the longer she was out of employment. It was held that periodical payments may include compensation for economic disadvantage resulting from marital choices, and are not limited to subsistence-level maintenance.
The Lords clarified that the “clean break” directive under section 25A must not defeat fairness, and ongoing periodical payments may continue for an unlimited duration where capital is insufficient to achieve a fair outcome. Baroness Hale also emphasised that the goal is not to achieve mathematical equality, but to prevent discrimination between breadwinner and homemaker roles.
Ratio Decidendi
The House of Lords held that fairness under section 25 of the Matrimonial Causes Act 1973 is achieved through three interrelated principles:
- Needs – primarily ensuring that each party’s financial needs, including housing and income, are met.
- Compensation – redressing any economic disadvantage suffered as a result of the marriage or its breakdown.
- Sharing – recognising that marriage is a partnership of equals, and assets acquired during the marriage should normally be shared equally, unless there is a good reason to depart, such as a short duration.
Conclusion
The case of Miller v Miller; McFarlane v McFarlane remains a momentous decision shaping the modern approach to financial remedies upon divorce in England and Wales, in particular its significance in shifting the goalposts of equality for women.
The House of Lords refined the principles first articulated in White v White, introducing the tripartite fairness framework of needs, compensation, and sharing, with equal division of assets as the starting point but capable of adjustment based on the circumstances of each marriage. The judgment confirmed that periodical payments may extend beyond immediate maintenance to compensate for economic disadvantage arising from career sacrifices, and that marital conduct is only relevant where inequitable to ignore. It also confirmed that compensation for lost earning capacity is a legitimate purpose of periodical payments and that the clean break principle must not result in unfair hardship.
Together, these cases provide a structured framework for ancillary relief, balancing equitable sharing with flexibility to account for both short and long marriages, and remain foundational in English family law.
Precedents Cited
Leadbeater v Leadbeater [1985] 1 FLR 789
Minton v Minton [1979] AC 593
SRJ v DWJ [1999] 2 FLR 176
White v White [2001] 1 AC 596
