Divorce formulae vs divorce lawyers: the picture abroad

Family Law|April 30th 2016

‘To have a formula or not to have a formula?’ – that is the question it seems for our readers, this week at least, along with ‘to have a divorce lawyer or not to have a divorce lawyer?’ Gary Lineker isn’t too keen.

Many of our valued readers agree with him, and reading their comments I get a sense of rather wounded soldiers who have been burdened with what they perceive to be unfair divorce settlements. And of course I have no problem with them airing their views here My blog is a place where they can sound off. I believe strongly in the right to free speech, provided it doesn’t become abusive.

So in order to consider these weighty issues further, I thought I would take a look at what happens elsewhere in Europe and compare and contrast the technicalities of financial settlements there and here.

It’s not easy because there is no uniform law across the EU. Instead there are great differences, much of which jars on me as an English lawyer and which I think make for real injustice. And to just be clear right now, spousal maintenance is a topic for another post.

For law students and readers with a genuine interest in comparative legal systems, there are a number of books on so-called ‘Jurisdictional comparisons’ available. A great start would be the one edited by James Steward of the law firm Manches.

Personally I think it’s very easy to take for granted all the orders a court can make on divorce in England and Wales over all the assets of the parties. Nothing is excluded, all is up for consideration. But that’s certainly not the end of it. On divorce the orders a court can make include spousal maintenance; payment of a lump sum out of capital; property orders including an order for sale of the property and the division of the proceeds; and pension sharing. The latter only came into effect in 2000 (prior to which there were nightmare cases involving wives in long marriages who couldn’t fully benefit from a pension unless they never remarried, something their husbands didn’t want either).

There are various other more esoteric orders available too, such as varying a nuptial (marital) settlement and transferring shareholdings and even, as required, ‘joining’ (bringing) third parties into the proceedings. Courts have the widest of powers to share out the assets of the parties – all of them, irrespective of whose name they are currently held in.

But that’s only the starting point. The end of the process will be different, with the court aiming to achieve fairness between the parties. A couple of cases in what is now the Supreme Court (but was then the House of Lords) are the usual starting points for guidance on how to apply the law. There’s White v White,  where the principle of equal sharing after meeting needs was approved, with no distinction to be made between homemaker and breadwinner. A then there’s the conjoined case of Miller v Miller and McFarlane v McFarlane., in which where the Court discussed needs, compensation and sharing as the three strands of the award.

So much for the judicial guidance. What statutory law does the Judge apply to reach a decision? He or she will refer to the factors set out in Section 25 of the Matrimonial Causes Act 1973 and apply those that are relevant.

These factors are:-

“(a)the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;

(b)the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c)the standard of living enjoyed by the family before the breakdown of the marriage;

(d)the age of each party to the marriage and the duration of the marriage;

(e)any physical or mental disability of either of the parties to the marriage;

(f)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 contribution by looking after the home or caring for the family;

(g)the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;

(h)in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit, which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.”

But if we look at Section 25A Matrimonial Causes Act 1973 we find the following too:

“Exercise of court’s powers in favour of party to marriage on decree of divorce or nullity of marriage.

(1)Where on or after the grant of a decree of divorce or nullity of marriage the court decides to exercise its powers under section 23(1)(a), (b) or (c), 24 or above in favour of a party to the marriage, it shall be the duty of the court to consider whether it would be appropriate so to exercise those powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree as the court considers just and reasonable.

(2)Where the court decides in such a case to make a periodical payments or secured periodical payments order in favour of a party to the marriage, the court shall in particular consider whether it would be appropriate to require those payments to be made or secured only for such term as would in the opinion of the court be sufficient to enable the party in whose favour the order is made to adjust without undue hardship to the termination of his or her financial dependence on the other party.

(3)Where on or after the grant of a decree of divorce or nullity of marriage an application is made by a party to the marriage for a periodical payments or secured periodical payments order in his or her favour, then, if the court considers that no continuing obligation should be imposed on either party to make or secure periodical payments in favour of the other, the court may dismiss the application with a direction that the applicant shall not be entitled to make any further application in relation to that marriage for an order under section 23(1)(a) or (b) above.”

From the above it can be seen that, although the Court has wide discretion in taking into account the factors listed; the Judge must also consider  ending the financial obligations of each party to the other as soon as it considers that just and reasonable.

In addition, as set out in Section 25 A (2), the court must make orders for  maintenance payments in such a way as  to enable the party receiving them to adjust without undue hardship to the end of his or her financial dependence on the other party.

Now opponents of this system argue for certainty, and a formula. Personally I disagree. This would mean that both parties’ arguments as to why they should keep certain assets or deserve more or less would have to  be disregarded. It works both ways. The court can take into account, for example, the lower earning power of one party; a disability; the ages of the parties; and the length of the marriage – and award accordingly. Similarly it can (and does) take into account assets earned pre- marriage as well as those inherited or gifted. These include assets which built up before the marriage, during it and even after the parties have separated but are still technically married.

Spousal maintenance too is not intended to be life-long, or in fact, for any longer than necessary, unless undue hardship would result from it not being so. And as Mr Justice Mostyn made clear in deliberations on the subject in the 2012 case of  B v S (Financial Remedy: Marital Property Regime), the term ‘undue hardship’ implies that Parliament intended there to be at least some hardship involved in adjusting to life post- divorce.

There are complicated legal principles involved in what maintenance is meant to achieve – compensation, needs, sharing. A deeper discussion on this will have to wait for another post.

So what happens over the Channel? Other countries have stricter regimes, although there is no one uniform approach across Europe.

Law Commission Consultation Paper No 198, Marital Property Agreements, states at paragraph 4.6:

“…the vast majority of European countries operate marital property regimes. These share three features. One is that they are systems of rules for the division of property on death, divorce or bankruptcy. That division is equal unless a couple have made it otherwise by contract. Another is that they are not concerned with what is usually referred to in the European context as maintenance, or income provision for spouses and children after divorce. The third is that they all involve the facility for couples to opt for a change of regime, before or after marriage, by contract.”

Summarising, Mr Justice Mostyn said that these ‘civil marital property regimes’:

“…can be divided into two groups namely (i) immediate and (ii) deferred systems of community. Immediate community involves automatic joint ownership of the community property and liabilities from marriage onwards (e.g. the Netherlands). Deferred community of property means that the two spouses keep their separate ownership of property during marriage, but that on death, bankruptcy or divorce their property is pooled and regarded at that point as a community, which is then divided equally (e.g. Scandinavia).Within each group one can distinguish systems of total community from communities of acquests [property that has been acquired]. In a system of total community, all the property of the couple is, generally speaking, jointly owned (e.g. Netherlands and Scandinavia). In a community of acquests, property acquired before marriage or by gift or inheritance afterwards is excluded from the community (e.g. France, and, up to a point, Germany).”

He adds:

“Thus one can see the great variety of default regimes in operation. In the Netherlands it is immediate and total; in Scandinavia it is deferred and total, in France it is immediate and [a community of] acquests; in Germany it is deferred and acquests.”

Leafing through the pages of James Stewart’s book (and I profess no professional expertise in any of these countries), we see that in Belgium community of assets during the marriage applies, but this does not apply to the pension. In France each spouse takes their own property back. They divide communal property equally minus any debt. In Germany pension, accrued [accumulated] financial gains, household effects and joint property is divided but the courts do not have the right to put all these aspects together and make one judgement considering the whole case. The court has no power to allocate property or other assets. A compensatory payment can only be made for an imbalance in accrued gains.

And so it continues, with many intriguing differences between each state.

In all cases the parties can contract out of the default regime, and enter into their own nuptial agreement.

And now we come to a key point. Unfortunately for some of my readers, who clearly hope otherwise, in none of these countries have divorce lawyers been wiped out. It is difficult to imagine how they could have been, given the complexities that are clearly still involved in operating these kind of systems, but there you go: those dastardly lawyers are still at work assisting clients caught up in those regimes, as are divorce lawyers in every other country in the world, almost all of whom have their own particular legal systems.

I am going to reach no conclusion because my opinions are pretty obvious. I look forward to the responses, much of which based on past experience I could probably write before they come in….

The founder of Stowe Family Law, Marilyn Stowe is one of Britain’s best known divorce lawyers. She retired from Stowe Family Law in 2017.

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Comments(5)

  1. spinner says:

    “much of which based on past experience I could probably write before they come in….” – As I could do with a lot of your own blog posts to be honest.

    90% of what you have written is about the current very out of touch law we currently unfortunately have in the UK and one paragraph on what actually happens abroad in a blog post titled “the picture abroad”.

    Clearly even in that one paragraph we can see that for the person with the most assets coming into the marriage the UK is the worst and also in regard to the pension and so on the person with the most assets after or even during the marriage is much worst off, a real disincentive for that person. As you say each jurisdiction that you mention has the right to opt out presumably through a prenuptial agreement.

    It’s OK the current system is unsustainable and will collapse under it’s own weight, it’s just a shame how much damage to society as a whole it will cause in the meantime.

  2. Polly Morgan says:

    The issue is one of certainty v discretion. A more certain system will enable the parties to predict the outcomes should their marriage break down. That may mean they make different decisions about eg giving up work to raise children, during the marriage. That could be good for society, or not good for society. But it is uncertain whether they would change behaviour: after all, no one gets married expecting to get divorced. Discretion enables fairness in an individual case and reflects the uniqueness of each family’s situation and protects the vulnerable party – although fairness is obviously in the eye of the beholder. But it does so at the expense of simplicity, and therefore increases costs.

  3. Andrew says:

    Assuming that men and women are (on average) endowed with equal brain-power and common sense – why should not written prenups be cast-iron, with a postponement if necessary to protect children during minority?
    .
    Adult men and women can settle a p.i. claim involving sums which exceed more than most couples will ever have or earn, and the imbalance of power between individual and insurance company is greater than that between spouses – but prenups are not binding and matrimonial finance cases cannot be settled without the approval of the court. Why?
    .
    We should stop infantilising women and let grown people make their own arrangements, wise or unwise as the case may be.
    .
    I am of course aware that I am spitting (a euphemism) into the wind!

  4. Nordic says:

    Dear Marilyn
    I must echo the earlier comment in that this reads like a (pre-emptive) defence of English family law rather than an objective description of practices in other jurisdictions. The good Mr Lineker really seems to have rattled your cage!
    .
    In my view, your post leaves the uninformed reader with several misconceptions. Firstly, it gives the impression that the family law in other European jurisdictions only deal with assets. They do not, but they do treat asset division as distinct from child and spousal maintenance. In my view this is vastly superior to mess created here where everything is mingled together and the kids used and abused in each and every issue.
    .
    Secondly, the description of the asset division rules leave the impression that they are horribly complicated, formula-based, contraptions which vary greatly across different jurisdictions. While the mechanisms may vary, the principles are largely the same, namely that the default regime requires couples to share the assets built up during the marriage equally. Across the jurisdictions I know reasonably well (France, Norway and Denmark), this is the default. Although the mechanisms deployed to get to this outcome vary, the principles are the same and these principles are well understood by the average marrying couple. Hence, Danish, Norwegian or French couples know what they are committing to, at least financially. Here, marrying couples have no clue, because it all depends on what the “judge on the day” might fancy. This is not justice, but chaos as I know personally all too well.
    .
    Thirdly, in noting that family lawyers also exist in other jurisdictions, you seem to imply that this, in the end, is much of a muchness. This is a false impression. Denmark has around 350 family law specialists for a 6 million population. Half of all Danish divorces are conducted by a single jointly appointed lawyer. People cannot get in to a court-room to argue asset division. Divorce legal cost are in the low single digit thousands and it would be impossible to squander a family’s wealth, and the kids inheritance, the way it habitually happens here. Indeed, I suspect your Danish counterparts would be green with envy at the sight of the money machine within which you operate.
    .
    You say that you could write the responses to this post. Possibly, but then I could write the posts of the average English family lawyer. All one has to do is follow the money. If you knew, from personal experience, how much financial and emotional damage is caused by the system you uncritically defend, you would have written a different post.

    • spinner says:

      Thank you for an actual analysis of “the picture abroad” possibly another iteration of your blog post Marilyn may be in order with an actual analysis of what happens in various countries around the world as that would genuinely be of interest.

      It’s the fanaticism by which you defend the current dysfunctional system that concerns me, it’s like the reaction you get if you criticise someone’s religion.

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