Financial Matters After Divorce

These Family Law pages were originally prepared by the Law Department at St. Brendan's Sixth Form College. 

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This Chapter was last updated on 30 October 2000


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Now that "matrimonial offences" have largely disappeared from divorce law, there is only rarely any dispute between the parties as to the desirability of a divorce in itself. Such disputes as do occur - and there are many - generally centre either on the arrangements to be made for any children or on the division of matrimonial property and other financial arrangements. This chapter is concerned with the property and finance, though financial support for children is dealt with later. Except where otherwise stated, all the powers of the court are exercisable equally in cases of divorce, nullity and judicial separation.

 

 
Browne v Browne [1989] 1 FLR 291, CA
The facts are set out below. Affirming an order for W to pay £175k to H, Butler-Sloss LJ said an application by a husband for a redistribution of assets is not in any way an unusual application ... in these times of equality of the sexes it would be a sad reflection if a husband were thought to be acting improperly by exercising the rights the law permits.

 

The court has considerable discretion in making financial orders following divorce, subject to the general guidance provided by statute. The doctrine of precedent operates only fairly loosely, and the appellate courts rarely interfere with an order unless the lower court applied altogether the wrong principles.

 

Orders available

The court can make four different kinds of order under ss.22-24A of the Matrimonial Causes Act 1973. Such orders can be made in favour of (or for the benefit of) either party to the marriage or any child of the family, though most applications for child maintenance are brought under the Child Support Act 1991.

Under s.22, the court seized of a petition for divorce, nullity or judicial separation may make an order for maintenance pending suit. That is, it may order either party to make regular payments to the other, for his or her maintenance, until such time as the matter is finally determined. The court can make such order as it thinks reasonable - the s.25 guidelines (below) do not strictly apply to this kind of order - and will take account of the parties' respective means. Such orders accounted for under 3% of all the orders made in 1996.

 

T v T (Financial provision) [1990] 1 FLR 1, Owen J
H and W divorced and W sought maintenance pending suit. The family's financial affairs were complicated, but theit capital assets were well over £1m and H had an annual income of more than £100k. In the circumstances, the judge ordered H to pay W interim maintenance at a rate equivalent to £25k per annum.

 

Under s.23, the court may make a financial provision order which may include an order for periodical payments, secured or unsecured, and/or a lump sum payment or payments, to the other party and/or to any specified person for the benefit of a child of the family. Payments for the benefit of a child cannot normally be required after the child's eighteenth birthday, but the order can be extended to a child over this age if the child is still in education or training.

Under s.24, the court may make a property adjustment order, requiring either party to transfer to the other (or to any person for the benefit of a child) such property as may be specified, or varying the terms of any ante-nuptial or post-nuptial agreement or settlement. Orders for transfers to adult children are limited as in the previous case.

Under s.24A, the court making a secured periodic payments order, a lump sum order or a property adjustment order may also make an order for the sale of specified property where this seems appropriate to give effect to its previous order. This power can be exercised even where some other person has a beneficial interest in the property, though the other must be given an opportunity of being heard in the matter.

 

Harwood v Harwood [1991] 2 FLR 274, CA
In ancillary proceedings following divorce, H's business partnership had (at least arguably) a beneficial interest in the house he owned jointly with W. The Court made an order for sale, half the proceeds to go to W immediately and the other half to be paid into court pending a determination of the partnership interest.

 

Financial provision orders

There are essentially two kinds of financial provision order: periodical payments and lump sum. An order can be made to take effect at any time in favour of a child of the family under the age of 18, and may require payment to be made to the child or (more commonly) to some other person - often the other parent - for the child's benefit. A periodical payments order is for such period as the court may decide, but must normally come to an end no later than the child's eighteenth birthday. Under s.29 of the 1973 Act an order cannot be made in favour of a child over that age unless the child is undertaking (or is about to undertake) education or vocational training, or there are other special circumstances which (in the court's opinion) justify making an order.

An order in favour of a party to a marriage can be made at any time after decree nisi has been pronounced, but cannot take effect until the decree is made absolute. (An order for maintenance pending suit can be granted to cover the intervening period.) Under s.22A of the Act (as amended by Schedule 2 of the Family Law Act 1996, when it comes into force), the order can be made at any time after the statement of marital breakdown has been lodged with the court, but cannot normally take effect until the divorce or separation order is made.

A periodical payments order requires regular payments to be made by one party to the other (or to some specified person for the benefit of a child), normally at so much per week, per month or per year. Such payments are normally "unsecured", and the payer must simply make arrangements (e.g. by a standing order) to pay them out of his own resources. If the payer has sufficient capital, however, and the court fears he may default, it may order that the payments be "secured" by the transfer of appropriate capital (usually in the form of an investment portfolio) to trustees. The capital remains the payer's property, and any balance reverts to him if the order comes to an end.

 

W v W (Periodical payments: pensions) [1996] 2 FLR 480, Connell J
Following divorce, W applied for financial relief. The proceedings were protracted: the financial arrangements were inherently complex, but H was very obstructive and tried to minimise his assets. The judge said a clean break was impossible because of H's conduct, and ordered periodical payments to W of £23k per annum, secured by an order addressed to the company holding H's substantial pension fund restraining H from interfering with that fund or depriving W of her survivor's pension if H should die first.

 

A periodical payments order in favour of a party to the marriage is automatically terminated by the remarriage of that party. This provides a powerful disincentive to remarriage, because entry into long-term cohabitation does not have the same effect and an amended court order is needed for any variation in the payments required in that situation. An unsecured periodical payments order (whether to an ex-spouse or to a child) automatically terminates with the death of either the payer or the payee, but an annuity obtained under a secured order may continue to make payments dependent on its own terms.

Under s.31 of the 1973 Act, a periodical payments order (also an order for maintenance pending suit) can be varied, discharged, suspended or (if suspended) revived by the court at a later date. In ordering any such variation, the court takes into account essentially the same factors (below) as in making the original order, with particular reference to the changed circumstances thought to justify a variation.

A lump sum order requires one party to pay to the other (or to a specified person for the benefit of a child) a certain sum either immediately or (if the court so orders) at a future date or by instalments over a period, perhaps with interest as appropriate. This may be more appropriate than a periodical payments order if the recipient has immediate expenses to be met, perhaps incurred over the period between the breakdown of the relationship and the date the order takes effect, or if the court is anxious to achieve a "clean break", though periodical payments may be ordered as well as a lump sum in appropriate cases.

Where the parties have substantial assets, a lump sum order can be made to distribute those assets between them and to provide the payee with a capital sum sufficient to guarantee an adequate income for the foreseeable future. (The calculation of this sum, taking into account factors such as inflation, life expectancy, income tax and investment possibilities, is commonly done using an accountant-designed computer program called a Duxbury calculation, but the judges have stressed that the result is for the guidance of the court and is not binding.)

A lump sum order in favour of a party to the marriage is a "once for all" order; no variation can be made if circumstances change, and no further lump sum can subsequently be ordered in favour of the same party. However, a lump sum order can be made many years after the divorce so long as it was applied for at the time of the petition, and the court can in any case adjourn proceedings for a few years before making a final order.

 

Twiname v Twiname [1992] 1 FLR 29, CA
The facts are set out above. The Court of Appeal confirmed that the court has jurisdiction to order a lump sum payment as much as 15 years after the original divorce. (The decision attracted much adverse comment in the media because of its disregard of the "clean break" principle.)

 

MT v MT (Financial provision: Lump sum) [1992] 1 FLR 362, Bracewell J
H and W divorced after twenty years' marriage; they had lived well beyond their income with the support of H's wealthy family. H expected to inherit a substantial sum on the death of his father, then 83 and in poor health, and the judge granted W's application for an adjournment of her lump sum application. Although a clean break is advisable, she said, justice demanded that after a long marriage W should receive a share commensurate with her needs and the capital available.
 
Under the 1973 Act, the court can vary a lump sum order for the benefit of a child, but this power will disappear once the 1996 amendments are brought into force. In any case, the courts very rarely make lump sum order for the benefit of children because of the danger that the person to whom the payment is actually made may use the money for some other purpose.

 

Property adjustment orders

A property adjustment order may require a transfer of property (this is the most common) from one party to the other, or to a specified person for the benefit of a child, or a settlement of property, or a variation in an existing marriage settlement. Property is anything capable of being valued in monetary terms, including property owned before the marriage and (to some extent) property likely to be acquired in the future. In practice most property adjustment orders are concerned with the ownership of the matrimonial home, though they have also been used in relation to investments and other property.

A property adjustment order can be made at any time after the decree nisi has been pronounced; when the 1996 amendments take effect, it will be at any time after the statement of breakdown has been lodged with the court. Property adjustment orders made on divorce are "once for all" and not subject to later variation, nor can additional orders normally be sought at a later date.

The court's powers in this respect are very wide but are not unlimited; for example, the court cannot order one party to pay insurance premiums or mortgage instalments on a matrimonial home that has been transferred to the other. In practice such matters are commonly dealth with by agreement between the parties, their formal undertakings being annexed to the court order by way of a schedule. The court is also inhibited from making any order prejudicial to the rights of a third party not represented in the proceedings: if the matrimonial home is subject to a mortgage, the building society or other mortgagee must be given an opportunity of being heard before any order is made that would affect its position.

 

 


 

THE STATUTORY GUIDELINES

In considering a possible order for maintenance pending suit, the court is bound only by the words of s.22 of the 1973 Act, that it may order such payments "as the court thinks reasonable". In dealing with applications for other financial provision or property adjustment orders, however, the court is subject to more detailed statutory guidelines.

 

Matrimonial Causes Act 1973 s.25(1)
It shall be the duty of the court in deciding whether to exercise its powers ... and if so in what manner, to have regard to all the circumstances of the case, first consideration being given to the welfare ... of any child of the family who has not attained the age of eighteen.

 

"All the circumstances" means just that, so that in Harris v Harris (see below) the Court of Appeal said it might in principle include the fact that a party had received bad legal advice.

 

Matrimonial Causes Act 1973 s.25(2)
As regards the exercise of its powers ... 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 ... has or is likely to have in the foreseeable future ...;
(b) the financial needs, obligations and responsibilities which each of the parties ... 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 ... and the duration of the marriage;
(e) any physical or mental diabaility of either of the parties ...;
(f) the contributions which each of the parties has made or is likely ... 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;
(h) ... the value to each of the parties ... of any benefit (for example a pension) which ... that party will lose the chance of acquiring [but see below].

 

Matrimonial Causes Act 1973 s.25(3)
As regards the exercise of its powers ... in relation to a child of the family, the court shall in particular have regard to the following matters:
(a) the financial needs of the child;
(b) the income, earning capacity (if any), property and other financial resources of the child;
(c) any physical or mental disability of the child;
(d) the manner in which he was being and ... expected to be educated or trained;
(e) the considerations mentioned ... in paragraphs (2)(a), (b), (c) and (e) above.

 

Matrimonial Causes Act 1973 s.25(4)
As regards the exercise of its powers ... against a party ... in relation to a child of the family who is not the child of that party, the court shall also have regard:
(a) to whether that party assumed any responsibility for the child's maintenance, and if so the extent to which ... and the length of time for which that party discharged such responsibility;
(b) to whether ... that party did so knowing the child was not his or her own;
(c) to the liability of any other person to maintain the child.

 

These matters are not exclusive, and the courts are free to consider other matters as well, but the Court of Appeal has resisted suggestions that it might lay down further guidelines. In particular, a former rule of thumb that the payee (usually the wife) should receive in total one-third of the parties' joint assets, has been largely abandoned and hardly ever features in modern judgements. Such a rule has always been inappropriate where the parties are very rich or very poor.

 

F v F (Ancillary relief: substantial assets) [1995] 2 FLR 45, Thorpe J
At the time of his divorce, H's personal assets were around £200m; he offered £75k per annum as maintenance pending suit, and a lump sum of £1.5m as final settlement. W sought £500k per annum pending suit and a £9m lump sum; the judge awarded her £360k per annum and (in due course) the lump sum she asked for. The parties' prenuptial agreement (under which W would have got much less) was disregarded in view of H's wealth.

 

Dart v Dart [1996] 2 FLR 286, CA
On her divorce from an American multi-millionaire, the English court awarded W a house in the USA together with a lump sum of £9m. W appealed and sought £120m as an appropriate proportion of their joint assets, but her appeal failed. Where W has made no direct contribution to H's wealth, said the court, there is no justification for applying a purely mathematical test: the correct test, applied by the judge, is what she reasonably requires.

 

Burgess v Burgess [1996] 2 FLR 34, CA
A solicitor H and a doctor W were partners in their respective firms; on their divorce the judge ordered a "clean break" based on a 50/50 division of their assets. The Court of Appeal affirmed the order: had the judge regarded equal division as a rigid rule she would have been wrong, but it was clear from her detailed judgment that she had taken it only as a starting point and would have been willing to modify it if appropriate.

 

Conran v Conran [1997] 2 FLR 615, Wilson J
During a 30-year marriage, W had raised three children (and two step-children by H's previous marriage), as well as supporting H in his creation of the Habitat retail chain. On divorce, the judge considered W's "reasonable requirements", then took account of W's contribution to the family and to the creation of the joint resources, and awarded her £6.2m (to be added to her existing assets of £4.3m) out of H's total assets of about £80m.

 

White v White (2000) Times 31/10/00, HL
H and W divorced after 34 years with combined assets of some £4£m, mainly in the farms (one owned jointly, the other by H alone) that they had run together. The trial judge, taking account of W's "reasonable needs", awarded her just under £1m, but the Court of Appeal, taking greater account of W's contribution over the years, increased that to £1£m. Dismissing appeals by both H and W, Lord Nicholls said a judge exercising his statutory discretion under s.25 should check his tentative views against a yardstick of equal provision, departing from that if and only if there are good reasons for so doing.

 

Welfare of any child

Under s.25(1), the welfare of any child under 18 is the first consideration, and this often results in an order for periodical payments not only for the benefit of the children but also for the maintenance of the parent (usually the mother) responsible for looking after them. It is not the paramount consideration, however, and the court may decide that in an individual case other considerations carry more weight.

 

M v B (Ancillary proceedings: lump sum) (1997) Times 15/10/97, CA
Varying the judge's order for a lump sump payment, Thorpe LJ said it is a paramount consideration when granting financial relief, particularly where there are children involved, to try to stretch the available capital so as to allow each of the parties to maintain a home of his or her own. The primary carer obviously needs to be able to make a home for herself and the children, but the other parent should also have a home in which the children can enjoy their contact time with him.

 

Waterman v Waterman [1989] 1 FLR 380, CA
The facts are set out below. The Court of Appeal quashed an order that would have prohibited W's seeking any extension of five years' periodical payments. Their child (for whom W was responsible) would then be ten, and a 10-year-old child still needs care that might limit the kinds of work W could obtain.

 

E v E (Financial provision) [1990] 2 FLR 233, Ewbank J
Some ten years after H and W married, H's wealthy father F made funds available for them (including funds to buy a house) by means of a discretionary trust over which F retained substantial control. H and W divorced because of W's adultery, the children remaining with H, but W sought financial provision. The judge ordered H to pay W £200k as a lump sum, and ordered further that £250k be removed from the trust, £50k for W absolutely and the other £200k to be held for her (by new trustees independent of F) on a life interest. W's children, he said, being the grandchildren of a rich man, should not see their mother in straitened circumstances.

 

Camm v Camm (1982) 4 FLR 577, CA
The facts of this case are described below. Ordering H to pay W periodical payments of £4000 per annum, Sir Roger Ormrod said is was not desirable for the children that their parents should have such totally different standards of living as they would have had under the judge's original order.

 

 

Resources and earning capacity

In considering the income and other financial resources of the parties, the court can take into account potential or notional earning capacity where this is appropriate. A spouse cannot therefore reduce his liability (or increase his needs) by becoming intentionally unemployed or by taking a job at a much lower rate of pay than might reasonably be expected. In any case, the word "resources" is unqualified, and all kinds of financial resources can be taken into consideration.

 

Schuller v Schuller [1990] 2 FLR 193, CA
H and W divorced after a long marriage; H remained in the former matrimonial home while W went to work for an elderly friend. When the friend died, W acquired her flat but argued this "after-acquired asset" should not be taken into account in making ancillary provision. The Court of Appeal disagreed: it was a relevant asset, and if H paid W £8500 there could be a "clean break" on a basis of equal division.

 

Michael v Michael [1986] 2 FLR 389, CA
H appealed unsuccessfully against the judge's refusal to take account of property that W was expected to inherit under her mother's will. The Court of Appeal said expectations of this kind are in principle relevant, but in the instant case the expectation was too uncertain, both in its fact and in its timing, to influence the provision ordered.

 

MT v MT (Financial provision: Lump sum) [1992] 1 FLR 362, Bracewell J
The facts are given above. The judge adjourned W's application for a lump sum in order that the court might take into account a substantial inheritance likely to fall to H on the death of his wealthy father, then 83 and in poor health.

 

Browne v Browne [1989] 1 FLR 291, CA
W was the daughter and granddaughter of wealthy women, and on their divorce H sought financial provision. Wood J found as a fact that W had access to substantial discretionary trusts, whose trustees in practice always acceded to W's wishes. He therefore ordered W to pay H a lump sum of £175k, taking the trust funds into account among W's assets even though she did not legally own them. The Court of Appeal dismissed W's appeal and said this was the correct approach.

 

 
Newton v Newton [1990] 1 FLR 33, CA
H appealed unsuccessfully against an order that he pay W a lump sum of £750k from his substantial business. W was 56 and in poor health; there was no reasonable prospect of her becoming self-supporting.

 

Leadbeater v Leadbeater [1985] FLR 789, Balcombe J
H and W divorced after four years' marriage; both had been married before. W was now 47, and although she had some work experience as a secretary, her unfamiliarity with modern office technology left her unqualified for a well-paid job. At the time of ancillary proceedings, H's assets were about £250k and W's about £80k; the judge ordered H to pay W a lump sum of £37.5k having regard to W's earning capacity and the standard of living she had enjoyed before the breakdown, but taking account of the short duration of the marriage.

 

Hardy v Hardy (1981) 2 FLR 321, CA
H and W divorced, and W lived on social security with their two children. H had a wealthy father who employed H in his racing stables at £70 per week, but it was understood that H would take over the business when his father retired. The judge ordered H to pay W £30 a week for herself and the two children, but the Court of Appeal increased this sum to £50 per week, H's earning capacity being considerably in excess of what he was actually receiving. H had accepted a low wage because he liked working for his father, said Ormrod LJ, but the court could see no reason why he should enjoy this privilege at the expense of W and the children. However, as H would not have any capital resources in the foreseeable future, W's application for a lump sum order was dismissed.
Re L (Minors: financial provision) (1979) 1 FLR 39, Dunn J
The magistrates ordered W to pay child maintenance to H, who had been given custody of the children, at £4 per week per child, expressly taking account of the earnings of the man with whom W was now living. Allowing W's appeal, the judge said this was wrong in principle: W herself (who worked as a caretaker but received no pay) had no means of her own, and no award should have been made.

 

Macey v Macey (1982) 3 FLR 7, Wood J
Following their divorce, H went to live with another woman X while W remained in the matrimonial home with their children. H paid the mortgage repayments and insurance on W's home, together with a sum for maintenance, but H's standard of living remained well above W's largely because X was herself earning. On W's application, the magistrates increased the maintenance order to take account of X's earnings, and H appealed. Allowing his appeal in part, the judge said the Act requires the court to take into account the resources of the parties to the marriage, not those of third parties such as second wives or cohabitees. However, X's income relieved H of expenditure he would otherwise have incurred, and so made a greater proportion of his income available for the payment of maintenance.

 

The parties' reasonable needs

The court must take into account the reasonable needs of the parties, and of children where it is considering an order for their benefit. Even where the proposed order is in favour of the husband or wife, the needs of the children may be relevant insofar as that party is responsible for their continued support, and this may include children not related to the party required to pay.

 

Stockford v Stockford (1982) 3 FLR 58, CA
On W's application for an increase in her periodical payments, the judge found as a fact that if the application were granted, H's remaining income would fall below subsistence level. H's capital was still tied up in the former matrimonial home now occupied by W, so that he had heavy mortgage repayments on the home he had bought for his new family. H's obligations to his second family had to be balanced against his obligations to his first wife, and W's application (and her subsequent appeal) therefore failed.

 

Slater v Slater (1982) 3 FLR 364, CA
Following divorce, W sought financial provision for herself and her children. H and his new wife now lived in Kent but worked in London, and the question was whether their heavy commuting expenses were "reasonable needs": the judge decided they were not and awarded periodical payments of £1900 per annum. Allowing H's appeal in part, the Court of Appeal said the husband's travelling expenses were indeed unreasonable; however, the judge had failed to take account of W's single-parent benefit and the payments should therefore be reduced to £1500 per annum.

 

Fisher v Fisher [1989] 1 FLR 423, CA
Following their divorce, H was ordered to pay W a lump sum of £50k together with maintenance of £5600 a year for herself and £1400 a year for their son. W subsequently had a second child by another man and applied for an increase in the maintenance order. The judge granted W's application and H's appeal was dismissed: W's earning capacity had been reduced by the birth of the new baby, said Purchas LJ, and there was nothing in the 1973 Act to restrict the court's discretion to vary the order so long as all relevant factors were taken into account.

 

Delaney v Delaney [1990] 2 FLR 457, CA
After divorce, W applied for financial provision for herself and the three children of the marriage. W lived in the former matrimonial home with the children, while H lived with another woman X in a one-bedroomed flat. H and X entered a scheme to purchase a three-bedroomed house in order that the children would be able to visit them from time to time; this left very little surplus even from their combined incomes. The registrar ordered H to pay £10 a week for each child (and a nominal amount to W), and the judge affirmed this order. Allowing H's appeal and substituting 5p per annum for each child, Ward J said a former husband can balance his obligations to his former family against his aspirations for a new life. In the instant case, H was entitled to have suitable accommodation for staying in contact with his children, and the purchase was not extravagant or unreasonable expenditure. The court would avoid making orders which were financially crippling to H, and social security benefits were available to W to make up her shortfall.

 

Conran v Conran [1997] 2 FLR 615, Wilson J
See above. The judge first considered W's "reasonable requirements", then took account of her contribution to the family and to the creation of their joint resources, before awarding her £6.2m out of H's total assets of about £80m.

 

Standard of living

The court must consider the standard of living enjoyed by the parties before the divorce, but unless they are very wealthy it is usually impossible to maintain this standard for either party.

 

Attar v Attar (No.2) [1985] FLR 653, Booth J
An air hostess W married a wealthy Saudi businessman H, but the marriage lasted only 6 months (less than 2 months of which they spent together) before H ended it by a talaq divorce. On W's application for financial provision, the judge said it would not be appropriate to give her the sum needed to maintain the opulent life style into which she had married. Bearing in mind the very short duration of the marriage, and W's ability to support herself, a lump sum of £20k would be enough to see her through the period of re-adjustment.

 

Ages and duration of the marriage

The court must also consider the age of each party and the duration of the marriage. A young ex-wife without children will normally be expected to find a job through which she can support herself, whereas an older woman with no career history or with small children to care for may need a substantial sum in maintenance. In considering the duration of the marriage the court normally ignores any period of cohabitation before the marriage proper, though there are some isolated exceptions.
 
C v C (Financial relief: short marriage) [1997] 2 FLR 26, CA
A wealthy businessman H met a high-class prostitute W; they married, had a child C, and separated after nine months. In ancillary proceedings on divorce, the judge ordered a lump sum payment of £195k to W (in return for her agreement to vacate the matrimonial home), together with annual payments of £19£k for W and £8k for C. H's appeal failed; Ward LJ said this was an unusual case, but a short marriage doesn't necessarily limit an award, and although the award was high it was within the bounds of reasonableness. The absence of a time limit was justified by W's uncertain career prospects, and H could always seek a variation in future.

 

S v S (Financial provision) [1994] 2 FLR 228, Douglas Brown J
When H and W divorced, it was agreed that H should remain in the matrimonial home with the children until the youngest (then aged 8) reached 18, after which the home should be sold and the proceeds split in equal shares. W returned a month later and resumed her duties as wife and mother, but H and W never formally remarried. When they separated again 16 years later (having in the mean time sold that house and bought a new one in their joint names) the question was how the property issue should now be resolved in view of the fact that H now had liquid assets of nearly ££m as well as the house. The judge granted leave to appeal out of time against the original order, which had clearly been overtaken by circumstances, and granted W's application for a further lump sum.

 

Disabilities

The court must take into account any physical or mental disability of either party: this has proved fairly straightforward in application and presents no significant legal problems.

 

Contributions to the family

The court must also consider the contribution which each party has made or is likely to make in the foreseeable future to the welfare of the family, including any contribution made by looking after the home and/or caring for the family. This is an area in which cohabitants are treated quite differently from married people: a cohabitant who looks after the home and brings up the children very rarely acquires any beneficial interest in the joint home by so doing.
 
Vicary v Vicary [1992] 2 FLR 271, CA
H and W had five children, including W's two daughters by a previous marriage. W did not contribute directly to H's business, but was an excellent wife and mother. When the marriage broke down because of H's adultery, W left the matrimonial home with the youngest child and H bought a house for them to live in. A consent order for further financial provision was subsequently set aside because H had not made full disclosure of his assets, and the judge ordered H to pay W a lump sum of ££m. W's unimpeached contribution in the home had enabled H to work hard, prosper and accumulate his wealth, he said, and she was entitled to share in the result. H's appeal was dismissed.

 

Conduct of the parties

A remnant of the "matrimonial offence" concept is retained in the requirement that the court should consider the conduct of each of the parties, if that conduct is such that it would be inequitable to disregard it. Only conduct of an extreme kind is normally considered, however: the aim is not to apportion blame for the breakdown of the marriage but simply to ensure that the outcome is not clearly unfair or absurd.
 
H v H (Financial provision: conduct) [1994] 2 FLR 801, Thorpe J
H seriously assaulted and attempted to rape W, as a result of which W spent some time in hospital and H was sent to prison. On W's application for financial provision on divorce, the judge said the assault was clearly a relevant factor (as was the fact that H had lost his job and could no longer support W and their child to the same standard). He ordered the transfer to W of H's half-share in the matrimonial home, but no periodical payments.

 

Bailey v Tolliday (1983) 4 FLR 542, Waite J
H was 19 and W was 25 when they married, but W soon began a clandestine affair with H's 59-year-old father F. W had one child already by a previous relationship, but subsequently had another by H and a third by F, who died soon afterwards. When the marriage broke down after five years, W (who was responsible for the three children) sought financial provision. The only substantial asset was the home, for which W had provided the initial deposit. The judge said his initial thought was to split the value of the home 60-40 in W's favour, but in view of her conduct he would split 30-70 in favour of H. W should be allowed to live in the house until she died or remarried or the youngest child reached 18, but H should then have a charge on the property entitling him to 70 per cent of the net sale price.

 

Evans v Evans [1989] 1 FLR 351, CA
H and W were divorced in 1953, but in 1985 W was convicted of inciting contract killers to murder H and was sentenced to four years' imprisonment. H applied for his periodical payments to be terminated, andf W counterclaimed for them to be increased. The judge granted H's application and rejected W's, and the Court of Appeal agreed. The court would be losing touch with reality, said Balcombe LJ, if it were to condemn a man who had faithfully paid maintenance for some 35 years to continue making payments to a wife who had solicited others to murder him.

 

L v L [1993] Fam Law 471, Thorpe J
H and W had formerly enjoyed an affluent lifestyle, but ran into financial difficulties because of H's gambling and unwise business investments, and recovered only when W took over the management of their money. On divorce, the judge said H's gambling and financial mismanagement must be regarded as conduct relevant to the financial provision to be made; conversely, W's prudent management was also relevant both as conduct and as a contribution to the family. But the main factor was the parties' needs, and he made a lump sum order accordingly.

 

K v K [1990] 2 FLR 225, Scott Baker J
H had a serious alcohol problem coupled with a personality disorder; he had not worked for eight years and (since the breakdown of his marriage) had been in temporary accommodation and reliant on welfare benefits. W, on the other hand, had tried hard to improve her financial position since the separation, and now had a steady job and a flat bought with help from relatives. The matrimonial home had been sold by the mortgagee, leaving combined assets of about £100k. The judge said the parties' conduct must be taken into account: H's needs were clearly greater than W's, so he should get more than half but "not very much more". He ordered a 60-40 split and a clean break.

 

Primavera v Primavera [1992] 1 FLR 16, CA
Shortly after her divorce from H, W inherited a house under her mother's will. Her mother had previously expressed a wish that the value of the house should be split between W and her two daughters, and W gave effect to this wish even though not legally bound to do so. In financial proceedings arising from the divorce, H argued that W's conduct in thus disposing of a valuable asset should be taken into account, but the judge disagreed and H's appeal failed. W's conduct was relevant but not unreasonable in the circumstances, and H was a man of substantial wealth.

 

Bateman v Bateman [1979] Fam 25, Purchas J
During their 15-year marriage, H and W lived mainly abroad because of H's work as an engineer. H subsequently obtained a decree nisi on the basis of five years' separation, and W sought financial provision. The judge said that although W's violence and other conduct towards H had substantially contributed to the breakdown of the marriage, she had made a valuable contribution by bringing up the children in the earlier years and she should get some provision. He ordered that she be allowed to live in the matrimonial home until she died or remarried, and then receive one-quarter of the proceeds of sale.

 

Leadbeater v Leadbeater [1985] FLR 789, Balcombe J
H and W, both in their forties and both previously married, divorced after four years. H had refused to accept W's son into the household, but had brought in a 16-year-old friend of his stepdaughter and had an affair with her; W had a long-standing drinking problem and had also had several affairs with other men. The judge said it would not be inequitable in this case to disregard the conduct of the parties in making financial provision: both H and W seemed equally to blame for the breakdown of the marriage.

 

Pension rights

In cases of divorce or nullity, the court must also consider the extent to which either party may lose an entitlement to a pension, insurance policy or other future benefit. (A judicial separation would be unlikely to affect any such benefit.) This requirement is strengthened by ss.25B-25D of the Matrimonial Causes Act 1973, inserted by the Pensions Act 1995 and replacing s.25(2)(h). Since July 1996, where either party has or is likely to have any benefit under a pension scheme the court must consider what order should be made in relation to that scheme.

There are basically four possibilities:

 

  • The court may compensate for the loss of pension rights by adjusting the lump sum and/or periodical payments order accordingly.

     

  • If the pension scheme can be regarded as a post-nuptial settlement, the court may exercise its powers to vary such a settlement as in Brooks v Brooks below.

     

  • The court has powers under the new statutory provisions to direct the trustees or managers of an occupational or personal pension scheme to make lump sum or periodical payments to the former spouse, though such orders cannot take effect until the pension is payable (i.e. when the holder reaches the specified age and/or retires from work). The court can also require the pension holder to exercise in favour of the former spouse any right of nomination over a lump sum payable on death.

     

  • Under s.16 of the Family Law Act 1996 (which may not be implemented for several years) the court will have powers to make a "pension adjustment order" increasing the pension rights of one party at the expense of the other, but the details have not yet been settled.

     

 

 


 

THE "CLEAN BREAK" IDEAL

The Law Commission recommended in 1982 that greater weight should be given to a divorced wife's own earning potential and to the desirability of both parties' becoming financially independent after divorce, where this is possible. Their proposals were enacted in the Matrimonial and Family Proceedings Act 1984 and are now contained mainly in s.25A of the Matrimonial Causes Act 1973.

This section imposes a duty on the court considering a financial support or property adjustment order in favour of a former spouse to consider whether it would be appropriate to exercise its powers in such a way that the financial obligations of each party towards the other will be terminated as soon as the court considers just and reasonable. The section applies in cases of divorce or nullity, but not judicial separation, and has no application to orders made for the benefit of any children. Section 25A(2) refers specifically to periodical payments and the court's power to order that these be for a fixed term, and s.25A(3) allows the court dismissing an application for periodical payments to direct that no further application be entertained.

 

Seaton v Seaton [1986] 2 FLR 398, CA
Because of H's drinking problems W carried the financial burdens of the marriage; eventually W went to live with another man X and H sought a divorce. H then had a stroke, leaving him seriously disabled and having no prospect of recovery, and went to live with his parents who cared for him. The Registrar dismissed H's application for periodical payments and made a direction under s.25A(3) precluding any further application. The Court of Appeal upheld the order: in the circumstances it would be unjust to make W go on supporting H indefinitely.

 

The 1984 amendments also inserted into the Inheritance (Provision for Family and Dependants) Act 1975 a new s.15(1), allowing the court to make an order prohibiting one party to a dissolved marriage from making application for "reasonable financial provision" following the other's death.

In practice the "clean break" is easily accomplished only where the parties have substantial capital assets, and the legislation itself imposes only a limited duty. The court is required only to consider whether a clean break would be appropriate, and there is no presumption in favour of such an order even where it would be practicable. There is a powerful trend towards lump sum and property transfer orders in preference to periodical payments, however, and in 1996 the County Courts made some 30 000 lump sum and property transfer orders and 6000 fixed-term periodical payments orders, compared with only 5000 orders for periodical payments to a spouse until further order. (A further 9000 orders were made for periodical payments for the benefit of a child or children, who are not subject to a "clean break" in any case.)

 

B v B (Financial provision) [1990] 1 FLR 20, Ward J
During a thirty-year marriage H and W had lived with their four children in a large country house on H's family estate. On divorce, they accepted the "clean break" principle and the judge ordered a lump sum payment of £570k so that W could buy a new house and establish a capital fund to provide her with a regular income.

 

Fisher v Fisher [1989] 1 FLR 423, CA
The facts are set out above. H sought the termination of maintenance payments to W, arguing for a clean break and the irrelevance of W's subsequently having had a child by another man. Dismissing H's claim, the Court of Appeal said a judge can order a clean break only where it is appropriate to do so, and the birth of the child (whether or not by W's own choice) was a relevant circumstance that he would have been wrong to ignore.

 

C v C (Financial provision) [1989] 1 FLR 11, Ewbank J
H and W divorced (somewhat acrimoniously) after twenty years' marriage and W sought financial provision. The judge said W should take just over half the combined family capital of £1m, but limited her periodical payments to £10k a year for three years and £5k a year for a further two years, by which time the younger child would be 18. He said the idea of periodical payments for life for a young or youngish wife (W was then 44 and had significant earning potential) with substantial capital is largely obsolescent.

 

Hedges v Hedges [1991] 1 FLR 196, CA
H and W, both aged about 40, divorced without children after less than five years. H remained in the former matrimonial home, which was owned by his employers, while W moved into other rented accommodation. H had £5k in capital and an income of about £20k per year, while W earned about £8k. The judge ordered H to make a lump sum payment of £2500 to compensate W for the loss of a widow's pension, and to pay maintenance of £200 per month for a limited period of 18 months. W's appeal failed: the purpose of the "clean break" legislation, said Mustill LJ, is to discourage maintenance colloquially known as "meal tickets for life" in cases of short marriages with no children. There was no reason to give W any more than the judge had ordered, namely, provision to keep her afloat until she was able to move into better paid permanent work.

 

Waterman v Waterman [1989] 1 FLR 380, CA
H and W cohabited for about 16 months before marriage, but the marriage broke down 17 months later. By the time of the proceedings they had a 5-year-old child C, living with W. H was ordered to pay maintenance for C; he was also ordered to pay a lump sum and maintenance to W for five years, the period not to be extended. The Court of Appeal allowed W's appeal in part, removing the prohibition on her applying for an extension, but refused to alter the order itself. The judge had taken the view that by the time C was ten W (a trained secretary) should reasonably be able to obtain employment; this was not "plainly wrong" and so should not be disturbed.

 

Morris v Morris [1985] FLR 1176, CA
When H and W divorced an order for periodical payments was made, and the amount was subsequently increased. The judge allowed H's appeal and ordered that payments cease when H (then aged 60) stopped work or reached 65. Allowing W's appeal and restoring the original order, the Court of Appeal said W (then 56, with a limited income) would not be able to adjust without undue hardship to any cessation of the payments. In this instance a clean break would not be appropriate.

 

M v M (Financial provision) [1987] 2 FLR 1, Heilbron J
H and W divorced after twenty years. H (who had a well-paid job and substantial assets) was willing to pay maintenance to W (now 47, who had spent most of her time bringing up their child), but argued that it should be for five years only in accordance with the "clean break" principle. The judge rejected his claim and ordered that the agreed payments continue "until further order". Termination after five years would be inappropriate and unjust, she said, because W's age and limited work experience would limit her earning capacity. W was entitled to financial provision that would maintain her comfortable standard of living.

 

Barrett v Barrett [1988] 2 FLR 516, CA
On divorce after 15 years' marriage, H appealed against an order that he pay W £25 per week until death, remarriage or further order. The judge allowed his appeal and set a fixed term of 4 years, predicting that W would have found a job in that time, but the Court of Appeal restored the original order. W was now 44, and had had no chance to build a career because of her family commitments: it was impossible to say if and when she would be able to find a suitable job.

 

Ashley v Blackman [1988] 2 FLR 278, Waite J
H and W each sought to vary a consent order for periodical payments by H to W; W was in receipt of various welfare benefits that would be increased or decreased to compensate for any change in H's contributions. The judge allowed H's application to stop the periodical payments: this would cause no hardship to W, so a clean break could be implemented with no need for any adjustment period.

 

The matrimonial home

For most divorcing couples, the matrimonial home is their most valuable capital asset. There is often disagreement as to its disposition: one party may want to remain living in the home (with the children, if there are any), while the other may want to see it sold and part of the proceeds made available to set up another home with a new partner. The court has various orders available for the resolution of such disputes, bearing in mind its powers under s.24A of the Matrimonial Causes Act 1973 to order the sale of the property if it thinks it appropriate. Most of these options leave the transferor without realisable capital, however, and so are normally appropriate only where other resources are available.

First, the court can order that the home be sold immediately and the proceeds divided between the parties in such proportions as it thinks right. If this will produce sufficient capital to allow both parties to find new accommodation suitable to their needs (and the needs of the children, if appropriate), it offers the possibility of a clean break, particularly if the surplus allows a lump sum to replace periodical maintenance. This situation is rare, however: few couples have sufficient equity in their home to make it a practical proposition.

 

R v R [1994] 2 FLR 1044, Brown P
H moved out to set up a new home with another woman X, while W remained in the matrimonial home. On divorce, H argued that the matrimonial home should be sold and the proceeds divided, the house being much larger than W now needed. The judge said W's wish to remain was not unreasonable, and refused to make an order for sale: he ordered that the house (worth some £1£m) be transferred to her along with a lump sum of ££m out of H's total assets of about £10m.

 

Second, the court can order one party to transfer her or her interest in the matrimonial home to the other, with or without a compensatory cash payment by the transferee. Alternatively, the court may order the transfer subject to a legal charge in favour of the transferor, convertible into cash when the home is sold at some later date.


Third, the court can make what is known as a Mesher order. This creates a trust for sale in favour of both parties (in such proportions as the court may decide), but with sale postponed until a specified event occurs. The event may be the youngest child reaching 18, or leaving full-time education, for example, or the occupant's remarriage. Such orders were quite common in the late 1970s and early 1980s but are rarely made today, largely because (as property adjustment orders) they cannot subsequently be varied if circumstances change.

 

 

 


 

PRIVATE AGREEMENTS

In an ideal world, it would not be necessary for the court to impose financial provision or property transfer orders at all: the parties would be able to make their own arrangements with much less bitterness and expense. The law encourages this, and it is pleasing to note that many parties do in fact reach private agreements without litigation. However, the court retains a supervisory role and can set aside agreements that it considers grossly unfair or contrary to public policy.

 

Camm v Camm (1982) 4 FLR 577, CA
When H and W separated, H indicated his willingness to provide a house for W and pay maintenance for their children, but steadfastly refused to agree to maintenance for W herself. W eventually told her solicitor that she would accept H's proposal: she was feeling the strain and her main concern was for the children. W's solicitor did not advise against this, and a private agreement was made in those terms. Four years later W (now advised by a different solicitor) applied to the court for a periodical payments order: the judge set aside the private agreement and made an order, but limited it to £900 per annum because of W's original agreement and her delay in making application. Allowing W's appeal and dismissing H's cross-appeal that the agreement be allowed to stand, the Court of Appeal distinguished Edgar and substituted an order for £4000 per annum. W had made the agreement under great pressure, said Sir Roger Ormrod, and should not be held to it.

 

F v F (Ancillary relief: substantial assets) [1995] 2 FLR 45, Thorpe J
The fact that the parties had made a prenuptial agreement that W (then a lawyer) would receive maintenance equivalent to a German judge's pension, said Thorpe J, should be disregarded in view of H's wealth.

 

S v S (Staying proceedings) [1997] 2 FLR 100, Wilson J
A very wealthy couple agreed in a prenuptial contract that any divorce would come under the jurisdiction of the courts of New York (where the couple had a home). When W subsequently brought divorce proceedings in an English court (where she was then living), H applied to stay the proceedings and the judge agreed that in this instance the prior agreement should be enforced.

 

Agreements as to financial and property matters, reached between the parties on divorce, are normally incorporated into formal consent orders, more easily enforceable and carrying certain tax advantages. In 1995 the county courts made as many consent orders as they imposed without the parties' consent. Under s.33A(1) of the 1973 Act, the court on receiving certain specified information from the parties may make an order on the agreed terms (within the scope of ss.23-24A) unless it has reason to think there are other circumstances into which it ought to enquire. Similarly, s.33(2) allows the court to vary an existing order with the consent of the parties.

 

Chaudhuri v Chaudhuri [1992] 2 FLR 73, CA
A "clean break" order awarded W the former matrimonial home as a home for herself and the children. When she remarried and moved in with her new husband X some 14 months later, H sought leave to appeal out of time against the original order. Leave was refused: the order had expressly taken account of the possibility of W's remarriage, and her non-disclosure of thte fact that she had already opened a joiunt bank account with X, although deceitful, was not sufficiently serious to justify upsetting the order.

 

 


 

CHANGE OF CIRCUMSTANCES

It quite often happens that after an order for ancillary relief has been made, the circumstances of one party (or of both parties) change in such a way that a change in provision may be appropriate. In this event, there are three ways in which a change can (sometimes) be made.

 

  • The original order may be varied, using the court's powers under s.31 of the Matrimonial Causes Act 1973. This is impossible in relation to property transfer and lump sum orders (except in relation to lump sums payable by instalments), but can be done with maintenance pending suit or (more commonly) with periodical payments. The court looks again at the whole situation, not just at the circumstances that have changed, and makes its decision accordingly.

     

    Flavell v Flavell [1997] 1 FLR 353, CA
    Following divorce, an order was made for two years' periodical payments to W. W later applied for a variation, and the judge extended the order indefinitely. H's appeal was dismissed: Ward LJ said the jurisdiction to vary does not depend on an exceptional or even a material change in circumstances. Obiter, it is not usually appropriate to terminate periodical payments for a woman in her mid-50s unless she has substantial capital and significant earning capacity.

     

  • The dissatisfied party may lodge an appeal against the original order, or (where no appeal was lodged within five working days of the original order) seek leave to appeal out of time. Leave is unlikely to be granted unless there has been a significant change in the value of property included in the order, or one of the parties to the order has remarried or died unexpectedly shortly after the order was made.

     

     
    Hope-Smith v Hope-Smith [1989] 2 FLR 56, CA
    When H and W divorced, an order was made that H pay W a sum of £32k out of the proceeds of sale of the matrimonial home, then valued at £120k but subject to a mortgage of about £30k. H delayed in selling the house, and when it was actually sold it its value had risen to £200k. Two years after the original order W sought leave to appeal against it, and the Court of Appeal (applying the Barder principles) granted leave and substituted an order that W receive 40 per cent of the net proceeds of sale.

     

    Barber v Barber [1993] 1 FLR 476, CA
    At the time of divorce W was already ill and had a life expectancy of about five years; in fact she died only three months later. The Court granted H's application for leave to appeal out of time against the financial provision order: W's death had nullified the whole basis of the order, which had been designed to give W sufficient capital to obtain accommodation in which the children (normally resident with H) could visit her from time to time.

     

    S v S (Financial provision) [1994] 2 FLR 228, Douglas Brown J
    Shortly after their divorce, W returned to H and resumed her duties as wife and mother, but H and W never formally remarried. When they separated again, the judge granted leave to appeal out of time against the original order, which (he said) had clearly been overtaken by circumstances.

     

  • The dissatisfied party may seek to have the original order set aside, either impugning its validity by reference to some factor which existed at the time it was made (e.g. duress, fraud, non-disclosure or mistake), or because some unforeseen event (such as a death in the family) has invalidated the basis on which it was made. In Barder v Barder (above) an application for leave to appeal out of time was coupled with an application to set the order aside, but applications to set aside are probably most common where a consent order is allegedly vitiated by non-disclosure.
     
When making orders for financial provision or property adjustment, either initially or on a subsequent application for variation, the court takes account of the fact (if it is the case) that a party has married or is cohabiting with a new partner. The assets and income of the new partner are irrelevant in relation to the parties' financial resources (see Macey v Macey at page 75 above), but they may be relevant in determining the parties' needs.

 

Duxbury v Duxbury [1987] 1 FLR 7, CA
H and W enjoyed a wealthy lifestyle during 22 years of marriage. When they divorced, the judge sought to achieve a clean break and ordered H to pay W a lump sum of £60k in addition to the matrimonial home. H appealed, arguing that so large a sum would benefit not only W but the man she was now living with. His appeal failed: it was common ground between the parties that their conduct was not to be considered, and H was a millionaire who could easily afford to meet the payment.

 

Periodical payments automatically come to an end if the recipient remarries, but not if he or she enters into cohabitation. This distinction has been attacked as providing a strong disincentive to marry, though a settled decision not to remarry so as to avoid loss of maintenance might well be "conduct that it would be inequitable for the court to disregard".

 

 


 

ENFORCEMENT PROCEDURES

A court order for the payment of a lump sum or periodical payments can be enforced by the ordinary civil enforcement procedures, including:
a writ of execution, authorising the bailiff or sheriff to seize goods to the value required;
garnishee proceedings to obtain the money directly from the payer's bank or building society;
attachment of earnings to obtain periodical payments by deduction at source;
a charging order imposing a charge on the payer's house or other capital asset; or
a judgement summons backed by a threat of imprisonment for non-compliance.

The court can also make an order under s.24A of the 1973 Act (at the time of the original order or later) for the sale of property, the proceeds of which can be used to make a lump sum payment, and the district judge can execute the necessary conveyance or other transfer document if the payer refuses to do so.

An order for periodical payments can be registered in the magistrates' court, either at the time of the order or later. The payer must then make the payments to the court rather than to the payee directly; the justices' clerk keeps a record of the payments and the magistrates can commit the "payer" to prison if he defaults. There is no problem, of course, if the order is for secured periodical payments: the trustees (who it is assumed are reliable!) will make the payments from the lodged capital as required.

If there is a fear that one party will try to defeat the other's claim for ancillary relief by disposing of assets (e.g. by selling them or giving them away or sending them abroad), the applicant can seek a Mareva injunction and/or an injunction under s.37 of the 1973 Act. Under the latter provision, a court which is satisfied that a party has disposed of (or intends to dispose of) any property with the intention of defeating the other's claim for financial relief can make an order setting aside or prohibiting the disposition. Any disposition made within three years before the application, or after the application, is presumed to have been made with this intention unless the contrary is shown, but there is an exception preserving the rights of a third party who has acquired property in good faith for valuable consideration other than marriage.

 

Roche v Roche [1981] Fam Law 243, CA
H was due to receive substantial damages following a serious accident. W intended to apply for a lump sum following their divorce, and sought an injunction under s.37 to restrain H from disposing of a quarter of his damages in the mean time. The judge granted such an injunction and H's appeal was dismissed. The restraint would cause no hardship to H, said Ormrod LJ: he would still be able to spend the other three-quarters of the damages in the mean time.

 

Shipman v Shipman [1991] 1 FLR 250, Anthony Lincoln J
W intended to seek financial provision on her divorce from H, who was working in America and was due to receive at least $£m as severance pay when his job ended. The registrar made an order under s.37 restraining H from disposing of half the money, and H appealed. The judge said a s.37 order was not appropriate, because there was no evidence that H had any intention to dispose of the money to defeat a claim for ancillary relief, but granted a Mareva-type injunction in the inherent jurisdiction of the High Court.

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