The House of Lords' groundbreaking judgments in the Miller and McFarlane divorce cases will have implications for Ireland, argues Geoffrey Shannon
Michael Douglas had a prenuptial agreement effected before he married. So did Brooke Shields, Andre Agassi, Joan Collins and Elizabeth Taylor. Significantly, Kenneth McFarlane and Alan Miller did not. Last week's House of Lords ruling will give renewed impetus to the drawing up of prenuptial agreements in Ireland. It is also likely to encourage divorce planning and forum shopping.
In the Miller case, the law lords held that Melissa Miller could keep the £5 million she was awarded by the Court of Appeal, after a childless marriage lasting less than three years to Alan Miller, a multi-millionaire fund manager.
Lawyers for Miller had argued that the House of Lords should cut the £5 million award to £1.3 million as the marriage was childless, lasted only two years and nine months, with the added factor of Melissa Miller bringing no wealth to the marriage. Describing the £5 million award upheld by the Court of Appeal as "a jaw-dropping amount", Miller's lawyers argued it would give her "a meal ticket for life" after a short marriage.
In the McFarlane case, the House of Lords considered the case of Julia McFarlane, who had given up a promising career as a solicitor during a 16-year marriage to Kenneth McFarlane, a tax partner. The law lords held that she was entitled to £250,000 a year from her husband for an indefinite period, rather than a mere five years as was held by the Court of Appeal. The couple had previously agreed a 50-50 split of their £3 million worth of assets.
While Ireland has a different divorce law to that in England, similar rules govern the manner in which assets are split following the granting of a decree of divorce.
On the introduction of divorce in Ireland, the courts were given a wide discretion to deal with the assets of the parties on the granting of a divorce. The 1996 Divorce Act sets out various factors which may be taken into account by the court in determining a fair financial settlement when the marriage ends: for example, need, age of the parties and the length of the marriage.
Last Wednesday's House of Lords ruling lays down three core principles for resolving financial and property disputes in a divorce case: need, compensation and contribution. These principles may well be endorsed in future Irish divorce cases.
The Miller case is of particular interest and may very well be followed in Ireland. The House of Lords' groundbreaking ruling indicates that even in a short marriage, a wife might be entitled to a 50-50 split of the wealth generated during that marriage. This is likely to strike fear in the hearts of wealthy Irish men contemplating separation or divorce after a short marriage.
One of the factors an Irish court can take into account is the length of the marriage, although it should be stated that it is only one of a number of factors. The Miller ruling will no doubt be reflected in any settlement negotiations between Heather Mills and Sir Paul McCartney. The Miller case also establishes another important rule: the conduct of the parties should not be taken into account through the size of the award, except in exceptional circumstances.
Miller had left his wife for another woman, conduct which influenced the size of the award in the lower courts. The Irish Supreme Court in the T v T case has also ruled on this point. Mrs Justice Susan Denham said Irish divorce law did not establish a fault-based divorce system, and the High Court should not have reduced the husband's share in light of what it considered to be his adultery. The only conduct an Irish court is likely to take into account is that which is "gross and obvious", for example, domestic violence. For the first time in England and Wales, the House of Lords in McFarlane stated that a wife who sacrifices her career prospects in order to look after the home and children is entitled to compensation.
One of the judges in the case, Lady Hale, said Mrs McFarlane should be able to share the "fruits of the matrimonial partnership" and was entitled to "compensation for the comparable position which she might have been in had she not compromised her own career for the sake of" the children and her husband. Lord Nicholls noted that marriage was a partnership of equals.
He described this as a "principle of universal application" and moreover said "there should be no bias in favour of the money-earner and against the home-maker and child-carer". This is also the position in the Republic. In the T v T case, Mrs Justice Denham said that the court in splitting assets on divorce must take account of, and compensate, a spouse's past and future earnings lost due to the assumption of marital and domestic responsibilities.
The model of divorce introduced in Ireland was one of lifelong support for the dependent home-maker and child-carer. By contrast, the English divorce regime facilitates a clean break for the parties after divorce. The importance of last Wednesday's ruling of the House of Lords is that it will further consolidate Britain's reputation as one of the most sought after places for the home-maker and child-carer to settle a divorce case. This judgment of the House of Lords comes within weeks of a ruling by the Irish Supreme Court that the correct test for the division of assets was "fairness", not equality as is the position in England
Can a wealthy Irish wife avail of this new ruling before the Supreme Court has had an opportunity to consider the principles set down in Miller and McFarlane? This may be possible under an EU regulation known as Brussels II bis. If you are resident in the UK (for example, Belfast) for 12 months you can avail of this regulation. This may prompt a wealthy home-maker and child-carer to litigate early to have her case heard in Britain.
A prenuptial agreement is a pre-wedding contract by which a couple intending to marry set out who gets what in the event of a divorce. The use of prenuptial agreements in Ireland is likely to rise following the Miller and McFarlane judgments. There is nothing preventing individuals intending to marry from signing a prenuptial agreement. The difficulty is that, like in England and Wales, the Irish courts are not obliged to enforce such an agreement should the parties separate or divorce. That said, in Britain prenuptial agreements are increasingly being taken into account by the courts in later divorce proceedings. In a recent English case, the Court of Appeal took into account the prenuptial agreement, describing it as conduct it would be unjust to disregard.
There is nothing preventing Irish judges from using their discretion to accept prenuptial agreements as a factor in reordering assets on the breakdown of a marriage. Ideally the law on prenuptial agreements in Ireland should be clarified to ensure prenuptial agreements are valid and enforceable to the extent that they support and foster the interests of children and spouses.
Geoffrey Shannon is a solicitor and author of Child Law (Thomson Round Hall, 2005)