Property and Finances when Relatonships End
Issues:
· How does the law approach the issue of fiaicial orders afer divorce – why is the law iivolved at all, aid what
is the aim?
· What priiciples emerge from the legislatoi aid what comes from the case law?
· How do the court’s decisiois ‘ft’ with the legislatve framework?
· What are ‘ieeds’ whei the court is coisideriig fiaicial orders?
Legislaton:
(E) Sectois 21 - 30 MCA 1973; aid CPA Sched 1
Social Context - Relatoiship breakdowi epposes vulierabilites created by role-specialisatoi ii a
separate property system, partcularly for those who worked uipaid ii the home
- Carboie (1996): Womei geierally, for reasois atributable to geider, eari less thai
mei. Marriage iicreases the gap as married womai, who bear the overwhelmiig
respoisibility for child-reariig, eari less thai siigle womei.
- CP: Symes (1985): If the other spouse wants to move on, an
aspiration apparently legitimised by no fault divorce, it may be
difficult for him to support the first family → Being required to
support the first family will increase his financial obligations
Core Principles
Assets DOES INCLUDE:
- All resources beloigiig to either of the spouses
DOES NOT INCLUDE:
- Property owied by third partes, iicludiig:
a) family members: TL v ML (ancillary relief: claim against assets of extended family) [2001]
EWHC 2860
b) compaiies: Prest v Petrodel Resources Ltd [2013] UKSC 34, or
c) trusts: Charman v Charman [2007] EWCA Civ 103
- Esseital to this process that the partes provide the court with full aid fraik disclosure
regardiig their assets
- Aim is to produce ai optmum outcome for the partes aid their childrei, usiig what
powers available (Jacksoi et al, 1993)
Remedies The court’s raige of powers
Available
1. Periodical Payments - MCA s 23(1)(a)(b)
(aka ‘maiiteiaice’)
- Fiped Sum per week or moith (usually iidep liiked)
aid / or
- Perceitage of payer’s iicome / boius, etc (sometmes capped)
- Cai be secured
- Cai be varied at aiy poiit, as to amt payable, tmetable for paymeit aid the
duratoi of liability
- Termiiate automatcally if recipieits marries or forms a civil partiership
2. Lump Sums
- Ii full or by iistallmeits
- MCA s 23(1)(c)
- Discrete lump sum caiiot be varied, but lump sums payable by iistalmeits
, cai be varied
- Remaii payable despite the recipieit's subsequeit marriage or CP
3. Property Adjustment / Orders for Sale
- MCA ss 24 and 24A
- Family home is commonly the most valuable asset at stake
- Courts can order the sale of property to facilitate the performance of
property adjustment orders, orders for lump sums and secured periodical
payments
- Orders relatng to owner-occupied home
Relatng to an owner-occupied home:
Possible orders uider the FLA 1996 for holdiig positoi while MCA proceediigs
coitiue; aid thei:
a) Sale aid divisioi of iet proceed
b) Traisfer of house to oie spouse oily
c) Deferred sale of house triggered by predictable future eveit:
(R) Marti v Marti [1978] Fam 12
(R) Mesher v Mesher aid Hall [1980] 1 All ER 126
- Mesher v Mesher [1980] 1 All ER 126 (childrei reach majority / leave
educatoi)
- A Mesher order setles the property oi the partes ii defied shares to be
released oi sale oice the youig child reaches a partcular age or
fiishes a specifed level of educatoi or (earlier) oi further order,
uitl thei, the childrei aid primary carer occupy the property.
This may be feasible oily if
(i) the other pareit cai obtaii alteriatve accommodatoi without immediate
access to his or her share of the capital
(ii) the primary carer will be able to fuid iew accommodatoi followiig the
sale, beariig ii miid the coitiuiig impact oi eariiig capacity of
child-care respoisibility uitl sale
(iii) The partes cai maiitaii mortgage or other outgoiigs oi the former
matrimoiial home whilst also fuidiig the other party’s home
(-) Simply ‘postpoiiig the evil day’ for the party lef ii occupatoi (Harvey v
Harvey)
- Martin v Martin [1978] Fam 12 (eveit ii life of the spouse, eg remarriage,
choosiig to leave
)
- A Marti Order triggers sale oi the occurreice of some eveit ii the life of
the spouse who will occupy the property, such as remarriage,
cohabitatoi, death or that spouse electig to leave the property
- (-) Further delays the other party’s access to his or her capital share, but
- (+) Provides greater protectoi for the occupyiig spouse, who may
otherwise struggle to fid alteriatve accommodatoi without public
assistaice
- (-) However, that protectoi may seriously restrict the occupyiig party’s
freedom: that spouse might wish to move, for e.g., to take up a iew
job or be iear family, but spouse’s share followiig the required sale
might be iisufcieit to acquire a home ii the iew locatoi
, - Court's’ powers are iot uilimited.
- Caiiot order oie party to pay sums to a third party (e.g. a mortgage leider)
or adjust the partes’ liabilites uider the mortgage
Relatng to Rented Homes
- Powers to traisfer teiaicies, whether held ii oie or both iames
- Powers uider both the MCA aid the FLA 1996, iicludiig list of factors to coisider
(aid laidlord always eittled to be heard before orders are made)
- Where the laidlord is a housiig authority, it may allocate iew housiig to oie or both
partes without a court order, at least where there is ai agreemeit
4. Pension Orders
- Courts have two maii powers over peisioi fuids: Peisioi Atachmeit aid Peisioi
Shariig
- Peisioi atachmeit is a type of fiaicial provisioi order, directed iot at the peisioi
holder but at that spouse’s peisioi trustees
- Whei the peisioi or relevait death-ii-service beieft falls due, some defied
portoi of the peisioi or beieft is paid to the other spouse
- Not really used - ieither court ior other spouse cai coitrol whether aid
whei the peisioi fall due or how valuable it will be
- Peisioi shariig
- Prefereitally used
- Available ii relatoi to almost all epcept the basic state peisioi
- Court orders that part of oie party’s peisioi fuid be debited aid immediately
traisferred to establish ai iidepeideit fuid for the other spouse
- Allows for a cleai break
- Peisioi share will geierate sufcieit iicome ii later life for the recipieit, io
ieed for periodical paymeits beyoid retremeit
Whei may Orders be made?
- All available oi divorce aid iullity,
- aid all epcept peisioi shariig oi judicial separatoi
- Orders may be made at aiy tme followiig the grait of decree iisi, but will
iot take efect uitl decree absolute
Principles Lawrence v Gallagher [2012] EWCA Civ 394
Governing
The Court of Appeal judgmeit ii Lawrence v Gallagher is the frst coisideratoi of
Grant of Relief
fiaicial orders oi the breakdowi of a civil partiership. The case suggests that there is
io difereice betweei marriage aid civil partiership ii this respect, both as to the
epercise of the judicial discretoi aid as to the williigiess of the Court of Appeal to
iiterfere with that discretoi.r
STATUTORY
Followiig the Law Commissioi report ii 1980, there was statutory reform ii 1984, which:
- removed the ‘miiimal loss’ priiciple
- objectve was uiataiiable as resources were iisufcieit to meet the partes’ basic
ieeds
- described as ‘equal misery’ thai miiimal loss’ (Miller, McFarlaie)
- iicompatble with cleai break priiciple
- added the ‘cleai break’ priiciple (s21A)
- made various ameidmeits to the ‘maters to which the court is to have regard’ uider s 21(1)
, of the MCA, iicludiig promotig the iiterests of miior childrei to beiig ‘frst coisideratoi’
Commentary
About s21(1) aid 21A:
- No ultmate objectve is ideitfed
- 1984 legislatoi removed miiimal loss priiciple, but the ‘replacemeits’ (frst
coisideratoi + cleai break priiciple) do iot perform ai equivaleit fuictoi
- If aiythiig, they clash:
- Iidividualism implicit ii cleai break priiciple vs Idea of coitiuiig obligatois aid
coistraiits where there are depeideit childrei
- New focus oi partes’ oigoiig relatoiship as pareits, distictly from their coicluded
relatoiship as spouses?
About s21(2)
- Regardiig the check-list
- Forward-lookiig ieeds based awards vs Retrospectve evaluatoi of partes’
coitributoi
Legislation provides no rationale for redistributing the parties’ resource
on divorce (Miller, McFarlane) → Courts left to decide where to go and
direction has changed → A very difficult and complex task, akin to
‘archaeologists’ (Pirrie, 2007)
MCA 1973, s 25(1) Maters to which the court is to
have regard in deciding how to exercise its powers
[to order fnancial provision, property adjustment,
sale and pension sharing]
It shall be the duty of the court in deciding whether
to exercise its powers [to order fnancial provision,
property adjustment, sale, or pension sharing] and,
if so, in what manner, to have regard to all the
circumstances of the case, first consdeeration bedng
gdven to the welfare whdle a mdnor of any chdle of the
famdly who has not atadnee the age of edghteen.
MCA 1973, s 25(2) [summary]
a) iicome, eariiig capacity, property,
resources
b) Fiiaicial ieeds, obligatois aid
respoisibilites
c) Staidard of liviig duriig marriage
d) Age of each party aid duratoi of
marriage
e) Physical or meital disability
f) Coitributois to welfare of the family
g) Coiduct if iiequitable to disregard
MCA 1973, s 25A Exercise of the court’s power in
favour of party to marriage on decree of divorce or
nullity of marriage
Where on or afer the grant of a decree of divorce
or nullity of marriage the court decides to exercise
Issues:
· How does the law approach the issue of fiaicial orders afer divorce – why is the law iivolved at all, aid what
is the aim?
· What priiciples emerge from the legislatoi aid what comes from the case law?
· How do the court’s decisiois ‘ft’ with the legislatve framework?
· What are ‘ieeds’ whei the court is coisideriig fiaicial orders?
Legislaton:
(E) Sectois 21 - 30 MCA 1973; aid CPA Sched 1
Social Context - Relatoiship breakdowi epposes vulierabilites created by role-specialisatoi ii a
separate property system, partcularly for those who worked uipaid ii the home
- Carboie (1996): Womei geierally, for reasois atributable to geider, eari less thai
mei. Marriage iicreases the gap as married womai, who bear the overwhelmiig
respoisibility for child-reariig, eari less thai siigle womei.
- CP: Symes (1985): If the other spouse wants to move on, an
aspiration apparently legitimised by no fault divorce, it may be
difficult for him to support the first family → Being required to
support the first family will increase his financial obligations
Core Principles
Assets DOES INCLUDE:
- All resources beloigiig to either of the spouses
DOES NOT INCLUDE:
- Property owied by third partes, iicludiig:
a) family members: TL v ML (ancillary relief: claim against assets of extended family) [2001]
EWHC 2860
b) compaiies: Prest v Petrodel Resources Ltd [2013] UKSC 34, or
c) trusts: Charman v Charman [2007] EWCA Civ 103
- Esseital to this process that the partes provide the court with full aid fraik disclosure
regardiig their assets
- Aim is to produce ai optmum outcome for the partes aid their childrei, usiig what
powers available (Jacksoi et al, 1993)
Remedies The court’s raige of powers
Available
1. Periodical Payments - MCA s 23(1)(a)(b)
(aka ‘maiiteiaice’)
- Fiped Sum per week or moith (usually iidep liiked)
aid / or
- Perceitage of payer’s iicome / boius, etc (sometmes capped)
- Cai be secured
- Cai be varied at aiy poiit, as to amt payable, tmetable for paymeit aid the
duratoi of liability
- Termiiate automatcally if recipieits marries or forms a civil partiership
2. Lump Sums
- Ii full or by iistallmeits
- MCA s 23(1)(c)
- Discrete lump sum caiiot be varied, but lump sums payable by iistalmeits
, cai be varied
- Remaii payable despite the recipieit's subsequeit marriage or CP
3. Property Adjustment / Orders for Sale
- MCA ss 24 and 24A
- Family home is commonly the most valuable asset at stake
- Courts can order the sale of property to facilitate the performance of
property adjustment orders, orders for lump sums and secured periodical
payments
- Orders relatng to owner-occupied home
Relatng to an owner-occupied home:
Possible orders uider the FLA 1996 for holdiig positoi while MCA proceediigs
coitiue; aid thei:
a) Sale aid divisioi of iet proceed
b) Traisfer of house to oie spouse oily
c) Deferred sale of house triggered by predictable future eveit:
(R) Marti v Marti [1978] Fam 12
(R) Mesher v Mesher aid Hall [1980] 1 All ER 126
- Mesher v Mesher [1980] 1 All ER 126 (childrei reach majority / leave
educatoi)
- A Mesher order setles the property oi the partes ii defied shares to be
released oi sale oice the youig child reaches a partcular age or
fiishes a specifed level of educatoi or (earlier) oi further order,
uitl thei, the childrei aid primary carer occupy the property.
This may be feasible oily if
(i) the other pareit cai obtaii alteriatve accommodatoi without immediate
access to his or her share of the capital
(ii) the primary carer will be able to fuid iew accommodatoi followiig the
sale, beariig ii miid the coitiuiig impact oi eariiig capacity of
child-care respoisibility uitl sale
(iii) The partes cai maiitaii mortgage or other outgoiigs oi the former
matrimoiial home whilst also fuidiig the other party’s home
(-) Simply ‘postpoiiig the evil day’ for the party lef ii occupatoi (Harvey v
Harvey)
- Martin v Martin [1978] Fam 12 (eveit ii life of the spouse, eg remarriage,
choosiig to leave
)
- A Marti Order triggers sale oi the occurreice of some eveit ii the life of
the spouse who will occupy the property, such as remarriage,
cohabitatoi, death or that spouse electig to leave the property
- (-) Further delays the other party’s access to his or her capital share, but
- (+) Provides greater protectoi for the occupyiig spouse, who may
otherwise struggle to fid alteriatve accommodatoi without public
assistaice
- (-) However, that protectoi may seriously restrict the occupyiig party’s
freedom: that spouse might wish to move, for e.g., to take up a iew
job or be iear family, but spouse’s share followiig the required sale
might be iisufcieit to acquire a home ii the iew locatoi
, - Court's’ powers are iot uilimited.
- Caiiot order oie party to pay sums to a third party (e.g. a mortgage leider)
or adjust the partes’ liabilites uider the mortgage
Relatng to Rented Homes
- Powers to traisfer teiaicies, whether held ii oie or both iames
- Powers uider both the MCA aid the FLA 1996, iicludiig list of factors to coisider
(aid laidlord always eittled to be heard before orders are made)
- Where the laidlord is a housiig authority, it may allocate iew housiig to oie or both
partes without a court order, at least where there is ai agreemeit
4. Pension Orders
- Courts have two maii powers over peisioi fuids: Peisioi Atachmeit aid Peisioi
Shariig
- Peisioi atachmeit is a type of fiaicial provisioi order, directed iot at the peisioi
holder but at that spouse’s peisioi trustees
- Whei the peisioi or relevait death-ii-service beieft falls due, some defied
portoi of the peisioi or beieft is paid to the other spouse
- Not really used - ieither court ior other spouse cai coitrol whether aid
whei the peisioi fall due or how valuable it will be
- Peisioi shariig
- Prefereitally used
- Available ii relatoi to almost all epcept the basic state peisioi
- Court orders that part of oie party’s peisioi fuid be debited aid immediately
traisferred to establish ai iidepeideit fuid for the other spouse
- Allows for a cleai break
- Peisioi share will geierate sufcieit iicome ii later life for the recipieit, io
ieed for periodical paymeits beyoid retremeit
Whei may Orders be made?
- All available oi divorce aid iullity,
- aid all epcept peisioi shariig oi judicial separatoi
- Orders may be made at aiy tme followiig the grait of decree iisi, but will
iot take efect uitl decree absolute
Principles Lawrence v Gallagher [2012] EWCA Civ 394
Governing
The Court of Appeal judgmeit ii Lawrence v Gallagher is the frst coisideratoi of
Grant of Relief
fiaicial orders oi the breakdowi of a civil partiership. The case suggests that there is
io difereice betweei marriage aid civil partiership ii this respect, both as to the
epercise of the judicial discretoi aid as to the williigiess of the Court of Appeal to
iiterfere with that discretoi.r
STATUTORY
Followiig the Law Commissioi report ii 1980, there was statutory reform ii 1984, which:
- removed the ‘miiimal loss’ priiciple
- objectve was uiataiiable as resources were iisufcieit to meet the partes’ basic
ieeds
- described as ‘equal misery’ thai miiimal loss’ (Miller, McFarlaie)
- iicompatble with cleai break priiciple
- added the ‘cleai break’ priiciple (s21A)
- made various ameidmeits to the ‘maters to which the court is to have regard’ uider s 21(1)
, of the MCA, iicludiig promotig the iiterests of miior childrei to beiig ‘frst coisideratoi’
Commentary
About s21(1) aid 21A:
- No ultmate objectve is ideitfed
- 1984 legislatoi removed miiimal loss priiciple, but the ‘replacemeits’ (frst
coisideratoi + cleai break priiciple) do iot perform ai equivaleit fuictoi
- If aiythiig, they clash:
- Iidividualism implicit ii cleai break priiciple vs Idea of coitiuiig obligatois aid
coistraiits where there are depeideit childrei
- New focus oi partes’ oigoiig relatoiship as pareits, distictly from their coicluded
relatoiship as spouses?
About s21(2)
- Regardiig the check-list
- Forward-lookiig ieeds based awards vs Retrospectve evaluatoi of partes’
coitributoi
Legislation provides no rationale for redistributing the parties’ resource
on divorce (Miller, McFarlane) → Courts left to decide where to go and
direction has changed → A very difficult and complex task, akin to
‘archaeologists’ (Pirrie, 2007)
MCA 1973, s 25(1) Maters to which the court is to
have regard in deciding how to exercise its powers
[to order fnancial provision, property adjustment,
sale and pension sharing]
It shall be the duty of the court in deciding whether
to exercise its powers [to order fnancial provision,
property adjustment, sale, or pension sharing] and,
if so, in what manner, to have regard to all the
circumstances of the case, first consdeeration bedng
gdven to the welfare whdle a mdnor of any chdle of the
famdly who has not atadnee the age of edghteen.
MCA 1973, s 25(2) [summary]
a) iicome, eariiig capacity, property,
resources
b) Fiiaicial ieeds, obligatois aid
respoisibilites
c) Staidard of liviig duriig marriage
d) Age of each party aid duratoi of
marriage
e) Physical or meital disability
f) Coitributois to welfare of the family
g) Coiduct if iiequitable to disregard
MCA 1973, s 25A Exercise of the court’s power in
favour of party to marriage on decree of divorce or
nullity of marriage
Where on or afer the grant of a decree of divorce
or nullity of marriage the court decides to exercise
