Calls for Family Law Reform

In a series of lectures at Gresham College in London, Baroness Deech, the Chair of the Bar Standards Board, called for reforms of the current English divorce laws.  She argued that current divorce laws are out of date and were based on the assumption that the husband should work and support the wife and marital assets should be shared equally regardless of the length of the marriage.  Her key suggestions for changing the law are:- 

• Judicial discretion in respect of financial decisions should end;
• Maintenance should end if and when a former wife lives with a new partner;
• No maintenance should be paid except in divorces involving older women or one spouse is incapacitated;
• Pre-marital assets should not be divided;
• There should be no division of marital assets at all where a marriage lasted three years or less.

However, Lawson-West would sound a note of caution on the removal of judicial discretion in respect of financial decisions.  Couples arrange their finances differently and finding a formula that allows for couples where both work in equally-paid jobs, couples where one is on a significantly lower income than their spouse and couples where one with agreement of the other has returned to study or has given up work, plus or minus children as appropriate would be horrendously complicated and likely to result in injustices.  Neither is it fair to automatically divide marital assets equally as Cleese v Eichelberger demonstrated.

Resolution, the association of legal professionals working to reduce conflict in separation and divorce, has also called for reform of Family law to include the benefits of the discretionary approach so that financial settlements can be tailor-made for individual families.  Resolution has also called for a no fault divorce and introduction of rights for couples who live together but do not marry.

Computer Hacking and Financial Disclosure in a Divorce

Failure of a spouse to completely disclose all financial assets, especially complex business assets, is often a concern during a financial settlement during the divorce process.  However, there is a legal duty on both spouses for full and frank disclosure and the court do have powers to order disclosure if there are strong grounds for believing one spouse has not complied.

In the case of Imerman v Tchenguiz, Mrs Tchenguiz started divorce proceedings.  Her husband, Mr Imerman, had many commercial interests including some with Mrs Tchenguiz’s brothers with whom he shared office space and computers.  When divorce proceedings were commenced by their sister, the brothers evicted Mr Imerman from their offices and later searched the shared computer system for documents and emails relating to his property portfolio, trusts and companies.  The brothers then copied found documents and emails to memory sticks.  However some of these copied documents were actually covered by legal privilege and should not have been copied and looked at.  Mr Imerman sought an injunction to prevent any further copying and distribution of those copied documents.  The brothers argued that they were entitled to access documents and emails on their shared computer system and that they were concerned Mr Imerman might try to hide those assets during the divorce proceedings brought by their sister.

The judge found that Mr Imerman was entitled to have the documents taken out of circulation and restrained further use or transmission of those documents.  One factor in the judge’s decision was that the documents had been password protected and therefore could be regarded as confidential.  The judge also found that the brothers should not have pre-judged whether or not Mr Imerman would have disclosed the documents during the divorce proceedings and went on to state that court orders are available for preserving evidence and carrying out searches where there is strong evidence that a spouse has not made a full and frank disclosure of matrimonial assets.  There was no evidence that Mr Imerman may try to hide his assets as he had already made seven lever-arch files’ worth of documents available to Mrs Tchenguiz’s solicitors.

Lawson-West solicitors would remind anyone in the process of divorce that financial disclosure must be full and frank and must include relevant documents even if they are password protected or encrypted.  Documents covered by legal privilege, such as correspondence between a spouse and solicitor, should not be read.  If you have strong grounds and evidence that your spouse has not made a full disclosure, apply for a court order.  Do not try to hack into their computer or read emails that are not addressed to you as hacking is a criminal offence that could result in a prison sentence.  Be aware too that any evidence uncovered by hacking may not be admissible in court, so although you may have found proof of undisclosed assets, the court may reject that proof because it was obtained illegally.  Whereas evidence found as a result of a court ordered search will be admissible and taken into account in any subsequent financial settlement.

Webster v Webster: why cohabiting couples need Living Together Agreements and Wills

Ms and Mr Webster met and became friends before Mr Webster married another woman with whom he had three children.  Mr Webster’s marriage ended and he began cohabiting with Ms Webster and they had two children together.  Mr Webster’s relationship with Ms Webster lasted 27 years, ending with his death.

Both Ms and Mr Webster worked whilst they were living together and maintained separate bank accounts.  Ms Webster’s earnings were significantly lower than Mr Webster’s and she paid for utility bills, furnishings and children’s clothes and needs.  Mr Webster paid the mortgage.  Although the mortgage and house were in Mr Webster’s sole name, Ms Webster claimed that both regarded the house as being in joint names.

After Mr Webster’s death, Ms Webster continued living in their home and continued paying all bills including the mortgage.  However, Mr Webster died intestate which meant his estate passed to all five children, now adults, although Ms Webster had a claim as a dependent under the Inheritance (Provision for Family and Dependents) Act 1975.  She also claimed a beneficial interest in the home she’d lived in with Mr Webster.  The adult children disputed her claim that there was a common intention that the home was to be held as beneficial joint tenants.

The Judge agreed with the adult children that Ms Webster did not have a beneficial joint tenancy, but she did have an interest in the house as Mr Webster’s intestacy did not give her any reasonable provision.  The Judge made an award of the transfer of the house to Ms Webster and a further award based on a Duxbury capitalisation of an income loss as Mr Webster’s death meant the household had lost two-thirds of its income.

Mr Webster died in December 2004 and the matter was decided in Court in 2009.  To avoid such lengthy court battles and legal costs, Lawson-West recommend that cohabiting couples make a Living Together Agreement, which clearly sets out beneficiary interest in any property whether it is held in joint names or one sole name.  Lawson-West also recommend that both partners each make a Will so that neither die intestate and leave the surviving partner to make a lengthy and expensive claim under the Inheritance Act.

Court recognises lost career opportunities when assessing former wife’s maintenance needs

Mrs McFarlane was a city solicitor who had given up her career to look after the three children of her marriage to Mr McFarlane, one of the two percent of top-earning equity partners at Deloitte.  The marriage lasted 18 years and the couple had cohabited before marrying.  Mrs McFarlane is currently training as a trademark attorney and already has qualifications as a solicitor.  Her needs had been agreed at £150,000 per year.  It had been agreed at the time of divorce there was not enough capital to enable a clean break settlement.

The High Court has awarded Mrs McFarlane £350,000 from her former husband’s income, which is currently £1.1 million after tax.  The award not only covers her needs but also compensates her for lost career opportunities while she stayed at home with the three children whilst her husband followed a successful career.

Mr McFarlane had suggested that his former wife could have found employment more related to her qualifications which would be better paid, as she could have made a very successful career if she had not chosen to stay at home to look after their three children.  However, the court rejected this argument as it was not supported by evidence.  Mrs McFarlane had demonstrated that the possible jobs her former husband suggested were not suitable for her and her long absence from work was also taken into consideration, particularly as solicitors are required to engage in continuing professional development and attend training courses which Mrs McFarlane had not done whilst at home looking after the children.

The award will be reviewed in 2015 when Mr McFarlane plans to take early retirement aged 55.  If his income falls below the point where he can afford to meet Mrs McFarlane’s needs of £150,000 per year, he could go back to court to seek a variation of the order.

Application to set aside a consent order after spouse’s non disclosure in Bokor-Ingram v Bokor-Ingram

Mrs Bokor-Ingram had been refused permission to appeal a decision in ancillary relief proceedings where she sought to have a consent order set aside because her husband had failed to disclose that he was moving to a better paid job.  The trial judge found that if the husband had disclosed that he was moving to a better paid job, there would have been little effect on the outcome of the consent order so Mrs Bokor-Ingram had been refused leave to appeal.

The Court of Appeal found that the trial judge’s decision “was causing, or was likely to cause, difficulty for specialist practitioners and judges”.  The Court of Appeal’s review found that if Mr Bokor-Ingram had disclosed that he was moving to a better paid job, his estranged wife would have requested more ancillary relief so the trial judge was wrong to conclude that disclosure would have had no impact.  The fact that he had not signed a new employment contract at the time of the consent order being settled was irrelevant as the duty to disclose extends to any fact relevant to the court’s review of the foreseeable future. 

Lawson-West would remind all parties that full and frank disclosure is the best way of avoiding lengthy and costly legal battles.

Financial Orders, Recession and Myerson v Myerson

Once a financial settlement has been agreed after a divorce and the settlement is payable in instalments, the Court has the power to vary the agreement, stop one or more instalments or re-open the financial settlement.

However, the Court will only do so in limited circumstances.  The Court will consider varying payments or stopping instalments if circumstances have very significantly changed or it would be unjust to allow the agreement to continue.  The Court will only consider re-opening a financial settlement where the fundamental basis on which the settlement was made had been invalidated.

In Myerson v Myerson the Count of Appeal found that Mr Myerson’s assets had been correctly valued at the time the financial order had been made.  That those assets had subsequently decreased in value was not enough to have the financial order re-opened.  The Judges warned that people should not seek to re-open financial orders on the basis of natural price fluctuations in property or shares.

With hindsight, it would have been better for Mr Myerson to share risk more equitably when considering the terms of the financial order.

In view of the difficulty this presents, particularly in times of financial uncertainty it is increasingly likely that divorcing couples will wish to divide their assets to share risk. Alternatively, where one of them is to retain the riskier assets they will expect a significant premium for giving up the risk free assets.

Mothers of IVF Babies can choose Second Parent to be named on Birth Certificate

Providing the person is not a blood relative and consents to being named, mothers of babies conceived via donor sperm and IVF will be able to choose who to name as the second parent on their baby’s birth certificate from April 2009.

The second parent will have important responsibilities and duties, including giving consent to the mother moving abroad or consent if the mother wishes to change the child’s name. The second parent could be exposed to claims for child maintenance from the Child Support Agency (due to be replaced by the Child Maintenance and Enforcement Commission).

Whilst the regulations mean that mothers could name long term partners or best friends as the second parent, the second parent needs to have fully considered all the consequences.

Gingerbread, support group for single parent families, release survey showing most parents do want contact to take place

“Problematic contact after separation and divorce?” surveyed 559 parents and shows that after divorce or separation, parents do want contact to take place. The survey also found that where children had weekly overnight stays with the non residential parent, children were more likely to have holiday contact as well.

Although contact arrangements were often changed, few contact arrangements were changed because the non residential parent stopped or reduced child maintenance payments. Most contact was reduced or stopped because of inflexibility, unreliability or a lack of commitment from either the residential or non residential parent.

Where parents mentioned child welfare concerns these were mostly down to alcohol abuse (46%), drug abuse (24%), mental illness (14%) and child abuse (5%). Other concerns included other parent saying negative things (12%), lack of routine (10%), not looking after the child properly (9%), child mixes with unsuitable people (4%), other parent is too harsh with the child (2%).

Resolution, the association for Family Law solicitors, has launched its “Parenting after Parting” initiative to help parents support children through separation and divorce.

Post-nuptial agreements are enforceable

The judgment in the recent McLeod vs McLeod case did not quite live up to the expectations of many in the legal profession. Instead of making a ruling that made pre-nuptial agreements enforceable in the UK, Baroness Hale instead referred the matter of pre-nuptial agreements to parliament, on the grounds that it was a legislative rather than judicial issue.

What the ruling did do, however, was find that in this particular case, the post-nuptial agreement made by the couple was in fact enforceable, since it was not contrary to public policy. The case involved an American couple who had relocated to the Isle of Man. The couple signed a pre-nuptial agreement before they wed in 1994. The husband, who was 27 years older than his wife, was also significantly wealthier. The agreement was subsequently varied on two occasions after the wedding, by agreement between the parties.

When the marriage broke down in 2005, the wife made an application for ancillary relief, and argued that all agreements, both pre and post-nuptial should be disregarded. In the first court decision, the Manx court awarded the wife additional sums. On appeal, the court found that the agreement didn’t make enough provision for the couple’s five children, and that the terms should be determined by the court instead. At this point, the husband appealed to the Privy Council.

While finding that the second post-nuptial agreement was enforceable, Baroness Hale also found that such agreements remain subject to the court’s power of variation. In this case, since the first judge had failed to alter the agreement to make proper provision for the children, it should be remitted back to the High Court who would do so.

She commented: “post-nuptial agreements… are very different from pre-nuptial agreements…There is nothing to stop a couple entering into contractual financial arrangements governing their life together, as this couple did as part of their 2002 agreement.”

So, with regard to post-nuptial agreements, the picture is clear. However, pre-nuptials are still a grey area until parliament take action to make them enforceable.

Statistics show divorce makes men richer

According to research carried out recently by the Institute for Social and Economic Research, divorce leaves men, in particular those with children, better off. At the same time, it leaves women significantly poorer.

The statistics show that when a father separates from the mother of his children, his income goes up by about a third. For women, regardless of whether they have children or not, the picture is much bleaker, with incomes falling by more than 20%.

The survey entitled ‘Marital Splits and Income Changes over the Longer Term’ is the first to investigate changing wealth levels associated with marriage breakdown in Britain. Its findings question the prevalent belief that men suffer financial penalties due to divorce, as their wives live comfortably off the proceeds.

The research also showed that maintenance paid by former partners had little impact, since only 31% of separated mothers received any payment from the father of their children. However, the impact on a woman’s financial position is lessened if she is employed both before and after the divorce, or if she starts to work after the relationship has broken down.

The author of the research, Professor Stephen Jenkins points out that in some cases, the man’s situation is adversely affected by divorce, for example if he has children with a new partner while paying maintenance to his first family.

It seems the only way forward is to overcome the differences between the roles of men and women both in respect of employment and within the family.