Monday, November 30, 2015

Cohabitation Break Up and the Division of Property

Cohabitation law is very different from matrimonial finances. Upon divorce a husband or wife has a claim against the assets and/or income of their separating spouse and the division of the matrimonial pot is decided on the basis of what is fair taking into account the factors for consideration via statute.

With regards to cohabitation law when unmarried couples separate their assets are divided according to land law. Historically this has appeared very unfair to the weaker earning party and some people can live and share a life for many years with their partner and receive no financial settlement if they have made no financial contribution.

Where properties are held in joint names the court has been required to consider the parties intention as to division and whether that intention changed over the years. This is where matters become more complex. A starting position of 50-50 can change due to an express intention. That is the parties have written documentation confirming they wish the share to be altered or an inferred intention. It is then for the court to decide whether the parties intended to depart from equality despite there being no documentation to support this.

Each case will be decided upon its own facts.

A recent Court of Appeal case had to consider whether there was a common intention to vary the beneficial interest, whether the shares which the judge  decided - 85%/15% were wrong and whether non payment of child maintenance payments was relevant to the calculation.

On the facts of this case Mr Phillips had taken 25% of the net equity and used it for his own purposes and post separation from 2008 onwards had made no contribution towards the mortgage. The court concluded that it would only have been acceptable for him to do this if a joint intention as to a change in the beneficial share was made.

The appeal was dismissed on all 3 grounds and it was held:
I consider that, in principle, it should be open to a court to take account of financial contributions to the maintenance of children (or lack of them) as part of the financial history of the parties save in circumstances where it is clear that to do so would result in double liability. 
 — Barnes v Phillips [2015] EWCA Civ 1056, [41]    

This is more a move towards fairness which is the bedrock of judicial discretion in matrimonial finances. 

The case of Stack v Dowden gives judges a wide discretion in taking into account any factors when assessing the “whole course of dealing in relation to the property”. Child maintenance and non payment there of has now fallen within that net. 

This is a welcome move but makes it more difficult to predict the outcome of cases.

Friday, November 20, 2015

Divorce without pain in celebrity land

The fashion in celebrity land appears to be a quiet divorce and continuation of family life . After the media storm of the McCartney break up who even remembers Madonna's divorce? That headline grabbing media magnet managed to get divorced and quietly move on.  How clever is she? I submit that she is unique in this regard.

The uncoupling fashioned by Gwyneth Paltrow et al offers a new landscape where couples spend time together post divorce in what appears happy families doing what families who are still legally and emotionally intact do. This all reminds me of Stepford Wives. Let's pretend we are having fun for the sake of the children, our reputation or to exhibit our exemplary emotional control, self sacrifice and lack of pain and our superiority.

Here's the thing - if you wanted to have Sunday brunch together as a family you would not be divorced. The relief of divorce is not having to spend time together - isn't that after all the point of divorce?

These celebrities are copying what most people do who don't want to get divorced but can't stand the sight of each other - live out their lives in misery still forced to present a united front to the outside. The reason lots of people give for not going through with divorce is financial - they can't afford it. What the fashionable celebrity set are expounding is financial independence via divorce, discreet sexual freedom via divorce but family gatherings a la unhappy marriages.

Is this a good thing?  In my experience couples who spend time together as a family afterwards usually do so because one party cannot move on. It's not about love or kindness it is about control and fear. It does not produce happy memories for the children or even happy children - it is dysfunctional and causes anger and rejection by the children.

Let's look at Halle Berry - what a stormy ride she has had with Olivier Martinez - they are now divorcing as reported in the Telegraph above - they state that they are moving forward with love and respect for each other. Has the passion run out then? It will be interesting to see if they are able to follow Gwyneth in her conscious uncoupling. Here's Gwyneth's explanation:

“What that really means is that even though you hate me and you never want to see me again, we are going to brunch because it’s Sunday and that’s what we do.”

Make your choice but remember - you only have one life and spending Sundays, Christmas and other special times with your ex who you may hate, loath, dislike be repelled by or simply find boring and offensive is endorsed by celebrities.

Tuesday, November 17, 2015

English Courts to Rule on International Spousal Maintenance Claim

English Court to rule on International Spousal Maintenance Claim

It is important to ensure that the financial aspect of your divorce is complete especially if you are a rich international businessman or woman.

In the above case the parties divorced in Slovenia in 2011 and the husband has since remarried. However, the wife moved to London in 2008 and has managed to have her spousal maintenance claim transferred from Slovenia to England where it is assumed the courts will be more generous to her claim.   

As The Telegraph reports:

Last year family judge Mr Justice Moylan gave Mrs Ramadani the go-ahead to claim spousal maintenance in an English divorce court

But Mr Ramadani challenged the decision, saying it was unfair for her to have “a second bite of the maintenance cherry” in the English courts which he said were known for their generosity to dependants.

Today, Lord Justice McFarlane said Mr Ramadani had "fallen a long way short" in his quest to stop his ex claiming a share of his millions. 

She had withdrawn her maintenance claim in Slovenia and was free to move the fight to England, he ruled. 

With the globalization of people's lives and many couples owning assets in mroe than one country forum hunting is an important consideration.  England has a reputaiton for being the most generous to the weaker party and has no limit on the term upon which spousal maintnenace can be set. There are still whole of life orders being made. Some jurisdictions limit this to 3 years. The court has a duty to consider a clean break in very case but will not order one if it will cause undue hardship and there is wide judicial discretion in this regard. Each Judge makes an order based on what he considers fair.

So the lesson for the rest of us is the same as anything else in life - tie up loose ends. How many other things are waiting to be completed - your will? Transfer of your gas and electricity account? 

Many people of course avoid finalising the matrimonial finances on divorce because of the potential cost. they consider that a gamble against a future claim is one worth taking. For some this pays off  but when it goes wrong the costs tend to be far worse. plus, as has been made clear recently by the Supreme Court - there is no long stop date in family law - unlike other areas of law which are governed by the statute of limitations - so a claim could arise 30 years hence... or even longer...

Tuesday, November 10, 2015

Fraud and the Supreme Court's Decision in Sharland

The case of Sharland v Sharland in the Supreme Court confirms that fraud will not be tolerated in the Family Courts and the previous Consent Order was set aside with an order for a re hearing of the wife's claim.
 What does this mean for the rest of us?

If you are found to have committed fraud - for example, deliberately not disclosed assets, undervalued them, lied about your employment - or as in the Sharland case not revealed that you were planning on selling your company shares 100s of millions - then you will have to go through the whole procedure again - or if possible only the steps necessary to  deal  with the issue of fraud. You will also probably be responsible for your ex's legal costs in getting the matter re listed. However, there is no guarantee even if you win an appeal that you will get all of your costs so this is a risk for both sides.

The lower courts in Sharland had not allowed the appeal on the basis that the substantial non disclosure would not have resulted in a different order and therefore it was a waste of time to re hear the matter as the court would arrive at a similar conclusion.

The Supreme Court disagreed and held that the husband's non disclosure was material and the judge would have made a different order if he had known about it. The Court of Appeal had made their decision on the evidence before them but the key is what would the evidence have been before the trial judge so the Courts should not have removed the possibility of a fair hearing from Mrs Sharland.

It will be interesting to see what happens - company could have been floated for £600 million but husband said it was worth £47 million - but they did not go ahead - the valuation of his shares will no doubt be the focus of the re trial but how much is hope value - what if he never sells? The wife already had 30% of his shares awarded to her. What I don't understand from her perspective is if she was prepared to settle for 30% of £47 million why is 30% of £600 million not enough?

So, setting aside the difficulties of uncovering the fraud in the first place what should the everyday lawyer and client take from this? If you are seeking justice and Mrs Sharland is quoted as saying it was a matter of principle not money then the court is available to give you a fair trial. However, most people do not have £10 million to back up their principle. If you uncover fraud - clearly you need legal advice as to whether it is worth going back to court. Each case is judged upon its own facts and each case has a different judge whose interpretation of fair differs from each other.

Monday, November 09, 2015

What Happens After Decree Absolute?

The divorce process in England and Wales is made of the seven stages. It is fault-based and the majority of petitions are based upon what is known as "behaviour". Once you have jumped through all of the necessary administrative hoops you are granted Decree Absolute. 

What is the impact of finally being divorced?

Whether it is the cause for celebration or commiseration there are important legal aspects:

 1. You can no longer inherit from your former spouse's estate. It is therefore important to update your will. If you are left anything in your ex-spouse's will and they subsequently die it will be treated as if you pre-deceased them and therefore any property left to you will be cancelled. If you have left anything to your ex-spouse the same applies and the risk of leaving the whole estate to your ex-spouse means that you would die intestate.

2.You will lose any entitlement to your ex spouse's pension. It is important to assess whether you need to make a claim for pension sharing or pension attachment order prior to applying for Decree Absolute.

£. If the property you are residing in is the sole name of your ex spouse you will need to vacate the property as you will lose your matrimonial home rights upon Decree Absolute. It is therefore important to resolve the matrimonial finances and ensure a Consent Order is drawn up outlining how the assets are to be divided upon divorce.

It is important that any agreement reached is made into a Court Order to ensure the agreement is binding and to limit any future potential claims. If agreement cannot be reached the Court can order a division of the assets and income based upon their decision as to what is fair. The court has a wide remit and is governed by judicial discretion.

Even after Decree Absolute the court's powers in relation to matrimonial finances continue. If you do not have a Court Order your ex spouse can return to Court decades later provided they have not remarried and make a claim on your assets. 

This has happened in the Wyatt v Vince case - the wife made a claim over 20 years after divorce - the husband was very wealthy and the wife was in poor financial circumstances.  The Supreme Court have allowed her case to proceed. This highlights how important it is to apply for a clean break even if you have few assets.

So it is important to get advice and consider your long term best interests - even if you wantt to bury your head and pretend it is not happening to you. It is so much better to make an informed decision than to receive a shock later...