‘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).”
“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….