Ancillary Relief - Assignment Example

Ancillary relief Introduction: Ancillary relief is mainly governed by Part II of the Matrimonial Causes Act of 19731, together with future amendments that have occurred2. 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”3 although a list of principles does exist4, 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. Ancillary relief proceedings typically occur in three distinct stages: (a) first appointment (b) financial dispute resolution and (c) final hearing5. The major issue at stake in such proceedings is the distribution of matrimonial assets. Recent trends have favored a clean break principle6, the desirability of which has been articulated by Lord Scarman as follows: “The law now encourages spouses to avoid bitterness after family breakdown and to settle their money and property problems. An object of modern law is to encourage each to put the past behind them and to begin a new life which is not overshadowed by the relationship which has broken down.”7 Therefore, the Act has been adapted over the years in order to ensure that the parties are able to achieve a clean break and a measure of finality after a marriage has ended8. Moreover, distribution of assets that was previously need based is now driven by principles of equal division and parties previously not included, such as former spouse, have also been receiving a share in distribution of surplus assets. The Clean Break Principle and need based relief: Case law has indicated that the clean break objective is not necessarily a principle that should guide ancillary relief in every case.9 The Courts are required to consider it in view of the advantages articulated by Lord Scarman as laid out above, however, there is no clear cut presumption that exists in favor of a clean break in every case.10 This is so especially when the welfare of the children is at stake, since Courts may be reluctant to impose a clean break in such cases.11 Complete judicial separation may not be advisable in every case, where children may need continued maintenance12. In such cases, the Courts have resorted to Mesher orders in property settlement, where the wife as the custodial parent13 is allowed to remain in the home until the children reach the age of 1814 or alternatively, till her death, remarriage or cohabitation with another man.15 Therefore, there has been a gender bias in favor of women for periodic maintenance payments, since Mesher orders cannot be varied;16 they constitute once and for all orders that hold good until children reach 18 years of age.17 In one instance, the tendency of the Courts to allow maintenance payments prompted a woman to try to get her husband murdered for higher maintenance.18 Moreover, as Douglas points out, such maintenance payments have been increasingly transferred into tangible assets,19 providing further advantages for the wife, although there have been cases where possession of the matrimonial home has meant that maintenance payments are reduced or extinguished.20 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.21 In the case of B v B, the allocation of finite assets resulted in an inequitable distribution between spouses and the entire proceeds went to the wife22. However, the wife may not always be deemed to be the weaker party in need, as was the case in C v C (Financial provision)23 where substantial assets were involved and the wife had a good education and significant earning powers, as a result of which the Court was deemed to possess the jurisdiction to vary the post or anti-nuptial settlement. While a wife with young children can receive maintenance, courts have not allowed such maintenance where such pressing need does not exist or where the nature of the relationship between the parties is one of cohabitation.24 Where the conduct of the wife is suspect, and geared towards acquisition of the husband’s assets, the Courts have not granted relief.25 Pre-nuptial agreements between the parties function as the determining factor in the division of assets and in such cases, wives may not be automatically eligible for shares in the husband’s assets.26 In the case of Vicary v Vicary27 the wife had made no financial contribution but was deemed to have contributed to her husband’s success. However, in the case of Burns v Burns28 such consideration was not allowed since the woman was a cohabitee rather than a wife. The significance of White v White: All the above cases demonstrate the need based approach of the Courts, although they have only considered “reasonable needs” while applying the Act29 and justification could not be provided for distribution of assets beyond needs30. However the problems arise when there are surplus assets available as compared to the needs of the parties and claimants are likely to receive awards that exceed their needs, therefore surplus funds have to be distributed using other principles and this has posed a problem for the courts. Financial assets can also include a future inheritance upon imminent death31 or even the income of a new spouse or live in partner32 and personal injury damages33. In general, once the need based requirements were met, spouses tended to receive less than 50% of the matrimonial assets and this was discriminatory to the female spouse. The case of White v White is significant because it 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 Act34. 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”35 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.”36 However, the significance of this case also rests on the fact that it strongly supports the ‘clean break” principle by making provision for lump sum payments and division of assets between both spouses from the perspective of fairness. In some cases, lump sum case settlements have been very high, such as the case of Gojkovic37 where the property assets were valued at 4 million pounds. A mathematical computer based calculation was used in Duxbury along the lines of 10 years of marriage producing a 60/40 split in assets.38 However, Burns39 questions this principle of fairness laid out in the case of White and points out that while it may work very well for rich divorcing couples and ensure equitable distribution of assets, it creates problems for middle class couples, where the decision on asset distribution is who has made the most sacrifice in meeting the needs of dependent spouses and children and may in some cases be inequitable.40 After the decision in White the case of Lambert also raised the question of equitable division of assets in the interest of fairness, even in instances where one party’s share might necessarily need to be increased to preserve fairness41. The recent trend has been for more husbands to contest the right of the wives to extra special consideration in the distribution of assets, as was the case in Sorrell v Sorrell.41 Moreover, the important issue of case management arose in the case of G v G42 which highlighted the intentions of the parties as an important determining factor in the allocation of relief. Therefore, the claims of the wives may be further reduced where deemed necessary in the interest of fairness, as per the criterion in White.43 Provisions for former spouses: Subsequent to the case of White, one of the ways in which ancillary relief provisions have changed is in allowing relief for the former spouse, through the amendments made to Section 25 of MCA 73. Earmarking has been inserted into the MCA44 modified from the Pensions Act of 199545. As a result, while interpreting the Act, a fraction of the assets are also accorded to the former spouse where they are substantial in nature. For example, the needs of the spouse were taken into account in the case of T v T46 and a portion of the matrimonial assets and maintenance were accorded, with maintenance allowance. But although the former spouse was not entitled to pension benefits, the husband’s lump sum death benefit was earmarked and the Court did consider a cash equivalent transfer value in determining the value of retirement benefits. Therefore, this case set an important precedent for the division of matrimonial assets on a proportionate basis, depending upon cash equivalent values. In the case of Burrow v Burrow47 the matrimonial assets were substantial, therefore the former spouse received a settlement from the sale of the family home, together with annual maintenance and half the husband’s pension income. But in the case of Hedges v Hedges48, where no children were involved, the wife’s petition for periodical payments from a property purchased by her husband was denied. Conclusions: The principle of fairness that was the criterion adopted in White, which also resulted in allocations for former spouses was questioned in the case of McFarlane, as being “elastic and often subjective.”49 The compensation principle was set out in White wherein it was laid out that a wife also contributes to her husband’s future earning capacity and he would be unjustly enriched if she was denied a share in those earnings.50 However, the enthusiasm of the Court for the clean break principle indicated a mandatory element in the principles laid out in the Matrimonial Causes act, which may not be true in every case. 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.”51 However, he also points out52 that a clean break cannot dictate the complexities inherent in achieving justice for the parties concerned by achieving the right balance between compensation and need. Plews53 has highlighted the difficulties that arise where bankruptcy and insolvency plagues the parties and notes that the position of spouses has improved over the years. However, Herring has contested the fairness of financial arrangements that are negotiated among parties as a part of contractual settlement arrangements between them and the compromising of state and community interests. He concludes that the question of redistribution of assets among parties in a divorce is not merely a matter of fairness between the individuals; the interests of the community and potential losses should also be taken into account where the content of assets are concerned, apart from legal costs to the community resulting from withdrawal of maintenance to wives through a clean break arrangement.54 This position has also been corroborated by Martin55 who has examined divorce law and ancillary relief in Ireland and concludes that a clean break may not necessarily signify good divorce law or be in the interests of the parties, since the State is forced to pick up the tab if either of the parties is unable to support themselves financially after the divorce. Miles56 has also highlighted the anomalies in the preset case law after White in terms of financial arrangements after divorce and concludes that a more coherent and principled approach is necessary and there is a need to find some middle ground between a clean break and the meal-ticket-for-life maintenance provisions. Therefore, from the above, it may be concluded that while recent developments in ancillary relief after the case of White have focused more on fairness for both parties, after an assessment of needs, there is still much that needs to be done to refine ancillary relief. From the perspective of wives, the recent developments allow a greater share in surplus assets and they may be eligible for a share that is greater than 50%. However, the trend to favor clean break divorces poses problems in middle class families for the party that is deemed to have made a lower contribution to the marriage, especially if there are children and there is a greater burden on the State to provide financial support for such parties. From the point of view of husbands, there is more leeway for reducing claims from wives, especially for maintenance payments. The provision for equitable distribution of assets could potentially lead to husbands being the recipients of lump sum amounts from assets belonging to their wives. The interests of dependent children are not affected, since the courts are still primarily concerned with the welfare of children being the first priority. However, where surplus assets exist, the new arrangements provide for a more equitable distribution of assets depending upon the contribution made by each party, with equal importance being provided to both the wage earner and the home maker. Moreover, former spouses have also been deemed eligible for a share in surplus matrimonial assets. The recent developments have also brought a wide range of investments under the purview of financial assets, including pension plans and future financial gain, therefore there is a move towards settlement of divorce cases among the parties without necessitating legal costs through the involvement of the State. However, as experts have pointed out, there are also ambiguities and inconsistencies that have been created by the precedent that White has set and the principles laid out in that case do not easily lend themselves to universal application in every case. Hence on an overall basis, it would appear that while some positive developments have occurred, there is a need for further refinement in the area of ancillary relief and the development of a more middle ground approach which can apply in a wider range of cases. Bibliography Books/Articles: * Burns, Mark, No Date. “What did Mr. and Mrs. White ever do for you?” [online] available at: http://www.mccormicks-solicitors.com/articles/get_pdf_data.php?id=31 * Douglas, Gillian, 2001. “Introduction to Family Law” Oxford: Oxford University Press * Eekalaar, John, 2001. “Back to basics and Forward into the Unknown.” Family Law 30 at 32 * Eekelaar, John, 1991. “Regulating Divorce.” Oxford: Clarendon Press * Herring, Jonathan, 2005. “Why financial orders on divorce should be unfair.” International Journal of Law, Policy and the Family, 19: 218-228 * Herring, Jonathan, 2004. “Family Law” Longman, at pp 222-223 * http://www.sharingpensions.co.uk/marbreak8.htm * Law Commission report No: 112 “The Financial Consequences of Divorce” * Martin, Frank, 2002. “From Prohibition to approval: The limitations of the “No clean break” divorce” International Journal of Law, Policy and the Family, 16(2): 223 * Miles, Joanna, 2005. “Principle of Pragmatism in ancillary relief: the virtues of flirting with academic theories and other jurisdictions.” International Journal of Law, Policy and the Family, 19: 242-256. * Nicholson, John, 2006. “Ancillary Relief Update” Solicitors Journal, 17 March 2006 * 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 * Walstead, Mary and Edwards, Susan, “Family Law” Oxford. at 7.33 Legislation: * Pensions Act 1995 * Matrimonial causes Act 1973 * Matrimonial and Family Proceedings Act of 1984 Cases: * 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 * Burrow v Burrow (1999) 1 FLR 508 * Burns v Burns (1984) 1 All ER 244 * C v C (Financial provision) (1989) 1 FLR 11 * Carson v Carson (1983) 1 All ER 478 * Chaterjee v Chaterjee (1976) 1 All ER 719 * Clark v Clark (1999) 2 FLR 498 * Clutton at [1991] 1 FLR 245 * Cordle v. Cordle [2001] EWCA Civ 1791 * Daubney v Daubney (1976) 2 All ER 453 * Duxbury v Duxbury (1987) 1 FLR 7 * Evans v Evans (1989) 1 FLR 351 * Foley v Foley (1981) 2 All ER 857 * G v G (2002) EWHC 1339; also see K v K (2005) EWHC 1070 (Fam) * Gojkovic v Gojkovic (1990) 2 All ER 84 * Hanlon v Hanlon (1978) 2 All ER 889 * Hedges v Hedges (1991) 1 FLR 196 * K v K (Financial provision:Conduct) (1990) 2 FLR 225 * Kokosinki v Kokosinki (1980) 1 All ER 1006 * Lambert v Lambert (Financial Provision: Contribution) (2003) 1 FLR 139 * Leadbetter v Leadbetter (1985) FLR 789 * Macey v Macey (1982) FLR 7 * Martin v Martin (1977) 3 All ER 762 * McFarlane v McFarlane [2004] EWCA 872 * Mesher v Mesher (1980) 1 All ER 126 * Michael v Michael (1986) 2 FLR 389 * Minton v Minton (1979) AC 593 * Phippen v Palmers (A Firm) [2002] 2 FLR 408. * SRJ v DWJ (Financial Provision) [1999] 2 FLR 181 * Sorrell v Sorrell (2005) EWHC 1717 (Fam) * Suter v Suter & Jones [1987] 2 FLR 232 * T v T (1998) 1 FLR 1072 * Thomas v Thomas (1995) 2 FLR 668 @ 670D * Vicary v Vicary (1992) 2 FLR 271 * White v White (2000) 2 FLR 983 Read More