Family Law and Divorce - Assignment Example

Family Law Part A In cases of divorce, the court provides ancillary relief, in the form of periodical payments and lump sum orders, under the provisions of the Matrimonial Causes Act 19731. It will also make orders regarding property2. If the parties are willing to come to an agreement, regarding these issues, then all these factors are incorporated in to a consent order. Thereupon, this consent order is formally submitted to the court, for its approval. There are some issues to be taken in to consideration, under section 25, while making the consent order. The approval is made under section 33(A) of the Matrimonial Causes Act 1973. This consent order had to be implemented, just like any other court order. Section 25 of the Matrimonial Causes Act 1973, deals with the norms relating to the settlement of matrimonial assets and monetary issues. Specifically, it comprises of the principles to be adhered to by the court, whilst dealing with the orders relating to financial provisions, property; and ancillary orders dealing with the sale of property, under sections 23, 24, 24(A), respectively. Decisions of the courts are chiefly based on the extant legislation and relevant case law. For making orders under sections 23, 24, 24(A) the courts takes the following factors, into consideration. First, the income, property and other assets of the disputants, which are either present or are likely to be available in the foreseeable future, are considered. Second, the present and future financial obligations and needs are taken into consideration. Third, the lifestyle of the family is considered. Fourth, the duration and age of the parties to the marriage is taken into consideration. Fifth, the physical and mental disabilities of these parties are taken into cognisance. Sixth, any contribution made towards the welfare of the family, is taken into consideration. Hence, the consent order should be drawn in such a manner that it includes all the issues regarding ancillary relief. It will be deemed to be a final order, and will prove to be difficult to modify or contest, subsequently. Hence, Sheila should have ensured, while drafting the consent order that it reflected all the agreed upon financial provisions. The drafting of consent orders necessitates the exercise of considerable care, so as to provide the maximum possible protection to the applicant. Several considerations have to be envisaged, whilst drafting consent orders. In the context of an order for the sale of property and distribution of proceeds, the factors enumerated below, have considerable significance. Specification should be in percentages and not in fixed amounts. This is because the total sale price of the property in question could vary by a substantial amount, if capital division with a percentage were to be reckoned. Moreover, issues, such as the fluctuations of the property market have also to be taken into account3. For declarations of solvency, the financial solvency particulars pertaining to both of the parties prove to be of great use, in circumventing certain application by trustees in bankruptcy. It is preferable to specify lump sum payments, instead of a lump sum by instalments. Moreover, these orders should not be variable. Sufficient care should be taken while making these orders; and all possibilities are to be imagined, while specifying the required protection. It is advisable to declare beneficial interest and to obtain a decree absolute. In the absence of a decree absolute, no order can be enforced4. According to the reasoning established in the case of Barder5, an application for setting side an order, on the basis of change in the value of assets, has to be submitted, within a year. Such change should cause significant damage to the underlying equity of the order6. The Matrimonial Causes Act 1973 provides the necessary jurisdiction to the courts, to decide on financial provision and to issue property adjustment orders, in divorce proceedings7. This Act does not require the parties, involved in ancillary relief proceedings to disclose financial information8. In ancillary relief cases, a Barder event proves to be equivalent to frustration. This situation requires the judge to concentrate on the supposed vitiating factor in the petition filed by a party that seeks relief from the effects of an ancillary relief consent order. In Judge v Judge 2008 EWCA Civ 1458, it was held that an inaccuracy, in respect of the value of an asset would not come under the Barder principle9. The following case law describes the courts discretion, while taking decisions in various situations regarding consent orders. In Cornick v Cornick 1994 2 FLR 530, Hale J held that the fluctuations in share prices satisfied the Barder test. She stated that the asset in dispute had been correctly valued at the time of making the order. Subsequently, there was a change in the value, within a relatively short period. The price variation had resulted due to a natural process of price fluctuation. She further opined that under such circumstances, the court should not manoeuvre the power to grant leave to appeal out of time. Such manipulation would be tantamount to a concealed power of variation, which had intentionally not been legislated by Parliament10. The unforeseen and unforeseeable fluctuations in share prices and house values constitute new events. An order will be made on the basis of the fair division of assets, and the terms of such order have to be stringently complied with. Furthermore, the original order has to be fair and operable, and both the parties should be in agreement, with regard to the exercise of that order. However, from a theoretical perspective, the courts do not follow the consent of the parties, as a matter of routine. The reality is that they evaluate agreements, in accordance with the provisions of section 25, prior to making an order11. The ruling in McFarlane v McFarlane: Parlour v Parlour 2004 EWCA Civ 872 results in a number of queries, regarding the approach of the judiciary towards the division of property and financial provision, in instances of breakdown of relationships. The courts have been partial to a practical and needs – based approach; whereas it would provide greater certainty, if the courts were to adopt an approach that was founded on the concepts of entitlement and compensation12. The decision in MacLeod v MacLeod 2008UKPC 64 provides clarification, regarding the legal principles relating to relationships, and described the various agreements between the parties in a relationship. The financial consequences of divorce were dealt with in this case. In addition, the relevance of the principles, in the 1973 Act, in respect of ancillary relief after divorce was discussed13. According to the customary law and public policy, pre – nuptial agreements are not binding on the parties. They merely constitute a factor that is to be taken into account, whilst granting ancillary relief, under section 25 of the Matrimonial Causes Act 1973. In contrast to this, couples who have separated or who are in the process of doing so can arrive at valid separation agreements14. Albeit, these agreements cannot exclude the jurisdiction of the courts in granting ancillary relief; they are binding in nature, and no public policy objection can cause such exclusion. This was illustrated in Hyman v Hyman 1929 AC 601decision15. In the MacLeod case, it was held that post – nuptial agreements were not to be deemed void on grounds of public policy, if they were made, in respect of some financial provision for an assumed future separation. Sections 34 and 35 of the Matrimonial Causes Act 1973 govern separation and post – nuptial agreements that engender financial provision for future separation. Therefore, all written agreements that are valid have a binding effect on the concerned parties, as per the provisions of section 3416. In addition, section 35 of this Act provides the grounds, whereby the post – nuptial agreements become valid. If the circumstances undergo change, then the agreement is to be correspondingly, modified. Any agreement that compromises on a claim for ancillary relief, and that it is not included in a consent order, is not binding. They are accorded a status that is akin to that of the post – nuptial and separation agreements, if one the parties to the relationship claims ancillary relief17. In B v B 2007 EWHC 2472 (Fam), it was held that non-disclosure by the defendant could not be relied upon, as the supervening event had been foreseeable. It was also ruled that such reliance was not permissible, if the effects on non – disclosure were found to be avoidable through proper enquiry18. Despite the fact that a share sale constituted a Barder event; if the wife had agreed to compromise her claim, then the court would not allow her to change her stance19. The wife was convinced that the future value of the shares held by her husband, would appreciate in value; nevertheless, she had consented to exchange any claim against these shares, for immediate remuneration20. In Heard v Heard 1995 1 FLR 970, the wife attempted to enforce the ancillary order, by putting up their matrimonial house for sale. On account of the economic recession, the amount offered for the matrimonial home, was less than half the amount that had been anticipated, at the time of making the order. The husband applied for leave to appeal out of time, twenty months after the making of the order. The lower court rejected his plea, which was however, upheld by the Appellate Court21. The drastic reduction in the cost of the house, constituted a new event, as per the interpretation of the Court of Appeal. Moreover, the latter opined that the delay caused in bringing the appeal by the husband could be condoned, as he attempted to prevent the sale of the house, during unfavourable market conditions, by trying his level best to raise the necessary funds22. The courts have the discretion to grant leave to a party that seeks to appeal out of time, in respect of orders pertaining to financial provision after divorce. This also applies to orders that are made, with regard to property transfer after divorce. Such grant of appeal out of time requires new events to take place after the making of the order. However, there are certain conditions that have to be fulfilled. First, the new events should have occurred after the order had been made and these events should have changed the very basis, on which the order had been made. As such, the appeal should be extremely likely or certain to succeed23. Second, the occurrence of such new events should have taken place within a reasonable short period of time, subsequent to the making of the order. However, it is quite possible for this reasonable time to vary from case to case. On the whole, a time limit of one year can be deemed to be reasonable. Third, the application for appeal out of time is to be made promptly, in accordance with the circumstances of the case24. In the majority of the cases the courts favour public policy and needs – based approach that is specific to the context of the case. Part B For advising John regarding his chances of success, the following issues have to be addressed: Whether, the reduction in the value of the houses constitutes a new event that can affect the basis of the consent order. The court had set out certain standards to seek an appeal out of time. As such, appeals for out of time claims should fall within any one of the second or third principles. If at the time of hearing, a wrong value is applied to the asset in dispute, then it would lead to a different order. The court, per se, is empowered to reopen a case, if the claimant party can establish that the wrong was not due to its fault. Such application of wrong value would be classified as an act of misrepresentation and non-disclosure of facts, even if it were to come under the ambit of the Barder principle. If something had happened that was unforeseen or unforeseeable at the time of hearing, and which served to alter the value of the asset, then it causes substantial change in the order, itself. It would also drastically modify the balance of assets, which are the subject matter of the order25. In practice, applications to set aside or appeal against a consent order, arise, in incidents involving the nondisclosure of important matters, supervening events, fluctuations in value of resources and death. If such an incident fulfils the three conditions of the Barder principle, then the latter will be applied to the order. The case law in this area suggests that the Barder principle applies to cases, in which the natural processes of price fluctuations change the value of houses, shares or an asset. The husband, in the Cornick case had certain share holding in the company, which subsequently, increased by 363%. This increase in share price took place within a period of nearly one and half years, after the making of the order by the court. The husband had shares in the Principle Capital Holdings Company. As such, shares have the peculiar tendency of undergoing price increase frequently26. In Cornick v Cornick 1994 2 FCR 1189 it was held that the value of an asset could undergo change. At times, such change could occur within a short period, after the order had been issued, due to natural consequences. In such situations, the principle in the Barder case was not to be applied, because this would be tantamount to providing a clandestine power of variation27. In Barder v Caluori 1987 2 All ER 440 the conditions to be fulfilled, in order to allow an appeal out of time, due to the occurrence of new events, were specified. These are, first, the events should have transpired, subsequent to the issuance of the order and those events should invalidate the cardinal assumption, upon which the order had been made. Second, such event should have taken place immediately or within a reasonable period of time, after the court’s order. Third, the application should be made, with reasonable promptitude, after the order28. In this case, it was held that the court had jurisdiction to permit an appeal out of time. In this case, both parties had assumed that the wife and children would require a home, for quite some time, after the making of the order. However, this assumption was convincingly disproved. Permitting an appeal out of time, should transpire, only if that appeal is likely to succeed on being heard; the supervening event had taken place, almost immediately after the order was made; and if the application for appeal out of time had been made promptly. Furthermore, such application should not prove to be prejudicial to innocent third parties29. In our present case, it is to be assessed, whether the events that had occurred after the consent order, would affect its cardinal value. The events had occurred within a reasonable period of time, after the making of the order. However, in Cornick v Cornick the Appellate Court held that the Barder principle could not be applied; in instances, wherein fluctuation in the value of an asset, was due to natural causes. Moreover, the application of the Barder principle would be equivalent to providing a disguised power of variation. Hence, John cannot base his claim for appeal out of time, on the fluctuation of house rates. Whether losses in pension funds, constitute a new event that could affect the basis of the court order. In Walkden v Walkden 2009 EWCA Civ 627, the husband was the managing director of a company. He was also a shareholder in that company, and the value of the shares held by him was of the order of £216,000. Subsequently, the husband acquired additional shares in this company, at a higher valuation. He did not disclose the acquisition of these shares, by him30. In addition, an individual bought this company for £3.7 million, and the husband received £1.8million towards his shareholding. The wife invoked the Barder principle of new events and claimed against the non – disclosure, by her husband. The lower court accepted her plea to set aside the consent order, between them. The husband approached the Court of Appeal, wherein it was held that the wife had chosen certainty, instead of speculation, regarding the worth of the business31. The sale that subsequently, took place could not be construed to be unforeseen, because during the negotiations between this estranged couple, the wife’s solicitor had procured advise to the effect that her husband’s share in the business was markedly, in excess of the amount declared by him. However, the realisation of the higher amount was speculative in nature. As such, the wife was aware that her husband was depending on the sale of the business, at some time in the future. On the basis of these considerations, the Court of Appeal upheld the husband’s appeal32. In respect of John’s pension losses, there was a substantial and drastic change in the value of pension assets. Moreover, this change was unforeseen and unforeseeable. In addition, this change would seriously affect the equity of the agreement reached between John and his wife. Consequently, John can successfully obtain an appeal out of time, on the basis of the Barder principle. Whether John’s assumption, regarding Sheila’s future marriage, will affect the consent order. John’s contention is that Sheila was contemplating marriage with some other person; hence, his responsibility was to be diminished. In Jenkins and Livesey the court held that the subsequent remarriage of the wife did not affect the consent order, regarding the payments to be made to her. As such, Sheila’s future marriage will have no effect on the consent order. Therefore, John cannot present this event as a claim for an appeal out of time. List of References B v B (2007) EWHC 2472 (Fam) Barder v Barder (Caluori Intervening) [1988] AC 20 Barder v Caluori (1987) 2 All ER 440 Cornick v Cornick (1994) 2 FLR 530 Edgar v Edgar (1980) 1 WLR 1410 CA Heard v Heard (1995) 1 FLR 970 Hyman v Hyman (1929) AC 601 Jo Miles, 2009, Agreements for grown – ups? Cambridge Law Journal, Volume 68, Issue 2 Joanna Miles, 2005, Principle or Pragmatism in Ancillary Relief: The Virtues of Flirting with Academic Theories and Other Jurisdictions, International Journal of Law, Policy and the Family, Volume 19, Issue 2 Jenkins v Livesey (1985) AC 424 Judge v Judge (2008) EWCA Civ 1458 McFarlane v McFarlane: Parlour v Parlour 2004 EWCA Civ 872 MacLeod v MacLeod (2008) UKPC 64 Matthew Brunsdon-Tully, Camini Kumar and Valentine Le Grice, 2009, Credit Crunch in the Court of Appeal: Myerson v Myerson, Family Law, Volume 39 Matrimonial Causes Act 1973 Simon Calhaem, Divorce and Recession Part I: Practical and Legal Considerations, Family Law, Volume 39 Using ancillary relief admissions at trial, The Times (London), 19 August 2009 Walkden v Walkden (2009) EWCA Civ 627 Read More