1/1/2019 An Introduction to Financial Remedy Proceedings Pranjal Shrotri, Barrister 36 Bedford Row London WC1R 4JH T +44 (0)20 7421 8000 F +44 (0)20 7421 8035 E-mail clerks@36bedfordrow.co.uk Web address www.36bedfordrow.co.uk Twitter @36BedfordRow 1 36 Bedford Row London WC1R 4JH T +44 (0)20 7421 8000 F +44 (0)20 7421 8035 E-mail: clerks@36bedfordrow.co.uk Web address: www.36bedfordrow.co.uk www.brandprotectionbarristers.co.uk Twitter: @36consumerlaw

1/1/2019 This Session Procedure Law Case studies Questions 2 2

Applications for financial relief following a divorce 1/1/2019 Applications for financial relief following a divorce Applications under the Matrimonial Causes Act 1973 Governed by Family Procedure Rules 2010 Made once petition for decree of divorce has been presented (MCA s26(1)) The goal of financial provision is fairness. White v White [2001] 1 AC 596, 599 per Lord Nicholls; Miller [2006] 2 AC 618 at §4–9 per Lord Nicholls. 3 3

Applications for financial relief following a divorce 1/1/2019 Applications for financial relief following a divorce An application under the MCA 1973 is not: Application for financial relief following a foreign divorce pursuant to Part III Matrimonial and Family Proceedings Act 1984 Schedule 1 Children Act 1989 application Child Maintenance application pursuant to Domestic Proceedings and Magistrates’ Court Act 1978 Application pursuant to TLATA 1996 4 4

1/1/2019 Section 25 MCA 1973 (1)It shall be the duty of the court in deciding whether to exercise its powers under section 23, 24 24A or 24B above and, if so, in what manner, to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen. (2)As regards the exercise of the powers of the court under section 23(1)(a), (b) or (c), 24, 24A or 24Babove in relation to a party to the marriage, the court shall in particular have regard to the following matters— (a)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; (b)the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future; (c)the standard of living enjoyed by the family before the breakdown of the marriage; (d)the age of each party to the marriage and the duration of the marriage; (e)any physical or mental disability of either of the parties to the marriage; (f)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; (g)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; (Note – see S v S [2006] EWHC 2793) (h)in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring. 5 5

Court issues standard directions to take the case to FDA 1/1/2019 Procedure Form A Court issues standard directions to take the case to FDA Form E to be filed (not less than 35 days before FDA: FPR r9.14) Ongoing duty of “full, frank and clear disclosure” 6 6

First Directions Appointment 1/1/2019 First Directions Appointment Directions hearing: Valuation of assets if can’t be agreed; FMH, pensions, company Mortgage capacity Property particulars for both parties Medical reports/reports if health in issue Evidence of efforts to obtain employment Questionnaire Object to questionnaire of other side Irrelevant Disproportionate Not possible to answer Cross-examination question 7 7

Financial Dispute Resolution Hearing 1/1/2019 Financial Dispute Resolution Hearing Without prejudice attempt to settle the case without final hearing Listed for one hour Use indication from the judge to settle case Directions to trial Consent order – requires Decree Nisi Order comes into force on granting of Decree Absolute 8 8

1/1/2019 Final hearing Judge hears evidence from parties and decides what financial order to make 9 9

Sources Miller v Miller; McFarlane v McFarlane [2006] UKHL 2 1/1/2019 Sources Miller v Miller; McFarlane v McFarlane [2006] UKHL 2 White v White [2004] UKHL 54 Duckworth’s Matrimonial Property and Finance Unlocking Matrimonial Assets – Andrzej Bojarski, Simon Sugar 10 10

Outcome Broad judicial discretion on facts of case: 1/1/2019 Outcome Broad judicial discretion on facts of case: ‘The function of the Family Division judge is not so much to state principles as to reflect the relevant circumstances of the particular case in the discretionary conclusion’ Thorpe LJ, Atkinson v Atkinson [1995] 2 FLR at 361 Changes with society: ‘Fairness is an elusive concept. It is an instinctive response to a given set of facts. Ultimately it is grounded in social and moral values. These values, or attitudes can be stated. But they cannot be justified, or refuted, by any objective process of logical reasoning. Moreover they change from one generation to the next’ Lord Nicholls, White v White,§4 11 11

Types of order Lump sum Property adjustment order Order for sale 1/1/2019 Types of order Lump sum Property adjustment order Order for sale Pension orders Spousal maintenance (NB child maintenance) 12

Principles on which court acts 1/1/2019 Principles on which court acts Need Compensation Sharing 13

1/1/2019 Need ‘When the marriage ends fairness requires that the assets of the parties should be divided primarily so as to make provision for the parties' housing and financial needs, taking into account a wide range of matters such as the parties' ages, their future earning capacity, the family's standard of living, and any disability of either party. Most of these needs will have been generated by the marriage, but not all of them. Needs arising from age or disability are instances of the latter. In most cases the search for fairness largely begins and ends at this stage. In most cases the available assets are insufficient to provide adequately for the needs of two homes. The court seeks to stretch modest finite resources so far as possible to meet the parties' needs. Especially where children are involved it may be necessary to augment the available assets by having recourse to the future earnings of the money-earner, by way of an order for periodical payments.’ Miller §11/12 per Lord Nicholls 14

1/1/2019 Compensation ‘Another strand, recognised more explicitly now than formerly, is compensation. This is aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage. For instance, the parties may have arranged their affairs in a way which has greatly advantaged husband in terms of his earning capacity but left the wife severely handicapped so far as her own earning capacity is concerned. Then the wife suffers a double loss: a diminution in her earning capacity and the loss of a share in her husband's enhanced income. This is often the case. Although less marked than in the past, women may still suffer a disproportionate financial loss on the breakdown of a marriage because of their traditional role as home-maker and child-carer.’ Miller § 13 per Lord Nicholls 15

1/1/2019 Sharing ‘A third strand is sharing. This ‘equal sharing’ principle derives from the basic concept of equality permeating a marriage as understood today. Marriage, it is often said, is a partnership of equals….. The parties commit themselves to sharing their lives. They live and work together. When their partnership ends each is entitled to an equal share of the assets of the partnership, unless there is a good reason to the contrary. Fairness requires no less. But I emphasise the qualifying phrase: ‘unless there is good reason to the contrary’. The yardstick of equality is to be applied as an aid, not a rule.’ Miller § 16 per Lord Nicholls 16

Matrimonial vs Non-matrimonial Assets 1/1/2019 Matrimonial vs Non-matrimonial Assets ‘Matrimonial property' is synonymous with ‘family assets' and includes; (i)money and things that have come into being during the marriage through the joint efforts of the spouses; and (ii)the matrimonial home, cars and chattels (other than heirlooms) that are intended for joint use and enjoyment, regardless of source ‘Non-matrimonial property’; (i)pre-marital property; property brought into the marriage by one party; (ii)extra-marital property; property not gained by a joint venture, such as property that is inherited; and (iii) post-marital property; property acquired by one spouse after separation 17

Matrimonial vs Non-matrimonial Asset 1/1/2019 Matrimonial vs Non-matrimonial Asset ‘The yardstick of equality ‘forcefully’ applies to matrimonial property’ Nicholas Mostyn QC, Rossi v Rossi [2006] EWHC 1482 at para 24.2 ‘ Property acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it…..Plainly, when present, this factor is one of the circumstances of the case….However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant's financial needs cannot be met without recourse to this property’ Lord Nicholls, White v White 610 ‘The importance of the source of the assets will diminish over time….As the family's personal and financial inter-dependence grows, it becomes harder and harder to disentangle what came from where’ Baroness Hale, Miller §148   18

Case Study 1 - Facts H and W married for 20 years 1/1/2019 Case Study 1 - Facts H and W married for 20 years Both aged 66 and retired W previously married, brought FMH into new marriage mortgage free 4 bedroom FMH worth 450K 1 bed in area costs 200-230K 2 bed in area costs 275-300K 1 bed rental in area costs £900pcm Both parties’ have pensions of £1,600pcm H has no family. W’s grown up children from her first marriage live in a different part of the city. W’s daughter is having medical treatment in the area and regularly stays overnight with W. 19

1/1/2019 Case Study 1 - Outcome FMH split so that H receives approximately 210K equity, W receives 240K equity No spousal maintenance 20

Case Study 2 - Facts 15 year marriage Two children aged 10 and 7 1/1/2019 Case Study 2 - Facts 15 year marriage Two children aged 10 and 7 H and W both 40 H earns net £32,000pa (£2,667pcm) in managerial position W, primary carer of children, earns net £14,000pa (£1167pcm) from work as a teaching assistant, child maintenance, and various benefits Equity in FMH = 175K. Monthly mortgage payments are £400pm. W cannot afford this on her income. 3 bedroom property costs 230K 21

1/1/2019 Case Study 2 - Outcome W to stay in property with assistance of spousal maintenance H to rent, until children reach 18, then FMH sold and equity split 60:40 in W’s favour 22

QUESTIONS? 23 1/1/2019 36 Bedford Row London WC1R 4JH T +44 (0)20 7421 8000 F +44 (0)20 7421 8035 E-mail clerks@36bedfordrow.co.uk Web address www.36bedfordrow.co.uk Twitter @36BedfordRow 23