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Finances During Divorce

“I’m going to court to sort out finances during divorce”

Step 1

If you have children, apply to the Child Support Agency to calculate how much one parent should pay to the other (called maintenance). Calculate child maintenance via this link. You only need to go to court if there are more financial issues to sort out.

 
 

Step 2

Fill in the form for a Financial Order and send it to the court (download here. To find your nearest court, put your postcode in here). If you can decide things beforehand with your ex-partner, draw up an agreement together (called a Consent Order), like this sample here. You can use a solicitor or do it on your own.

 
 

Step 3

Go to court on the date you are given for the Final Hearing. The court will then make a decision about the case.

 
 
 
 

What could happen?

 
 

A

 
The court could approve your agreement.
 
 

B

 
The court could help you change your agreement so it is fairer.
 
 

C

 
The court could make a new order about finances which you both have to stick to.
 
 
 

Approximate cost: £0-4000

Approximate timescale: 4-12 weeks.

 
 
 
 
 

More info

It costs £20 to apply to the CSA to help you sort out maintenance payments, and £50 to apply to the court for a consent order. If you use a solicitor, they will cost an additional £350-£1000. A financial order costs £255.You may also have to pay mediation costs (you may be asked to go to mediation by the court before they make a decision). Mediation costs approximately £150 per hour and an average case requires 4-8 hours of mediation.

Cohabitees

COHABITEES –

Many problems that arise when cohabitees own property together tend to recur very frequently. For example, assume that two people own a property together – whether as joint tenants or as tenants in common – and there is no evidence of any agreement of the proportion in which each each joint owner owns the property. In the absence of evidence to the contrary the law will assume that it is held equally.

Now this can lead to obvious injustice. Say , for instance, one of the joint owners pays the deposit on the property and pays all the the mortgage. If this couple were to split up then the person who had contributed nothing would almost certainly say that he/she was a joint owner and therefore entitled to half the net proceeds of sale. Indeed, the situation can be worse than this in that the joint owner who has not contributed to the deposit or the mortgage might leave and go and set up home elsewhere. This situation might continue for many years until the joint owner who has remained and who has continued to pay the mortgage wants to sell. At this point the absent co-owner who has contributed nothing will almost certainly appear and want to claim half. The fact of the matter is that the signature of both joint owners is required to effect a sale and so the joint owner who has remained will not be able to sell the property without the signature of the other joint owner. It is this power which gives the absent joint owner a great deal of leverage in such a situation.

Now, the fact of the matter is that in general a property belongs to the person (or persons) who have paid for it and so unless there is an agreement to the contrary it would be possible for the person who has paid the deposit and the mortgage payments to claim that the property was his/hers alone despite the fact that it was in joint names. However, there are several difficulties with this approach.

First, there is the fact that in order to effect a sale the signature of both joint owners is needed. This means that it might be easier to buy off the interest of the person who has not contributed in order to get the signature. This fact alone gives a lot of leverage. Second, a joint owner in this position is in the difficult situation of having to say, “Yes, it is true that the property is in joint names but in reality it is entirely mine because I paid for it.” The difficulty about this is that it has to be proved and it can be quite difficult to prove these things when perhaps many years have gone by. The person who has not contributed might even say, “Yes, it is true that I did not contribute anything but I was made a joint owner in return for doing the housework.” In short, if a joint owner gets into this situation it can very likely only be resolved by litigation. Rather than enter into the uncertainty and cost of that (which is usually considerable) such a joint owner may simply prefer to agree a figure to buy off the claim. This frequently happens.

Family Mediation Week, Day 5: Mediation Works

Family Mediation Week, Day 5: Mediation Works

It’s the final working day of Family Mediation Week, but our call to raise awareness of the importance of family mediation is far from over.

Family Mediation Week’s Friday theme is ‘Mediation Works’, aiming to demonstrate the effectiveness of family mediation as a viable alternative to bitter court battles. As we know, mediation has been shown to be quicker, less costly and less adversarial than going to court or using a solicitor; the purpose of ‘Mediation Works’ is to make the public aware of this, too.

Today’s Family Mediation Week resources are all based around this theme. First up is our ‘Mediation Works’ whiteboard video: a short film explaining the process of family mediation and how it can help couples and families separate more smoothly.

Our first blog for ‘Mediation Works’ is written by Hugh England, Chair of the Family Mediation Council. Hugh’s post about the invaluable work done by family mediators and the positive effects this can have on separating couples is an important and powerful read, and is published on both the FMA’s blog and on the Family Mediation Week website.

Hugh’s post will be followed in the afternoon by a blog from Jan Walker, Emeritus Professor of Family Policy and Strategic Research Adviser at Newcastle University’s Institute of Health and Society, whose research into mediation has revealed overwhelmingly positive results, time and time again. Jan’s blog will be published on the FMA’s blog in the early afternoon.

Actions for today

Please promote and share the ‘Mediation Works’ whiteboard video on your mediation service’s website and social media – you can find it here.

Jan Walker’s blog can be viewed here on the Family Mediators Association’s website, while Hugh England’s post can be viewed on the Family Mediation Week website as well as here on the FMA blog. Please take a minute to read them and share with your followers.

Don’t forget to tweet about Family Mediation Week – please use the hashtags #FamilyMediationWeek and #MediationWorks to support today’s theme. You can find a ready-made tweet here – just click to post.

A big thank you

We’d like to take this opportunity to thank all our members for their involvement in Family Mediation Week. Whether you held an event, wrote to your local press, featured the week on your blog or tweeted your support for the campaign, your backing has been an enormous part of the week’s success and has contributed invaluably to raising public awareness of family mediation.

The campaign doesn’t stop here, of course. The resources produced throughout Family Mediation Week will remain relevant, educational and valuable, so please do continue to share them on your social media pages or recommend them to interested parties: the videos can all be found on the FMA’s YouTube channel, and all the blog posts from the week will remain on the Family Mediation Week website and the FMA’s own website.

Thank you all!

Liam Gallagher and Nicole Appleton divorce case costs them £800k as details of £11m deal revealed

Liam Gallagher and Nicole Appleton divorce case costs them £800k as details of £11m deal revealed

Judge Martin O’Dwyer today ruled assets should be split in half and said Gallagher and Appleton should each get about £5.5 million FilmMagic

Peace has broken out between Liam Gallagher and Nicole Appleton – picture from 2010

Liam Gallagher has been forced to hand over half of his £11m fortune to ex-wife Nicole Appleton.

The Oasis rocker and the All Saints singer have been locked in a court battle to divide up their assets and finally bring the curtain down on their 13-year relationship.

Married for five years, the pair split in 2013 when, as previously reported, Liam, 43, fathered a love child with an American journalist.

Legal restrictions preventing reporting of the case were lifted today.

Liam and Nicole, 41, will split their £10.8m nest egg down the middle, dividing up their matrimonial assets with Nicole walking away with half.

A quickie divorce formally brought the marriage to an end in just 68 seconds but the battle over who should be left with what has needed two years, and a host of highly-paid lawyers, to sort.

Liam and Nicole went to war over his clothing company Pretty Green, the London home they shared, his cash from the Oasis back catalogue and potential future earnings.

The couple, who have a teenage son together, broke up after news leaked of Liam’s 2012 fling with New York music writer Liza Ghorbani.

In the divorce settlement judgement handed down by judge Martin O’Dwyer at the Central Family Court today, it said: “It was only when publicity was about to occur in April 2013 when Mr Gallagher told his wife.

“The circumstances were extremely unfortunate. The wife was away on holiday and she was informed by telephone by the husband.

“In fact, by this time Mr Gallagher had started a relationship with another person. This unsurprisingly marked the end of the relationship between husband and wife.

“Ms Appleton was greatly distressed not only because of the earlier incident but also because of the breakdown of her relationship which was based upon prolonged deceit.”

During the week-long court battle, much of which is still subject to an injunction, Liam and Nicole’s legal teams traded barbs, with Nicole accused of splashing the cash following the split and Liam accused of lying over his worth.

Judge O’Dwyer said the rockstar had “downplayed” his potential future earnings to the court but did not accept he had lied.

Dashing the hopes of millions of fans, an Oasis reunion is not on the cards, the court heard, even though Liam would welcome such a move.

The judge said: “Mr Gallagher says there are no plans to reform and although he would like to do so, he does not anticipate there is a possibility currently of any such reform.

“Although he expressly would like to re-enter the music business currently he says there is no prospect of that.”

But, the judge added: “Mr Gallagher’s earning capacity is immensely difficult to predict.”

In his evidence to me, he clearly downplayed his prospects for earning in the music business in the future.

“I accept that Mr Gallagher’s current income is made up from the basics from his income with Pretty Green and royalties.

“However, he is a man of worldwide fame. He has proved both in his membership of Oasis and in the formation of Beady Eye that there is the potential for him to earn much greater sums than this.”

And, as revealed last month, All Saints are planning a comeback for next year with new tunes for 2016.

But the judge said: “Ms Appleton tells me her music career has effectively been on hold for many years. Recently there has been an attempt to revive it but she does not know what the future holds.”

Liam’s legal team argued that she could earn money working in a shop or cash in on her celebrity status.

One certainty for Nicole is that she will be allowed to stay in the couple’s family home, which Liam wanted her out of so it could be sold.

The judge said: “Mr Gallagher’s counsel has invited me to order that the former matrimonial home should be sold. I decline to so order. How adults organise their financial affairs is a matter for them.”

The judge ruled that if Liam returns to music and makes “a substantially higher income”, Nicole can come back to court to get her pay out reviewed.

Judge O’Dwyer said the cash the couple were fighting over was “very remote from the circumstances of most people” and they had lived “a very good lifestyle”.

And he slammed the “manifestly excessive” £800,000 they spent on lawyers and for wasting court time, and taxpayers money, with their mud slinging.

Liam and Nicole met in 2000, after his marriage to actress Patsy Kensit, and wed in 2008. Neither were in court yesterday.

Oasis split up in 2009 following a series of furious rows between Liam and his brother Noel. Liam is now seeing his former aide Debbie Gwyther. The pair moved in together earlier this year.

 

Source: http://www.mirror.co.uk/3am/celebrity-news/liam-gallagher-nicole-appleton-divorce-7035800

Family Mediation Week 2016

It’s time to choose a better way:

DIVORCE AND SEPARATION SOLUTIONS supports Family Mediation Week 2016 

Every year, thousands of families are torn apart by bitter court battles. Relationships between separating parents are irretrievably broken, and all too often their children are caught up in the middle.

But it doesn’t have to be that way.

There is another way, a way that has helped many divorcing parents build a constructive future for their family, without a court imposing decisions on them.

About family mediation

Family mediation puts you in control, with the help and support of highly trained professionals who can help you make decisions about your future.

Research shows that mediation is often the best way for families to resolve conflicts. It is proven to be faster, less costly and – crucially – less adversarial than divorcing through the courts. Unfortunately, too few people know about it, and end up locked in angry disputes that have far-reaching consequences for them, and for their children.

Family Mediation Week (11-15 January 2016)

11-15 January 2016 is Family Mediation Week. Organised by the Family Mediators Association (FMA), our aim is to raise awareness of mediation as an alternative to court battles for separating couples.

Mediation can help you take control of your own family’s future, making constructive decisions together rather than asking someone else to decide what should happen to your children or your finances. We want to help and support people at the point of separation, and also let other people know that family mediation is an option they can suggest to friends or family members who are experiencing separation and don’t know where to go for help.

Over the course of Family Mediation Week, we will be publishing information and resources to help more people understand that there is a better, more constructive option that puts children first and helps separating families create a brighter future.

Find out more

To receive more information about family mediation, how it works and how it can benefit separating families, contact us on 07583 281492.

YOU WANT TO GO TO COURT? READ THESE CASES – TAKE NOTE – IT COULD BE YOU!

CASE ONE:-

Family Court, 18 June 2015, HHJ Wildblood QC Peter Duckworth for the husband; Daniel Leafe for the wife. http://www.bailii.org/ew/cases/EWFC/OJ/2015/B74.htm

The husband and wife were married in August 1999, and separated 13 years later in August 2012; they were both now 58. There were no children of the family. The financial remedy proceedings on divorce began in August 2013.

The wife worked as a primary school learning mentor, and lived in the former matrimonial home. The husband lived in rented accommodation, and was a managing director of a small company. On the findings of the district judge, and ignoring pensions, the assets were just under £300,000, including an equity of £76,000 in the family home, and a company valuation of £206,000. The wife had a 49% shareholding in the company, valued at £60,550.

The district judge concluded that the wife was significantly over-housed in the property, but thought she should be given a time-limited opportunity to release the husband from the mortgage and show that she could afford the mortgage and other outgoings. He ordered the family home to be transferred to the wife subject to mortgage, and for the wife to indemnify the husband in respect of mortgage interest account payments, with a requirement that she try to secure the husband’s release from the mortgage.

After adding the whole of the gross value of the company to the capital balance sheet, the judge ordered the wife to transfer her 49% shareholding in the company to the husband in return for a lump sum of £99,600. The husband was to bear any liability to tax that might arise as a consequence of the transfer.

The husband had pensions valued at £276,475; the wife had a pension valued at £79,102. The judge ordered a pension sharing order in relation to three of the husband’s pensions, involving a transfer of £111,616 from the husband’s pension to the wife’s pension; this gave the wife 53.6% of the total pension pot.

 

The district judge found that the wife’s income was £1,187 pm, and that her income needs were £2,700 pm. He found the husband’s monthly income was £8,000, with monthly income needs, ignoring liabilities, of between £2,500 and £2,760. The husband’s current income levels were in fact lower than this, but the district judge considered that the husband’s current health difficulties and the time being put in to a new business venture would soon be over, and that previous income levels would be restored. He went on to make a joint lives order requiring the husband to pay the wife £2,250 pm in periodical payments (£27,000 pa), expressly not backdated.

The district judge said in relation to the lump sum: ‘I infer that the husband can raise this amount from the company . . . his fall back position would be surrendering or selling the . . . policy. The husband appears content (or at least resigned) to continuing to rent . . . he put no case of wanting to buy. However he has a substantial mortgage capacity . . . taking everything into account I see no reason to depart from equality in this case. As regards how this is expressed I leave this to the parties to agree. It might be a single lump sum of £101,100 if it is decided not to express the agreed lump sum as consideration for the shares’.

The husband strongly disputed that the district judge had been right about his income, in particular about the district judge’s predictions that his income would return to the levels achieved in 2012/13, and he appealed, seeking to admit fresh evidence. He was also seeking a reduction in the lump sum payment to £20,000, time to make the payment, and a clean break.

The parties’ costs to date were over £127,000.

The judge allowed the husband’s appeal, and ordered a rehearing.

The mathematics that the district judge used had been correct; the principles that he applied had most definitely not been.

In relation to the lump sum it had been simply wrong for the district judge to add in the whole of the capital value of the company when deciding upon the appropriate capital division. The company was not going to be sold and the husband could not contemplate selling it whilst facing the obligations that the district judge placed upon him. The business was no more than an asset that produced an income stream from which both parties were to benefit under the order. There was no question of the husband being able to use his ownership of the shares as a means of raising £206k. It was not just a matter of the company not displaying a copper bottom. It was that its current value was purely hypothetical, because it could not be accessed without destroying the husband’s earning capacity. If the value of the company were to be accessed through sale it certainly would not produce anything like the income return of £8,000 p.m. suggested by the district judge as being the husband’s current income. The district judge had recorded that the husband’s counsel ‘is not attributing any value at all to the company – bizarrely in my view; I do agree that the asset is illiquid but don’t see that as relevant to present circumstances’; this court could well understand why husband’s counsel had adopted the approach he had.

In calculating the assets for the purposes of the exercise carried out by him, the district judge’s approach to the husband’s indebtedness had been unsound. The relevant passage of the judgment read: ‘I can only go by what is in the bundle. I conclude that I can attribute no more than £20,000 to the husband by way of liabilities’. A schedule of the documentation about the husband’s liabilities contained within the bundle revealed documentary evidence of indebtedness of £61,101.16. There was justification for the husband’s statement that the combined effect of that indebtedness, costs and the lump sum liability was quite obviously beyond the husband’s reach. The schedule covered a number of different dates but the solution to this was not to produce an evidentially unsound figure of £20k. Further, if there was difficulty about the correct figure for this sort of indebtedness the whole issue could and should have been put right at trial by the husband being directed to get the evidence there and then; where there was an issue of £40k difference in such a small money case that very simple approach should have been followed. Further still, it was far from unusual in financial remedy hearings for the documentation about credit card indebtedness to cover a range of dates; rarely was the documentation on such an issue entirely up to date, especially where there were so many debts.

In approaching the value of the company the district judge had not taken into account that the husband owed the company £62,987. Therefore, although the company had been valued at £206k on a net asset basis, the value in the husband’s hands of the company should be discounted at the very least by £62,987 (since of the sum of £206k, £62,987 represented that liability of the husband to the company). The point was that, on the basis of the order made by the district judge, there was no way that this debt to the company would ever be paid by the husband (not least because he would not have the means to pay it). Therefore the company held an ‘asset’ in the form of the sum due from the husband, which would never be realised. If that sum was to be taken into account as an asset of the company it should also have been taken into account as a debt of the husband. It was not for the husband to call a witness on this issue since there was nothing to challenge; it was a fact that this money was owed. Other failures in disclosure would not affect this issue – the question was: ‘is the figure of £206k correct?’ Past receipt by the husband of that sum would not make it available now. The husband might find a way round the debt but that would mean that the company would not receive it. For some bizarre reason it appeared that this point had not been ‘run with’ before the district judge although there may have been oblique reference to it. Insofar as it was necessary, the court gave permission for that issue to be raised at this hearing (how could it do otherwise in the interests of fairness?).

The district judge had not conducted a correct analysis as to whether the husband could raise the lump sum ordered. He had inferred that the husband could raise it from the company but had not examined how this might in practice be done. The evidence showed that the company had had only £70,559 at the bank at the date of the hearing, £17,254 of which was VAT owed to the government. Even if that sum could have been drawn from the company gross (which it could not) it did not account for a lump sum of £101k. Further, the fact that the husband had offered £65k by way of lump sum does not mean that he could raise £100k.

The district judge should not have ignored tax when looking at the value of the company (the husband’s counsel had said ‘first, it is not possible to get anything out of the company without paying tax’ and he had been right). The district judge had wrongly ignored CGT in relation to the value of the company on the grounds that ‘it will only be payable in the future, and who knows what the rates or allowances will be (in particular, following a general election next year)’. The district judge had also ignored the evidence that the most tax efficient way for the wife’s shares to be acquired was by the company buying them and that this would lead to a tax liability of £21,982. There was no valid basis upon which CGT on share valuation could be ignored in circumstances such as this. It would have to be paid sometime.

In relation to income, regrettably, at no point of the judgment had the district judge analysed the evidence that he had heard about this issue, in particular he had not analysed the trading information of the company. Was the business of the company such that previous levels of income were likely to be restored? The issue had been left open by the expert for the judge to resolve. The reasons that the judge had given for his opinion that the income would be restored were not analytically sound. The creation of a new business did not create any basis for saying that the main business would restore its profitability; the new business was not a profit making enterprise at the time of the hearing and the very fact that it was being set up suggested a need for the husband to branch out into other areas of trading. The husband’s ill-health did not form a basis for saying that trading conditions would restore themselves and his alleged non-disclosure in other areas of the case did not affect this issue at all. What was more, there was no apparently credible evidence that events had shown the district judge’s predictions to be correct.

The test in Ladd v Marshall [1954] 1 WLR 1489 regarding the admission of fresh evidence on appeal required that:
i) the evidence could not have been obtained without reasonable diligence at the
time of the hearing because essentially not available then;
ii) the evidence, if accepted, would be of fundamental impact on the correct level of periodical payments;
iii) the evidence was apparently credible. The husband’s fresh evidence about income must be admitted even under the strictures of the relevant test. Further, the reality was that, if the court rejected the application to adduce fresh evidence, a variation application was bound to follow. That variation application would take place against the same demonstrably vulnerable analysis of the district judge’s judgment – it could not possibly take place, even on the terms of the district judge’s judgment, on any assumption that in August 2014 the husband definitely had the income that the district judge had found. It would have to take place on the basis that the district judge had recognised that there was a risk that the husband’s income was not as high as he, the judge, had anticipated. On a variation application the husband would be entitled to say that the identified risk had occurred (if he could substantiate it on evidence). Thus there was an inevitability that the issue of income would have to be revisited in any event. It was highly regrettable that this inevitability had not been faced up to without a considerable incursion of costs into the very limited means of these parties.

It was obvious that permission to appeal must be given and the appeal must be allowed in relation to the capital provision. The evidence in relation to income must be admitted and therefore there were compelling reasons why the issues of periodical payments must be reheard (justifying leave) and, in the light of that evidence, it would be unjust for the current order to remain (justifying the allowing of the appeal on that issue also). Further in allowing the appeal, the court observed that the issues of capital could not be severed from income and, thus, capital and periodical payments would have to be reheard. In relation to income there was the further point that there was now credible evidence, through the admission of fresh evidence, that the district judge’s assessment of income had been wrong as at the time that he heard the case.

There would have to be a rehearing, to be conducted by this court. That was highly regrettable in a case where the costs of the parties were already so disproportionate and they both seemed locked into conflict. Pending that re-hearing, this was a case that cried out for mediation. The court would strongly recommend to both parties that they either arbitrated on their differences or mediated. It may be very much in their interests now to arrange for a specialist mediator to be approached.

 

 

CASE TWO:-

Family Division, 1 July 2015; HHJ Wildblood QC

Nicholas Sproull, instructed by Willans, for the husband; Juliet Allen, instructed by Lodders, for the wife.

http://www.bailii.org/ew/cases/EWFC/OJ/2015/B87.html

The couple separated in 2013 after over 17 years of marriage; they had two children, who lived with the wife. The husband worked as an independent financial adviser in a business which had run as a partnership between the husband and wife for many years (the wife had not participated actively in this business), but which was dissolved as a partnership by the husband after the separation. The husband had, since the separation, set himself up as a property investor, in partnership with a man called NC, and held three rental properties, one of which was occupied by NC and one of which was occupied by the husband. The husband’s capital share of the properties was valued at £36,53. The husband had remortgaged one of the properties; he claimed that this was in order to maintain and renovate the properties, but the wife claimed that this was dissipation that should be divided between the parties. The wife had been suffering from depression, and in 2014 made two attempts to take her own life.

The husband claimed his net annual income in the next 12 months would be £40,000 to £50,000. He was able to produce accounts, and he gave evidence about this. No income was attributed to the husband from the property business. The wife had been entirely financially dependent on the husband since the children were born, and had no recent work experience. Her income consisted of state benefits of £354 a month. The mortgage on the family home cost £625 pm.

The wife was given permission to instruct an expert to value the business. His valuation was £315,000. The expert also estimated the husband’s income as about £75,000 net pa, relying on the turnover in the accounts. The husband disputed this, arguing that he had deferred income from previous years into the turnover shown for the year 2014, which meant that the turnover had been disproportionately inflated in a way that would not be repeated, and also that he had taken on increased overheads, for example a compliance officer, which also meant that his turnover from previous years would not be a reliable indicator of his income.

During a lunch interval in the middle of the husband’s evidence he was told not to talk to his legal team, and particularly not to talk to NC. In fact, he did talk to NC, apparently about personal trainers and an Ironman that NC was going to enter. The judge found that the husband was in contempt. The judge said both that this was relevant to the decision that he had to make, and, in a clarifying note, that he had not taken it into consideration.

The district judge found that the total assets in the case had a value of £345,686, he did not include an add-back for the remortgage of the investment property, but indicated that he would take it into account in a general way. He transferred the family home to the wife, with a net value of £229,752 (it had a mortgage of £400,000, on the basis that the wife was to use her best endeavours to secure the release of the husband from the mortgage, otherwise to sell the property when the youngest child was 18, in 2019. He took the wife’s income needs at £3,091, which included monthly repayments of a tax liability, and ordered the husband to pay maintenance (assessed as a global figure) of £2,500 pm to provide for the wife and the two children. He also directed that the wife should retain £19,000 in a joint account. He did not take the business capital into account, on the basis that it was needed to generate the husband’s income, which he assessed as about £75,000 net pa.

The husband sought to appeal, arguing that the district judge had failed to take account of his evidence as to his income, had wrongly failed to impose a term order with a bar on extension, had taken the wrong approach in accepting the evidence of the wife’s expert as to the value of the business, had wrongly found the husband to be in contempt, had wrongly criticised the husband for remortgaging the investment property in his name, had been wrong in deciding not to order a sale of the former matrimonial home, had wrongly taken into account a sum the husband was owed by his mother, which would be repaid only on her death, and had been wrong to transfer the money in the joint account to the wife.

Since the original hearing the wife had obtained employment in a local estate agent’s office, working 3 days a week. It took nearly 9 months for the appeal to be heard, 4 of which were spent completing the district judge’s order.

The judge granted permission to appeal and allowed the appeal. It was deeply regrettable that, as a result of the errors within the judgment, the court did not have the material available to consider what order should make instead; the court therefore had to order a rehearing.

Unfortunately, the district judge’s assessment of the husband’s income had been flawed and his conclusions had been insufficiently explained.  The evidence of the wife’s expert had been given an undue authority within the case on matters relating to the husband’s income and, thereby, the district judge had fallen into error.

The finding of contempt had been inappropriate and unnecessary to the exercise that the district judge had to perform. The husband had been wrong to speak to NC over lunch having been warned not to do so but the conduct complained of (speaking about personal trainers and an Ironman competition) had had nothing whatsoever to do with the outcome of the case, although it had been described by the district judge as ‘relevant’ to it. The court knew the Gloucester waiting area well and could well understand what had occurred (which had happened in the full view of the lawyers and not remotely surreptitiously).

The district judge had found the husband guilty of misconduct in taking out borrowing on an investment property but had not made any findings of fact as to how the husband was said to have misused this money or the sum involved. He had then said that he was taking that ‘dissipation into account in all the circumstances of the case’ but had not explained how.

In considering whether to order a sale of the former matrimonial home, the district judge had not carried out any adequate analysis of the husband’s case that a share equity arrangement would permit the wife to buy alternative accommodation. Further, he had not considered adequately whether it was realistic for the wife to remain in the current home in the light of her indebtedness.

Because the income of the husband had been inadequately identified or reasoned the net effect of the district judge’s order had also been inadequately explained and analysed.

The wife’s expert had been instructed to value the husband’s business, yet his evidence had been used both by the wife and the district judge as a basis for identifying the husband’s income in a way that was not sustainable. Some of the district judge’s figures were simply inexplicable, being unsupported either by evidence or by submissions. The district judge had been entitled to reject the husband’s evidence about his income, but should have explained why he was doing so. The figure for the husband’s income had been crucial to the case, affecting the correct level of periodical payments and the extent to which the husband could meet his own needs. The judge had wrongly described the expert’s report as unchallenged, whereas in fact it had rightly been treated as irrelevant by the wife, once it became clear that the business could not be treated as both a capital asset and an income-generating asset. The judge had indeed not treated the business as a capital asset, but he had taken it into account in respect of the husband’s income, and his analysis of the status of this report had been wrong. The judge’s approach to the expert evidence had been completely wrong and the husband’s legal team had been unfairly and wrongly criticised. This was part and parcel of the deficiencies in the assessment of the husband’s income, a core factor in this case. With respect to the husband’s investment business, the husband would have to produce his accounts, and explain them himself at the rehearing (rather than merely referring the court to his accountant’s explanation).

Quite plainly the conversation between the husband and NC had had absolutely nothing to do with the correct outcome of the financial remedy applications. It was a complete irrelevance in that context. It was certainly not conduct that the court could possibly take into account when deciding on the correct outcome. The difficulty was this. If a judge said that something was relevant in the sort of strong terms used by the district judge, he must be taken to mean what he said. A judgment had to be capable of being understood on its face and a party to the proceedings must be able to understand the methodology of the court. It seemed highly likely that, at the time that he wrote the judgment, the district judge had regarded this issue as relevant to how the capital should be divided (because he said so himself). He had associated it with the husband’s conduct in re-mortgaging the investment property and had later taken that remortgage into account. The reality was that the district judge had been making findings of conduct and saying that he treated them as relevant. He had been incorrect to do so and a clear statement in a judgment that something was being treated as relevant could not be cured by a clarifying note.

The problem with the district judge’s approach to the remortgage of the investment property was that he had not made any specific findings about what had been dissipated. He had accepted that there was no evidence of concealment and then said that the ‘issue is the dissipation of assets’. As this court had said in the course of argument: ‘What dissipation?’ The husband did not accept that he had dissipated any sums of money and there had been a large amount of argument and contention about this at the hearing. It might be right that there were circumstances where the strict add back suggested in N v F [2011] EWHC 586 had to yield to a more general and discretionary approach. But, before any discretion could be exercised, there had to be findings about what had been dissipated. The judge certainly had not made findings that £65k had been dissipated (although invited to do so). What he appeared to have done was to say a) that the issue had been raised and b) that he thought it ought to be taken into account in some general discretionary way. That was impermissible without some underlying findings. The court had no idea whether the district judge had found the wife’s allegation of dissipation substantiated (or whether it just remained an ‘issue’), or any idea of the amount that the district judge considered had been dissipated.

There had simply been too many errors within the district judge’s judgment for that judgment to stand. The court had thought very carefully indeed as to whether the judgment could possibly be upheld on the simple basis that the wife needed the former matrimonial home and the maintenance provision might be justified. The court had been unable to approach this appellate hearing on that basis because:

  1. i) To do that would, quite simply, be manifestly unjust.
  2. ii) It would not bring about the end of litigation between these spouses in any event. As sure as night followed day, the consequence would be that there would then be an application to vary the periodical payments. That application would come before a district judge and would take place against the backcloth of the current judgment of the district judge. That would have these consequences, amongst others:
  3. a) The judgment of the district judge would be reinforced by the appeal judgment. This court was not prepared to do that.
  4. b) The conduct of the hearing of the variation application would be skewed by the errors in the current judgment not being corrected.
  5. c) There would be a very real danger that similar errors would be repeated since the existing errors would have passed unnoticed;
  6. d) The court would not be able to conduct an overview of the financial position of these parties. Although this case was straightforward, the issues of income and capital were intertwined and, in a variation application, the full capital issues could not be addressed.
  7. e) A variation application would leave it to these parties once again to engage in fresh family litigation. One only had to look at the wife’s application placed before the court this morning and think about the manner in which she and her team had conducted the current litigation, to see how destructive a course that would be. Any such fresh litigation would take months to resolve and, on past record, lead to huge amounts of wasteful expenditure which would cause irreparable damage to the financial circumstances of these parties and their children and further, unwarranted, litigation strain for this already over-stressed family as a whole.

The court did not feel able, having allowed the appeal, to impose its own order without some additional evidence. The scope of the cross applications heard at the outset of today’s hearing demonstrated why this was the case. The court did not know and was not prepared to guess: a) the correct amount of the husband’s income; b) the correct amount of the wife’s income (there was a dispute about her entitlement to tax credits); c) whether in the current circumstances the wife had a mortgage raising ability; d) what the parties now said about their housing needs; and e) the parties being now so acquainted with the grief of indebtedness, how that indebtedness was to be managed.

The total legal costs were over £120,000. These were disproportionate and there had been insufficient control of litigation expenditure. The district judge had been right to describe them as scandalous. This was not a complex case. It involved a home, a working husband who was effectively a sole trader, a few modest assets, considerable liabilities, two children and a depressed wife. For money to have been wasted on such disproportionate costs was truly scandalous. Further, these parties had two children – what sort of example were they setting their children when they spent so much of the money that should be directed to their children’s welfare on blinkered and self validating litigation?

The court was particularly critical of the level of this wife’s costs. They were double those of the husband and nothing that the court had seen got anywhere near justifying that. The court had itself witnessed two wholly unnecessary applications being brought by the wife: a) for transcripts of all of the evidence before the district judge to be ordered at the husband’s expense for the purposes of the appeal, an application which the court had not allowed and b) a full legal services application, when the correct application should have been for a partial release on a stay which, when suggested by the court, had been agreed on the evening before a hearing of the legal services application and only after considerable cost expenditure. Further, money had been wasted on obtaining expert evidence about the suggested value of the husband’s business when that capital value argument had then been abandoned (rightly) at trial and was never going to have the sort of relevance originally suggested. That expenditure on costs had taken place against the backcloth of strong complaint made by the husband before the district judge about the wife’s costs expenditure (no trial bundle, no open offer, no updating disclosure and a late production of her s 25 statement that had been prepared 3 months before the hearing started but was filed 7 days before the hearing started). The above remarks must be before any judge assessing costs in this case and the court asked that there be very careful scrutiny of the costs being claimed by the wife’s legal team. It could not be right that this level of cost expenditure had occurred in a case of such modest assets. The costs claimed were about 36% of the total assets held, according to the district judge by the parties. The burden that this now created upon the parties, especially the wife, must be immense.

Any rehearing had to be very tightly controlled indeed. Ultimately it was accepted that the evidential issues should be these:

  1. The current incomes of both parties;
  2. The retention by the wife of the former matrimonial home;
  • The housing needs of both parties;
  1. The income needs of both parties;
  2. The indebtedness of the parties;
  3. The wife’s health.

It was agreed that the wife would be able to conduct cross examination of the husband on the issue of dissipation but for no more than one hour. However, the court wished to make it plain that, if it found any more money was being wasted by this wife on costs, it would impose costs sanctions – if she, or the husband, pursued any more pointless or unmeritorious issues the court would reflect that in a costs order (without prejudice to any arguments and applications that might be advanced about existing cost expenditure). It was at least highly possible that past dissipation of assets (which in a big money case could be of obvious importance) might be regarded as totally overshadowed now, with the exigencies of the current very limited financial circumstances of these parties the true focus of this case was now on the limited issues set out above – especially relevant would be these questions: i) Where were these people to live and ii) what incomes were these people to have?

Although not in any way deciding the point now, the court foresaw that the husband would have a difficult task persuading the court that this wife should face a time limit to any order for periodical payments, particularly if it involved a s 28(1A) bar, but even without such a bar.

The above issues must be adhered to; there was to be no more profligate expenditure on legal costs. Any district judge assessing the costs of either party from this point on until conclusion of the rehearing should disallow that party’s costs insofar as the costs of any party (from this point onwards) exceeded £7,500 unless a) any party had made submissions to this court that it should revise that figure or b) the judge carrying out the assessment considered that an extension beyond that figure was genuinely necessary.

The court strongly recommended now that the parties made every effort to resolve their differences without the need for the rehearing to take place.

The court reserved the costs of the appeal until conclusion of the rehearing. Both parties knew what their own financial circumstances were and, with the level of costs that she had incurred, the wife should know about her tax credit position (and, if she didn’t, she needed to find it out hurriedly). Although the court did not know what the husband’s income was, he did. If it were to be shown on fresh evidence that the district judge had been correct about his income, that would be bound to have an impact on the orders for costs made.

The court was well aware of Rule 28.3 (5) of The Family Procedure Rules 2010 but: a) those provisions did not apply to the costs of appeals and b) was limited by Rule 28.3(6) which stated: ‘The court may make an order requiring one party to pay the costs of another party at any stage of the proceedings where it considers it appropriate to do so because of the conduct of a party in relation to the proceedings (whether before or during them)’.

 

 

 

 

CASE THREE:-

Family Court, 10 June 2015, HHJ Wildblood QC

Matthew Brunsdon Tully for the husband; Stephen Roberts for the wife.

http://www.bailii.org/ew/cases/EWFC/OJ/2015/B76.html

The couple were in their mid-40s; they had been married for 20 years; they had three children. The wife was living in the family home with the children; the property had an equity of £224,000. The wife worked for a charity. The husband lived with his new partner (who herself worked), and was a managing director of a company. The husband owned 30% of the A shares in the company; the wife owned 20%; the remaining 50% of the A shares were owned by a third person. The husband owned all the B shares. The wife had an income of £1,659 pm; her budget was £2,740 pm. The husband’s net income was £2,777 pm, with a personal budget of £1,077 pm.

At the FDR the parties reached an agreement, and an order was made. Both parties were unrepresented at this stage. The order provided for the family home to be transferred to the wife, with a charge back to the husband, which was to become exercisable/triggered by the first of: the wife’s death, remarriage, or cohabitation for a continuous period of 6 months (with permission to seek to defer the charge); the youngest child reaching 18 or finishing full time secondary education. The wife was to transfer her shares in the company to the husband. The husband was to pay maintenance including spousal maintenance for 5 years with a ban on extending the term. The order was explicit about the lack of agreement on certain issues, specifically the amount of global maintenance, the extent or size of the charge back, or the means of repayment of HMRC debts, these issues were to be determined by the court.

However, at the final hearing before a district judge, no mention was made of the order made by the FDR judge, or the agreement on which it was based. By now the wife had had legal advice; her counsel’s skeleton argument for the final hearing suggested that a joint lives basis for the maintenance was appropriate, notwithstanding that the agreement reached at the FDR had limited maintenance to 5 years. The district judge was also asked to decide upon the trigger events for the sale of the home, even though this had also been agreed at the FDR. The judge was also asked to decide how the husband’s remaining share in the home should be expressed.

The district judge decided that the sale should occur when the youngest child reached majority. He also ruled that the husband’s remaining share in the property should be 16% of the gross value of the house, with an allowance for any enhanced value arising from capital expenditure by the wife. He also decided that an undertaking from the wife to use her best endeavours to procure the release of the husband from the mortgage on the home would be sufficient, rather than a requirement that, if she did not procure his release within a short period, the property should be sold. The district judge also decided upon the quantum of periodical payments by way of a global figure for wife and children. His order for payment of £1,245 pm was based on a comparison of the parties’ budgets and incomes and he ordered the husband to pay the wife an amount that met the deficit in her budget, and which left the husband with a residual income that almost exactly matched the full amount of his surplus. These decisions were not appealed.

The district judge also decided that the global maintenance would end if either party died, the wife remarried or there was a further order of the court. He considered that the wife was not able to improve her income for the next 2 years, because of her responsibilities to the children, but noted that she intended to do some training. He also said that he was not going to make a finding that the wife would definitely be earning more in 2 years’ time, or even in 5 years’ time. The husband appealed this order, suggesting instead that the payments should cease on 2019, with a ban on extending the term.

The judge allowed the wife’s appeal.

The express definition of the issues to be litigated at the final hearing, identified following a skilfully conducted FDR, had been ignored when the final hearing took place, inadequate evidence had been sought on key issues and simple principles of law had been overlooked. A husband, who was acting in person and was appearing against counsel for the wife at the final hearing, had received counsel’s skeleton argument only minutes before the final hearing and had not been given assistance in identifying the core legal points that arose in relation to the issue raised in this appeal. The FDR had been rendered near purposeless. A clear agreement about the duration of maintenance had been ignored. At no point had there been developed argument as to implications or merits of the agreement that the parties had reached at the FDR. The issue of the agreement had in fact not made it on to the agenda at all. The only time that there had been any argument about the merits of a ‘term order’ was in counsel’s closing speech. The district judge had dealt with the issues on the basis of what he thought was appropriate without any reference to the agreement that the parties had made. That agreement should have been treated as an important factor, because:

  1. a) Parties should be encouraged to agree issues in family litigation;
  2. b) Where agreement was reached any attempted departure from it had to be justified – the question that inevitably arose was: ‘what vitiating factors were suggested?’;
  3. c) Where the court recorded on the face of an agreed order that specific issues only were to be litigated, that agreement should not simply be ignored during the future hearing. If there was to be an attempted departure from those agreed issues or a redefinition of them, this should have happened only on notice and should have occurred openly. To do otherwise entirely negated the purpose of the earlier hearing or ‘the message will be sent to judges conducting FDRs involving one or more litigants in person that they are not worth the paper they are written on’;
  4. d) Important issues of fact were at issue, especially the question of whether the wife could adjust without undue hardship to the termination of her claim to periodical payments. If there was to be a departure from the agreed term order, how could there not have been a question to the wife: ‘Since 7 August and until today, 3 September, you have signalled your agreement to a term order even after you consulted solicitors. Why has your position about your ability to be self-sufficient changed?’

The agreement about the issues that remained to be determined had not simply been ‘part of the discussion at the FDR hearing’. It had been an agreement between the parties that was of a continuing nature and which had persisted from the time of the FDR until the wife purported to give notice of her change of mind on
the morning of 3 September 2014, through the service on the husband of counsel’s skeleton argument.
The court was at the end of the FDR hearing to ‘give directions for the future course of the proceedings’; a definition of the outstanding issues to be decided was part of that process. That was what had happened here. The deputy district judge had been entirely right to narrow down the issues for hearing and to express the remaining issues with such clarity. She had made an exemplary order at the end of the FDR. The terms of the agreement had been openly displayed on the court’s order. That should have been the first port of call at the final hearing. It should not have been ignored. There was no record of any discussion at the hearing before the district judge as to whether the agreement should be before the court. Thus there had been no argument to the effect that the agreement was inadmissible (nor could there have been). The absence of any reference to the agreement at the final hearing (save for a brief mention in counsel’s opening which had not been developed or followed though) was inexplicable. There had been no examination in evidence about why the agreement had been made and why the court should depart from it. In particular the wife had not been asked about why she had agreed at the FDR but was now seeking to resile from this agreement. The judgment was given on the basis of the district judge’s opinion about what should happen. In deciding what ‘should happen’ the fact of the agreement had been itself an obvious and important factor but had not been taken into account. The judge had begun his judgment by referring to the fact that many matters had been agreed. He had not touched on the fact that a term order had been, but was no longer, agreed. He had not raised any questions about the issue at all. At the very least the court might have hoped that counsel or the judge would have raised the question: ’27 days ago you agreed to a term order, today you no longer do so. Why have you changed your mind?’ If the court was to depart from a term order with an express limitation under s 28(1A), it should also have given consideration to the possibility of a term order without such a bar (leaving it to the wife to apply to extend the term if she could show valid reason).

There was an apparent suggestion that there was little difference between a term order and a ‘joint lives’ order, because the husband could apply to vary. That suggestion was profoundly wrong.

In this case it would not have been open to the deputy district judge to have made a term order for periodical payments at the FDR because other parts of the periodical payments order were not resolved, in particular quantum (a completed order for periodical payments with a variation application at the final hearing would have been a fictional approach to what was occurring at the FDR and was not the basis of the agreement). Without determining the point, which had not been fully argued, the court’s view was that the order made by the deputy district judge recorded a ‘contractual agreement’ (per Thorpe LJ in Rose) rather than an unperfected order.

It was perfectly plain is that there had been a clear agreement that a term order should be made. Further, the agreement in this case raised the clear issues of fact already identified (i.e. why did the wife now say that she could not be self sufficient at the end of the term). That issue had never been examined during the hearing and had not been addressed at all by the district judge by reference to the agreement in his judgment. The district judge had not taken any evidence on why the wife sought to depart from the agreement. It was simply not enough for the district judge to have expressed his view about a term order without incorporating within his judgment an analysis of the agreement reached.

It was not helpful, correct or necessary to view what had happened at the FDR as a ‘partial agreement’, which, because it only addressed part of the financial remedies in issue, should be regarded as less cogent. The agreement reached had been expressed clearly and part of that agreement had been that the parties would only litigate certain issues. The agreement therefore had not been partial; it had been a full consensual acceptance that only some defined issues should be litigated. It was a full and complete agreement defining the issues that remained. The very fact that the parties had agreed that only some issues should be litigated raised Edgar type considerations.

As a litigant in person the husband should have been assisted with this point at the hearing and someone should have asked the wife to explain her position properly in evidence.