Derby Divorce advice solicitors

Derby divorce advice solicitors McIntosh Fleming & Co offer a cheap fixed fee divorce where both parties agree the marriage is at an end. We charge just £750 inc VAT for an uncontested divorce. If the parties have agreed how to split their finances on separation we charge just £500 inc VAT to formalise any settlement agreement or consent order. Or if you want to set matters out in advance like the stars prenuptial agreements are just £500 inc VAT as well. Other Derby divorce lawyers charging by the hour will end up costing you a lot more. So what are you waiting for – just drop us an e-mail to gary@derby-solicitors.co or call us free on (0800) 1712215.

Case study 1

Divorce – Financial provision – Ancillary relief – Non-matrimonial property – Parties both American – Husband having significant financial resources prior to marriage – Two children being born during marriage – Family moving to London and husband continuing to earn well as banker – Wife not working after arrival in London – Husband leaving banking and gaining employment as teacher – Marriage breaking down after 16 years – Wife seeking ancillary relief – Whether husband having alienated funds – Whether husband failing to exploit earning capacity – Whether any of husband’s pre-marital wealth to be excluded from application of sharing principle.

Held – (1) If a party disposed of assets to defeat another party’s claim, such a transaction could be reversed under s 37 of the Matrimonial Causes Act 1973. Similarly when there was clear evidence of dissipation (in which there was a wanton element), the dissipated sums could be added back or re-attributed. Short of that, a party could do what he wanted with his money; faint criticism falling short of either of those standards was not acceptable. Quite apart from the fact that the sums mentioned were de minimis in the context of the case, the wife’s submission that the husband had unjustifiably alienated funds therefore had to be rejected (see [39], below).

(2) If it was alleged that a party was not exploiting an earning capacity, then it was incumbent to prove that by clear evidence rather than by anecdotal scraps. In the instant case, the court would have expected evidence from an employment consultant demonstrating that the husband had indeed had a substantial earning capacity in the financial sector since 2007. The evidence relied on by the wife was no more than anecdotal scraps, which the husband had convincingly demonstrated were either misunderstood, hopelessly stale, or insubstantial. Furthermore, even if the wife had been able to show that the husband had indeed eschewed a higher earning capacity, it would be impossible to criticise him for moving into another more happy and fulfilling field at the age of 55, even if that was rather lower paid (see [42], below).

(3) Although the treatment of pre-marital property was highly fact-specific and very discretionary, the discretion had to be exercised consistently and predictably. Such property had to be taken into account since it presented a contribution made by one party unmatched by an equivalent contribution by the other. However, the longer the marriage went on, the easier it was to say that, by virtue of the mingling of that property with the product of the parties’ marital endeavours, the supplier of that property had, in effect, agreed to share it with his or her spouse. The appropriate approach was, first, for the court to decide whether the existence of pre-marital property should be reflected at all; that depended on

[2012] 1 FCR 139 at 141

questions of duration and mingling. If it decided that reflection was fair and just, the court should then decide how much of the pre-marital property should be excluded (whether it should be the actual historic sum, less (if there had been much mingling), or more (to reflect a springboard and passive growth)). The remaining matrimonial property should then normally be divided equally. Finally, the fairness of the award should be tested by the overall percentage technique. Of course, that was subject to the question of need. In the circumstances, it would be wrong and unfair for none of the husband’s pre-marital wealth to be excluded from the sharing principle; it was the bedrock on which the marriage had been founded. As against that were the undoubted facts that the marriage was long and the monies were well and truly mingled with the material funds, signifying an acceptance by the husband that to a great extent the monies, or at least their growth or earnings, would be shared with the wife. Accordingly, the sum of £1m would be excluded; that satisfied the justice of the sharing principle, and the residual sum would meet the wife’s needs. But for her needs, more would have been excluded. The actual percentage of the divisible whole that the wife would receive would be 44.7%, amounting to £4.237m after payment of her debts. It was not easy to assess the wife’s needs as her only statement of needs in her Form E was completely unrealistic. However, in the circumstances, an all-in housing fund of £1.75m was appropriate. After deducting the housing fund, the wife would have a Duxbury fund of £2.487m which would produce an annual income of £104,000. She could live comfortably on that; the historic rate of expenditure was simply not sustainable for the future (see [7]–[9], [14], [45], [47]–[48], [50], below).

Case study 2

Divorce – Financial provision – Ancillary relief – Failure to disclose assets – Parties marrying and having three children – Parties divorcing after 20 years and wife seeking ancillary relief – Consent order being made on basis that wife would receive lump sum in full settlement of all claims – Wife subsequently applying for order to be set aside on account of husband’s failure to disclose assets – Order being set aside and judge awarding wife additional lump sum – Husband appealing – Whether judge erring in failing to take account of interest paid by husband on loans connected to undisclosed property – Whether judge erring in failing to consider monies spent by husband on renovating two further properties – Whether judge erring in relation to valuation of bracelet owned by husband.

Held – (1) A litigant in ancillary relief proceedings who had gone out of his way to disguise, hide or otherwise cover up his financial affairs could not later be heard to complain that the judge had missed one or other point of detail in his attempt to delineate that party’s finances through the haze created by the smoke and mirrors that the litigant had deployed. However, the wife’s submission in that regard could not apply in full to the figure of £40,000. The judge had been able to determine that interest in that sum had been paid by the husband to Mr S in respect of the loan which, the judge found, had facilitated the original purchase of the plot. It was therefore directly connected to that development. It was nevertheless important not simply to focus on that one loan in isolation. The judge had attempted to track the borrowings on the property after the original loan to Mr S had been repaid. It was plain that once the property was for a time mortgage-free, the husband had remortgaged it to Mrs C. He had later discharged that loan through the further mortgage from Linked Lending Limited and it was that final loan which was accounted for by the judge in the sum of £232,000 in computing the profit figure. The loan to Mrs C and its successor to Link Lending Limited seemed to have nothing to do with achieving the purchase or development of the Commercial Street premises; they were simply secured on it. Arguably, therefore, the judge need not have taken the final loan into account when computing the profit figure. The husband had been unable to explain in any manner that the judge found to be acceptable the twists and turns of his financial dealings during that

[2012] 1 FCR 339 at 341

period. The judge might well have been justified in holding that the final Link Lending Limited loan should not be brought into account when computing the net profits on the Commercial Street premises, but had made a favourable decision towards the husband in that regard. On the information before the appellate court, it was not possible to tie the obtaining of the Mrs C loan to the increase in value of the Commercial Street property; its only established connection with the property was that for a time the property had been used as security for the loan. The judge had accordingly been justified in ignoring the £96,000 interest when computing the level of profit. In the circumstances, it was not possible to characterise the judge’s approach in failing to add the disputed sums into his calculation as plainly wrong (see [36]–[42], below).

(2) In the circumstances, it was not possible to say that the judge had been plainly wrong in failing to give specific arithmetic credit for the cost of improvement work to either of the two other properties because (a) the husband had made no specific claim for such costs in the case presented by his counsel; (b) they were not established in evidence; and (c) they had no direct arithmetical relevance to the lump sum awarded (see [50], below).

(3) By implication, if not expressly, the judge had rejected the lower valuation figure advanced by the husband in relation to the bracelet. That point had not been argued in the written closing submissions on behalf of the husband. In any event, its only relevance was to form a modest element in the overall computation of the husband’s worth which the judge had used as a rough and ready yardstick in looking at the overall fairness of the lump sum to which he eventually arrived. It was very difficult for a party who had been found to be dishonest and opaque about so much of his financial circumstances as to cause the judge to estimate, assume and at times, no doubt, guess at his finances, to pick upon a small yet specific element and argue for pound for pound credit in his favour in that regard. If the husband had conducted the litigation in a co-operative, open and honest manner, setting out in credible detail the minutiae of his finances, then it might have been possible to identify, understand and correct any specific arithmetical or evidential error in the calculation; such an approach was, however, the antithesis of the manner in which he had conducted himself over the course of a decade in relation to resolving the financial issues that remained between himself and his former wife (see [53], below).

The appeal would therefore be dismissed.

Case study 3

Will – Reasonable provision – Spouse – Husband and wife being married for 22 years – Husband’s will providing wife with right to occupy matrimonial home but subject to conditions including obligation to fund repairs – Property being given to husband’s son from previous marriage absolutely subject to wife’s right to occupy – Residuary estate being awarded to son after small bequest to wife – Wife bringing proceedings seeking reasonable financial provision – Judge awarding wife one-half beneficial interest in property – Whether judge erring in principle or plainly wrong – Inheritance (Provision for Family and Dependants) Act 1975, ss 1, 2, 3(2).

Held – It was established that, on every application under ss 1 and 2 of the 1975 Act, the court had to ask itself two questions, the first being whether reasonable financial provision had been made for the applicant and the second being, if not, what financial provision ought he or she to receive. The instant appeal was only concerned with the second question, the answer to which, in the case of a spouse, was not confined to reasonable financial provision for his or maintenance. The question of what was reasonable financial provision for a surviving spouse was necessarily fact-specific; in some cases a capital provision might be appropriate, in others a life interest would suffice. The observations of Lord Nicholls in Miller v Miller, McFarlane v McFarlane [2006] 2 FCR 213 at [22] (admittedly in a somewhat different context) underlined the importance of the matrimonial home. Section 3(2) of the 1975 Act imposed a ‘statutory cross-check’ in proceedings brought by a widow. The court was thus required to have regard to the provision which the applicant might reasonably have expected to receive had the marriage terminated by divorce instead of by the death of the husband. However, it was inappropriate to make too much of that ‘cross-check’; testamentary provisions had to be respected, subject to the

[2011] 3 FCR 1 at 3

need to ensure that reasonable financial provision was made for the applicant. Decisions under the 1975 Act as to what would constitute such provision involved the exercise of judicial discretion. There was unlikely to be a ‘right’ figure and an appeal should not be allowed simply because, had it heard the case at first instance, the appellate court might have taken a different view. The court should only interfere on well established grounds. In the circumstances of the instant case, the judge had not erred in principle or been plainly wrong in awarding the widow a one-half beneficial interest in the property rather than confining her to a life interest. The relatively small size of the estate was the governing reality. Constrained by that reality, the judge had had to grapple with the need to make reasonable financial provision for the widow. His options had been limited. The primary practical consideration was that the provision of a share in the capital gave the widow a ‘capital cushion’ to cope with whatever factual eventualities unfolded. Thus the life interest alternative, even coupled with the residuary estate, would be demonstrably inadequate for the widow both to fund the repairs which the property required and to maintain herself. The repairs would exhaust the residuary estate. If all that was available to the widow was the life interest, she would then have nothing to live on. Whilst it might be that even with a share in the capital the widow would ultimately be unable to raise funding for the repairs, it was at least a step in the right direction. Moreover, should it prove impractical to undertake the repairs, the widow would need to relocate. Whether she sought to purchase a smaller replacement property or rented accommodation, she would need some such cushion. Absent the judge’s order, she would not have it. Two further factors provided additional justification for the judge’s decision, the first being that the instant case had involved a long marriage. Given the significance of the matrimonial home, the award of a capital share in the property to the widow was appropriate, especially as it was by that means, if at all, that reasonable financial provision (and hence security) could be made for her. The importance of that provision easily outweighed any attachment to the family home enjoyed by the son. The second factor was that, given the deeply hostile relationship between widow and son, it was only by making the capital provision which the judge had ordered that there was the prospect of a clean break—if the property was sold. By contrast, the provision of a life interest would have precluded any such break. The appeal would therefore be dismissed ([19]–[23], below); Re Davis (decd) [1993] 1 FCR 1002, Re Krubert (decd) [1996] 3 FCR 281, Fielden v Cunliffe [2005] 3 FCR 593 and Miller v Miller, McFarlane v McFarlane [2006] 2 FCR 213 considered.

Case study 4

Divorce – Financial Provision – Ancillary relief – Application to set aside order – Mistake – Court taking potential liability of husband to Charity Commission and Inland Revenue into account when determining ancillary relief award in wife’s favour – Husband’s negotiations subsequently leading to significant reduction in amount of liability – Wife’s application to set aside ancillary relief orders being dismissed – Wife appealing – Whether ancillary relief orders vitiated by mistake as to size of liability – Whether non-disclosure by husband leading to inaccurate assessment of liability – Whether evaporation of husband’s stated moral obligation to pay certain sum regardless of legal liability constituting new event – Whether judge erring in ordering wife to pay half of husband’s costs of application to set aside orders.

The husband was a highly successful businessman and notable benefactor. In 1986, he created an offshore trust which later made a substantial payment, in the light of his wishes, to a newly created charity of which he and his wife were trustees. In 1996, he embarked on a business venture through a company called Isoworth Holdings Ltd. At his suggestion, the trustees of both the offshore trust and the charity invested heavily in Isoworth, which collapsed in December 2000. The husband and wife divorced in 2001 and, on 12 July, ancillary relief orders were made against the husband requiring him to provide the wife with assets valued at £6,625,000 on a clean break basis. The award represented 38% of the available assets, which the judge had calculated as amounting to £15,650,000 after deducting a liability of £14m from the husband’s assets. The wife had shown no interest in the possibility, raised by the judge, of a calibrated award which would increase or decrease in accordance with the ultimate determination of the size of the liability. Rather she had asked the judge to effect, to the maximum possible extent, a transfer to the husband of her exposure to the liability. Conceding that the liability should be borne entirely by him, the husband had undertaken to indemnify the wife against it in an unlimited amount. The major component of the liability related to the risk that the Charity Commission of England and Wales (the Commission) might require the husband and wife, as trustees of the charity, to personally reimburse it for the amount lost by their decision to invest its funds so heavily and speculatively in Isoworth, a company in which the husband had a substantial personal interest. At the hearing, the husband had stated that he considered himself to be subject to a moral obligation to reimburse the charity, irrespective of his legal obligation to do so. An allied but

[2009] 2 FCR 158 at 159

independent risk was that, to the extent that the husband’s donations had been deployed in an investment in consequence of which, as a person already interested in the success of Isoworth, he had received a benefit, gift-aid relief granted by the Inland Revenue would subsequently be ruled to be invalid. At the conclusion of the husband’s negotiations with the Commission and the Inland Revenue in 2006, the liability to reimburse the charity was agreed to be nil, the husband having argued that if a donation to the trustees of a charity was made conditional upon their investing it in a specified way, they had no discretion regarding the nature of the investment and, even if it enured to the benefit of a trustee and then became valueless, the Commission would be unable to charge the trustees with breach of duty (the conditionality defence). The liability to repay sums relating to invalid gift-aid relief was agreed to be in the sum of only £600,000. The wife applied by summons for an order setting aside the ancillary relief orders. Subsequent to the dismissal of her application by the same judge, she appealed to the Court of Appeal. She submitted that (i) the husband had failed to disclose evidence in 2001 which would have made the availability of the conditionality defence clearer and led the judge to assess the liability in a sum lower than £14m, (ii) the ancillary relief orders were vitiated by a substantial mistake as to the size of the liability and (iii) the evaporation of the husband’s sense of moral obligation to reimburse the charity was a new event which invalidated a fundamental assumption upon which the orders had been made. She further submitted that there were various courses open to those seeking to reopen ancillary relief orders and that, if she had chosen to appeal against the orders out of time rather than to apply within the existing proceedings for an order setting them aside, the appeal would have been allowed. She also appealed, and the husband cross-appealed, against the judge’s order in February 2008 that the wife should pay 50% of the husband’s costs of her application. The wife relied on r 2.71(4)(a) of the Family Proceedings Rules 1991,SI 1991/1247, which provided that ‘the general rule in ancillary relief proceedings is that the court will not make an order requiring one party to pay the costs of another party’, while the husband invoked r 44.3(2)(a) of the Civil Procedure Rules 1998, SI 1998/3132, which provided that ‘the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party’.

Held – (1) The wife’s case on non-disclosure could not be accepted; there had been material before the court in 2001 which suggested that a defence of conditionality might have been successfully developed on behalf of the trustees of the charity in negotiation with the Commission.

(2) A judge’s compilation of a balance sheet, usually necessary in order to enable him to address the principle of equality, often required him to confer a spurious specificity on the value of assets, or on the size of liabilities, in relation to which, on the evidence before him, he could reach no confident conclusion: his balance sheet demanded figures so he inserted into it the figures which he considered to be the most probable or, more accurately, the

[2009] 2 FCR 158 at 160

least improbable. In light of that, the reasons for rejecting the assertion that the wife’s award in 2001 was vitiated by mistake could be collected into four linked propositions. First, the size of the liability had been a known unknown in the proceedings and the judge had found that the spectrum within which it might fall was vast. Secondly, the makings of a conditionality defence, which would have dramatically reduced exposure to the charity, albeit not to the Inland Revenue, had been there for all to see and explore further. Thirdly, it had been because of the wife’s acknowledgment that the size of the liability had been so uncertain that she had successfully pressed the court to transfer her exposure to it, as a trustee, to the husband to the maximum possible extent. She had actively sought and secured a solution under which she had left the marriage with assets of firm value and under which, by contrast, the husband had been required to meet the liability, whatever it size might have proved to be. Fourthly, for precisely the same reason, the wife had shown no interest in the judge’s suggestion that her award might have been calibrated so as to rise or fall in accordance with the ultimate determination of the size of the liability. She had forsworn the benefit attendant upon the determination of a low liability because of the concomitant detriment attendant upon that of a high liability and, also, because of the stress likely to be generated by the interim uncertainty.

(3) The moral obligation of a respondent to an application for ancillary relief, for example to accommodate or maintain an elderly parent, could occasionally serve to reduce the level of his legal obligation to an applicant, particularly if it existed, even embryonically, at the time of the marriage. However, it was rare for a moral obligation to trump a legal obligation and a moral obligation to pay further funds to a registered charity would not do so. Accordingly, the evaporation of the husband’s sense of moral obligation to reimburse the charity was not a new event which invalidated a fundamental assumption upon which the orders in 2001 had been made; Barder v Barder (Caluori intervening) [1987] 2 All ER 440 considered.

(4) The Court of Appeal was an inappropriate forum for an attempt to reopen an award of ancillary relief in circumstances in which the primary ground was otherwise than that the judge had erred on the material before him. Thus where the award had been made by a high court judge or a circuit judge, proceedings should normally be launched by summons or notice of application returnable before the judge who made the award (or, if impracticable, to a judge at the same level). Thus, had the wife in the instant case first approached the Court of Appeal, it would have shut out her proposed appeal on the basis that she should have issued a summons returnable before the original judge. Furthermore, even if the Court had proceeded fully to consider her substantive appeal, its despatch would have been negative in that it would have been made by reference to considerations identical to those leading to the conclusion that the judge had been right to dismiss her application to set aside the orders.

[2009] 2 FCR 158 at 161

(5) The wife’s application for an order setting aside the ancillary relief orders did not itself constitute ‘ancillary relief proceedings’ as defined in r 1.2(1) of the 1991 Rules, which meant that the ‘no costs’ rule relied on by the wife did not apply. The proceedings were, however, ‘family proceedings’ within the meaning of that rule and of s 32 of the Matrimonial and Family Proceedings Act 1984 in that they constituted a matrimonial matter within the meaning of para 3(a) of Sch 1 to the Supreme Court Act 1981. Since r 10.27(1)(b) of the 1991 Rules provided that CPR 44.3(2) did not apply to ‘family proceedings’, the ‘general rule’ contended for by the husband was also inapplicable. The judge had therefore had before him a clean sheet. By reference to, inter alia, the wife’s responsibility for the generation of the costs of a failed application, he had been entitled to start from the position that the husband was entitled to his costs, before going on to decide that the extraordinary features of the case reduced by one half the wife’s liability.

The appeal against the substantive order and the appeals against the order for costs would be dismissed.