EU referendum—implications for family law

The UK has voted to leave the EU: what will be the immediate consequences, and longer term considerations, for family lawyers and their clients. Michael Wells-Greco, partner at Charles Russell Speechlys, and Nigel Shepherd, National Chair of Resolution and head of family at Mills & Reeve offer their insight.

What will be the immediate impact of the vote to leave?

Michael Wells-Greco (MWG): The UK has two years to make its divorce settlement on its departure from the EU but that is completely separate from any framework agreement for longer-term future arrangements with the EU. The question to be asked is whether the divorce will be an elegant disengagement or messy? A major change, or withdrawal from the EU instruments relevant to family law, risks disruption, considerable confusion and years of uncertainty. This is particularly problematic given that family law is rarely a legislative priority, and at a time in the UK when the availability of legal aid has been greatly reduced.

Nigel Shepherd (NS): It’s too early to know the full implications for family law, but what is clear is that we are entering a period of great uncertainty. Like most areas of legislation, family law in the UK is currently intrinsically linked to that in other jurisdictions. There are also wider issues not directly related to family law. Should a short-term impact on the financial markets turn into a longer-term economic issue then it will affect people’s personal finances, things like pensions, investments, and house values. These will all need to be taken into consideration when dealing with financial matters upon divorce.

What might be the longer term implications?

MWG: As EU law had permeated family law and practice across the EU, families will be asking whether they can continue to benefit from EU rules in relation to enforcement of matrimonial orders (divorce, separation) and parental responsibility orders (residence and contact). Some may be advised to take pre-emptive steps now rather than wait for the uncertainty following the two year withdrawal.

NS: We won’t know yet what withdrawal from the EU will mean for measures like Brussels IIa, which provides for uniform jurisdictional rules for divorce proceedings; or maintenance arrangements, which are currently regulated throughout the European Union. It’s unlikely that the implications for family law will be a priority for the government, and it’s a distinct possibility that any currently planned or envisaged reforms to family law will be put on hold. Resolution will continue our work with government and others to both influence the future of family justice, and provide our members with the support, information and resources they need in order to deal with the post-referendum landscape.

Family Justice Council guidance on ‘financial needs’ on divorce

At long last the Family Justice Council has published its Guidance on ‘Financial Needs’ on Divorce, described by President of the Family Division, Sir James Munby, in his foreword as ‘…intended as a useful tool for the judiciary in relation to the making of orders to meet financial needs following divorce and the dissolution of civil partnerships’, but surely also as useful guidance for practitioners when advising clients on this difficult discretionary area of family law.  But will difference will it make?

The guidance focuses on those cases where the available assets do not exceed the parties’ needs, and provides a summary of the law as explained and developed in leading cases. It also includes a number of helpful case studies of common scenarios.

Background

The origins of the guidance are in the Law Commission’s 2014 report, Matrimonial Property, Needs and Agreements, which highlighted concerns regarding evidence of significant regional differences in the levels of needs-based support likely to be awarded in different courts, and a lack of transparency in this area of the law. The Law Commission recommended that the Family Justice Council prepare guidance for the courts, with the stated aims of achieving both greater clarity and consistency of approach.

What is the purpose of the guidance?

At 64 pages in length, this is not a light read. It raises the question of the weight it will be given in practice: it has no statutory basis, it is merely guidance. The President says that on distribution of the guide to the judiciary, ‘The consensus view was that its distribution nationally will be of significant assistance to judges without in any way diminishing the fundamental importance of judicial discretion.’

The authors of the guidance acknowledge that, as the Law Commission observed, in an area where there are no rules or strict entitlements, there is a limit to what such guidance can achieve. The guidance cannot, and is not intended to, change the law. Its stated purpose is to ‘disseminate information about the ways in which the courts’ discretion is currently exercised, and to encourage the consistent use of that discretion in a particular way and (if possible) with a particular objective’. The intention is that it will be revised and updated at regular intervals.

It is also suggested that the guidance should be read in conjunction with Sorting out Finances on Divorce, the guide produced previously for the assistance of litigants in person.

Conclusion

Are we any further forward? Not hugely. I suspect that regional variations will persist, not least in part because there are regional economic differences that inevitably impact on financial provision cases. The guidance will hopefully promote some greater degree of consistency, and may prove a useful reference point, but it cannot and does not change the law. It remains that while the Matrimonial Causes Act 1973 has been amended numerous times since coming into force, it is an Act that was conceived in a very different time. The concept of needs has, more recently, largely been shaped by case law, and that case law has (for at least the last decade or so) been dominated by big (if not huge) money cases. Most cases do not fall into that category, making the existing law an awkward fit for the everyday case. So, read, digest and contemplate the guidance. The worked examples are particularly interesting reading. But don’t expect a dramatic move to consistency of approach any time soon.

Geraldine Morris is a solicitor and Head of LexisPSL Family.

Twitter: @GeraldineMorris

Variation of child maintenance on the grounds of assets

Family analysis: The child support maintenance case of SM v Secretary of State for Work and Pensions shows that the infinite variety of family arrangements will always create fresh litigation despite the efforts of legislators to provide a comprehensive code, says James Pirrie, director of Family Law in Partnership Ltd.

Original news

SM v Secretary of State for Work and Pensions and BM (Child support: variation/departure directions: just and equitable) [2016] UKUT 245 (AAC)

The Upper Tribunal (UT) allowed a father’s appeal against a First-tier Tribunal (FTT) decision that payments he had made for his son’s extra-curricular activities such as music lessons and sport at school would not be taken into account when deciding the amount of child support maintenance he should pay.

What were the background facts?

There were two applications for a variation of child support maintenance seeking an adjustment to the formula figure:

  • an application for an increase by the mother, as the parent with care, on the basis of the father’s ‘underused’ assets
  • an application for a reduction by the father, as the non-resident parent, on the basis that he was paying school fees

The Child Support Agency (CSA) granted both applications. But the father appealed to the FTT, arguing that the variation did not pass the required test of being ‘just and equitable’, within the meaning of section 28F of the Child Support Act 1991 (CSA 1991), as regard should be had to the sums he paid as voluntary contributions towards his school extras for his son such as music lessons, school trips, bus fares, school uniform, school clubs and sports activities.

The FTT rejected the father’s argument, and he appealed to the UT.

What did the UT decide?

The UT found that the CSA and the FTT had correctly decided that the sums paid by the father were not simply to be lumped together as, within the meaning of CSA 1991, s 8(7)(b), ‘expenses incurred in connection with the provision of the instruction or training’ of his son and treated as generating an adjustment on the father’s application for a variation.

However, it considered that it was legitimate to consider whether those contributions were of such a size as to lead to the refusal of the mother’s application on the basis of underused assets (ie whether he was paying enough voluntarily and so a further uplift to the formula figure to reflect his assets was not just and equitable). The CSA had not considered this angle, which the UT found a material error.

The UT remitted the case to the FTT for fresh consideration.

What is the significance of this case?

It is a paradox that a detailed code will always spawn vastly more litigation than might be expected. I remember looking around the House of Lords in 2006 on one of the early visits of the state department to our Supreme Court (Smith v Secretary of State for Work and Pensions [2006] UKHL 35, [2006] All ER (D) 161 (Jul)) and thinking that the 27 lawyers then wrestling with another short phrase in the statute did not bode well for the administrative scheme. This case is a further illustration of the infinite variety of family arrangements that generates challenges for the administrative scheme.

The drafters of the scheme aimed to remove discretion from the system and provide clear rules for its officers to pinpoint clear outcomes. Unfortunately, family circumstances have always been able to create ambiguity in even the most clear-seeming phrase. An ‘arms race’ has ensued of increasing definition and increasing complexity which has created a legal labyrinth so extensive as to be beyond the understanding of all but the most motivated specialists.

Just to locate this conundrum. There have been three schemes. This case involves the second scheme (live from 2003) and while it has now been overtaken by the third scheme, there are similar provisions in the current scheme, so this case is not of historical interest only. Each scheme permits a variation direction to be given to take into account certain additional expenses, such as educational costs, where this is just and equitable (and thus reduce the level of payment). The schemes also permit an increase in the level of the award in certain circumstances, and here the mother had applied for an increase on a ground no longer permitted, namely assets that were held by the father that should be treated as generating a notional income.

The decision in this case was being made by the UT at the second layer of appeal from the state agency’s decision-maker. Here Gwynneth Knowles QC, judge of the UT, tells us that:

  • educational costs are taken account of as a variation ground, and thus accommodated they cannot found a ‘just and equitable’ argument
  • extras may not be educational costs if they are not directly connected to the education, eg Duke of Edinburgh activities would be extra-curricular at a state school and so should be regarded as such at a private school
  • it is possible that enough of those costs might incline the CSA to decide that the parent is paying enough and therefore not order an increase on the grounds of that parent’s various other assets

Although how it might go about making that decision is anyone’s guess. In all likelihood, the teenagers in the instant case are surely going to see ongoing litigation between their parents as the poor CSA scheme seeks to come up with a rational way of making that decision. One suspects that the cost to the CSA of hosting this contest will be considerably more than the adjustment that would result from either taking account of or excluding the extras payments from the calculations.

Interviewed by Robert Matthews.