Translating Big Money principles in Divorce

It is one of the great ironies of family law that the divorce cases that hit the headlines and the law reports are by and large those where the family is very wealthy and can afford to pay the costs of litigating their case through the final hearing, and then onwards through to the Court of Appeal when someone alleges an error in the initial judge’s treatment of the case. In our common law tradition, where judicial decisions of the higher courts become binding precedents, the big money cases affect how judges decide the outcome of the cases of the vast majority who don’t have those limitless resources, and how we as lawyers inform and advise our clients. So how do the principles devised when dissecting the lifestyles of the rich and famous filter down to apply where there’s not quite enough to permit the comfortable forging of two homes from one?

It is worth mentioning to start with that there is a list of factors set out in an Act of parliament that judges must consider when dealing with financial division on divorce. These are known as the “Section 25 factors” for they are set out in s.25 of the Matrimonial Causes Act 1973, and for civil partnerships the list is set out in Schedule 5 to the Civil Partnership Act 2004. You can download our factsheet about those statutory principles here. The factors are such fundamental matters as the needs of both parties and their resources, their ages and the length of the marriage, and any disabilities. The first consideration is always the welfare of any children.

It was only relatively recently in legal terms (in 2000) that the idea of fairness and equality was introduced to family law with the landmark decision in White v White, which enshrined the procedure of measuring a proposed financial distribution against ‘the yardstick of equality’. Then in 2006 in the headline grabbing House of Lords case of Miller; MacFarlane, the law lords declared that the overarching objective of a fair outcome required the court to consider three principles in addition to the statutory factors: the parties’ relationship-generated needs (generously interpreted), compensation for relationship-generated disadvantage and sharing of the financial fruits of the relationship. These have been abbreviated in every day family lawyers’ usage to “needs, sharing and compensation”.

We will look in detail at what amount to “needs” in a future blog (coming soon!), but of the principles arising from case law, it is naturally the one which dominates most cases, as even at fairly high asset and income levels it can be difficult to divide one household into two while retaining a similar standard of living. The question is what do the adults and the children need, and how can this be achieved from available resources? In most cases needs are established by looking at what it will cost to house the parents and the children, and the requirements of an income stream to meet essential outgoings on each home. Often there is no room for needs to be “generously interpreted”; the children’s need for a secure home tends to have to come first, and the rest falls into place where it can.

Sharing of the assets is what tends to happen when each person’s needs can be met, so in reality it is only relevant when there is more than enough to go round, although this tends to happen more often when there are no children to consider. In big-money cases, this tends to become the battleground where each ex-spouse gives reasons why they should have more of what’s left than the other – perhaps, because of non-matrimonial property, which is less easily divided as part of the financial settlement. “Matrimonial property” tends to cover the family home and anything acquired during the marriage. “Non-matrimonial property” covers things owned before the couple got together and gifts or inheritances received by one or other of them during the marriage. In a short marriage it may be that matrimonial property is divided equally, but each party keeps their own non-matrimonial property. The longer the marriage, the more blurred the distinction becomes, and when a case is all about needs, then judges may put everything into the proverbial pot so that roofs can be put over the family’s heads.

Concepts such as “relationship generated disadvantage” and “compensation”, where the stay-at-home parent‘s career has been curtailed by the duties of running the home and caring for the children, are rarely applied in practice as there are rather narrow criteria to fulfil.

In many cases, the principles that emanate from the higher courts when dividing assets on divorce, despite their memorable labels, are of little relevance to the couple involved. What a court is striving to achieve in all cases is “fairness”. That may require one party to be kept out of his or her share of the assets until the children have left home, or both parties moving into much smaller properties than they are used to, or dipping into one party’s inheritance to adjust the capital more evenly. Where trusts or companies hold the bulk of the wealth used by the family, lawyers and the courts often have to be very creative to find a way to get to a solution that might be seen as fair by an impartial observer. At higher asset levels and when matters get international, they are often very complex in legal terms.

So whilst the principles and bons mots handed down by the best legal brains in the biggest money cases can be helpful reading for judges across the country, their aim remains achieving fairness through a pragmatic approach to the case in front of them. All cases turn on their own facts, but in most instances, needs and resources are the important factors.

If you would like to talk to us about any aspect of family law, please give us a ring on 01223 443333 to make an appointment to see Gail, Sue, Simon or Adam. Or from November, our new partner Tricia Ashton!

Tricia Ashton to join CFLP as Partner

Cambridge Family Law Practice is thrilled to announce that Tricia Ashton has agreed to become a partner in November 2014.

Tricia Ashton

Originally hailing from Hartlepool, Tricia studied law at the University of Cambridge and the College of Law in London. She comes to CFLP from the Cambridge office of Mills & Reeve, where she trained as a solicitor and has practised in the family team since qualification. Tricia is a collaborative family lawyer and a qualified community mediator.

The Legal 500 lawyers’ directory reports that Tricia “has ‘abilities and judgement that belie her years’, and is one to watch.” Tricia describes herself as ‘clear and pragmatic, with a keen eye for detail and passionate about helping families’. She particularly relishes the intellectual challenge of complex financial cases and international children matters.

We’re really looking forward to welcoming Tricia as part of our team.  In the meantime, if there’s anything that Gail, Simon, Adam or Sue can help with, do give us a call on 01223 443333.

Divorce and the recession

At the risk of stating the blindingly obvious, worries about money and finances are one of the major causes of stress and anxiety in the modern world. It is perfectly normal to feel anxious or down when times are hard. Money problems can affect your self-esteem and it is also common for those concerns to spill over into our close personal relationships.

This is something borne out by a recent report from Relate. The study, called “Relationships, Recession and Recovery” shows that couples worst affected by the recession are eight times as likely to suffer relationship breakdown.

For the study, Relate examined data from 40,000 households across the UK concerning how people were affected by the economic downturn between 2009 and 2012. The findings showed that that people who suffered worst from the recession were considerably more likely to have experienced deterioration in the quality of their relationships. Relate calls this the “social recession” which they say is a direct result of the economic recession the country has experienced.

In the study people were grouped according to their economic experience during those years.

  • People who had not experienced any financial impact from the recession were largely unaffected in terms of their relationships.
  • People who were just about getting by financially, working unpaid overtime, yet who were optimistic about things changing were almost twice as likely to have experienced relationship breakdown as those unaffected by the recession.
  • Further down the scale, people who still had a job but endured financial distress with debt arrears, low job satisfaction and low optimism were three times as likely as the unaffected group to have broken up with their spouse or partner.
  • People who had lost their jobs, were suffering from financial problems and were not optimistic about their situations changing were around four times as likely to have separated.
  • Finally, people who were out of the labour market, suffering from “high financial distress” and were pessimistic about things changing were on average eight times as likely as the unaffected group to have experienced relationship breakdown (ten times for women; six times for men).

Relate are calling for action to better fund relationship support, as they argue that good-quality relationships are fundamental to our health and wellbeing, our ability to engage and progress in education and work, and they are essential to building resilience and independence. All of these things feed back into national economic recovery.

It is well understood that financial difficulties, unemployment and money worries can reduce relationship quality by increasing conflict, decreasing mental wellbeing, and even impacting on physical health. An interesting point made by the authors of the study is that they feel that the social recession will outlast the economic one, as more unhappy relationships drag on until the financial situation improves enough to allow people to go their separate ways. Certainly, increasingly those contemplating divorce are concerned to keep legal costs to a minimum so as to ensure the maximum funds remain for the family’s use. Here are a few ways of working with a solicitor while keeping your costs down:

First, try to keep the emotion out of the legal process. This is easier said than done, of course. However, the courts are not interested in apportioning blame for relationship breakdown, so pouring hurt and recriminations into the legal process will only inflame the dispute and run up costs – it’s the future you need to focus on now, not the past.

Secondly, ensure you have enough emotional support to help you through the process. Solicitors are much more expensive than counsellors and using them as a shoulder to cry on is not a good use of your funds. Your lawyer or your GP will be able to refer you to a good counsellor, and in many cases this can make a real difference to how you handle the challenges of divorce.

Third, trust your solicitor to progress your case. Costs mount up very rapidly for anxious clients. A good family lawyer will be a busy family lawyer, and may not be able to get to your email or letter immediately, but will respond when they are able to give it full attention. If you have concerns about whether your solicitor has received a communication from you, have a word with their secretary – it will keep a lid on costs.

Fourth, you can also keep costs down through being organised with your financial information, and working with your solicitor to complete disclosure in a structured way rather than piecemeal. A box full of paper takes a long time to sort out, and this ends up being more costly than disclosure presented to us in an organised way.

Finally, and perhaps most importantly, consider alternatives to litigation at every stage. We have written extensively about mediation, collaborative law and negotiation as better, and cheaper, options for many people. It’s not always possible to avoid court, but even if you can narrow down the issues of dispute in another forum it is likely to save you money in the long run. On the same point, don’t let the fight get in the way of a sensible, commercial settlement – your solicitor will help you decide when one of these might be proposed, or accepted.

If you would like to talk to us about finance, costs or any other aspect of family law, please give us a ring on 01223 443333 to make an appointment to see Gail, Sue, Simon or Adam.

Education matters

We all understand the importance of a good education. It is something the judges sitting in the family court understand too. A child’s education is one of the things which people who have parental responsibility for a child can make decisions about, and (if necessary) litigate over.

An interesting recent case showed that a child’s educational opportunities will be prioritised over other considerations when a court has to make a decision about his or her future. This case concerned a 15 year old girl of mixed Mexican and British Bangladeshi heritage who had lived with her mother and elder siblings in England after her parents separated.

In 2010 the mother, the girl, and her two older siblings moved to Mexico with the permission of the court. Once there, the children were initially educated in an English-Spanish bilingual private school, but were moved to a Spanish speaking state school after a year. The girl was apparently unhappy in the Spanish speaking school (English being her first language) and was unable to take the courses she wanted. In July this year, the girl told her mother she was going to spend the night at a friend’s house, but instead, with the practical and financial assistance of her father in England, she crossed the border into the USA and then flew to England.  Her mother didn’t know, let alone agree. The girl informed her mother by Facebook that she was in London and intended to remain there.

The mother then made an application under the Hague Convention for an order that the girl be returned to Mexico, her home country. The Hague Convention (or to give it its full title “The Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction”) is a multilateral treaty, which regulates which country has the jurisdiction to decide where the child should live, namely the country where the child was habitually resident. It aims to protect children from the harmful effects of abduction across international borders by providing procedures to bring about their prompt return. 93 states worldwide are signatories, so when a child is taken from one signatory state to another, then prompt action before the courts of the country to which they have been taken can secure their return.

When the family court here deals with an application under the Hague Convention it must first determine whether the child was (and remains) habitually resident in the country from which they have been removed (in which case the child must be returned) or whether they have become resident here, in which case there is more discretion.

In the case we are looking at here, the girl was habitually resident in Mexico, and had not lost that habitual residence by virtue of her journey to England. The judge was therefore obliged to order her return unless one of the exceptions set out in the Convention applied – these are very limited but include an objection from the child to being returned if they have attained an age and degree of maturity at which it is appropriate to take account of their views. The objection must be to the country, not to living with the other parent.

The girl in this case objected to being returned to Mexico as she thought her chances of a good education were far better in England. Unfortunately her life with her father and his family since she had returned here had been chaotic. She had witnessed domestic violence in the wider family and her father had evicted her. Unfortunately she had no school place for this new school term and was facing having to drop an academic year. By contrast, her mother had secured her a place in a bilingual school in Mexico on a scholarship basis.

The judge was concerned that the girl would not be able to engage constructively in education in this country if she were not able to live in a settled and secure home. Her difficult circumstances with her father, and the lack of clear schooling options for her in England convinced the judge that her strong desire for a good education would be better served by a return to live a more settled life with her mother and to be educated in a school for which a place was available. He therefore ordered her return to Mexico against her wishes.

In other education-related cases the court has favoured more secular over strictly religious schooling for the greater opportunities it affords to children. It is reassuring to know that the family court will look to what is the best educational outcome for the children it’s concerned with, even if that means disagreeing with the children themselves.

In the meantime, if you would like to talk to us about education, arrangements for children or any other aspect of family law, please give us a ring on 01223 443333 to make an appointment to see Gail, Sue, Simon or Adam.