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Detailed Practice Notes written by our Professional Support Lawyers, guiding you through the key issues in each topic.
Special considerations - overviewContributions
In most cases an analysis of the parties’ contributions will be specifically excluded by the court. The fact that one party was the breadwinner and one the homemaker should not, by itself, provide any justification for a departure from the sharing principle. Such an approach would be discriminatory.
In exceptional cases a contribution over and above that which would normally be found in considering contributions to the family, financial or otherwise, may be a factor (see below).
There are a small number of cases where contributions can be taken into account. The test has been allied to the test in conduct (per Baroness Hale of Richmond in Miller v Miller, McFarlane v McFarlane ): where the disparity in contributions to the welfare of the family are 'inequitable to disregard', they should be considered.
Inherited assets may be considered non-matrimonial/civil partnership property. Lord Nicholls of Birkenhead in White v White described inherited assets as 'one of the circumstances of the case, [representing] a contribution made to the welfare of the family by one of the parties to the marriage'.
However, inherited assets are never completely excluded from the court’s consideration. If the needs of any children and the parties demand it, the fact that assets are inherited will almost certainly be ignored. But where such needs can be satisfied by the use of other resources, the court will give weight to the special nature of an inheritance.
Distinctions have been drawn between different types of inherited property; for example, money received from a relative in a will during the course of the marriage/civil partnership might be treated in a very different way from a landed estate that has been within one spouse’s family for generations. Fairness in each case will be different.
An actual inheritance received by a party is very different to the aspiration for, or expectation of, an inheritance while the putative donor is alive.
Cohabitation and the length of the marriage/civil partnership
In very broad terms:
marriages/civil partnerships of less than five years are generally described (by authority, rather than statute) as short
marriages/civil partnerships of five to twelve years are medium-length
marriages/civil partnerships of over twelve years are long
The length of the marriage/civil partnership includes the period of cohabitation that precedes it if the cohabitation moved seamlessly into the marriage/civil partnership. In the case of civil partnership no reported cases have yet dealt specifically with this issue.
Short marriages/civil partnerships
Property is treated in different ways if it is property acquired during the marriage/civil partnership other than by inheritance or gift.
The presumption is that matrimonial/civil partnership property acquired with the joint intentions of the parties during the marriage/civil partnership should normally be shared equally, whatever the length of the marriage/civil partnership. This presumption of equality does not apply with such force to non-matrimonial property, unless overridden by need. The length of the marriage/civil partnership is a relevant factor.
The court will also consider the marital acquest ie the value that has accrued to the parties during the period of the marriage. This may range from the value of pension contributions made to profits earned and the value built up in an enterprise. This was a significant factor in the case of McCartney v Mills.
The presumption is likely not to apply very strongly to a short marriage/civil partnership, where credit will be given to the party who brought the property into the marriage/civil partnership, or inherited it. On the other hand, the presumption will apply with some considerable force to a long marriage/civil partnership. But it is a matter of degree, to be considered in all the circumstances.
The effects of non-disclosure
Parties are under a continuing duty of full and frank disclosure of their means.
A party found to have failed in that duty during the course of proceedings will face:
costs consequences if hearings have to be adjourned because disclosure is incomplete or confusing, and
adverse inferences being drawn against them if they fail to rectify the omission
Although conduct that it would be inequitable for the court to disregard is a s 25 factor, cases in which it will be considered are exceptional and some relate to relevant domestic violence. For example the wife who could not work as the husband had severed the tendons in her arm and could not continue her occupation as a nurse, received the lion’s share of the assets. In other circumstances the conduct may be such that it cannot be adequately addressed in an order for costs such as when the costs of the litigation were wholly disproportionate to the assets in the case. A distinction should be drawn between marital misconduct, with which the statute is concerned, and litigation misconduct.
Sometimes a substantial proportion of the assets are taken up by the value of a business that is a going concern. A market valuation of a trading company may often be significantly higher than the pure amount of cash that can be generated from it at any one time. A relevant and appropriate valuation of the business asset should be obtained and there should be an appreciation that it may, in the final analysis, have to be sold to meet a party’s claim.
However, a court will not destroy a going concern without a very good reason. A common method of squaring the circle is for a party to receive their award in a series of lump sums over time, allowing the business to replenish itself with cash in the meantime.
Assets held in trust
Where a party is a beneficiary under a trust, their interest will not be ignored by the court. It will be a resource available to them for distribution. Its specific availability to the party will be a relevant factor in the court’s discretion.
Offshore structures that, on the face of it, appear to close off wealth to a party will be examined critically. The court has to look at the 'reality of the situation'. It will be prepared to make an order that provides 'judicious encouragement' to a third party trust to make assets available to a spouse/civil partner. The question is whether, if the party were to request the trustees to advance the whole (or part) of the capital of the trust to them, the trustees would be likely to do so.
Most recent authority is concerned with big-money cases, ie cases where there is a surplus of assets over need. The principles of compensation and sharing will apply.
Few recent authorities are concerned with small-money cases, ie cases where there is likely to be a shortfall of assets to meet need, due to the simple reality of the parties’ inability in such cases to bear the legal costs of an appeal to the higher courts. The principle of needs will apply in such cases.
Commonly, parties have interests in property together with third parties. Often, this will be in respect of real property co-owned by different family members. Their rights are rigorously respected by the ancillary relief (financial order) courts. Their claims must be given the same weight as if they were litigating separately.
Consideration should be given at an early stage to whether they should intervene or be joined as a party. Mr Nicholas Mostyn QC (sitting as a deputy judge of the High Court) gave specific guidance regarding practice and procedure for third party interests in the 2006 case of TL v ML (Ancillary Relief: Claim against assets of extended family).
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