Muck and the McCartneys

When it comes to divorce, we've heard a lot a lot about the Millers, the McFarlanes and the McCartneys lately, but what effects are all these big name cases having on the man on the street, or the woman on the farm?

An Important Farming Case

When the House of Lords gave their first judgment in 30 years on divorce finances, it was a farming case that came to the fore. Mr and Mrs White owned two farms between them worth over £4 million. The House of Lords said it was important in cases like the Whites, where the couple had been married for a long time, to divide the assets equally.

As it happens the House of Lords gave Mr White more than 50% because one of the farms had come from his side of the family originally.

The Millers and the McFarlanes

The Millers and the McFarlanes seemed a world apart from your average upland hill farm. Mr Miller had £16 million assets at marriage which increased to £32 million within less than three years of marriage. Mr McFarlane was a partner in Deloitte & Touche earning £735,000 per annum net and Mrs McFarlane had given up her job as a city solicitor to bring up the children. Their assets were about £3 million.

The House of Lords' Decisions

Mrs Miller was initially awarded £5 million. Although Mr Miller appealed, the House of Lords upheld the original Order as a fair division of the £16 million assets accrued during their marriage.

Mr and Mrs McFarlane split their capital equally but initially the court awarded Mrs McFarlane maintenance for herself of £250,000 per annum against Mr McFarlane during their joint lives. Following several appeals, the House of Lords upheld that decision.

The House of Lords' decisions were based on firstly meeting the parties' needs, secondly compensating where appropriate, and thirdly sharing the assets the parties had built up during the marriage.

Another Farming Case

About two years ago and before the Millers' and the McFarlanes' judgment in the House of Lords, the High Court ruled on a divorce of a couple living on a hill farm in the north of England. It was a 16 year marriage with two children. The farm land and buildings in the husband's name were worth £1.74 million and the couple had other assets between them worth about £700,000 excluding very modest pension funds. The farm had been in the husband's family for four generations and he hoped one of the children would take on the farm although that seemed most unlikely.

The court did not make a 50/50 division but instead ordered the husband to pay the wife £400,000 for a house for herself and the children and another £175,000 as a lump sum in lieu of maintenance for the wife. In total the wife ended up with just over 25% of the assets. This, in the judgment of the court, was sufficient to meet her needs whilst recognising the vast bulk of the assets were brought into the marriage by inheritance.

It is interesting to speculate on how this case might have turned out if it had been decided after the Miller and McFarlane cases and if the wife had given up a promising well-paid career. Would the introduction of the idea of "compensation" by the House of Lords have lead to a higher award for a wife in these circumstances?

It is also worth noting that the wife's needs could be met from the assets other than the farm. If that had not been the case, there might well have been a sale of the farm.

What for the Future?

As farms pass on to the younger generations, we are likely to see more disputes about whether the farm should stay in the family or whether it should be sold. The House of Lords' emphasis on meeting needs and compensation may overcome arguments about inheritance but what is "fair" when a farm has been in one family for generations and it is the only way of life the farmer has known? In some cases, prenuptial agreements may help (even though they are not necessarily binding) but they need to be carefully drawn up, well in advance of the marriage.

Once a farmer could avoid a big divorce claim if they just lived with their partner without getting married but we can expect new draft laws for co-habiting couples in the future which may well change that. Even now, if there are children, a claim can already be made on their behalf, not just to the Child Support Agency for maintenance but also for capital to provide for the children until they are 18.

Simon Mortimer is a Partner in Burnetts' Family Law department. For more advice on farming divorces, contact Simon on 01228 552222.