Family Law - Ancillary Relief according to the Matrimonial Causes Act - Case Study Example

Ancillary relief Introduction: Ancillary relief is mainly governed by Section 25 of the Matrimonial Causes Act of 19731, together with future substitutions that have occurred2. According to Section 25, a divorced spouse can claim ancillary relief based upon the spouse’s income, earning capacity and financial resources as well as on the basis of the financial needs and obligations of each party and the extent to which each has contributed to the relationship. The Court’s duty in the event of a divorce is to allow for the distribution of assets after taking into account “all the circumstances of the case.”3 There is a wide latitude of discretion that has been allowed to the Courts, which has been articulated by Waite, LJ as follows: “The discretionary powers conferred on the courts…..[by the Act]…to redistribute assets are almost limitless”4 although Section 25 of the MC Act is to function as a basic guideline to the Court to decide how it will exercise its powers, taking into consideration all the circumstances of the case, such as welfare of children, income and earning capacity among others and according due weightage to each. The Matrimonial and was notable in that the clean break objective and the identification of children’s interests as the first consideration were set out under its provisions. there is no clear cut presumption that exists in favor of a clean break in every case.5 Complete judicial separation may not be advisable in every case, where children may need continued maintenance and in such cases, the Courts have resorted to Mesher orders in property settlement, where the wife as the custodial parent6 is allowed to remain in the home until the children reach the age of 187 or alternatively, till her death, remarriage or cohabitation with another man.8 However, recent developments in case law have brought about modifications in the principles of ancillary relief, such that the Court direction has shifted towards a fairness approach where a non discriminatory approach is to be applied. Analysis: The approach of the Courts thus far has therefore been need based, although they have only considered “reasonable needs” while applying the Act9 and justification could not be provided for distribution of assets beyond needs.10 The case of White v White was the first case where the division of matrimonial assets was done on the basis of equality and a mathematical division of assets, identifying fairness as the implicit objective of Section 25 of the Matrimonial Act11 although it was acknowledged that this is dependent upon judicial subjectivity. Another important objective achieved by this case was in recognition of the equality in the roles of both spouses, as stated by Lord Nichols: “there should no bias in favor of the money earner and against the home maker and child carer” through the “universal application”12 of the Matrimonial causes Act, wherein the Courts are asked to examine “the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contributions by looking after the home or caring for the family.”13 The case of White v White has been hailed as a landmark ruling in that it created the yardstick of an equality of division of assets rather than need.14 But in analyzing the case of White v White, Mears points out that in a typical ancillary relief proceeding, the wife’s financial position is inferior, hence the single, significant matrimonial asset is generally awarded to the wife.15 While Lord Nicholls clearly stated that “there is no place for discrimination between husbands and wives and their respective roles,”16 he did not carry this through in setting out equality as a starting point in ancillary relief, stating that “a presumption of equal division would be an impermissible judicial gloss on the statutory provision.”17 Mears argues that the ruling in White v White in effect, pulls the law on ancillary relief back to 1973, and the case of Watchel v Watchel where the guideline that was provided was a one third division of capital assets18. However, a true application of the principle of no discrimination between home-maker and bread-winner would mean that an equitable division of assets would be mandated rather than a one third division. Mears argues further that there should have been a comprehensive analysis in White of the situations where equality would be equitable and where it would not, other than a general principle that equality should be departed from only for good reason, without defining what would constitute good reason. On this basis therefore, White v White does not strictly mandate that ancillary relief should ensure that there is no discrimination between home maker and bread winner because no relief has been offered for divorcing husbands, apart from the criterion that with limited assets, the wife will receive most of it and with a larger share of assets, she will receive half or one third of capital assets. However Bailey Harris (2005) points out that some significant developments have occurred in so far as no discrimination is concerned, in that the policy of the Courts on distribution of matrimonial assets has shifted from a needs based approach to a non discriminatory approach19. In earlier cases, Courts have largely used the discretion provided to them to determine allocation of assets on the basis of need of the parties to be satisfied from finite resources.20 In the case of B v B for example, the allocation of finite assets resulted in an inequitable distribution between spouses and the entire proceeds went to the wife.21 This may not be an equitable principle in modern times where the institution of marriage and the roles within it have changed, as was stated in the case of R v R22 : “husband and wife are now for all practical purposes equal partners in marriage.” On this basis therefore, it was argued that the principle of equality may be applied, both in short marriages as well as long ones23. In the case of GW v RW24 it was held that entitlement in so far as equal division of matrimonial assets is concerned needs to take into account not only the respective contributions made by each party “but also an accrual over time” This was contested by Lord Nicholls in the case of McFarlane v McFarlane, although the application of non discrimination meant that the appeal in McFarlane25 was allowed. The marriage in this case has lasted for 16 years and while the capital of the parties was inadequate for a clean break but Mr. Farlane was a high earner. Lord Nicholls however contended that entitlements must be governed by a principle of fairness and not necessarily through a strict division of matrimonial and non matrimonial assets. The Court held that in applying the criterion of equality, there needs to be a distinction between matrimonial and non matrimonial property, however weightage must still be accorded to each party’s contribution rather than merely dividing these assets equally along distinct lines. In the McFarlane case, the District Court allowed periodical payments for the wife which was equivalent to one third of the husband’s net income, despite the fact that she was also earning, which would have enabled her to receive an amount that was over and above what was required strictly for maintenance. On this basis, the Court held that it would be discriminatory to allow the wife to accumulate surpluses from maintenance payments and on this bases, Mr. McFarlane’s appeal to have the payments reduced was allowed. Eekelaar notes that the judgment in the case of White has moved the basis of the award in divorce proceedings away from “the subjective evolution of desert to a more objective assessment of entitlement.”26 Plews has highlighted the difficulties that arise where bankruptcy and insolvency plagues the parties and notes that the position of spouses has improved over the years27. In the case of M v M (Financial Provision: Substantial Earning Capacity28, the Courts held that the quantification of periodic payments needs to be carried out not as a precise science, but rather with due weightable accorded to both the parties in order to achieve a fair outcome. Bailey Harris has pointed out in some cases such as N v N (Financial Provision: Sale of Company) as well as M v M cited above, the Courts have refused to treat future earning income capacity as a divisible asset on the grounds of non discrimination and equality being applied, since the potential division of future income would be a factor that could function to dampen the incentive of the wage earner, while also creating a position where the payee would be dependent upon the wage earner and exacerbate the animosity between the parties. Therefore, as Bailey Harris points out, the developments subsequent to White have meant that capital and income are to be treated differently. In so far as periodic payments are concerned, earlier principles applied by the Court on a need based approach which resulted in long drawn out maintenance payments, have now been restricted after the decision in McFarlane. The overriding focus of the Courts is now geared towards the achievement of a clean break and in those instances where periodic payments are necessary, their duration and amounts may be restricted. Conclusion: On the basis of the above, it must be concluded that while White was a landmark case, it has by no means declared an equal distribution of assets as the legislative precedent to be followed in each case. While earlier cases had treated the home maker differently because she was in an inferior position in terms of financial earnings, the basis for the division of matrimonial assets has not changed. While earlier, the need based approach was applied by the Courts which resulted in the wife gaining a substantial part of the husband’s assets, the developments after White have refined the approach of the Courts to one that is based upon fairness. An equal distribution of assets may not be mandated, however while assessing how the assets should be divided, the Courts will also take into consideration, the contribution of the individual parties and the disposition of justice to both the parties. In this approach, the Courts are to accord due weightage to the fact that in the present time, the earning capacity of the husband and wife may be on par and that no surplus gains are to be allowed to the wife in terms of periodical payments. This is a recognition of the fact that a non discriminatory approach must be applied which also takes into account the need to accord fairness to the husband as well. By allowing maintenance payments to continue for a long time and allowing the wife to earn a surplus, a discriminatory result will be achieved. Therefore, even in those cases where periodical payments are to be received, the term has been restricted. Moreover, the Courts are now reluctant to include the future earning capacity as one of the criteria in distribution of assets since this would be a disincentive to the primary wage earner. However, the case of White also made it plain that the contributions of the wife as home maker were not to be ignored, therefore applying the criterion of fairness, due weightage should also be given to the wife’s role as primary care giver in arriving at a disposition of assets. On the basis of the foregoing, it may therefore be concluded that ancillary relief is not yet at the stage where there is no discrimination at all between homemaker and bread winner. However, recent developments have moved from a need based approach to a fairness approach, therefore there is more of a tendency by the Courts to ensure that the rights of both parties are taken into account in a distribution of assets. Hence it may correctly be stated that there has been a move towards achieving non discrimination, but this is not yet executed on the principle of equal distribution but on the basis of a measured analysis of the individual circumstances of each case, giving due weightage to all factors except the future income earning capacity, as well as non matrimonial which have been excluded from the resources that may be considered in asset distribution. Bibliography * Allen, Sue, 2000. “Ancillary relief: case ‘updated attitude of courts’ towards achieving a fair division of assets.” Law Society Gazette, 2 Nov 4(1) * Eekalaar, John, 2001. “Back to basics and Forward into the Unknown.” Family Law 30 * Harris, Rebecca Bailey, 2005. “The paradoxes of principle and pragmatism” Ancillary relief in England and Wales.” International Journal of Law, Policy and the Family, 19 (229) * Mears, Martin, 2001. “White v White: Yet another turkey.” New Law Journal, 151 (6967) :151 * Norrie, Kenneth, 2006. “Clean break under attack” The Journal, July 2006. [online] available at: http://www.journalonline.co.uk/article/1003219.aspx * Plews, Christine, 2005. “Until debt do us part….”Family Law Journal, May 2005: 6-8 Cases cited: * B v B (Financial Provision: welfare of the Child and Conduct) (2002) 1 FLR 555 * Barrett v Barrett (1988) 2 FLR 516 * Browne v Pritchard (1975) 3 All ER 721 * Cordle v. Cordle [2001] EWCA Civ 1791 * Foster v Foster (2003) EWCA Civ 565 * GW v RW (Financial Provision: Departure from Equality) (2003) 2 FLR 108 at 121-122 * Leadbetter v Leadbetter (1985) FLR 789 * Martin v Martin (1977) 3 All ER 762 * McFarlane v McFarlane (2006) UKHL 24 * Mesher v Mesher (1980) 1 All ER 126 * M v M (Financial Provision: Substantial Earning Capacity) (2004) 2 FLR at 28 * R v R (1992) 1 AC 599 at 617 * Thomas v Thomas (1995) 2 FLR 668 @ * White v White (2000) 2 FLR 983 Legislation cited: * Matrimonial Causes Act 1973 * Matrimonial and Family Proceedings Act of 1984 Read More