Calling in the experts

In many divorce cases, the finances can be sorted out by discussions between the people involved and their lawyers, without the need to instruct a third party to give an expert opinion. However, fairly frequently there are financial disputes that need a definitive answer on asset values, or advice on financial structures or options for the family after separation. This blog looks at the roles of experts within financial remedy cases.

Expert advice can be something as straightforward as valuing a house or other asset, so that a capital figure can be put on it. At the other end of the scale is detailed forensic analysis of complex business structures, pension funds or trusts to see how income streams, shares or capital might be extracted and divided to fund a settlement. It is also possible to use medical professionals to provide expert opinion on, for example, how a medical condition might affect a person’s ability to work, or on essential care and the cost thereof.

Experts can be used in a more informal capacity, such as using an estate agent to put a value on a house. During negotiations or alternative forms of dispute resolution, the parties can agree to use an expert to provide valuations or advice. This can be done very informally by simple verbal agreement, or by letter and a more formal process, depending on the circumstances.

The situation gets a little more complex when litigation is involved. Within the litigation context it is possible to divide experts into three categories: sole (or party) experts, single joint experts and shadow experts.

The first point to make is that permission of the court is required to use and rely on expert evidence within financial remedy proceedings. That applies whether the evidence is written or whether an expert will be called to give oral evidence at a hearing. Permission will only be given where the evidence is “necessary” to resolve the proceedings. In fact, until recently, the test was whether the evidence was “reasonably required”. The new test is aimed at tightening up the use of experts in divorce and dissolution cases in the interests of efficiency and economy.

Recently the Court of Appeal upheld a decision not to allow an expert to be instructed to value the husband’s management entities in what has been dubbed “England’s wealthiest divorce case”. This was because the evidence was speculative, and therefore not necessary to resolve the proceedings, and also the wife had not asked for it earlier in proceedings.

A sole, or party, expert is instructed by one spouse or civil partner only (who is also likely to bear the costs in full) and their role will be to provide information to enable the lawyers to advise the party as to a particular issue. The advice of such an expert, whilst not actually partisan, may well have a bias towards the position of the party instructing them. For example an accountancy expert instructed by a business owner may emphasise the difficulty of extracting money from the business to fund a settlement, whereas his or her opposite number instructed for the non-business owning spouse may emphasise the ease with which money could be extracted.

Even though instructed by one party, as the evidence is court-sanctioned, the expert has a duty to help the court, and not to mislead it. That duty overrides the duty to the party instructing and paying them.

A joint expert is one instructed by both parties, and the letter which instructs them must be agreed by both parties, and if necessary approved by the court. A single joint expert is impartial, and that is the most important aspect of their role. Courts are generally in favour of joint experts, rather than party experts, as they can help narrow the areas in dispute, rather than expanding them, as can sometimes happen when each party has their own expert. In any event, even where the parties want to submit evidence from separate experts, the court may direct that the evidence be given by a single joint expert.

A shadow expert is one who advises one or other spouse in the background as part of that person’s legal team, and is not approved or endorsed by the court; the court may not even know. The use of shadow experts will increase the costs of the person instructing them, but where one side has real concerns about, for example, the complexity of the financial situation and the use of a single joint expert, having a friendly expert on hand to offer guidance can be useful. She or he can review the joint expert’s report, and identify where questions should be asked or more evidence sought.

Your solicitor will speak to you about the need for evidence and the use of experts in your case at an early stage. If an expert is needed to shed light on a particular issue, it is important to identify the right person for the job, and where relevant to approach the other party’s solicitor to try to agree how best to proceed as soon as is practicable.

If you would like to make an appointment to speak to one of us, please call us on 01223 443333.

Children’s involvement in process

In an ideal world, neither children nor their parents would set foot in a courtroom. They would grow up without the involvement of judges, childcare professionals, experts and lawyers. However sadly, for many families the involvement of family law professionals in the lives of the children is an all too present reality. As the chief executive of Cafcass (see here for our explanation of the role of Cafcass) Anthony Douglas put it recently: “home life should tick over in the background for children, allowing them to grow up in the outside world without always being worried. For too many children … family life is in the foreground, because it is so difficult and preoccupying.

There has been a steady development within family law to allow children a voice within disputes which affect where, with whom and how they live. On the one hand this is a hugely positive development – children are given the opportunity to have their opinions heard by the judge dealing with their case, and to put forward their own view, which may differ from the polarised positions of the adults in the case. However, the flip side may well be to make the children feel like they are under even more pressure, with their home life under scrutiny from outsiders.

There are various professionals who might become involved with children. Firstly, there is the staff of Cafcass, whose officers are known as Family Court Advisers. When a Judge feels that to properly decide a dispute, he or she needs a report about what is in the children’s best interests or their wishes and feelings, the Family Court Adviser will meet with the children (as well as their parents and any other relevant adults) in order to form an opinion on what would be the best outcome for the children. The Officer’s report will often be the only place where children can get their opinions across to an independent adult, so it can be of fundamental importance.

In some cases, other experts will speak to or represent the interests of the children. Where the court feels the child needs more of a voice in the court process to ensure that his or her interests are fully looked after, a Guardian may be appointed to look after the child’s interests within the legal proceedings. A Guardian will represent the child, or children, and may instruct lawyers to represent the child separately from those representing the adults. In very unusual cases, children may be permitted to instruct their own solicitors, to argue their case.

These days, it is not uncommon for judges to meet the children in a complex case, although it happens less often in local courts than in the larger family centres. This is done in a controlled setting, and is a chance for the judge to get to know the children a little, and for them to meet the person who will make or has made decisions that will affect them.

Apart from legal representation, some cases require the involvement of experts, such as psychologists, paediatricians or independent social workers, all of whom will, in some way, be directly involved with the children and affect decision making with regards to their future.

The impact that any of these adults will have on the children can be profound. We are all familiar (or ought to be) with the pressure and responsibility children feel when their parents separate. Add an extra ingredient to the mix in the form of an expert or court adviser, and the situation can get harder for the children. However, if managed well, it could be seen as a pressure valve for children to let off steam and concerns to someone who will listen to them and not take sides.

In mediation, there is the possibility of direct consultation with a child or children, which is undertaken by a mediator who has special training to talk to kids. The idea here is that the consultation is slightly separate from the main mediation process, and often undertaken by a different mediator. This mediator will meet the children and find out their concerns, only feeding back into the main mediation if the children are happy for her or him to do so, and in an agreed form – sometimes a summary of the meeting, sometimes a letter. The children are always reassured that the adults will make the decisions, but that their opinion counts and the adults want to hear what they have to say, if they want to say anything.

When children’s family lives go from the background to the foreground, it is always important to help support them in the best ways possible.

There are always things parents can do to help children through the process. These include trying an amicable alternative to litigation, i.e. negotiation, mediation or collaborative law. Try to insulate your children from the dispute, and if possible focus on enjoying time together and doing the activities they love, rather than dwelling on the dispute or pushing for details about their “other home” or coaching them for the involvement of experts. They might benefit from being able to talk to a therapist or counsellor – a neutral party to whom they can speak openly about their feelings and work through any grief, resentment, or guilt. Your GP should be able to put you in touch with someone.

Don’t forget to remind the children that the separation and dispute are not their fault, and that both of their parents love them. You might think it’s obvious that they aren’t to blame, but children often internalize feelings of guilt around separation, assuming they must be the cause.  Take a look at our children page for some excellent resources.

If you would like to make an appointment to speak to us about family law, please give us a ring on 01223 443333.

Dining without prejudice?

According to the wisdom of the great Oscar Wilde (in The Importance of Being Earnest) “once a week is quite enough to dine with one’s own relations”. This is a sentiment likely to be shared by a couple whose dinner date has been at the centre of a recent legal tussle, and which raised an interesting, if somewhat technical, legal issue.

The case, known as BE v DE is in essence a dispute over whether or not the English courts have jurisdiction to hear this particular divorce and financial remedy case. The international couple concerned are very wealthy, and as is common in big money cases, the wife hopes to have the case heard here, where she hopes she will do better, and the husband hopes that the courts in his home country will deal with the case as there the outcome is likely to be less generous to the wife.

The dispute about the dinner they had together centres around whether or not their dinner date could be considered a ‘without prejudice’ meeting.

What is “without prejudice” and why is it important?

Discussions and correspondence that are “without prejudice” cannot later be referred to in a court or tribunal, in contrast to “open” correspondence or negotiations, which can. The concept of “without prejudice” is an important tool so that people in dispute can freely discuss ways to resolve their dispute without worrying that any admissions or offers to settle which they might make will be used against them at a later date. For example, within collaborative law, all the discussions which take place at four-way meetings are without prejudice so as to encourage cooperation and free discussion about possible ways forward. Likewise, in mediation any proposals made and agreement reached are without prejudice to any court proceedings.

In the BE v DE case, the husband gave the wife a proposed form of a written agreement between them at the ill-fated dinner back in April 2013. He described it as a “post-pre-nup”, to get financial concerns out of the way so they could try to rebuild their marriage. She was not expecting it, and on skim reading it the wife saw many references to their separation. She rebuked him, and an argument ensued which ended when he stormed off.

The wife petitioned for divorce in England, and the husband petitioned in his home country. In court proceedings in this country, the wife filed statements referring to the meeting and the draft agreement to support her case that the English courts had jurisdiction. This was because the document contained a proposed provision that she should continue living at her address in London “… which she currently lives in”, which the wife believed supported her case about being habitually resident in England. The husband argued that the meeting and the draft written agreement were ‘without prejudice’, and as such the wife should not refer to them in court documents. He wanted any mention of the meeting or document to be removed from the statements she made.

Ultimately the husband’s application to have the wife ordered to remove all mentions of the meeting and the associated document did not succeed.

The judge found that there must be a sufficiently definable dispute in existence for the ‘without prejudice’ protection to be relevant. Here the wife’s intention when she met the husband for dinner was to try to save their marriage, whereas the husband’s intention in preenting the document was to limit her eventual claims on divorce. The judge decided there was not at that stage a dispute that they were both trying honestly to resolve through negotiation.

Even if there had been a dispute in existence, then it would have needed to be clear that both parties were genuinely seeking to compromise the dispute through negotiation in order for those negotiations to attract the protection of being ‘without prejudice’. Both people need to be clear that they are attempting to settle a dispute (as when entering mediation or collaborative practice). On the facts here, the judge said it rather looked like the husband was trying to impose something on the wife in the form of a separation agreement, and there was no genuine bilateral settlement negotiation.

As a result the wife will be free to refer to the dinner, discussions and document in her evidence in support of her claim that the husband accepted her habitual residence here. This should assist her case that the English courts ought to accept jurisdiction.

So to recap, if you want to be able to claim the protection of the ‘without prejudice’ umbrella for negotiations, there needs to be a defined dispute and a genuine attempt to settle it through negotiations by both parties.

As always, if you would like to discuss this or any other aspect of family law with us, please arrange an appointment on 01223 443333.

Child support: changes and charges

Back in February this year we brought you an update on the new child maintenance regime. Things have moved on since then, so here we are again.

As a reminder, all new applications to the child maintenance scheme now use the paying parent’s gross income. It is payable for children under 16, or aged between 16 and 20 and still in non-advanced full time education or training. It is calculated as follows:

  • For gross income of up to £800 per week, child support is payable at the rate of 12% for one child; 16% for two children; and 19% for three or more children.
  • For gross income of £800 to £3,000 per week, child support is payable at the rate of 9% for one child; 12% for two children; and 15% for three or more children.
  • Parents earning less than £7 per week (or in prison, or who are students) pay nothing. Those earning £7-£100 or who are receiving certain state benefits pay a flat rate of £7 per week, and there is a reduced rate for those earning between £100 and £200.
  • Deductions from the total child maintenance payable can be made to take account of other children who live in the paying parent’s household at the rate of 11% for one child; 14% for two children; and 16% for three or more children.
  • Further deductions can be made to reflect the number of nights the child for whom maintenance is paid stays with the paying parent. If the child stays on average one night per week there will be a 1/7th reduction, two nights leads to a 2/7th reduction and so on.

By way of reminder, the much maligned Child Support Agency closed to new business in November 2013. The organisation now dealing with all new cases is the Child Maintenance Service (CMS). Like the CSA it is a Government body, and has largely the same functions. Over the next few years the CSA’s cases will be terminated. All affected parents will be contacted between now and 2017 to give them notice that their current arrangement will end. Most clients will get 6 months’ notice and will be offered support from Child Maintenance Options to put a new arrangement in place, or can opt to use the CMS.

With effect from Monday 30 June 2014 most parents making a new application to the Child Maintenance Service (CMS) for an assessment of child maintenance will have to pay an application fee.

The application fee is a flat £20 which is payable by the parent with care of the children who is applying for a maintenance assessment. This fee is a reduction from the original amount of £100 which the Government wanted to charge, and the lower level is the result of lobbying from several quarters. All new applications will attract this fee, unless the applicant is under 19, or is a victim of domestic violence or abuse. (In order to qualify as a victim of domestic violence the applicant must have reported it and must make a declaration at the time of the application that they are a victim of domestic abuse or violence).

There are also ongoing collection fees, which will have a far greater impact on parents than the one off application fee, because they are continuing charges on maintenance collected by the CMS from the non-resident parent and passed onto the parent who looks after the children more of the time. They penalise both the paying and the receiving party, and represent the Government’s attempt to get parents to sort out and pay maintenance for their children without troubling the collection service. New cases are already coming into this system, and from 11 August 2014 collection charges will be charged to both parents in a pre-existing case where the CSA currently passes on maintenance, no matter how long parents have been using the system, unless the parents opt to transfer money direct instead.

When the CMS is used to collect the maintenance, a 20% administration fee will be added to every amount collected from the paying parent. So, as an example, if the amount assessed is £100, the paying parent will actually have to pay a further £20 (so £120 in total) to CMS.

At the receiving end, the parent with care of the children will be charged a 4% fee on any child support collected through the CMS. So of the £100 assessed as payable, only £96 will actually reach the parent.

For both payer and recipient these amounts add up over the course of a year to quite a reasonable amount of money, on which they will both lose out. However, if the parents can make arrangements to pay maintenance directly from one to the other, fees will not apply, whether or not the CMS has been used to calculate the amount of maintenance payable; however, this isn’t available if the payer is in arrears. A maintenance calculation is a stand-alone application – you do not have to apply for the CMS to collect the maintenance due at the same time. So someone who only wants the CMS to perform a maintenance calculation will only have to pay the £20 application fee, as long as both parents can manage the direct payment option.

The CMS refers to payments made directly between parents as ‘maintenance direct’ or ‘direct pay’. Where CMS is used to collect and pass on the maintenance, that is using the ‘collection service’ or ‘collect and pay’.

Whilst we support initiatives encouraging parents to sort out arrangements themselves, we share the widely held concerns about these new charges penalising many families. Will these charges really help or encourage parents to support their children financially? Where the receiving parent is forced to use the CMS to collect maintenance as it is not being paid willingly, he/she and the children will be penalised for a situation beyond their control. In the end, we consider that the new charges are likely to increase resentment between parents already struggling to cooperate, and that children are likely to bear both the financial and social brunt of the fall-out.

As always, if you would like to make an appointment to talk to us about any aspect of family law, please call us on 01223 443333.