Saturday, 7 April 2012

Playing a Straight Bat? Financial Arrangements When A Civil Partnership Ends

This is a post about the Court of Appeal's decision in Lawrence v Gallagher in March 2012, which was the first appeal about financial arrangements following the dissolution of a civil partnership. I offer strong criticism of the Court of Appeal, but for reasons which apply just as much to many of its decisions in heterosexual divorce cases.


On the 29th of March 2012, the first appeal case was heard in England and Wales regarding the financial arrangements made after the breakdown of a civil partnership. The legal principles applicable to post-civil partnership financial arrangements are identical to those that apply when a heterosexual marriage ends - so the real question was whether the fact that the former relationship was between two people of the same sex, rather than between two people of different sexes, would impact on the way those principles are applied.


The facts of the case:

In Lawrence v Gallagher, the two men had been living together as partners since early 1997, and had entered into a civil partnership in December 2007. The relationship was formally dissolved in 2009. They agreed that the case should be treated as if they had been in a civil partnership for nearly 12 years since the legal option was not open to them during most of this time, and they would have availed themselves of it if it had been.

Before they met, both men had bought properties in London; Lawrence's was significantly more valuable than Gallagher's, since he worked in the City and Gallagher was an actor. They later lived in Lawrence's flat, while Gallagher's flat was sold. With the proceeds and additional money from Lawrence, they then bought a large weekend house in the country.

The financial arrangements that the court was asked to address were not straightforward, but the total assets being considered amounted to about £3.8m. By family law standards, this gets the case into the 'big money' category, especially as there were no children to consider. There were two properties, two pension funds (one very large), some shares (which had not yet been awarded), considerable cash savings and some valuable items. The men were also both working, with Lawrence earning considerably more than Gallagher.


The legal principles which applied:

The relevant legal principles for separating civil partners are set out in Schedule 5 of the Civil Partnership Act 2004. Paragraph 21(2) sets out 8 factors to which the court must give particular regard, and it is well known from the equivalent divorce cases under section 25(2) of the Matrimonial Causes Act 1973 that the overriding objective is to achieve a fair and non-discriminatory outcome, with all contributions to a family's well-being presumptively valued equally (see White v White). This overall objective takes into account three broad principles (see Miller v Miller; McFarlane v McFarlane):
  1. meeting the parties' needs (generously interpreted)
  2. compensating one party for losses incurred for the benefit of the family overall (such as giving up a career to look after house and home)
  3. equal sharing of family assets

The decision in the High Court:

In the High Court, Mrs Justice Parker heard the case and gave a 'reserved' judgment (meaning that she went away to think about the case and write her judgment over a few days, rather than giving judgment immediately the hearing ended). She decided that Gallagher should get about 45% of the assets, totalling £1.6m. This included the country house, part of Lawrence's pension, a lump sum of £577,000, and part of the share value once it was obtained. Lawrence appealed to the Court of Appeal.


The appeal to the Court of Appeal:

The important thing to know about appeals in family law cases is that the Court of Appeal is supposed to have a very limited role. The appeal is not a second bite of the cherry for a litigant unhappy with the decision of the first court. The rule is that the Court of Appeal may interfere only where one of the following things has happened (see, eg, Piglowska v Piglowski):
  • the judge failed to apply the correct law;
  • the judge made findings of fact which were unsupported by the evidence which make the outcome untenable;
  • the judge applied the law to the facts in a way which was "outside the generous ambit within which reasonable disagreement is possible".
Moreover, it is important that the Court of Appeal not assume too readily that the judge made 'sloppy' errors. As Lord Hoffmann explained in the Piglowska case:

"The exigencies of daily court room life are such that reasons for judgment will always be capable of having been better expressed. ... These reasons should be read on the assumption that, unless he has demonstrated the contrary, the judge knew how he should perform his functions and which matters he should take into account. This is particularly true when the matters in question are so well known as those specified in section 25(2) [which are identical to those applicable in the Lawrence case]."

So what did the Court of Appeal have to say about Parker J's decision in Lawrence v Gallagher? At para 19 of the appeal judgment, Lord Justice Thorpe described her judgment as "careful and conscientious", as referring "very fully and conscientiously" to the relevant authorities, and as "conscientiously apply[ing] the s.25 criteria".

This is high praise, though not surprising. High Court judges are the most experienced family court judges, well used to cases that are both factually and legally complicated - that is their job - and Parker J is widely regarded as a no-nonsense judge. Despite all this, the Court of Appeal interfered with her decision. So let's look back at the three reasons why the Court of Appeal is allowed to interfere:

Did Parker J make a mistake about the law? Clearly not.

Did Parker J make mistakes about the facts of the case? Well, yes, apparently she did make a few small errors, but Thorpe LJ was clear that "that neither individually nor accumulatively would they justify success" for Lawrence in his appeal (para 26).

So it must have been that Parker J made a decision which was "outside the generous ambit within which reasonable disagreement is possible"? Well, it's hard to see how. Let's look at the reasoning.

Thorpe LJ agreed with Parker J that Lawrence should get the London flat and Gallagher the country house. He agreed with her that there was then a need to give Gallagher something more to reflect the facts that (a) the flat was worth more than twice as much as the house, and (b) Lawrence had a much higher future income than Gallagher. (So far, so good for Parker J.)

Then we reach the crux of the case. Thorpe LJ criticised Parker J for not explaining more fully where the sum of £577,000 came from, on the basis that "the route that the judge chose to arrive at a fair outcome, followed too theoretical a map" (para 48).

What?! The Court of Appeal interfered with the discretionary judgment of a highly experienced High Court judge on the basis that she thought about the facts too theoretically in order to achieve a fair outcome? This judgment smacks of Court of Appeal judges doing precisely what Lord Hoffmann told them they were not allowed to do in Piglowska, namely "substitut[ing] their own discretion for that of the judge by a narrow textual analysis which enables them to claim that [she] misdirected [her]self". There was simply no basis for this interference by the Court of Appeal.

The end result was that Gallagher's original £577,000 award was reduced to £350,000, and the division of the shares was removed from the equation entirely.


Discussion:

There are two things to might be said about Lawrence v Gallagher. The first is that it is a little disappointing to see the Court of Appeal concluding the first post-civil parntership case by making the outcome less equal and giving more of the assets to the person with the high-paying job. The whole point of the post-marriage cases is that earning wages is not meant to be more valuable than contributing to family life in other ways. Homosexual couples are no different from heterosexual couples in this way - each brings what he or she can to the relationship - and there is a slightly mercantile feel to the Court of Appeal's judgment that leaves an unpleasant taste in the mouth.

However, that feeling is somewhat lessened by the second point worth noting, namely that this case looks like so many post-marriage cases. It is yet another example in a long list of the Court of Appeal interfering with trial judges for no legitimate reason in order to advance the interests of high wage-earners against their less well-paid former partners. Usually this works to the advantage of working men against their child-raising former wives, but Lawrence shows those principles to be annoyingly universal. 

It looks as if the Court of Appeal judges just can't help themselves. They see a decision that is not what they would have done, and they have to interfere - even though the law is, precisely, that they are not allowed to interfere on that basis. In the Lawrence case, the Court of Appeal changed Parker J's original division of 45/55 to a final division of 40/60. Parker J got the law right, and she made no material errors about the facts - so the Court of Appeal must be trying to tell us that, when the 'right' outcome was 40/60, it was not reasonable for Parker J to think that 45/55 was right?

Come off it. This was an experienced judge who thought about the case carefully and got the law right, and there was no legitimate justification for this appeal to be allowed.

Despite all that, there is no reason to think that Lawrence v Gallagher implies some different approach to civil partnership cases from marriage cases. In fact, it's business as usual - appeal judges sticking their oars in without justification. As Supreme Court Justice Lady Hale said in 2006, and as Lord Wilson repeated just 2 weeks before the Lawrence decision, the Court of Appeal's approach has the effect of "robbing the trial judge of the discretion entrusted to [her] by the law". It's certainly hard not to think that Parker J was robbed of her discretion in this case.


The title of this post was inspired by Jo Miles, Fellow of Trinity College Cambridge, but
she bears no responsibility for the views expressed here, which are mine alone. A fuller
version of the post has since been published in the Journal of Social Welfare and Family
Law, available here: http://www.tandfonline.com/eprint/H7aIPuZs27N2ePVrc7eW/full

3 comments: