Archive for the ‘equality’ Category

LKW v DD -‘equal sharing’ principle

June 20, 2016

In LKW v DD ((2010) 13 HKCFAR 537) the Court of Final Appeal had to deal with the issue of the division of assets between a divorcing couple where the available assets exceeded the parties’ needs. Ribeiro PJ gave the only full judgment.

The principles that govern the making of an ancillary relief order are those contained in section 7 of the Matrimonial Proceedings and Property Ordinance. Given the close structural similarities between it and section 25 of England’s Matrimonial Causes Act 1973 it is unsurprising that Hong Kong’s courts have had regard to the English authorities on section 25 ([11]). Had the applicable principles in Hong Kong changed given the House of Lords decisions in White v White and Miller v Miller and McFarlane v McFarlaneC V C represented the law in Hong Kong before White v White. Wives in ‘big money’ cases got enough to meet their reasonable requirements and any surplus over joint needs went to the husband unless the wife could show that she had ‘earned’ a share in the surplus. The C v C approach was not good law since it gave excessive weight to ‘needs’ / ‘reasonable requirements’ which is only one of the section 7 criteria.

The overarching requirement is to achieve a fair solution:

‘what is fair treatment upon the dissolution of a marriage involves concepts which ‘change from one generation to the next’ and the values underlying C v C do not reflect elementary notions of fairness as between husband and wife in present day Hong Kong. To confine a non-working wife’s award to the sum needed to meet her “reasonable requirements” and to permit the husband to keep the remaining assets is patently unfair and discriminatory’ ([28]).

It was argued that to follow White v White would be to apply western values to Hong Kong’s Chinese population ([37]). Ribeiro PJ rejected this. White v White‘s insistence on fairness was equally relevant in Hong Kong ([40).

Ribeiro PJ emphasised that the guidance that he would give later in his judgment was only that. He was providing guidelines to assist judges in the exercise of their section 7 discretion case-by-case. The guidelines represent an attempt to balance flexibility and legal certainty ([47] – [53]). They only apply where there is a surplus of assets over needs ([54] – [55]).

Ribeiro PJ identified five steps to be followed:

  1. Identify the parties’ assets ([71] – [73]);
  2. Assess the parties’ financial needs ([74] – [79]);
  3. Apply the sharing principle if assets exceed needs ([80] – [82]);
  4. Consider whether there are good reasons for departing from equal division (equal sharing should not be applied mechanistically) ([83] – [86]);
  5. Decide the outcome ([131] – [132]).

He also identified four principles to be gathered from White v White which judges should bear in mind in applying section 7:

  1. The objective of fairness ([56]);
  2. Rejection of discrimination ([57]);
  3. Apply the yardstick of equal division ([58] – [61]);
  4. Avoid ‘minute retrospective investigations’ (a lengthy and pointless trawl through the details of the parties’ conduct over the course of the marriage) ([62] – [69]).

The judgment contains useful guidance on the application of several of the steps.

In the present case, the Court of Appeal had awarded the wife half of the total assets and there was no basis for interfering with this award.

Michael Lower

White v White: the equality ‘yardstick’

June 12, 2016

In White v White ([2001] 1 AC 596, HL) a couple divorced after thirty years of marriage. The appeal concerned the ancillary financial relief proceedings. This was a case where the couple’s joint assets were more than sufficient to meet the needs of them both. The House of Lords had to consider how the discretion conferred on the courts by the Matrimonial Causes Act 1973 (‘the Act’) should be exercised in cases such as this. Mrs. White sought an order giving her an equal share in all of the assets. Lord Nicholls gave the main judgment. He pointed out that this was a case where there was an ‘equality of contribution’ by Mr. and Mrs White over the course of their marriage. This was an important feature of the case (at 602).

Section 25 of the Act requires the court to have regard to all the circumstances of the case when exercising its discretion; the welfare of children is of first importance. Section 25(2) contains a list of factors to which the court is to have regard. Section 25(2)(f) requires the court to have regard to, ‘the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after or caring for the family’. Lord Nicholls made the point that the need for the outcome to be fair meant that there was no place for discrimination:

‘But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering paragraph (f), relating to the parties’ contributions … If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the home-maker and the child-carer ‘ (at 605)

A judge may be minded to order an unequal division of the couple’s assets :

‘Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.’ (605)

There is no presumption of equality (only a ‘yardstick’) but:

‘Today there is greater awareness of the value of non-financial contributions to the welfare of the family. There is greater awareness of the extent to which one spouse’s business success, achieved by much sustained hard work over many years, may have been made possible or enhanced by the family contribution of the other spouse, a contribution which also required much sustained hard work over many years. There is increased recognition that, by being at home and having and looking after children, a wife may lose for ever the opportunity to acquire and develop her own money-earning qualifications and skills.’ (605 – 6)

Judicial approaches that would give the wife enough to meet her needs but would allocate any surplus over needs to the husband mean that ‘discrimination would be creeping in by the back door.’ (608) Needs are only one factor and the court needs also to have regard to factors such as the available resources and the parties’ contributions (609).

‘In my view, in a case where resources exceed needs, the correct approach is as follows. The judge has regard to all the facts of the case and to the overall requirements of fairness. When doing so, the judge is entitled to have in mind the wish of a claimant wife that her award should not be confined to living accommodation and a vanishing fund of capital earmarked for living expenses which would leave nothing for her to pass on. The judge will give to that factor whatever weight, be it much or little or none at all, he considers appropriate in the circumstances of the particular case.’ (610)

The Court of Appeal had awarded Mrs. White two-fifths of the couple’s net wealth (almost doubling the amount awarded at first instance) and the House of Lords upheld this award.

Michael Lower