“Setting a precedent” – what does it actually mean? (Transparency Project)
In this guest post from the Transparency Project, barrister Lucy Reed explains the doctrine of precedent and how it works in practice, correcting a mistake made by more than one newspaper recently in reporting the financial dispute arising out of a divorce.
On 27 February 2017 The Telegraph reported on an ongoing appeal in the Court of Appeal by a wealthy wife (Mrs Sharp) in respect of the financial order made following her divorce.
In their article The Telegraph say that :
A ruling in Mrs Sharp’s favour would overturn a 2006 judgement which awarded a wife £5m of her husband’s £30m fortune after two years and nine months of marriage.
That ruling said that couples’ assets should be split in half by default, no matter how short the marriage.
That statement is dismally inaccurate. And this post will explain why.
The slightly unusual feature of this case is that it was a case of a husband applying for financial orders in his favour against the wife. Mr and Mrs Sharp hadn’t been married very long, they didn’t have children, and each had a career. In a nutshell, Mrs Sharp disagrees that the judge was right to split their assets roughly down the middle, saying that the parties hadn’t pooled their finances and in essence, her position was that she should be able to keep what she came in with.
The decision that Mrs Sharp is appealing against can be read in full here : JS v RS  EWHC 2921 (Fam) (06 November 2015). It is unclear why the appeal has taken so long to be heard, but it may just be a question of workload at the Court of Appeal. A decision on the appeal is awaited.
Let us imagine for a moment that the Court of Appeal were to allow the appeal and reduce the Husband’s award. Would that decision overturn the 2006 judgment The Telegraph refer to? No.
The judgment that is being referred to is the case of Miller / McFarlane  UKHL 24;  2 AC 618;  1 FLR 1186. That is a decision of the House of Lords. Both the original judge (Mr Justice Peter Singer), and the Court of Appeal are bound by the legal principles set out in the decision – which says that even in short marriages matrimonial assets should usually be shared, in recognition of the different but equal contributions the parties have made to the asset base during the marriage (but see below). That is to say, all lower courts have to follow the guidance in Miller/Macfarlane. Under the Doctrine of Precedent a court lower down the food chain cannot overturn the decision of a court higher in rank; it has to follow the principles set out in the judgments of more senior courts. When we say something “sets a precedent” this is what is meant. The House of Lords (now replaced by the Supreme Court) is the most senior court in the UK, and all the other courts in England & Wales are stuck with what they say – unless and until The Supreme Court hears another case and decides they had got it wrong or the law has changed.
Not all courts can make binding precedents that other courts / judges must follow. It works like this (from the top of the food chain to the bottom).
- Every court is bound by The House of Lords / Supreme Court (apart from the Supreme Court itself!)
- Every court apart from the Supreme Court is bound by The Court of Appeal. The Court of Appeal sometimes disagrees with itself, but if it does the later case is the one that should be followed — so the Court of Appeal is bound by itself, unless certain conditions apply.
- Decisions of a Divisional Court (more than one judge of the High Court sitting on a case) bind the High Court and any judges / courts below.
- Decisions of a single High Court judge bind courts below, and are persuasive to other High Court judges
- Judgments on Permission to Appeal applications aren’t usually precedent, but see this recent post for an exception.
- Decisions in County Courts and Family Courts by Circuit and District Judges (or magistrates) are not authority for anything.
- If there is a conflict between what one judgment and another says the one that should be followed is the one by the higher court.
It’s worth noting that many of the decisions published on BAILII under the President’s Transparency Guidance [see also  1 WLR 230] are not Precedents, that is to say they don’t represent a binding authority that can be relied upon in another case. They are often interesting, but not legally very relevant.
It is also worth explaining that a principle set out in a precedent is easy to state, but less easy to apply in practice. It tells lower courts how to approach a particular issue, but it doesn’t necessarily give the answer to the case because every factual scenario is different, and the principle has to be applied to the facts. Were facts differ from the scenario in the precedent, it can be argued that the principle doesn’t apply. Distinguishing the facts of one case from the facts of a precedent in this way is not the same as overturning a precedent, because the principle still remains valid.
If Mrs Sharp wins her case,what will have happened is that the Court of Appeal have said that the interpretation of Miller/McFarlane and the application of it to the particular facts of Mr and Mrs Sharp’s relationship and finances was not quite right, perhaps because for some reason the principle didn’t apply in her case or should have been tempered by other principles or factors. There have been lots of different interpretations of what the House of Lords meant in Miller and McFarlane over the years and what Mrs Sharp’s lawyers are doing is to try and persuade the Court of Appeal to interpret that precedent in a way which is favourable to Mrs Sharp, or to argue that there is an exception.
But the outcome definitely won’t mean that we can all ignore Miller/McFarlane or that Miller/McFarlane is wrong. Just that it might not have meant what we thought it did!
The only way that Mrs Sharp’s case could end up overturning Miller/McFarlane is for the appeal to be pursued by one or other party to the Supreme Court and for Mrs Sharp to succeed in persuading them to either change their minds or draw a distinction between the scenario in Miller/McFarlane and hers.
What Miller/McFarlane definitely doesn’t say is that splitting assets in half is a “default”, if by default the journalist means “automatic”, although it would probably be fair to say that authority suggests that equal division should be a starting point where there is sufficient to meet both parties needs, and depending on other factors. The reason there has been so much debate over the years about the correct interpretation of this judgment is that Parliament has given the courts a very wide discretion and the court has to take into account ALL the circumstances in each case before making a decision tailored to the specifics. In Miller/McFarlane (as in any other precedent) the court is setting out general principles rather than hard and fast rules that must necessarily be applied in each case – the application of a clear principle to messy facts is tricky. If splitting assets down the middle was automatic we’d have a lot fewer of these appeals to report on because there would be nothing much to argue about. So, for example, factors like how much the assets were pooled or “mingled” during the marriage, what each party needs to get by on, whether there was an inheritance or any number of other factors might mean that splitting things down the middle was NOT the appropriate outcome in any given case.
We are grateful to Brian Sloan (@briandsloan) for flagging this issue via twitter :
— Brian Sloan (@briandsloan) February 28, 2017
This post originally appeared on the Transparency Project blog and is reproduced with permission and thanks.