Family Finances On Relationship Breakdown

FAMILY FINANCES ON RELATIONSHIP BREAKDOWN

Below are listed some acts and orders which may be helpful in your case. Feel free to look into any of them further if you wish –

ACTS

Acts and financial orders the court can make on divorce or dissolution

• Matrimonial Causes Act 1973
  • Section 23 – Periodical payments order + lump sum order.
  • Section 24 – Property adjustment order.
  • Section 24(A) – Order for sale of property.
  • Section 21-25 – Pension orders.

• Civil Partnership Act 2004
  • Schedule 5, Part 1 – Periodical payments order + lump sum order.
  • Schedule 5, Part 2 – Property adjustment order.
  • Schedule 5, Part 3 – Order for sale for property.
  • Schedule 5, Part 4-4A – Pension orders.

• Housing Orders
  • Mesher Order – This dictates how the family home should be dealt with whilst both parties are divorcing.  It allows for the sale of the family home to be postponed for a set amount of time or until a certain event e.g. the children are a certain age (Mesher v Mesher [1980]).
  • Martin Order – This is similar to a mesher order. However, this applies to divorcing partners who do not have children and one party wishes to delay the sale of the home in order to remain living in the property (Martin v Martin [1978]).

• Clean Break Orders
  • Matrimonial Causes Act 1973 –
    • Section 25 A(1) – where the court is exercising its powers – it is their duty ‘to consider whether it would be appropriate so to exercise those powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree as the court considers just and reasonable.’
    • Section 25 A(2) – consideration of the possibility of a delayed clean break order.

• • Civil Partnership Act 2004 –
    • Schedule 5, pt.5, para.23(2): where the court is exercising its powers – it is their duty ‘to consider whether it would be appropriate so to exercise those powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree as the court considers just and reasonable.’

The statutory factors that the court must take into account in making financial orders.

• Matrimonial Causes Act 1973 –
  • Section 25(1) – Regard must be given to all circumstances of the case, with first consideration being given to the welfare of a child of the family who has not reached the age of 18.
  • Section 25(2)(a) – Income, property, earning capacity, and other financial resources must be taken into account.
  • Section 25(2)(b) – Financial needs, obligations, and responsibilities must be taken into account.
  • Section 25(2)(c) – The standard of living enjoyed by the parties must be taken into account.
  • Section 25(2)(d) – The ages of each party and the duration of the marriage must be taken into account.
  • Section 25(2)(e) – Any physical/mental disability of either party must be taken into account.
  • Section 25(2)(f) – Contributions to the welfare of the family by either party.
  • Section 25(2)(g) – The conduct of either party must be taken into account.
  • Section 25(2)(h) – The value to each of the parties of any benefit which, by reason of the dissolution/annulment of the marriage, that party will lose the chance of acquiring.

• Civil Partnership Act 2004
  • Schedule 5, Part 5, paragraph 20 – Regard must be given to all circumstances of the case, with first consideration being given to the welfare of a child of the family who has not reached the age of 18.
  • Schedule 5, Part 5, paragraph 21(2)(a) – Income, property, earning capacity, and other financial resources must be taken into account.
  • Schedule 5, Part 5, paragraph 21(2)(b) – Financial needs, obligations, and responsibilities must be taken into account.
  • Schedule 5, Part 5, paragraph 21(2)(c) – The standard of living enjoyed by the parties must be taken into account.
  • Schedule 5, Part 5, paragraph 21(2)(d) – The ages of each party and the duration of the civil partnership.
  • Schedule 5, Part 5, paragraph 21(2)(e) – Any physical/mental disability of either party must be taken into account.
  • Schedule 5, Part 5, paragraph 21(2)(f) – Contributions to the welfare of the family by either party.
  • Schedule 5, Part 5, paragraph 21(2)(g) – The conduct of either party must be taken into account.
  • Schedule 5, Part 5, paragraph 21(2)(h) – The value to each of the parties of any benefit which, by reason of the dissolution/annulment of the civil partnership, that party will lose the chance of acquiring.

Below are listed some cases which may be helpful. A basic summary or a relevant quote has been included with the case titles. Feel free to read more into the cases and get more details into the ones that may help you – 

• Vince v Wyatt [2015] UKSC 2014

  • In this case, the couple were married in 1981 and lived on benefits. They filed for divorce in 1982. The divorce did not include any financial orders as they had no assets. At the time of the supreme court hearing, their daughter lived with Ms Wyatt and their son lived with Mr Vince. After this, Ms Wyatt worked in a low paid job but Mr Vince became very wealthy (he gained £57 million in assets).

    Wyatt applied for a financial order 27 years after divorce after hearing about his wealth. Since financial orders were not made during their divorce, she could make an application for one, asking for £1.9 million. The judge said that it was a short marriage that ended a long time ago and she didn’t contribute to his wealth. However, she did still have a claim based on her contribution to caring for the family and children. She ended up receiving £300k.

• Jones v Jones [2011] EWCA Civ 41
  • Case regarding a high amount of marital wealth –

    • Judge Wall P in Jones v Jones [2011] EWCA Civ 41 said: “it seems to me unfortunate that our law of ancillary relief (financial) should be largely dictated by cases which bear no resemblance to the ordinary lives of most divorcing couples and to the average case heard, day in and day out, by district judges up and down the country. The sums of money…involved in this case are well beyond the experience and even the contemplation of most people. Whether the wife has £5m or £8m, she will still be a very rich woman and the application of the so called “sharing” and “needs” principles may look very different in cases where the latter predominates and the parties’ assets are a tiny percentage of those encountered here…”

These cases are ones which correspond to some of the above acts and orders listed –

Cases parallel to the above statutory factors that the court must take into account in the making of financial orders –

• First consideration given to the welfare of any children under the age of 18
  • Suter v Suter and Jones [1987] 3 W.L.R. 9 – “The first consideration, not the paramount consideration.” In this case, H divorced his W due to her committing adultery with R. W was given custody of the children and allowed to remain in the matrimonial home. H was ordered to make periodical payments of £200 per month for the children and £100 per month for W. H appealed, which was allowed, and it was determined by the judge that the children’s welfare was greatly important to consider, but not an overriding consideration. The payments were lowered to £1 per annum.
  • Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 – “This is a clear recognition of the reality that, although the couple may seek to go their separate ways, they are still jointly responsible for the welfare of their children. The invariable practice in English law is to try to maintain a stable home for the children after their parents’ divorce. … Giving priority to the children’s welfare should also involve ensuring that their primary carer is properly provided for, because it is well known that the security and stability of children depends in large part upon the security and stability of their primary carers…” (para.128)
  • Murphy v Murphy [2014] EWHC 2263 – “The having of children changes everything.” In this case, a husband and wife were getting divorced and the court was determining whether the maintenance paid should be reduced at some point in time and whether it should not continue after the children’s secondary education. The husband argued that the wife’s earning capacity would be £25,000 once the children reached 6 1/2 years old as she was earning £30,000 before the children were born, therefore the amount of maintenance she will receive should be reduce once the children reach this age. Once the children finished secondary school, the payments should end. However, the wife argued that we cannot assume it is easy for people to go back to their careers and work once the children are in school. For the wife, her plan to retrain as a teacher was not possible due to the long hours and her need to pay for child care. It was determined by Justice Holman that the having of children changes everything and the economic impact will continue to effect the wife long after the children have finished school.

• Income, earning capacity, property, and other financial resources
  • Barrett v Barrett [1988] 2 FLR 516 – ‘the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire’ (Matrimonial Causes Act, s25(2)(a); Civil Partnership Act, Schedule 5, pt.5, para.21(2)(a)) – factor they have to take regard to. In this case, the husband was ordered to pay the wife £25 a week for life or until remarriage. This order was then altered later to state that the wife will only receive these payments for 4 years. This was appealed by the wife. It was determined by the Court of Appeal that the wife had limited options for a career due to her role in looking after the children during marriage, therefore finding sufficient employment would be difficult after the divorce. The order was then reversed so that the original decision in the wife’s favour was upheld.

• Financial needs, obligations and responsibilities
  • M v B (Ancillary Proceedings: Lump Sum) [1998] 1 FCR 213) – ‘the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire’ (Matrimonial Causes Act, Section 25(2)(a); Civil Partnership Act, Schedule 5, pt.5, para.21(2)(a)).

    Judge Thorpe LJ said, “In all these cases it is one of the paramount considerations, in applying the s 25 criteria, to endeavour to stretch what is available to cover the need of each for a home, particularly where there are young children involved. Obviously the primary carer needs whatever is available to make the main home for the children, but it is of importance, albeit it is of lesser importance, that the other parent should have a home of his own where the children can enjoy their contact time with him. Of course there are cases where there is not enough to provide a home for either. Of course there are cases where there is only enough to provide one. But in any case where there is, by stretch and a degree of risk-taking, the possibility of a division to enable both to rehouse themselves, that is an exceptionally important consideration and one which will almost invariably have a decisive impact on outcome.”

•  

• The Standard of Living – ‘the standard of living enjoyed by the family before the breakdown of the marriage’ (Matrimonial Causes Act, Section 25(2)(c); Civil Partnership Act, Schedule 5, pt.5, para.21(2)(c))
  
  • K v L [2011] EWCA Civ 550 (a modest standard of living) – In this case, despite the immense wealth of the parties (their shares were worth £57m at the time of this hearing), the couple lived very modestly. It was for this reason the court agreed that the husband’s needs were taken care of with his awarded £5m. The shares were the wife’s main assets before her marriage to her husband. They had grown over their 21 year marriage.    
  • Robson v Robson [2010] EWCA Civ 1171 (a “recklessly wasteful” lifestyle) – In this case, the standard of living of the parties was considered to be reckless. The husband had inherited some wealth which led to this lifestyle. It was decided that the wife would be awarded periodical spousal payments of $140,000 a year until she was payed a lump sum of £8m and periodical payments of £15,000 for the children. This was appealed by the husband who argued that this was excessive and the judge was wrong in his assessment of the wife’s needs based on her reckless spending of their wealth. The wife’s lump sum was lowered to match her housing needs and income needs.

• Age of each party and the duration of the marriage – ‘the age of each party to the marriage and the duration of the marriage’ (Matrimonial Causes Act, Section 25(2)(d); Civil Partnership Act, Schedule 5, pt.5, para.21(2)(d))
  
  • Short marriages (e.g. Attar v Attar [1985] FLR 649 – In this case, the husband and wife were married for 6 months without children. The husband had substantial wealth whilst the wife did not and was unemployed. Her previous job paid her £15,000 per annum, which she left after marriage. The husband payed £5,000 and £4,800 through a periodical payments order. The court determined that more financial support was required from the husband to help the wife return to the position she was in before marriage. The wife was given a lump sum which was equal to two years of salary from her previous job to allow her to get back on her feet.
  • Miller v Miller [2006] 2 FCR 213) (money generated in a short marriage) – In this case, the parties involved were in a childless marriage for less than three years. The husband’s income was substantial and his assets were valued at £17m at the time of separation. He ended the marriage as a result of his new relationship with another woman. The judge awarded £5m to the wife at the time of separation. The husband appealed this decision, however it was ultimately dismissed.
  • Total length of the relationship (e.g. GW v RW [2003] EWHC 611) – regarding the total length of relationship, whether that be cohabitation before marriage too. In this case, it was stated by Nicholas Mostyn that “I cannot imagine anyone nowadays seriously stigmatising pre-marital cohabitation as “living in sin” or lacking the quality of emotional commitment assumed in marriage. Thus in my judgment where a relationship moves seamlessly from cohabitation to marriage without any major alteration in the way the couple live, it is unreal and artificial to treat the periods differently.”

• Physical/Mental Disability – ‘the age of each party to the marriage and the duration of the marriage’ (Matrimonial Causes Act, Section 25(2)(d); Civil Partnership Act, Schedule 5, pt.5, para.21(2)(d))
  
  • This is also considered under the ‘financial needs, obligations and responsibilities’ heading.
  • C v C (Financial Provision: Personal Damages) [1995] 2 FLR 171. In this case, the husband’s disability entitled him to a greater share of money even though he left wife on social security benefits.

• Contributions to the welfare of the family – ‘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 the home or caring for the family’ (Matrimonial Causes Act, Section 25(2)(f); Civil Partnership Act, Schedule 5, pt.5, para.21(2)(f)
  
  • White v White [2001] 1 A.C. 596 (per Lord Nicholls: “There should be no bias in favour of the money earner and against the home-maker and the child-carer…”). In this case, the husband and wife were married for 30 years with children. They had a dairy farming partnership. The wife took care of the children but also took part in the farming business with her husband. The division of assets led to 43% going to the wife and 57% to the husband.

• Conduct – ‘the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it’ (Matrimonial Causes Act, Section 25(2)(g); Civil Partnership Act, Schedule 5, pt.5, para.21(2)(g))
  
  • K v L [2010] EWCA Civ 125. In this case, the husband had sexually abused the wife’s grandchildren. The husband was awarded nothing despite the wife having over £4 million in property.
  • Good conduct (e.g., A v A (Financial Provision: Conduct) [1995] 1 FLR 345). In this case, good conduct was taken into account. The husband made no effort to work whilst the wife was earning a degree and starting a new career. This was considered to be good conduct from the wife and, therefore, was taken into account when making further judgements.